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Estate of Colquhoun v. Estate of Robert G. Colquhoun

Decided: February 24, 1981.


On appeal from the Superior Court, Chancery Division, Morris County.

Allcorn, Pressler and Furman. The opinion of the court was delivered by Pressler, J.A.D.


This appeal raises questions which have not been recently addressed by our courts regarding the nature of the obligations owed by cotenants to each other.

Robert G. Colquhoun and his wife Elizabeth Colquhoun purchased a home in Basking Ridge, New Jersey, in August 1973 as tenants by the entirety. They were assisted in the purchase by their son Robert F. Colquhoun, who lent them $51,000 secured by a mortgage on the property, which both his parents executed and which was duly recorded. The mutual understanding was that $35,000 of this sum was to be in the nature of a bridge loan to be repaid by the parents when they sold their former home. Accordingly, the mortgage instrument stipulated that $35,000 be paid by August 31, 1974 and that the remaining $16,000, together with 6% interest, be paid in equal monthly installments over a 24-year period commencing in October 1974. The $35,000 was timely repaid but it appears that there were no payments ever made on account of the $16,000 balance.

Although there was evidently some marital discord between the elder Colquhouns, they continued to reside together until October 17, 1978, when Robert G. Colquhoun died testate. Elizabeth, his widow, died testate on May 29, 1979. Robert, the father, by his will expressly disinherited his wife, his son Robert and a younger son Owen, leaving his estate to sisters and brothers in Scotland. He did, however, name his son Robert his executor. Elizabeth, by her will, expressly disinherited her husband and her son Robert, leaving the bulk of her estate to her son Owen whom she also named as executor.

In June 1978 Robert, the son, had assigned to his father, individually, the mortgage on the Basking Ridge property. It is stipulated that the assignment was without consideration. The intent of the son to have benefitted the father alone is made clear by the underlining of the word "individually" in the instrument of assignment and by the fact that Robert, the son, is an attorney at law of this State who may be presumed to have been fully aware of the import of the verbiage employed. Robert, the father, who died only a few months after the assignment, did not record the instrument during his lifetime, it having been represented to us in writing by the attorney for his estate that he chose not to do so. Insofar as the record before us indicates, the assignment was not recorded after the father's death and there is, further, nothing in the record to suggest that his wife Elizabeth, during her lifetime, had any knowledge at all of the assignment. Indeed, the contrary appears to be true.

Elizabeth Colquhoun, having by reason of her husband's death succeeded to the sole ownership of the property, was evidently concerned about not having an appropriate written memorialization of the repayment to her son Robert of the $35,000 bridge loan. Accordingly, in November 1978 her attorney wrote to Robert, as mortgagee, communicating his mother's request for "some type of written evidence of the payment." On March 3, 1979 Robert executed a partial discharge of the original mortgage by a document declaring satisfaction thereof to the extent of $35,000. That document made no reference to the earlier assignment of the mortgage by Robert to his father. It was, moreover, executed by Robert individually and not as executor of his father's estate, which by then was the owner of the mortgage.

Elizabeth died some three months after delivery by Robert of the partial discharge. Insofar as we are able to reconstruct from the record, it appears that shortly after her death the attorney for Robert's estate advised the attorney for her estate that it was Robert's estate rather than the son Robert who was the holder of the mortgage and entitled to receive payment

thereof. That is the clear import of an exchange of correspondence between these attorneys in July 1979, the last communication being a letter from the attorney for Robert's estate referring to the principal and interest due on "the mortgage held by Mr. Colquhoun at the time of his death" and enclosing "a photocopy of the assignment of mortgage which I referred to in my earlier letter."

Based on this information, Elizabeth's estate sued Robert's estate seeking a determination of its liability, if any, on the mortgage. Its concern extended not only to any balance due but also to the validity of the partial discharge executed by Robert, the son, after he had already assigned the mortgage to his father.

As the matter became focused during the course of the litigation, the primary issue in dispute, as perceived by plaintiff's counsel, was whether Elizabeth's estate was entitled to a set-off against Robert's estate in the amount of half of the mortgage balance. Plaintiff's theory was that during their lives Elizabeth and Robert had been co-obligors in respect of the underlying debt and, therefore, that Robert's personal estate should continue liable for one-half thereof. The impact of the fact of the assignment of the mortgage by Robert the son to Robert the father appears not to have been fully appreciated either by the parties or the trial judge. In any event, each of the parties moved for summary judgment, Elizabeth's estate claiming that it was liable for only half the outstanding mortgage debt and Robert's estate claiming the right to recover the entire mortgage ...

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