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City Federal Savings and Loan Association v. Jacobs

Decided: February 10, 1983.


On appeal from Superior Court of New Jersey, Chancery Division, Essex County.

Bischoff, J. H. Coleman and Gaulkin. The opinion of the court was delivered by J. H. Coleman, J.A.D.


The issue raised by this appeal is whether a mortgagee which obtains a judgment of foreclosure can be compelled to take possession of the property and maintain same before the Sheriff's sale. The Chancery Division judge ordered plaintiff to take possession as of January 19, 1983. We previously stayed that order. We now reverse the order of possession.

A brief review of the procedural background and facts giving rise to this appeal is helpful to a resolution of the pivotal issue. In 1966 Benjamin and Clara Jacobs (defendants) executed a mortgage in favor of the Mohawk Savings and Loan Association (Mohawk). The mortgaged property is a 50-unit residental apartment building located at 60 North Arlington Avenue, East Orange. Plaintiff is the successor in interest by way of merger with Mohawk. Defendants defaulted on their mortgage payments in September 1981 and have not made any payments of interest and principal since that time. As of September 1981 the balance due on the mortgage was $174,617.48. In December 1981 defendants communicated to plaintiff their desire to provide a "deed in lieu of foreclosure." Plaintiff did not respond to this request.

Plaintiff filed a foreclosure action in the Chancery Division, Essex County, on March 4, 1982 seeking foreclosure, possession and appointment of a receiver. The complaint was later amended to name the tenants in possession as additional defendants. Defendants did not answer the complaint and default was entered on April 29, 1982. On October 8, 1982 plaintiff moved to

have a receiver of rents appointed pending satisfaction of the mortgage. This motion was denied by the trial judge because plaintiff would soon get its judgment and order for possession. Defendants again offered to provide a deed in lieu of foreclosure, which was refused.

On December 13, 1982 a final judgment was entered in the foreclosure action. Plaintiff was awarded $178,025.04 plus interest from October 1, 1982, and counsel fees of $1,905.25. It was ordered that plaintiff recover possession of the premises. The court directed that the mortgaged property be sold to pay the debt owed plaintiff.

Defendants received the final judgment on December 29, 1982 and subsequently communicated directly and by telephone in early January 1983 with plaintiff's representatives regarding the surrender of possession of the premises. On January 11 or 12, 1983 Dr. Jacobs hand-delivered to counsel for plaintiff the keys to the premises and indicated he "quits, vacates and surrenders possession of the subject premises. . . ." Counsel for plaintiff returned the keys to counsel for defendants and notified defendants that plaintiff would not take "under any circumstances, possession of the Jacobs property."

Defendants then filed an order to show cause directing plaintiff to take possession of the property. Plaintiff offered to move to have the judgment of possession deleted from the final judgment. Plaintiff's application was denied. On January 18, 1983 the court directed plaintiff to take possession and management of the property, effective January 19, 1983. We stayed the order on January 18, 1983 before the parties took any actions pursuant to the order.

Plaintiff argues that "[t]he count for possession in the complaint and the right to possession in the final judgment were not required for the successful foreclosure of the subject mortgage. They were included in this foreclosure action as a convenience to the mortgagee or the purchaser at the Essex County Sheriff's sale and were not designed to benefit the mortgagors, Dr. and

Mrs. Jacobs. The trial court should have granted the mortgagee's cross-motion and deleted the possession portion of the final judgment. The mortgagors possessed no legal or equitable grounds to use the portion of the final judgment concerning possession to burden the mortgagee with unwanted possession of the mortgaged premises. In ...

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