On appeal from Superior Court, Chancery Division, Middlesex County.
Approved for Publication June 4, 1997.
Before Judges Petrella, Skillman and Eichen. The opinion of the court was delivered by Petrella, P.j.a.d.
The opinion of the court was delivered by: Petrella
The opinion of the court was delivered by PETRELLA, P.J.A.D.
Appellants Edward Simonson and Simonson Family Associates, L.P. (Simonson) appeal from a final judgment granted to respondent Z Cranbury Associates (Z Cranbury) following an admeasurement hearing that had been ordered upon the entry of a prior judgment of foreclosure. Simonson objects to the trial Judge's enforcement of a release provision inserted into a non-recourse, purchase money mortgage given by Z Cranbury to Simonson as partial payment for an approximately 249-acre tract.
Between 1982 and 1988, Z Cranbury paid Simonson a total of $180,000 for six annual options to purchase property located in Cranbury, New Jersey. *fn1 Notwithstanding its failure to persuade local zoning officials to reduce a six-acre lot size requirement for residential homes, Z Cranbury exercised its sixth option and purchased the Simonson tract for $6,723,891 on June 24, 1989.
Pursuant to a provision of a 1985 extended option agreement, Simonson gave Z Cranbury a credit against the purchase price for its prior option payments. At closing, Z Cranbury paid the remainder of 10% of the purchase price (approximately $490,000) in cash and financed the balance through a $6,051,502 promissory note secured by a ten-year purchase money mortgage in favor of Simonson. Paragraph Six of the note stated that
this Note is non-recourse to the undersigned [(Z Cranbury)] and in the event of a default on this Note or the Mortgage, the sole remedy of Holder [(Simonson)] is limited to foreclosure upon the property subject to the lien of the Mortgage for satisfaction and no deficiency or other personal action will be instituted against the Undersigned.
Following a one-year extension of the effective date of its repayment obligation, Z Cranbury defaulted on its promissory note. Simonson *fn2 filed a complaint in foreclosure in November 1990, to which Z Cranbury asserted by counterclaim its right to obtain the unconditional release of 20.4 acres from the mortgage. In support of its claim, Z Cranbury cited Paragraph Three of a rider to the mortgage, which provided in pertinent part:
A. Releases from the lien of this Mortgage shall be obtained for the number of acres of property for which a release from the lien of this Mortgage is sought upon payment of a sum equal to the product of the following formula:
(Number of acres sought to be released) x (1.25) x ($27,000/acre)
Notwithstanding the foregoing, at any time upon Borrower's request, from and after the date hereof Borrower shall be entitled to the release from the lien of this Mortgage of 20.4 acres without payment of release consideration, *fn3 and in addition at any time on Borrower's request and without payment of additional release consideration, such acreage as Borrower shall require for construction of access roads and installation of utilities and such other easements as may be deemed necessary by the Borrower for development of the property. There shall be credited against the release consideration to be paid hereunder all amounts paid in reduction of the principal amount of the Note which this Mortgage secures.
C. All acreage to be released shall be contiguous and shall contain a reasonable proportion of roadway frontage, open space and 'green belt' areas. ...
D. No portion of the mortgaged premises shall be released from the lien of this Mortgage unless it is legally transferable as an entity separate from the remainder of the mortgaged premises in accordance with a legally effective ...