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Pear Street, LLC v. 818 Pear Street


January 4, 2011


On appeal from the Superior Court of New Jersey, Chancery Division, Cumberland County, Docket No. C-30-07.

Per curiam.


Submitted: December 15, 2010 - Decided: Before Judges Axelrad and Lihotz.

The issue on appeal involves the validity of a deed in which the grantee, now deceased, stamped the grantor's signature to effectuate the transfer. Following a bench trial, the Chancery judge upheld the validity of the deed. The grantor appeals. We affirm.

On September 12, 2007, plaintiff Pear Street, LLC (Pear Street or grantor) filed suit against defendants, 818 Pear Street, LLC (818 Pear Street or grantee), Interstate Net Bank (the Bank) and William J. Lemons, Executor of the Estate of Angelo Rodriguez (the executor), seeking to invalidate a deed from plaintiff to 818 Pear Street, as well as the encumbering mortgage provided to the Bank. The grantee and the executor filed an answer and counterclaim against the grantor, its sole member, Carol Rodriguez, and her husband Angel,*fn1 seeking repayment of rents collected by them on the subject property. The Bank filed an answer and cross-claim against 818 Pear Street and the executor, seeking to have the mortgage declared valid and enforceable and, if the grantor succeeded in its underlying suit, seeking contribution and indemnification from them. Pear Street, Carol and Angel filed answers to the counterclaim. 818 Pear Street and the executor also filed an answer to the Bank's cross-claim.

On May 4, 2009, 818 Pear Street and the executor were relieved from further participation in the suit, agreeing to be subject to the court's declaration as to the validity of the subject deed.*fn2

Plaintiff moved for summary judgment on June 9, 2009, seeking to have the deed and mortgage cancelled. The Bank filed opposition. Plaintiff's motion was denied on July 14, 2009.

A trial was conducted on July 14 and 15, 2009. The court issued a written decision on September 15, 2009, holding that the deed and mortgage were valid and enforceable. A final judgment was entered on October 14, 2009.

On December 14, 2009, plaintiff filed a motion seeking a stay of execution of that part of the final judgment requiring it discharge the notice of Lis Pendens, which was granted by the Chancery judge on January 22, 2010, pending appeal. Pear Street and Carol appealed (collectively referred to as appellants when appropriate).

Carol and Angel purchased the property located at 818 Pear Street in Vineland on October 27, 1998. On November 9, 2005, Carol formed Pear Street, in which she was the sole member. On November 30, 2005, Carol and Angel transferred the property to Pear Street. At trial, Carol testified that her son Angelo had been in the business of purchasing cheap homes to fix up and resell. Carol owned a business called Andesco, in which Angelo had an interest, which was used to facilitate Angelo's purchase of the homes. Angelo ran day-to-day operations and was given the authority to use Carol's signature stamp to write checks.

Carol acknowledged that she and Angel would often loan Angelo large sums of money for business dealings and personal reasons. In 2006, Carol gave Angelo permission to allow his employees, who were working on a nearby house, to stay at the subject property. At some point, Carol also allowed Angelo to rent out the property and retain the proceeds to pay his bills. Angelo assumed responsibility for insuring the property and paying for utilities. The real estate bills were also sent directly to Angelo. Unfortunately, Angelo committed suicide on or around February 16, 2007.

The primary factual dispute at trial concerned a deed dated December 2005, transferring ownership of the subject property from Pear Street to 818 Pear Street, a business in which Angelo was the sole member. The deed was recorded and filed in the Cumberland County Clerk's office on December 27, 2005, despite not having been dated and acknowledged by a notary public.

Theresa DeGarmo, Angelo's administrative assistant at the time the deed was executed, testified that Angelo used his mother's signature stamp to sign the deed and transfer the property to his company. When Angelo asked DeGarmo to witness him stamp his mother's signature, DeGarmo telephoned Carol and received permission to do so. DeGarmo testified Carol told her that Angelo had her authority to use the signature stamp to transfer the property. DeGarmo explained that she witnessed the signature as a convenience so Angelo did not have to bring the deed to his mother to sign. She also testified that although she was a notary public, she did not notarize the deed because the parties did not sign the document in her presence.

It was DeGarmo's understanding that Carol was transferring the property to Angelo so he could obtain financing from the Bank. Angelo ultimately obtained a $740,000 credit line secured, in part, by the subject property. The Bank's representative testified that the Bank had relied on Angelo's representation that he had the authority to encumber the subject property.

Carol acknowledged that she allowed her son to rent the property and retain the proceeds, but denied ever authorizing the use of her signature stamp to effectuate the transfer. She claimed she did not even learn the property had been transferred to Angelo until she received a letter from the clerk's office on May 15, 2007, explaining that she might need to file a corrective deed due to the lack of notarization. This claim, however, was belied by a May 1, 2007 letter sent by her attorney to the executor, asserting that Angelo had "wrongfully conveyed this property with neither the permission nor consent of my client."

