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Joan Ryno Inc. v. First National Bank of South Jersey

Decided: March 10, 1986.


On appeal from the Superior Court, Law Division, Atlantic County.

Morton I. Greenberg, Long and Havey. The opinion of the court was delivered by Morton I. Greenberg, P.J.A.D.


This matter comes on before this court on appeal by plaintiff, Joan Ryno, Inc., from a final judgment in its favor for damages of $1,500 on which prejudgment interest of $985 was allowed. The case involves a breach of a commitment by defendant First National Bank of South Jersey to make a mortgage loan. Even though the case was tried to a jury, the trial judge decided the matter himself as he concluded that on the undisputed evidence plaintiff was entitled to a judgment on liability but its damages were limited to $1,500. Plaintiff, regarding this award as inadequate, brings this appeal. Defendant has not cross-appealed.

The facts developed at the trial are not complicated. In 1977, plaintiff acquired land in Voorhees Township and subdivided it into three lots intending to build two houses, one as a personal residence for its officers, Frank and Joan Ryno, and the other to sell. Frank Ryno (Ryno), who was in charge of plaintiff's construction activities, made inquiry at defendant's Echelon branch concerning the availability of construction financing and was directed to a Mr. Wylerback at defendant's Washington Township branch. Wylerback told him that defendant would issue a commitment for a loan for the personal residence but not for the resale house. This was agreeable to plaintiff and

the loan for the personal residence was taken by plaintiff and later closed.

After the initial turn-down of the resale house loan defendant indicated that it would consider a construction loan for that house if plaintiff procured a buyer for it. Consequently plaintiff placed the plans and specifications for this proposed house with a real estate broker to find a purchaser for it. This effort proved fruitful and on March 6, 1978, David Pierson and his wife entered into a contract to buy the house for $69,500. The construction time was important to the Piersons as they wanted to be in the house by July. Plaintiff was attempting to expedite the construction as it did substantial work on the building even before it obtained financing. The Piersons sought financing from defendant which on May 12, 1978 issued a mortgage commitment to them for the purchase. On the same day defendant issued a $50,000 commitment for construction financing at 9 1/2% interest to plaintiff which, however, was not delivered to plaintiff until May 19, 1978. When the commitment was delivered Ryno paid a $50 fee charged for it by defendant and signed an acceptance of it.

Unfortunately a few days after May 19, defendant's employee, David A. Lewis, who had been involved in the matter, called Ryno and told him defendant was cutting back lending and would not be advancing plaintiff the money, a decision made in defendant's Atlantic City office. Lewis, however, referred Ryno to George Emmons, defendant's vice-president in charge of mortgages.

Over the next two days Ryno made several telephone calls to Emmons but was never able to talk to him on the telephone as Emmons did not return his calls. Eventually, between five and ten days after May 19, 1978, Ryno went to Atlantic City and without an appointment walked into Emmons' office. At that time Ryno threatened defendant with litigation if it would not honor the commitment. Nevertheless Emmons confirmed that defendant would not make the loan.

Some days after Ryno's meeting with Emmons, Lewis called Ryno and related that Emmons wanted Lewis to see if something could be worked out. By this time, however, the Piersons had withdrawn from the purchase and had either obtained or asked for a return of their deposit. Subsequently on June 13, 1978 defendant issued to plaintiff a supplementary construction mortgage commitment for $50,000 at the same interest rate as in the earlier commitment. This new commitment was valid for six months but plaintiff refused to accept it as its ability to sell the property was now in question. Plaintiff conceived that it needed a commitment valid for a longer period.

Eventually the situation was largely salvaged. On July 12, 1978, plaintiff obtained a construction mortgage commitment from Atco Bank for $53,000, interest to be 4% above the prime rate, to secure a six-month note renewable for two more six-month periods. Unfortunately, there is no evidence in the record of the prime rate and thus we cannot compare the interest costs of the Atco loan with that under defendant's commitment. The record also is not clear as to the amount of interest plaintiff paid the Atco Bank. However it appears that with this financing, only $40,000 of which was actually drawn, plaintiff was able to complete the property and it did so, eventually reselling it by deed dated June 8, 1979 to Daniel and Lorraine O'Brien for $68,000, $1,500 less than the price under the Pierson contract. This $1,500 differential was the only recovery made by plaintiff in the case.

Notwithstanding the problems between the parties, defendant continued to hold the financing on the Ryno's home. However, on August 1, 1980, more than two years after defendant breached its commitment to plaintiff, the mortgage payment due from plaintiff on the personal residence was not paid, an event which though seemingly unrelated to this case, has generated the principal issue on this appeal. On November 14, 1980, defendant instituted foreclosure proceedings on the residence ...

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