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General Electric Credit Corp. v. Winnebago of New Jersey Inc.

Decided: March 28, 1977.

GENERAL ELECTRIC CREDIT CORPORATION, PLAINTIFF-APPELLANT,
v.
WINNEBAGO OF NEW JERSEY, INC., LAND ACQUISITIONS, INC., SCHIFFMAN RECREATION VEHICLES OF FLORIDA, INC., NORMAN SCHIFFMAN, GRACE SCHIFFMAN, RICHARD R. SCHIFFMAN, AND BARBARA SCHIFFMAN, DEFENDANTS-RESPONDENTS



Matthews, Seidman and Horn. The opinion of the court was delivered by Matthews, P.J.A.D.

Matthews

In January 1976 plaintiff instituted an action against defendants seeking repayment of collateral deficiencies arising out of defaults under credit obligations owed by defendants to plaintiff. In that proceeding plaintiff sought and obtained temporary restraints which enjoined defendants from removing from their premises collateral in which plaintiff had a security interest.

Plaintiff and defendants thereafter entered into an agreement, dated February 25, 1976, under which defendants acknowledged

their defaults and material breaches and agreed to give plaintiff a mortgage on property in Paramus, New Jersey, and in Pennsylvania, further to secure the collateral deficiencies due plaintiff. The action was thereupon dismissed without prejudice.

Despite repeated demands of plaintiff, defendants refused to execute the mortgages or to otherwise perform the agreement of February 25, 1976. Plaintiff again instituted an action against defendants seeking specific performance of defendants' promise to execute mortgages on the mentioned properties.

Subsequently, plaintiff learned that defendants had suffered a substantial judgment lien against the Paramus property, and that title to the Pennsylvania property had never been acquired by them. Plaintiff then amended its complaint, with leave of court, by adding a fifth count. The added count alleges that defendants' execution of the agreement of February 25, 1976 was fraudulent and was intended to impede and delay plaintiff in the collection of the deficiency balance due to it; that defendants never intended to execute any mortgages in favor of plaintiff as promised by them in said agreement, and that defendants had, without notice to plaintiff, substantially reduced or eliminated any equity in the properties which were the agreed upon subject of such promise to mortgage, thereby rendering specific performance of such promise to mortgage worthless. Based on those allegations plaintiff now seeks judgment directing defendants to execute mortgages on other properties in which they have an equity in such aggregate amount that the deficiency balance owed to plaintiff will be fully secured, as was intended by the agreement of February 25, 1976, or, in the alternative, directing defendants to convey their interests in those other properties to plaintiff.

Based on the allegations of the added count and the relief sought therein, plaintiff filed notices of lis pendens against various parcels of real estate in which defendants have an interest, including property owned by a nonparty, Schiffman

Realty Company, Inc., which plaintiff alleges is wholly owned by the individual defendants.

Thereafter, defendants moved for an order discharging plaintiff's notices of lis pendens (except that notice filed by plaintiff against the Paramus property). The trial judge granted the motion. We granted a stay of the trial judge's order, and on application, leave to appeal. R. 2:2-3. We have elected to consider the merits, R. 2:11-2, and have been provided with briefs and have heard the argument of counsel.

The filing of notices of lis pendens is authorized by N.J.S.A. 2A:15-6:

In every action, instituted in any court of this State having civil jurisdiction or in the United States District Court for the District of New Jersey, the object of which is to enforce a lien, other than a mechanic's lien, upon real estate or to affect the title to real estate or a lien or encumbrance thereon, plaintiff or his attorney shall, after the filing of the complaint, file in the office of the county clerk or register of deeds and mortgages, as the case may be, of the county in which the affected real estate is situate, a written notice of ...


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