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Morsemere Federal Savings & Loan Association v. Nicolaou

Decided: January 16, 1986.

MORSEMERE FEDERAL SAVINGS & LOAN ASSOCIATION, A UNITED STATES CORPORATION, PLAINTIFF,
v.
GEORGE NICOLAOU AND CHRISTINE G. NICOLAOU, ET AL., DEFENDANTS-RESPONDENTS, V. RAYMOND DI PRIMA, APPELLANT



On appeal from Superior Court, Chancery Division, Hudson County.

Furman, Petrella and Cohen. The opinion of the court was delivered by Petrella, J.A.D.

Petrella

Raymond DiPrima appeals from an order denying his application to intervene with respect to the proceeds of a foreclosure judgment and sale and denying him entitlement to any of the surplus funds.

The property owned by defendants Nicolaou was brought into foreclosure by Morsemere Federal Savings & Loan Association (Morsemere) and a final judgment of foreclosure entered

on May 31, 1983 under a July 8, 1981 mortgage held by Morsemere.*fn1 Subsequent to the foreclosure judgment DiPrima obtained a default judgment against George Nicolaou solely, in the amount of $13,216.99, which was filed February 7, 1984. Nicolaou instituted a bankruptcy proceeding which was apparently dismissed in September 1984 without discharging the amount owed DiPrima.

On October 12, 1984 a foreclosure sale was held by the Bergen County Sheriff and DiPrima purchased the property for $170,000. DiPrima then filed a motion seeking to intervene in the foreclosure action and for payment of surplus funds from the sheriff's sale, as well as certain additional relief.*fn2 This motion was denied in its entirety in an order entered March 6, 1985.

DiPrima is not only the purchaser at the foreclosure sale, but a post-foreclosure judgment creditor for $13,216.99. He is subsequent in priority to lienholders whose liens were perfected at the time of the foreclosure judgment. The fair market value of the foreclosed property was not established because the issue was not raised below, although according to respondent's brief, when the attorney for the Nicolaous inquired of DiPrima's attorney about repurchasing the property, he was advised that a purchase price of between $200,000 and $225,000 would be considered.

We are satisfied that a lien claimant cannot be made a party to a foreclosure suit after the final decree. New Home Building & Loan Ass'n v. Wel-Bilt Construction Co., 98 N.J. Eq. 545, 547 (Ch.1926). N.J.S.A. 2A:50-30 does not apply to

allow DiPrima to intervene as a party here because DiPrima's lien did not exist "at the time of the filing of the complaint" or even at the time the foreclosure judgment was entered.

However, a different situation exists regarding a claim to participate in any surplus by a creditor who obtains a judgment subsequent to the foreclosure judgment. Such a judgment creditor may participate in any surplus after prior claiming lienholders (at the time of the foreclosure judgment) have been paid or satisfied. Although we incline to the view that monies held in the custody of the court should not be subject to levy, except through process or court order in the same action as the money was deposited, see Western Savings Fund Society of Philadelphia v. Goodman, 103 N.J. Super. 307, 313-314 (Ch. Div.1968), it appears that that may have been permitted in Vineland Savings & Loan Ass'n v. Felmey, 12 N.J. Super. 384 (Ch. Div.1950), on the ground that no substantial confusion or embarrassment resulted in that situation. See 33 C.J.S. Execution ยง 55, p. 187 (1942). R. 1:13-8 provides:

The priorities of parties' liens and encumbrances are fixed and determined as of the date of the commencement of the action, unless the parties otherwise agree or it is otherwise ...


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