On appeal from Superior Court, Law Division, Cumberland County.
Petrella, Muir, Jr., and Brochin. The opinion of the court was delivered by Petrella, P.J.A.D.
The issue in this appeal is whether the mortgagees of property, which has been the subject of waste or damage, have sufficient legal or equitable interest in the mortgaged property to give them standing to sue a third party for damages to the mortgaged property. The Law Division Judge concluded on defendant's summary judgment motion that the mortgagees had to have legal title, not equitable title, at the time the cause of action accrued, and dismissed their complaint. We reverse and remand for trial.
Robert and Sheila McCorristin instituted suit for damages against defendant Salmon Signs (Salmon) on November 3, 1988.*fn1 They alleged in their complaint that on or about March 11, 1988, Salmon bolted an advertising sign through the aluminum siding and plaster of a building on their property in Millville, New Jersey to hang banners advertising a South Jersey Symphony concert. The complaint alleged that not only
had damage been done to the siding and plaster by defendant, but that the facia board was dislodged.
The plaintiffs had owned the property, but on October 30, 1984, sold it to P & A Investment, Inc., a New Jersey corporation (P & A Investment), and took back three mortgages, secured by notes. Two of the mortgages were taken in the individual names of the plaintiffs. The third was in the name of their wholly owned New Jersey corporation, McCorristin's Holly House, Inc. The mortgages and mortgage notes provided that in the event any monthly installment of interest or principle remained unpaid for 30 days, or in the event of other defaults, the mortgagee had the option to accelerate the outstanding principle balance and interest.*fn2
On or about January 10, 1987 and February 10, 1987, P & A Investment*fn3 was in default in payment on the mortgage notes. It is not clear from the record whether Salmon was either a tenant in the building at the time or was merely in the process, with or without permission, of erecting banners on the building to advertise a concert. It was the placement of these signs that allegedly damaged the building.
Foreclosure proceedings were eventually instituted in the Chancery Division. We are not advised of the date they were first instituted. However, on March 31, 1988, plaintiffs filed an amended complaint in foreclosure against the title owners and various lienholders. Salmon was not named as a defendant in the foreclosure proceedings. In the amended foreclosure complaint, plaintiffs alleged that they then had physical possession of the property which was abandoned by the title owners. Plaintiffs also alleged that they had paid the insurance and
were responsible for the physical maintenance of the property from January 10, 1987 to the present.
As noted, the damage to the property allegedly inflicted by Salmon was said to have occurred on March 11, 1988. A lis pendens was recorded on April 11, 1988, by plaintiffs and McCorristin's Holly House, Inc. with regard to the mortgaged property.
Plaintiffs' separate Law Division complaint against the defendants (which is the subject of this appeal) was thereafter filed on November 3, 1988. A judgment of foreclosure on the property was entered on September 21, 1989. On November 28, 1989, plaintiffs ...