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Girard Acceptance Corp. v. Wallace

Decided: May 31, 1978.

GIRARD ACCEPTANCE CORPORATION, PLAINTIFF-RESPONDENT,
v.
EDWARD W. WALLACE AND LAURETTA WALLACE, HIS WIFE, DEFENDANTS-APPELLANTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 141 N.J. Super. 171 (1976).

For reversal and remandment -- Chief Justice Hughes and Justices Mountain, Sullivan, Pashman, Clifford, Schreiber and Handler. For affirmance -- None. The opinion of the court was delivered by Schreiber, J.

Schreiber

Defendants Edward W. Wallace and Lauretta Wallace, husband and wife, in defense of plaintiff Girard Acceptance Corporation's foreclosure action on two mortgages on two separate tracts of land, contended that the mortgages were unenforceable and the underlying obligation was void because of violations of the Secondary Mortgage Loan Act, N.J.S.A. 17:11A-34 et seq. The trial court granted the plaintiff's motion for summary judgment. On appeal the Appellate Division affirmed. 141 N.J. Super. 171 (1976). We granted defendants' petition for certification. 72 N.J. 458 (1976).

The complaint asserted that the defendants were indebted to the plaintiff in the sum of $5,888.64 per a written obligation dated February 17, 1972, providing for payment of the debt in installments, that defendants had defaulted "within the terms" of the obligation and that plaintiff elected the entire principal balance to be due and payable. It was also alleged that the defendants had executed mortgages on two separate tracts of land in the Township of Plumsted, Ocean County, to secure the payment of the obligation. In its prayer for relief plaintiff sought a judgment for the amount due, foreclosure of the defendants' equity of redemption, sheriff's sales of the lands and payment to the plaintiff of the sums due. The defendants' answer admitted all the allegations of the complaint and set forth two separate defenses asserting violations of the Secondary Mortgage Loan Act, N.J.S.A. 17:11A-44(a) and N.J.S.A. 17:11A-51(a) and (c).

Plaintiff moved for summary judgment, relying only upon the admissions in the answer. Defendants also moved for summary judgment, relying upon the contract entered into by the defendants. On the return day no evidence was taken and no affidavits submitted. We deduce the following from this sparse record.

There are four contract documents, each dated February 17, 1972, and each executed by the defendant: (1) an Installment Sale and Security Agreement (Agreement) with

Whelan Pontiac-Buick, Inc. which consisted of two pages; (2) a note, which was physically a part of the Agreement document, payable to the plaintiff Girard Acceptance Corporation; and (3) two mortgages executed by the defendants as mortgagors and the plaintiff Girard Acceptance Corporation as mortgagee.

The Agreement recited that Whelan Pontiac-Buick, Inc. (Seller) had on February 17, 1972 delivered to the defendants a used 1969 Cadillac for a cash selling price of $3295. The down payment was $19.50. There were numerous additional charges such as the New Jersey sales tax and the fees for recording the mortgages. The time balance due was $5,888.64. The total deferred payment price was $6,008.14, which the defendants agreed to pay in 48 consecutive equal monthly payments. The Seller reserved title in the automobile and was empowered upon default to take immediate possession and sell the car. The Agreement specified "Recorded Mortgage Against Real Estate" as other collateral. The terms also stated:

It is intended and agreed that the Buyers on even date are signing a mortgage and time note for the balance due, which mortgage may be recorded immediately, but no foreclosure shall issue thereon unless there shall be a default under this agreement.

The note, which was set forth at the foot of the first page of the Agreement, recited that for value received the defendants agreed to pay to the order of the plaintiff 48 consecutive installments of $122.68, or a total of $5,888.64. It also stated that upon default, the entire principal balance would become due.

On the second page of the Agreement, there was a statement to the effect that any provision found to be invalid would not affect the validity of the remaining provisions. Beneath that was an assignment without recourse executed by the ...


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