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Chase Manhattan Bank v. Josephson

Decided: January 6, 1993.

THE CHASE MANHATTAN BANK, A NATIONAL ASSOCIATION, PLAINTIFF-RESPONDENT,
v.
MR. AND MRS. SEYMOUR JOSEPHSON, SHERRI BAGNELL AND ROBERT HANSELMAN, DEFENDANTS-APPELLANTS, AND SAUL WERNER AND GRACE WERNER, MATTHEW STEINFELD, KIM CAGLIARI, CORRINE MCLAUGHLIN, AND ALEX CAPRIO, DEFENDANTS. MARYLAND NATIONAL MORTGAGE CORPORATION, PLAINTIFF-RESPONDENT, V. REBECCA LITTLEJOHN, DEFENDANT-APPELLANT, AND GEORGE CLAPPS, GWENDOLYN, CLAPPS, STATE OF NEW JERSEY, DEFENDANTS



On appeal from Superior Court of New Jersey, Chancery Division, Essex County.

J.h. Coleman, Shebell and Conley, JJ. The opinion of the court was delivered by Coleman, J.h., P.J.A.D.

Coleman

These consolidated cases raise the identical issue of whether the L. 1986, c. 138, effective October 29, 1986, amending the Anti-Eviction Act, N.J.S.A. 2A:18-61.1 et seq., overturned Guttenberg Sav. and Loan Ass'n v. Rivera, 85 N.J. 617, 428 A.2d 1289 (1981), which held that a foreclosing mortgagee's right to possession is superior to that of a subsequent lessee. The trial Judge in each of the two foreclosure proceedings involved in this appeal held that the 1986 amendments did not overturn Guttenberg. We agree and affirm.

I

The facts in the Maryland National Mortgage Corporation (Maryland National) case are simple. On January 28, 1988,

George Clapps and his wife Gwendolyn Clapps purchased 66 Oak Avenue, Irvington, N.J. On the same day they executed a purchase money mortgage to E.B. Mortgage Corporation for $58,200. The mortgage was recorded February 5, 1988. The bond and mortgage gave the mortgagee the right to possession upon default. The Clapps defaulted on the mortgage on February 1, 1991, and foreclosure proceedings were instituted on November 12, 1991, followed by the filing of a lis pendens on December 9, 1991. After the complaint was filed, defendant-appellant Rebecca LittleJohn entered into possession under a lease on the property with the Clapps dated January 3, 1992. The complaint was amended to name her as a defendant for the purpose of seeking possession. LittleJohn filed an answer which was eventually stricken, and the matter was ordered to proceed as an uncontested foreclosure action. We granted LittleJohn leave to appeal.

II

The facts in the Chase Manhattan Bank (Chase) case are a bit more complex. Seymour Josephson and his wife Marianne Josephson took possession of a single family home located at 650 Prospect Avenue, West Orange, N.J. in 1973 under a one year lease. The Carteret School for Boys owned the house as part of a much larger estate. The lease was renewed annually until 1978 when they became, they assert, month-to-month oral lessees.

In September 1987 Robert Hanselman became a tenant in another single family home, located at 646 Prospect Avenue, West Orange, N.J., also owned by the Carteret School for Boys. Both 646 and 650 Prospect Avenue along with other property were sold by the Carteret School for Boys in November 1987 to Saul Werner and Grace Werner, his wife. The purchase was financed largely through funds obtained from Chase on November 23, 1987 when the Werners executed a "Mortgage, Assignment of Leases and Rents and Security Agreement" dated

November 23, 1987. The deed and mortgage were recorded on December 11, 1987. The bond and mortgage gave the mortgagee the right to possession upon default.

Robert Hanselman vacated 646 Prospect Avenue in 1989. However, in June of 1990, he moved back into the house along with Sherri Bagnell. On July 9, 1989, the Werners were deemed in default, and a complaint in foreclosure was filed on October 20, 1989. The Werners filed an answer and counterclaim which were stricken on June 15, 1990. Three days later the Werners filed a petition for voluntary bankruptcy under the United States Bankruptcy Code on June 18, 1990. On March 19, 1991, Chase accepted a deed from the Werners in lieu of finalizing the foreclosure action and then obtaining a sheriff's deed. After the deed was recorded, discovery provided by the Werners in the bankruptcy proceeding revealed there were tenants occupying the single family homes. Therefore orders were entered on April 19, 1991 and thereafter allowing Chase to amend the complaint in foreclosure to name the tenants, the Josephsons, Hanselman and Bagnell, as defendants in order to obtain a judgment for possession against them.

On December 17, 1991, Chase filed a motion for summary judgment seeking to eject all the tenants from the respective properties. The attorney representing the tenants on the return date of the motion did not oppose the application. The requested ejectments were granted on January 24, 1992. A few days later, however, the Public Advocate filed a motion for reconsideration on behalf of the tenants on February 3, 1992. The Public Advocate argued that the 1986 amendments to the Anti-Eviction Act required Chase to show good cause for removal pursuant to N.J.S.A. 2A:18-61.1. On March 13, 1992, the Judge concluded that the 1986 amendments were not intended to overturn Guttenberg and that the Josephsons were month-to-month tenants thereby precluding any relief under Guttenberg or the 1986 amendments.

The Josephsons, Hanselman and Bagnell have appealed. In the brief filed on behalf of these appellants, we have been advised that "Robert Hanselmann and Sherri Bagnell have also elected to vacate their premises pursuant to the lower court's January 24, 1992, order rather than pay back rent." Since the right to continued possession is the only issue raised on appeal, and ...


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