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Panetta v. Equity One

June 15, 2005


On appeal from Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. C-140-97.

The opinion of the court was delivered by: Fisher, J.A.D.



Argued February 2, 2005

Before Judges Fall, Payne and C.S. Fisher.

In this appeal, the parties dispute whether a deed conveying real property -- that specifically mentioned upland property but made no mention of a related riparian grant --should be interpreted to include the riparian grant. After considering the evidence, the trial judge found that the grantors did not actually intend to convey the riparian grant and, thus, concluded that the conveyance included only the upland property. We reverse because N.J.S.A. 46:3-16 mandates that deeds be construed to include all appurtenant property rights, such as this riparian grant, unless expressly excluded.


Rowena Schoener Francis, her son George Francis, and George's wife, Carolyn Francis, were the owners of property located at 633 Point Avenue, Brick Township. According to the findings of the Chancery judge, this property had been owned by members of the Francis family "for several generations."*fn1 The property consisted of an upland lot (designated on the tax map as Block 934, Lot 23.01) and a riparian grant (separately designated on the tax map as Block 934, Lot 23.03).

George Francis operated a business that, in or about 1995, required an infusion of capital to remain viable. A loan was sought from Equity One. Only 633 Point Avenue was available as security for the loan. In order to simplify the transaction with Equity One and to avoid entangling his mother in his apparently precarious business and financial affairs, George Francis arranged to have his mother transfer her interest in 633 Point Avenue to him and his wife. During this process, Equity One had the property appraised and, as a result, agreed to lend $220,000.

George Francis claimed that he prepared a deed based upon the description given by Equity One. The deed's property description did not expressly include the riparian grant or refer to its separate description on the tax map as Lot 23.03; instead the 1995 deed's description referred only to Lot 23.01:

The property consists of the land and all the buildings and structures on the land in the Township [of] Brick, County of Ocean, State of New Jersey known and designated as Lot 23.01 Block 934 on the tax assessment map of the Township of Brick.

The deed also described the property by the metes and bounds of only the upland property, but also more broadly described the property as that which is "COMMONLY KNOWN AS 633 Point Avenue," thus suggesting the inclusion of the appended riparian grant. Mrs. Francis readily executed this deed at her son's request. With the execution of a mortgage by George and Carolyn Francis on the property referred to in the 1995 deed, Equity One made the loan.

In ascertaining the parties' intentions, the Chancery judge made the following observations in his findings of fact:

To be fair, [George] Francis would have encumbered the riparian interest if asked to do so, but since Equity One did not ask for it, he did not give it. . . . Equity One did not ask to encumber the riparian grant and [George] Francis, knowingly, did not encumber it. This court concludes as fact that there was no intention on the part of [George] Francis to encumber the riparian grant. He did not care either way, and if Equity One wanted it he would have given it to them. But because Equity One did not ask for it he had no intention of encumbering it. Equity One also had no intention of encumbering the riparian grant. Equity One was not even aware of the existence of the riparian grant. If they had been aware of it, they would have included it in the mortgage and [George] Francis would have given them a mortgage. There simply was no meeting of the minds with regard to the encumbering of the riparian grant.

This court concludes that [George] Francis only intended to get from his mother that which was necessary to obtain mortgage proceeds and to protect his mother from liability. Equity One provided him with a description of what they wanted to encumber in order to give [him] the loan. That was all [George] Francis wanted from his mother. He knowingly prepared the deed to reflect what the bank had requested. [Mrs.] Francis intended to give her son what he needed to save his business. It is doubtful that she even read the deed. It is just as doubtful that she was even consciously aware of the separate existence of the riparian grant.

In short, the Chancery judge determined that of all the parties to this transaction -- George Francis, his wife, his mother, and Equity One -- no one was aware that the riparian grant had a separate existence on the municipality's tax map except George Francis, and he did not disclose this fact to Equity One. As a result, the description of the property in the mortgage obtained by Equity One as security for its loan to George Francis neither expressly included a reference to Lot 23.03 nor contained a description of the riparian grant. If the mortgage encompassed the riparian grant, it did so only in a general way.*fn2 By the same token, and of critical importance, the mortgage did not specifically exclude the riparian grant.

When George Francis defaulted on the loan, Equity One foreclosed and a sheriff's sale occurred on June 24, 1997. Equity One was the successful bidder and, while the sheriff's deed is not included in the record on appeal, we assume that it contains a description of the property identical to that contained in Equity One's mortgage and the 1995 deed conveying the property to George and Carolyn Francis. Thus, through this process, Equity One became the holder of legal title to that which was transferred to George and Carolyn Francis by way of the 1995 deed.

At the same time, Equity One received offers to purchase the property from the plaintiffs. The Chancery judge observed in his factual findings that plaintiff Joseph Panetta had written to Equity One on June 25, 1997, offering to purchase the property for $220,000; that plaintiffs Dennis and Dorothy McKenna offered on July 23, 1997 to purchase the property for $265,000; and that plaintiff Anne Covey had offered, also on July 23, 1997, to purchase the property for $240,000.

Equity One decided to reject these offers and commence a bidding process that involved only the plaintiffs. On July 25, 1997, Equity One wrote to plaintiffs, advising that it was rejecting all prior offers and, as "the owner of 633 Point Avenue," was offering to sell the property to the highest bidder pursuant to the indicated terms.

Panetta submitted a bid of $225,000 and expressed no conditions or other terms. McKenna submitted a $287,000 bid in the form of a written contract, which provided that a certain portion of the purchase price was to be applied by Equity One toward a realtor's commission, leaving a "Net to Seller" of $269,780; McKenna's contract/bid also contained a description of the property that included both the upland portion and the riparian grant. Covey submitted a bid of $280,000, which included a statement that "[s]aid property according to the deed recorded in Ocean county lists a riparian grant which is incorporated in this bid as sale of both the property and the riparian grant."

On July 29, 1997, Equity One informed Covey that her $280,000 bid was the highest. As requested, Covey forwarded a 10% deposit and a proposed contract that described the property as including the riparian grant.

On July 30, 1997, after reviewing the listing agreement mentioned in the McKenna bid, Equity One's attorney believed a mistake had been made. He advised plaintiffs that the bidding would be reopened on a competitive instead of a sealed bid basis. Before that process could be commenced, however, Covey filed a complaint in the Chancery Division asserting that she had entered into a valid and enforceable contract with Equity One,*fn3 and seeking the remedy of specific performance. Panetta and the McKennas soon filed their own suits.*fn4 Johnson & Johnson Realty, the realtor referred to ...

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