The court was also provided with an August 10, 2007 e-mail from DeGarmo to Carol expressing concern that Carol was planning to lie and deny authorizing her son to use her signature stamp in order to have the deed set aside. Specifically, DeGarmo wrote:

I am not sure what the situation is with 818 Pear Street. I know you are trying to get paid for that property but Carol, you are aware of what Angelo did with the deed. I know you were aware of what he did with the deed and the signature stamp. Please don't do it this way. I really don't want to get involved but if I am asked I will have to tell the truth.

Carol did not respond to the e-mail.

Judge Rafferty accepted as credible DeGarmo's testimony that Carol authorized her son to use her signature stamp to transfer the property to his company, noting that "Ms. DeGarmo has nothing to gain or lose regarding the outcome of this case." The court also considered DeGarmo's e-mail to be additional evidence that the stamped signature was authorized by Carol. The court did not credit Carol's testimony, noting, for example, the inconsistency between her claim that she did not learn about the conveyance until May 15, 2007 and her attorney's letter to the executor two weeks earlier.

Having concluded that Angelo's use of the signature stamp was authorized by Carol, the court relied on N.J.S.A. 46:14-4.2 to uphold the validity of the deed. The statute provides as follows:

For purposes of this title, a signature includes any mark made on a document by a person who thereby intends to give legal effect to the document. A signature also includes any mark made on a document on behalf of a person, with that person's authority and to effectuate that person's intent. [Ibid.]

Judge Rafferty additionally found the actions of the parties after the deed was executed corroborated his finding that the transfer was authorized, noting that Angelo collected rent from the tenants who leased the property, procured insurance for the property, and received the real estate tax bills at his address. The judge found it unnecessary to address the Bank's alternative argument that such conduct constituted a legal ratification of the conveyance.

Finally, Judge Rafferty held that the lack of notarization was irrelevant as to the validity of the deed. He explained that notarization is only required for recording purposes. Moreover, the clerk had initially accepted for recording the deed as executed.

On appeal, appellants argue: (1) the deed and mortgage are legally invalid because Carol was not physically present when her stamped signature was placed upon the deed as grantor, and

(2) the deed and subsequent mortgage are invalid because Carol never personally appeared before DeGarmo or any other officer authorized to take acknowledgments. Based on our review of the record and applicable law, we conclude these challenges are without merit.

The scope of our review of a judgment entered in a non-jury case is limited. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 483 (1974). Findings of the trial court are binding on appeal when supported by adequate, substantial and credible evidence. Id. at 484. We will not disturb such findings "unless they are so wholly insupportable as to result in a denial of justice . . . ." Id. at 483-84 (internal citation and quotation marks omitted).

Deference is particularly appropriate when the evidence is largely testimonial and involves questions of credibility. Connell v. Diehl, 397 N.J. Super. 477, 490 (App. Div.), certif. denied, 195 N.J. 518 (2008). On the other hand, a "trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, LP v. Twp. Comm., 140 N.J. 366, 378 (1995).

Appellant's argument that Carol physically needed to be present for her signature to be valid is not supported by the statute or case law. N.J.S.A. 46:14-4.2 was intended to codify the definition of "signature" as set forth in Mutual Benefit Life Insurance Company v. Brown, 30 N.J. Eq. 193 (Ch. 1878), aff'd, 32 N.J. Eq. 809 (E & A 1880). See also New Jersey Law Revision Commission, Report and Recommendations on Recordation of Title Documents 11 (1989) (the Commission).

The Mutual Benefit case involved a mortgage foreclosure in which the defense was forgery of a defendant's signature on a power of attorney under which the mortgagor obtained title. 30 N.J. Eq. at 194. The defendant had left the country for about twelve years, leaving his wife in a property without any means of support. Id. at 195-96. The power of attorney bore a date a few days before the defendant left. Id. at 195. Pursuant to the document, the defendant's brother-in-law was his attorney in fact, and pursuant to a plea for financial assistance for the defendant's wife, the mortgage was obtained on the defendant's property. Id. at 196-98. The court held that the defendant neither proved forgery nor the invalidity of the power of attorney, stating, "[i]f [the defendant's] signature was written by his direction, and in his presence, it is clear there was no forgery, and I think he ought not to be allowed to repudiate in a court of conscience a paper thus executed while he is in the full enjoyment of the fruits which it brought to him." Id. at 202.

