On appeal from the Superior Court of New Jersey, Chancery Division, Ocean County.
Michels, McElroy and J. H. Coleman. The opinion of the court was delivered by Michels, P.J.A.D.
Plaintiff Lottie S. Bruenn and defendants Stanley Switlik and Richard Switlik, Sr., individually and as executors under the will of P. Wanda Switlik, deceased, and defendant Irene K. Switlik appeal from a judgment of the Chancery Division holding that the sole ownership of a certain note and mortgage, dated June 21, 1973, executed by Hardwicke's New Jersey Preserves, Inc., the predecessor of defendant Great Adventure, Inc. (Great Adventure), as mortgagor, in favor of Stanley Switlik and his late wife P. Wanda Switlik, as mortgagees, passed upon the latter's death to Stanley Switlik, as surviving joint tenant pursuant to the provisions of N.J.S.A. 46:2D-1. Other portions of the judgment under review determined that (1) Great Adventure would be permitted to retain all future payments of principal and interest on the note and mortgage as such payments become due and to apply them in partial satisfaction of a judgment which Great Adventure recovered against Stanley Switlik; (2) directed that the portion of the court-ordered escrow account representing payments made to the estate of P. Wanda Switlik on account of principal and interest under the note and mortgage be turned over to Great Adventure and applied in partial satisfaction of its judgment against Stanley Switlik, and (3) entered final judgment in favor of Great Adventure against the estate of P. Wanda Switlik in the sum of $319,692.92, including interest, which constituted a refund of Great Adventure's principal and interest payments to the estate, after P. Wanda Switlik's death, under the note and mortgage.
The pivotal issue posed on this appeal is whether the trial court erred in failing to reform the note and mortgage of June 21, 1973, which did not contain a specific designation as to the form of ownership of Stanley Switlik and P. Wanda Switlik, to reflect the Switliks' intent to own those instruments as tenants in common and not as joint tenants.
The relevant facts are not essentially in dispute. Stanley Switlik and P. Wanda Switlik were the owners of a large tract
of land in Jackson, New Jersey, known as the Lahaway Plantation. They owned this property as tenants by the entirety. P. Wanda Switlik had contributed approximately one-half of the purchase price of the land and the cost of improvements thereon, and after its acquisition made substantial contributions on account thereof. On June 21, 1973 Great Adventure purchased most of this property from Stanley Switlik and P. Wanda Switlik as a future site for an amusement park. As part of the purchase price Great Adventure gave Stanley Switlik and P. Wanda Switlik the note and mortgage dated June 21, 1973 in the original principal amount of $1,446,625, with interest at the rate of 6% a year. The note and mortgage provided for semi-annual payments of $72,331.25. Although the property had been owned by the Switliks as tenants by the entirety, neither the note nor the mortgage specified whether the Switliks owned these instruments as joint tenants or as tenants in common. However, the mortgage, in pertinent part, provided:
If Stanley Switlik and/or Wanda Switlik should die during the term of this mortgage, then on the due date of any estate, transfer or inheritance taxes which may become payable to the United States of America or any State or subdivision thereof by reason of the death of either of them, the Mortgagor shall be obligated to prepay with interest then due thereon, and there should automatically be accelerated for payment, the sum of Three Hundred Thousand ($300,000.00) Dollars (Six Hundred Thousand ($600,000.00) Dollars in all, in the event of the death of both); the said principal prepayment or prepayments to be credited against the principal installments which may next become due hereunder.
The note also contained a substantially identical provision.
The parties stipulated that from June 21, 1973, when the note and mortgage were executed, until October 25, 1975, when P. Wanda Switlik died, the semi-annual mortgage payments made by Great Adventure to Stanley Switlik and P. Wanda Switlik were "unevenly divided." Each payment was made by a single check payable to both of them, and the uncontroverted proofs show that Stanley Switlik and P. Wanda Switlik deposited their respective shares of the mortgage payments in separate bank accounts. It was further stipulated that after P. Wanda Switlik died the payments made by Great Adventure under the mortgage
"were divided evenly between the Estate of P. Wanda Switlik and Stanley Switlik." Again, the uncontroverted proofs show that these payments were also deposited in separate bank accounts.
On December 23, 1975, following the death of P. Wanda Switlik, Great Adventure tendered to Stanley Switlik a check in the sum of $304,150 -- the amount due in accordance with the provisions of the acceleration clauses contained in the note and mortgage. This check was refused and Great Adventure was informed that all future checks would be accepted only if made payable to both Stanley Switlik and the estate of P. Wanda Switlik. Sometime thereafter Richard Switlik, Sr., one of the executors of the estate of P. Wanda Switlik, notified Great Adventure that because estate taxes were due on his mother's estate, the payment due under the acceleration provisions was needed. On July 23, 1976 Great Adventure issued a check payable to both Stanley Switlik and the estate of P. Wanda Switlik in the sum of $319,143. The parties stipulated that this payment was also divided evenly between Stanley Switlik and the estate of P. ...