On certification to the Superior Court, Appellate Division.
For reversal and remandment -- Chief Justice Wilentz and Justices Pashman, Clifford, Schreiber, Handler, Pollock and O'Hern. For affirmance -- None. The opinion of the Court was delivered by Schreiber, J.
We are called upon to decide whether a mortgagee may recover on a supersedeas bond the interest accruing during an unsuccessful appeal by the mortgagor of a foreclosure judgment. This question is to be resolved under the circumstances of this case, where the fair market value of the property purchased by the mortgagee for a nominal amount at a sheriff's sale is probably greater than the mortgage debt owed to the mortgagee and the surplus would have satisfied, in whole or in part, the interest accrued subsequent to the foreclosure judgment.
The facts are not in dispute. In 1974, the defendant Hampton Gardens, Ltd. purchased an 80 unit, two-story garden apartment complex located in Toms River, New Jersey, either assuming or subject to an existing first mortgage owned by the plaintiff Hudson City Savings Bank. The plaintiff declared a default in July 1976, went into possession and started foreclosure proceedings. The Superior Court, Chancery Division, entered a foreclosure judgment in favor of the plaintiff on October 11, 1977. The judgment recited the mortgage indebtedness of $983,161.19. It ordered that the mortgaged property be sold and the proceeds be applied to satisfy the debt, costs, counsel fees and interest
from September 15, 1977. Any surplus from the sale was to be deposited with the clerk of the court.
The defendant appealed and applied for a stay of the sale pending appeal. The trial court granted the stay on condition that defendant post a supersedeas bond for $75,000 "in conformity with the Court Rules [ R. 2:9-5 and R. 2:9-6] in such case made and provided to secure interest, appellant [ sic ] costs, counsel fees, and against any losses plaintiff may sustain from its possession of the subject premises." The defendant thereupon posted a bond for $75,000.*fn1
The Appellate Division affirmed the judgment of foreclosure and the defendant's petition for certification was denied. 81 N.J. 41 (1979). As the sole bidder at the sheriff's sale on April 10, 1979, plaintiff purchased the property for the nominal amount of $100. After the sale, plaintiff moved to recover the $75,000 that had been posted as a supersedeas bond on the grounds that the taxed costs on appeal were $865 and that accrued interest on the amount of the original decree at the legal rate of 8% from the date of judgment in 1977 to May 8, 1979*fn2 was $129,293.11. The defendant argued that plaintiff was not entitled to recover on the bond because the value of the property, which the bank had allegedly contracted to sell for $1,125,000, exceeded the sum of the mortgage debt plus accumulated
interest. Therefore, the plaintiff had suffered no loss of interest as a result of the delay engendered by the appeal.
The trial court granted plaintiff's motion to collect $75,000 on the bond because the calculated interest exceeded that amount. The defendant appealed and the Appellate Division affirmed in an unreported opinion. We granted plaintiff's petition for certification, 85 N.J. 486 (1981), and now reverse.
The supersedeas bond serves as a device to protect a party who has been successful at trial but has been forestalled from proceeding during an appeal. The bond's necessary terms and conditions are provided by the Rules Governing the Courts. Two rules apply to a bond posted pending an appeal of a foreclosure judgment. R. 2:9-5 provides in part that a judgment adjudicating "the rights or liabilities of parties in respect of property which is the subject of an appeal or certification proceedings shall be stayed only upon the posting of a bond pursuant to R. 2:9-6 or a cash deposit" unless the court otherwise orders on good cause shown. R. 2:9-6(a) states that "[w]hen the judgment determines the disposition of the property in controversy . . . the amount of the supersedeas bond shall be fixed at such sum only as will secure the damages recovered for the use and detention of the property, trial and appellate costs, and interest."
These rules have remained substantially intact since their initial adoption in 1948. See Rules 1:2-11 and 1:2-13 (effective September 15, 1948); R.R. 1:4-7 and R.R. 1:4-8 (1953). Their previous ...