The court further explained that at common law, signing was not essential to the validity of a deed, but the statute of frauds required the grantor to sign the document "in person, or by an agent thereunto lawfully authorized by writing." Ibid. The court also noted the majority of authorities held that "if the grantor's name is written by the hand of another, in his presence and by his direction, it is his act, and the signature, in point of principle, is actually his as though he had performed the physical act of making it." Ibid. The court concluded that "[t]he essential ingredient of the transaction is the disposing purpose, an intention, by the act done or directed, to divest himself of title and pass it to the grantee. If this is the purpose of the grantor's mind, the deed is his, though his name be traced by the hand of another." Id. at 203.

Appellant seizes on the "in his presence" language in Mutual Benefit to argue that the stamped signature of Carol could only have been deemed valid if someone at her direction had used the stamp in her presence. According to appellant, it is not enough that Carol told DeGarmo she authorized the use of her signature stamp on the deed and, in fact, intended the property to be transferred to her son's company.

We disagree that the holding in Mutual Benefit upon which N.J.S.A. 46:14-4.2 was based required that a signature, stamp, or mark must be made in the presence of the person in question in order to be valid. The main concern of the court in Mutual Benefit was not the physical presence of the grantor but the question of the grantor's intent. According to comments by the Commission accompanying the passage of the statute in 1991, the statute was intended in part to codify the definition of signature as set forth in Mutual Benefit, which was:

A person physically unable or too illiterate to write his name may sign by making a cross, a straight or crooked line, or dot or any other symbol. Simply making a mark by bringing the pen in contact with the paper is sufficient.

[Commission, supra, at 11; Mutual Benefit, supra, 30 N.J. Eq. at 203.]

The Commission further explained that the newly-drafted definition in the statute is "broad enough to include any form of written signature, traditional signature by mark, and signatures made by stamp or mechanical device" and additionally "includes signatures made on behalf of a person." supra at 11. The Commission also noted that "[w]hile such a definition is not now found in the law, it was considered important to add it." Id. at 3.

Absent from the Commission's comment and the statute is any reference to a physical presence requirement. If the Legislature wished to codify a requirement that an individual must be physically present while a mark is being made on his or her behalf, it is likely the Legislature would have done so expressly rather than relying on the courts to imply such a requirement from a case decided over a century ago. This is particularly so in light of the importance the Commission attached to codifying the signature definition.

In contrast to N.J.S.A. 46:14-2.2, a requirement that a will "be signed by the testator or in the testator's name by some other individual in the testator's conscious presence and at the testor's direction" is expressly set forth in N.J.S.A.

3B:3-2(a)(2) (emphasis added). The Legislature's omission of similar language in N.J.S.A. 46:14-4.2 is a strong indication it did not intend to incorporate a physical presence requirement into this statute.

We also note that at the time the statute was enacted, our case law held that "[o]rdinarily an instrument satisfies a general statutory requirement for signing, even that of the statute of frauds, where the name of the interested person or firm is printed, stamped or type-written thereon either personally or by an authorized person with the intention that such act constitutes a signing and authentication thereof." J.D. Loizeaux Lumber Co. v. Davis, 41 N.J. Super. 231, 238 ((App. Div.) (citations omitted), certif. denied, 22 N.J. 269 (1956).

In determining whether a physical presence requirement should be incorporated into N.J.S.A. 46:14-2.2, we afforded the words of the statute "their ordinary meaning absent any direction from the Legislature to the contrary [and] [i]f the plain language leads to a clear and unambiguous result, then the interpretive process is over." Klumb v. Bd. of Educ. of Manalapan-Englishtown Reg'l High Sch. Dist., 199 N.J. 14, 23-24 (2009). Further, our interpretation of a statute should not create an absurd or an unreasonable result. In re Alleged Will of Macool, 416 N.J. Super. 298, 312 (App. Div. 2010). See also In re Johnny Popper, Inc., 413 N.J. Super. 580, 589 (App. Div. 2010). A physical presence requirement in this statute would lead to an absurd result. It is unclear what purpose would be served by allowing an individual to sign a document on behalf of a grantor if the grantor must also be physically present and could affix any mark on the deed as a valid signature.

We defer to Judge Rafferty's credibility assessments and conclusion that Carol authorized her stamp to be used and intended to transfer the subject property to her son's company. Having found that such intent is present, there is no legal basis requiring the grantor to be present in the room at the moment his or her signature or mark is affixed to the document for the conveyance to be valid. Accordingly, Judge Rafferty appropriately concluded as a matter of law that the deed was valid.

There is also ample basis in the law for Judge Rafferty's conclusion that the deed is valid between the parties even if it was not in recordable form. Just as a deed does not need to be valid to be recorded, a deed does not need to be recorded to be valid. See Siligato v. State, 268 N.J. Super. 21, 28 (App. Div. 1993) ("[An unrecorded deed is void only as against subsequent purchasers, encumbrancers, and judgment creditors. It is perfectly efficacious in passing title from grantor to grantee . . . .").


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