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Guttenberg Savings and Loan Association v. Rivera

Decided: April 21, 1981.

GUTTENBERG SAVINGS AND LOAN ASSOCIATION, A CORPORATION OF NEW JERSEY, PLAINTIFF-APPELLANT,
v.
EMILIO RIVERA, SINGLE, HIS HEIRS, DEVISEES AND PERSONAL REPRESENTATIVES, AND HIS, THEIR OR ANY OF THEIR SUCCESSORS IN RIGHT, TITLE AND INTEREST; MRS. EMILIO RIVERA, WIFE OF EMILIO RIVERA; PARK AVENUE ASSOCIATES, A PARTNERSHIP; VICTOR VILLARI, HIS HEIRS, DEVISEES AND PERSONAL REPRESENTATIVES, AND HIS, THEIR OR ANY OF THEIR SUCCESSORS IN RIGHT, TITLE AND INTEREST; NEWS PRINTING CO., INC., A CORP.; JOSEPH DANIEL FERRARO, INDIVIDUALLY AND AS PARENT AND GUARDIAN OF PHILIP FERRARO; STATE OF NEW JERSEY; JOHN M. SCIROCCO AND DIANE F. SCIROCCO, HIS WIFE; FRANK L. ANNESE AND JENNIE L. ANNESE, HIS WIFE, DEFENDANTS, AND NORMA RIVERA; OLGA MUJER. GOEN RODRIGUEZ; ELIZABETH KALISAK AND RICHARD DRESSLER, DEFENDANTS-RESPONDENTS



On certification to the Superior Court, Appellate Division, whose opinion is reported at 171 N.J. Sper, 418 (1979).

For reversal and remandment -- Chief Justice Wilentz and Justices Sullivan, Clifford, Schreiber and Pollock. For affirmance -- Justices Pashman and Handler. The opinion of the Court was delivered by Schreiber, J. Pashman, J., dissenting. Justice Handler joins in this dissent.

Schreiber

On May 12, 1966 John Scirocco and Frank Annese borrowed $30,000 from the Guttenberg Savings and Loan Association (Guttenberg) to purchase a building, consisting of eight residential apartments, located in Jersey City. A purchase money first mortgage was given as security for the debt. A default occurred in 1978 when the mortgage payments were not made and Guttenberg instituted foreclosure proceedings joining as defendants the mortgagors, subsequent purchasers of the property, judgment creditors and five tenants in possession, whose tenancies had been created and commenced after the mortgage had been recorded. The complaint was in the usual form requesting that the amount due on the mortgage be fixed, the equity of redemption be foreclosed, and the property be sold to satisfy the indebtedness. In a second count plaintiff demanded possession in accordance with the terms of the bond and mortgage.*fn1

Four tenants filed an answer in which they denied the mortgagee was entitled to possession absent compliance with N.J.S.A. 2A:18-61.1 (Anti-Eviction Act) which permitted removal of tenants for only certain specified reasons. The defendant tenants moved to dismiss the complaint on the ground that it failed to state a claim upon which relief may be granted. The trial court denied the motion, finding that N.J.S.A. 2A:18-61.1 applied only to summary dispossess actions instituted in the county

district court and that therefore the statute did not affect a mortgagee's right to possession upon default by the mortgagor. 165 N.J. Super. 201 (Ch.Div. 1979).

Guttenberg then moved for an order striking the tenants' answer. Defendant submitted a cross motion for summary judgment, supported by affidavits from four tenants. In the affidavits all the tenants asserted a willingness to pay rent to Guttenberg. Three tenants also alleged that they were not residing in the building in question because they had been ordered by Jersey City's Director of Conservation to vacate their apartments which were not in habitable condition. The mortgagee submitted an affidavit in opposition stating that it had never been in possession of the building, that it had never received or sought any rent from any tenants, and that the landlord-mortgagor was the present owner. At the oral argument on the motions the attorney for defendants requested the trial court to reconsider its previous ruling and contended that the tenants had offered to pay the rent but the mortgagee refused to accept it, that the right to attorn belonged to the tenants, and that therefore a new landlord-tenant relationship subject to the Anti-Eviction Act had come into existence. The trial court rejected these arguments and reaffirmed its prior holding. Plaintiff's motion to strike the answer was granted.

