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American Bank & Trust Co. v. Lott

Decided: April 10, 1985.

AMERICAN BANK & TRUST COMPANY OF PENNSYLVANIA, PLAINTIFF-RESPONDENT,
v.
FRANK W. LOTT, JR. AND CAROLE A. LOTT, DEFENDANTS-APPELLANTS, AND FIRST NATIONAL BANK & TRUST COMPANY OF BEVERLY, DEFENDANT. AMERICAN BANK & TRUST COMPANY OF PENNSYLVANIA, PLAINTIFF-RESPONDENT, V. FRANK W. LOTT, JR. AND CAROLE A. LOTT, DEFENDANTS-APPELLANTS



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 193 N.J. Super. 516 (1984).

For modification and affirmance -- Chief Justice Wilentz and Justices Clifford, Schreiber, Handler, Pollock, O'Hern and Garibaldi. For reversal -- None. The opinion of the Court was delivered by Pollock, J.

Pollock

The issue on this appeal is whether a foreign bank, notwithstanding its failure to comply with the filing requirements of the Corporation Business Activities Reporting Act, N.J.S.A. 14A:13-14 to -23 (Reporting Act), may maintain a mortgage foreclosure action in the Superior Court.

Plaintiff, American Bank & Trust Company (American), a Pennsylvania bank, sued to foreclose mortgages on property owned by defendants Frank W. Lott, Jr. and his wife, Carole. The Lotts moved to dismiss the complaint because American had neither filed a notice of business activities report as required by N.J.S.A. 14A:13-15 nor qualified for an exemption from filing by obtaining a certificate of authority to do business as permitted by N.J.S.A. 14A:13-16 a. Another provision of the Reporting Act, N.J.S.A. 14A:13-20, prevents a foreign corporation

from maintaining an action in the state or federal courts of New Jersey if it fails to satisfy those statutory requirements. The Lotts contend that, because American did not satisfy those requirements, it may not maintain the present action.

The trial court denied the Lotts' motion to dismiss the complaint, and the Appellate Division affirmed. 193 N.J. Super. 516 (1984). In affirming, the Appellate Division concluded that a certificate of authority to act as an executor, testamentary trustee, or guardian, issued by the New Jersey Commissioner of Banking (Commissioner) to American pursuant to N.J.S.A. 17:9A-316, satisfied the Reporting Act exemption from filing a notice of business activities report under N.J.S.A. 14A:13-16 a. 193 N.J. Super. at 518.

Although we affirm the judgment of the Appellate Division, we do so because we conclude that the Legislature did not intend the Reporting Act to apply to foreign banks. Because the Reporting Act does not apply, the requirements of that Act and American's certificate to perform certain fiduciary activities are irrelevant to the determination whether American can maintain the present action.

I

American is a bank organized under the laws of Pennsylvania, with its principal office in Reading. Although it does not maintain a New Jersey office, American has made loans to New Jersey borrowers and has secured a certificate as required by N.J.S.A. 17:9A-316(B) to perform limited fiduciary activities in this state.

Frank Lott is the principal shareholder and operations manager of Staveco Electrical Construction Co. (Staveco). American lent substantial sums of money to Staveco pursuant to loans closed in Pennsylvania. By September 1981, however, Staveco was in default on its loans. In exchange for four mortgages on three New Jersey properties and the personal guarantees of the Lotts, American agreed to refinance the

loans and advance fresh capital to Staveco. One month later, Staveco moved from Pennsylvania to New Jersey, and American subsequently extended approximately $300,000, bringing Staveco's principal indebtedness to $875,000. In March 1982, Staveco filed a petition in ...


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