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Carteret Savings and Loan Association v. Davis

Decided: March 10, 1987.

CARTERET SAVINGS AND LOAN ASSOCIATION, F.A., A FEDERALLY CHARTERED SAVINGS AND LOAN ASSOCIATION, PLAINTIFF,
v.
BURTON R. DAVIS AND MOZELL Y. DAVIS, HIS WIFE, FIRST NATIONAL BANK OF NEW JERSEY, RUTGERS MINORITY INVESTMENT COMPANY AND THE STATE OF NEW JERSEY, DEFENDANTS, AND THE MONEY STORE, DEFENDANT-RESPONDENT



On certification to the Superior Court, Appellate Division, whose opinion is reported at 200 N.J. Super. 167 (1985).

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

O'hern

This case concerns a complication in a mortgage foreclosure sale. The question is whether a junior mortgagee who has acquired the debtor's title at a prior foreclosure sale also acquires the limited ten-day right to redeem property after a foreclosure sale that the original debtor-mortgagor possesses by virtue of this Court's decision in Hardyston v. Tartamella, 56 N.J. 508 (1970).

In 1976, Burton R. Davis and Mozell Y. Davis executed a second mortgage to the Modern Acceptance Corporation to secure a loan for $11,000. This second mortgage was assigned to the Money Store. The property was the subject of a first mortgage held by the Carteret Savings & Loan Association as security for a loan of $56,000. The Money Store foreclosed on the second mortgage when the mortgagors defaulted upon the

second and all subsequent payments. The mortgagors were later adjudicated bankrupt. The Money Store filed its foreclosure complaint thirteen months before the filing of a similar complaint by Carteret Savings & Loan Association.

A Final Judgment in the foreclosure action was entered and the Money Store was the successful bidder at the sheriff's sale held July 13, 1983. It assigned its bid to a subsidiary, Major Brokerage Co. (We shall hereafter refer to both interests as if held by the Money Store.)

The first mortgagee, Carteret Savings & Loan Association, also foreclosed on the property, causing the property to be sold to raise the $80,418 due on its mortgage at a sheriff's sale on March 7, 1984. Due to a scheduling conflict, no representative of the Money Store was able to attend the sale. The high bidder at the sale was Constance Silakoski. She bid $81,000. Although Silakoski's name does not appear in the caption, she is the real party in interest here.

After the sale, a representative of the Money Store tendered to the sheriff within the statutory period of redemption the amount required for redemption of the Carteret mortgage. See R. 4:65-6(c). Silakoski objected to the sheriff's acceptance of the offer and this action ensued. The Law Division, on the Money Store's action to compel the sheriff to accept the redemption, found "no reason to rule that the extended right to redeem does not apply to a * * * title holder in the Money Store's position * * *."

The Appellate Division affirmed. 200 N.J. Super. 167 (1985). In its view, as the purchaser at the foreclosure sale, the Money Store acquired all the rights of the owner with respect to the mortgaged premises, subject only to the lien of the other outstanding mortgage. Thus, the Money Store acquired the right of redemption, including the limited right to redeem within ten days after the sale, and the exercise of that right by its assignee was proper. 200 N.J. Super. at 171. The premises have since been conveyed to a third party for $90,000. We

granted petitioner Silakoski's request for certification. 103 N.J. 485 (1986).

I.

A brief and by no means definitive review of the course of the law of mortgages helps to place the issue in perspective. An interested reader may review the materials contained in G. Osborne, Mortgages (1951), and Durfee, "Redemption From Foreclosure Sale -- The Uniform Mortgage Act," 23 Michigan L.Rev. 825 (1925) and with respect to New Jersey practice, Weinstein, "Foreclosure and Deficiency ...


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