Rimm, J.t.c. (temporarily assigned).
[207 NJSuper Page 158] In this foreclosure action the only remaining dispute is whether the attorney for plaintiff is entitled to an allowance of
attorney's fees upon tender of the full amount of principal and interest prior to the entry of judgment. There are no reported cases on the issue, but, although the amount involved in the present case is relatively small, the court is given to understand that the issue frequently presents itself in mortgage foreclosure actions.
Default having occurred in the mortgage held by plaintiff in this matter, a complaint in foreclosure was filed on January 30, 1985. On February 13, 1985 a notice of lis pendens in the pending foreclosure action was filed in the office of the Clerk of Cape May County. Defendant, Margaret T. Toland, was served with process in the matter, but defendant, Joseph D. Toland, was never served. Counsel for plaintiff was then requested to supply a pay-off statement, the property having been sold by defendants, Toland. Counsel for plaintiff advised that, as of June 6, 1985, there would be due for principal and interest the sum of $33,890.08, exclusive of costs and attorney's fees. Plaintiff's attorney demanded, in addition to the payment of principal and interest, fees and costs in the total amount of $750, including actual out-of-pocket costs of $209.92. This resulted in an attorney's fee of $540.08.*fn1 Defendants' counsel at the time objected to the charge for costs and attorney's fees, but plaintiff's attorney advised that if the $750 was not paid, in addition to principal and interest, the mortgage would not be discharged of record, the foreclosure action would be completed and sheriff's sale would be scheduled.
On June 3, 1985 a settlement took place in the Cape May County office of Chelsea Title and Guarantee Company at which time the Tolands conveyed the property. In order to complete the settlement, the settlement officer sent a check made payable to counsel for plaintiff in the amount of $750 with a notation that the fees were being paid under protest.
The mortgage was subsequently discharged of record, and the matter is presently before the court on defendants' motion for return to defendants of the attorney's fees paid under protest. There is no dispute that plaintiff is entitled to its costs in the amount of $209.92.
Defendants argue that attorney's fees in a foreclosure action are governed by R. 4:42-9(a)(4) which provides for the calculation of fees on all sums adjudged to be paid to plaintiff. Since no judgment was entered, defendants argue that no attorney's fees may be allowed.
Plaintiff counters with three arguments. It refers to the provisions of the note and the mortgage which are the subject of the litigation. Both documents provide for reasonable costs and counsel fees. Secondly, plaintiff argues that the allowance of fees and costs in accordance with the rule of court is in addition to any fees due and payable prior to the entry of judgment. Finally, it argues that, once there is a default in the payment of a mortgage, the mortgagee may bring a foreclosure action and, if it saw fit to do so, continue the foreclosure action to judgment and sheriff's sale, regardless of the prior sale of the premises by the owner and tender of payment of the mortgage balance in full. The point of this argument made by plaintiff is that it could refuse payment, enter judgment and have costs taxed, including attorney's fees. Such an argument is completely without merit and it is rejected out of hand. No court of equity, on proper application, would permit a mortgagee to refuse payment of the entire mortgage debt in full, including interest, on its demand that it be permitted to complete the foreclosure action to the entry of judgment and sheriff's sale.
The contention that the allowance of fees in this foreclosure action is governed by the contractual relation between the parties as set forth in the note and mortgage is also rejected. In Coastal State Bank v. Colonial Wood Products, Inc., 172 N.J. Super. 320 (App.Div.1980), the court held that the
court rule, not the contractual provisions in the note and the mortgage, controls the allowance of attorney's fees in an action to foreclose a mortgage as opposed to a suit on the note.
The dispute is then resolved by specific reference to R. 4:42-9, Counsel Fees. That court rule provides that "[n]o fee for legal services shall be allowed in the taxed costs or otherwise, except" and there then follow certain exceptions including the allowance of attorney's ...