Defendants requested a stay of the trial court's order. However, it appeared that the mortgagor had abandoned the property and that the City of Jersey City had declared the building unfit for habitation. Accordingly, defendants' counsel withdrew his motion for a stay. A final judgment fixing the debt due of $19,796 and ordering sale of the premises was entered on March 30, 1979.

Defendants appealed. Having been advised at oral argument that the execution sale had resulted in a purchase of the property by a third person, the Appellate Division stated it could not decide the rights, if any, the tenants might have to reoccupy

the premises after rehabilitation.*fn2 However, it found the viability of the appeal continued and the tenants' stake in the outcome of this litigation was sufficient to confer justiciability.

The Appellate Division reasoned that the purpose of the Anti-Eviction Act was to prevent evictions of tenants for unfair or arbitrary reasons, particularly at a time when a critical housing shortage existed. Since the Act applied to removal proceedings against residential tenants in the Superior Court as well as the county district court, the Appellate Division believed that the Legislature intended to include foreclosing mortgagees within the umbrella of the Act. Accordingly, it reversed. 171 N.J. Super. 418 (1979).

We granted plaintiff's petition for certification, 84 N.J. 417 (1980), and permitted the Savings Bank Association of New Jersey, New Jersey Savings League and Applied Housing Associates of Hoboken, New Jersey to intervene as amici curiae.

I.

A preliminary inquiry to be considered is whether this cause is moot. It is our understanding that the premises have been boarded up by the City of Jersey City because they are not habitable and that the property has been sold to a third person. However, the defendant tenants maintain the issues are not moot since they desire to move back into their apartments once the building is repaired and claim they have a right to do so. We have also been advised that defendants had filed a notice of lis pendens before the foreclosure sale so that any purchaser would have had knowledge of the tenants' interest in the property at the time of the sale. In view of these circumstances and the public importance of the issues, the Appellate Division decision having been reported, we address the questions on their

merits. See Housing Authority, Newark v. West, 69 N.J. 293, 295-296 (1976).

II.

The precise substantive issue is whether a foreclosing mortgagee of a residential apartment building may obtain a Superior Court order evicting tenants under leases subordinate to the mortgage without complying with the Anti-Eviction Act. We hold that the Act applies only to the traditional landlord-tenant relationship and not to that of a mortgagee holding a lien prior to the leasehold of a tenant in possession.

Resolution of the problem turns upon the legislative intent behind the Act which reads in pertinent part as follows:

No lessee or tenant or the assigns, under-tenants or legal representatives of such lessee or tenant may be removed by the county district court or the Superior Court from any house, building, mobile home or land in a mobile home park or tenement leased for residential purposes, . . . except upon establishment of one of the following grounds as good cause: [Next follows a list of 13 grounds] [ N.J.S.A. 2A:18-61.1]

The section following N.J.S.A. 2A:18-61.1 refers to the requirement that no judgment for possession shall be entered "unless the landlord has made written demand and given written notice" (emphasis supplied), which must specify "the cause of the termination of the tenancy" and which notice "shall be served . . . upon the tenant or lessee. . . ." N.J.S.A. 2A:18-61.2. The Act then states that "no landlord may evict" except for the statutory causes, N.J.S.A. 2A:18-61.3 (emphasis supplied), and that no lease may provide for "tenancy" termination other than for the statutory reasons, N.J.S.A. 2A:18-61.4.

The statutory framework is aimed at a landlord-tenant relationship. The use of the words "lessee or tenant" indicates the Legislature had in mind those occupants of residential dwelling units who had a certain correlative relationship with someone else, namely, a landlord or lessor. Otherwise the Legislature would have used a broader terminology. Furthermore, the sections of the Act should be read together. The first section, 61.1, refers to grounds for removal of lessees or tenants in the

county district court or the Superior Court. The second section, 61.2, relates to the necessity of demand and notice to be given by the landlord. Reference is made in this respect only to the landlord. Section 61.3 prohibits a landlord, and only a landlord, from evicting a tenant except for good cause as stated in section 61.1. The language employed in the Act shows that it is directed at the landlord-tenant relationship.

The legislative intent is also evinced by its location within the statutory scheme regulating landlord-tenant proceedings. A statute is not to be interpreted in a vacuum. In Petition of ...


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