On appeal from Superior Court, Law Division, Bergen County, whose opinion is reported at 151 N.J. Super. 363(1977).
Lora, Seidman and Milmed. The opinion of the court was delivered by Seidman, J.A.D.
This appeal by defendant New Jersey Bank concerns the priority between a judgment obtained by it against the former husband of plaintiff herein, on which, pursuant to a writ of execution, the sheriff levied on the judgment debtor's interest in the marital home, record title to which was in the judgment debtor and plaintiff as tenants by the entirety, and "liens" on the marital home and the proceeds of the sale thereof, created by the divorce judgment in favor of plaintiff.
The chronology of events begins with the entry of the divorce judgment on March 9, 1975. It provided, in part, for the sale of the marital home, the net proceeds to be divided 60% to plaintiff and 40% to her spouse. These shares were "declared to be liens upon the said marital home and proceeds of sale." The judgment further directed the payment of certain debts out of the husband's share of the net distribution from the sale of the house, "which [debts] are declared to be liens." These debts, totalling $14,750, included, in addition to other items, support arrearages "reduced herein to a judgment" in the amount of $3,950, a counsel fee of $1,500, and moneys due department stores on charge accounts.*fn1 On March 18, 1977 plaintiff's attorney caused an abstract of judgment to be entered upon the civil judgment and order docket of the Superior Court. The abstract contained an enumeration of the indebtednesses listed in the divorce judgment.
The bank's judgment against the former husband, in the amount of $17,905.20 and costs, was entered on March 21, 1977, and a writ of execution was issued four days later.
On April 20, 1977 the Bergen County Sheriff levied on "all the right, title and interest, of the defendant, Stuart E. Sisco,"*fn2 in the former marital home.
Plaintiff immediately informed the bank of the divorce judgment and claimed priority over the bank's judgment to the extent necessary to comply with the terms of her judgment. She thereafter filed her complaint in the Law Division seeking a determination that "she is the holder of a valid equitable interest and lien in such real property which is not subject to the lien of [the bank's] judgment and is not subject to the levy and execution," and a direction for the discharge from the levy and lien of her "equitable interest and equitable lien as created by the said judgment of divorce."
After a hearing, judgment was entered in plaintiff's favor which, among other things, "discharg[ed] and releas[ed] the lien and levy issued by defendant * * * as against the equitable lien which exists in Susan M. Sisco's favor in the sum of $12,750 from Stuart P. Sisco's interest in the property," and directed the conveyance by the former husband of his interest in the marital home "free of any lien, levy or other encumbrance" resulting from the judgment of the bank. This appeal ensued.
The bank contends that (1) plaintiff does not own a valid interest in her former husband's share of the real estate, levied upon by the bank; (2) as the first levying creditor it is entitled to "priority of the husband's share to be satisfied in full before any other judgment creditor, including the plaintiff," and (3) plaintiff's failure to record the Chancery Division judgment prior to the levy and execution is fatal to her claim. These contentions are, of course, disputed by plaintiff. She argues that (1) she holds a valid equitable interest in her former husband's share of the proceeds of the sale of the marital home which cannot be affected by execution
and levy upon defendant's judgment; (2) her equitable liens in the share of the proceeds of sale are entitled to priority over the claim of the judgment creditor; (3) failure to record the Chancery Division judgment prior to the execution and levy was not fatal to her claim, and (4) to allow defendant to prevail would frustrate the intent and purpose of the divorce judgment.
To resolve the issue of priority between the bank's judgment and plaintiff's "liens" assertedly derived from the divorce judgment, it is preferable that we deal separately with the one pertaining to the division of the marital property and plaintiffs interest therein, and that with respect to the payment of the enumerated indebtednesses out of the former husband's share of the proceeds from the sale of the home. We consider the latter first.
In his opinion, reported at 151 N.J. Super. 363 (Law Div. 1977), the trial judge (the same one who heard the divorce matter and entered the judgment therein), reasoned that the divorce judgment had created an equitable lien in plaintiff's favor on her former husband's 40% interest in the subject property, and that the proceeds from the sale of the property were to be applied in part to satisfy the first mortgage therein and the equitable liens "which were created for the benefit of Mrs. Sisco." 151 N.J. Super. at 370. He said that any attempt to execute on her judgment and have a sheriff's sale "would have been in direct contravention of the court order requiring the house to be put on the open market for sale." Id. He expressed the view that it would be "anomalous to hold that the plaintiff should have ...