The instant matter is before this court on a motion by defendant, First National Bank of Central Jersey ("FNBCJ"), for summary judgment against defendant, Household Finance Corporation III ("HFC"), on the issue of priority. This priority battle between two lenders in a relatively routine foreclosure action raises issues about home-equity lines of credit which have not yet been addressed in published opinions by the courts of this State.
On December 4, 1986, Defendants Clifford and Cynthia Harwick executed a home-equity-revolving-line-of-credit note to FNBCJ and a mortgage on their home in Ringoes, New Jersey to secure payment of that note. The credit limit on the note was $40,000. The FNBCJ mortgage was recorded in the Hunterdon County Clerk's Office on December 23, 1986, in book 786 of mortgages at page 977.
Approximately six months later, on June 24, 1987, the Harwicks executed another home-equity-revolving-line-of-credit note to HFC. A mortgage on the Ringoes, New Jersey home was also executed to secure payment of the HFC note. This mortgage was recorded in the Hunterdon County Clerk's Office on June 26, 1987 in book 815 of mortgages at page 653.
Plaintiff, Goldome Realty Credit Corporation ("Goldome"), which held a first mortgage on the Harwick premises in Ringoes, filed a complaint in foreclosure against the Harwicks on November 16, 1988. By amendment to its complaint, Goldome added FNBCJ and HFC as party defendants. In response, FNBCJ filed an answer and cross-claim against defendants
Harwick and HFC. As to HFC, FNBCJ claims that the mortgage lien of HFC is subordinate to that of FNBCJ, because the HFC mortgage was recorded six months later.
HFC also filed an answer and cross-claims against the Harwicks for foreclosure and against FNBCJ for a determination that its lien has priority over FNBCJ's lien. The HFC cross-claim against FNBCJ is based on the fact that substantial advances were made by FNBCJ after the HFC mortgage was recorded.
By way of the instant motion, FNBCJ demands dismissal of the cross-claim by HFC and an order confirming the priority of the mortgage of FNBCJ over the mortgage of HFC. FNBCJ's motion is premised on N.J.S.A. 46:9-8.1 et seq. FNBCJ also relies on the certification of its recovery agent, Dominick A. Papera, which establishes the following facts:
a) advances up to $40,000.00 were obligatory rather than optional under the terms of the FNBCJ note,
b) FNBCJ received no notice from HFC that the Harwicks had executed a note and mortgage in favor of HFC, and
c) neither the Harwicks nor HFC had ever requested that the FNBCJ line of credit be terminated.
In support of its position HFC submits xerox copies of its check in the amount of $37,000, payable to FNBCJ. On the reverse side, this check bears the following endorsement: "For payment in full for Clifford Harwick Account # 06562051." The date stamp on this check and the records of FNBCJ reveal that this check was credited to the Harwicks' FNBCJ line of credit on or about July 1, 1987. Although HFC contends that this check was intended to payoff the Harwick account in full, it can produce no documentary evidence that FNBCJ was ever notified that this payment was intended to terminate the Harwicks' line of credit. In addition, the $37,000 payment was not ...