This matter was submitted for decision on stipulated facts and documents, there being no material facts in dispute. The question is whether an enforceable lien is created by the docketing of a judgment against one of the grantors in a deed to real property shortly after conveyance of the property to the purchaser but before the deed and purchase money mortgage were placed on record.
Plaintiffs Gutermuth took title to a single-family residence from defendants Storms on July 25, 1975, during a closing at about 10 A.M. that morning. According to the closing statement, the total purchase price was $60,500 and it was to be satisfied by credit to purchasers of $59,961.32 for tax and insurance adjustments, realty transfer fee and the sums necessary to satisfy two outstanding mortgages and two judgments of record. The balance of the purchase price in the sum of $538.68 was delivered to the sellers attorney, the sellers having not appeared at the closing.
Counsel for the purchasers had arranged for a final continuation of the title search, including a judgment search on the morning of the closing, and determined that no additional liens appeared of record before the closing took place. Upon completion of the closing, counsel for the purchasers retained all the necessary funds in escrow to satisfy known existing liens and arranged for delivery of the
new deed and purchase-money mortgage for recording. Although the record does not indicate the manner in which the deed was delivered to the Morris County Clerk for recording, counsel agree that it is fair to assume it was placed in the mail. The closing took place on Friday, July 25, 1975, and the deed was recorded four days later, Tuesday, July 29, 1975.
At 11:23 A.M. on July 25, 1975, within about 1 I/2 hours after the closing had been completed, a judgment in excess of $15,000 was docketed against David Lee Storms, one of the grantors, in favor of defendants Ropiecki and Morris. The Ropiecki-Morris judgment was based upon a judgment obtained by the creditors in the State of New York two years previously against Storms and a corporation in which he was involved. Defendant Ruth M. Storms, who held title with her husband, by the entirety, before the conveyance, was not named in the judgment, hence it is conceded that any lien which may be found to exist is limited to the interest of the husband, Donald Lee Storms.
Defendants Storms moved out of New Jersey before the closing and have not appeared in this action. Plaintiffs seek a judgment quieting title by declaring the Ropiecki-Morris judgment of no force and effect as a lien against the title in question. Defendants Ropiecki and Morris seek to enforce the judgment as a lien against the interest of Donald Lee Storms in the property as a matter of record at the time their judgment was docketed. They concede that enforcement of such a lien would be complicated because of the ownership by the entirety.
A judgment creditor levying against the debtor spouse acquires no greater rights than that spouse had, i.e. , a one-half interest in the life estate, for the joint lives, and the debtor spouse's right of survivorship. Newman v. Chase , 70 N.J. 254 (1976); King v. Greene , 30 N.J. 395 (1959). But in view of the result reached by this court, we need not be concerned with that problem here.
It is stipulated that plaintiffs had neither actual nor constructive notice of the Ropiecki-Morris judgment and that Ropiecki and Morris had neither actual nor constructive notice of the conveyance on July 25, 1976. It is further stipulated that the affidavit of title executed by the Storms for the closing "did not reveal the likelihood of a judgment to be entered on behalf of Ropiecki and Morris." It is conceded that the affidavit of title of Donald Lee Storms contains a misrepresentation of fact in that it fails to recite the New York judgment and the pendency of the suit on that judgment in this State.
Plaintiff's reliance on the doctrine of equitable subrogation under these circumstances is well placed. Where a purchaser retains funds in escrow to satisfy existing mortgage and judgments liens, and in fact ultimately uses such funds to satisfy those liens, such purchaser stands in the shoes of those mortgage and judgment lienholders and may assert their claims to priority as against any subsequent lien claimant.
In Camden Cty. Welfare Bd. v. Federal Dep. Ins. Co. , 1 N.J. Super. 532 (Ch. Div. 1948), the welfare board took a deed and paid off a mortgage on the property without being aware of defendant's judgment. The court agreed with the board's argument that it was subrogated to the position of the mortgagee whose lien it ...