Chase Manhattan Bank v. Josephson
| Decision Date | 06 January 1993 |
| Citation | 619 A.2d 241,261 N.J.Super. 428 |
| Parties | 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. |
| Court | New Jersey Superior Court — Appellate Division |
Susan R. Oxford, Asst. Deputy Public Defender, for defendants-appellants (Zulima V. Farber, Public Advocate, atty.; Ms. Oxford of counsel and on the brief).
Robert J. Donaher, for plaintiff-respondent (Waters, McPherson, McNeill, attys.; Gregory J. Castano and Kenneth D. McPherson, Jr., of counsel; Mr. Donaher on the brief).
Gregory G. Diebold, for amicus curiae Hudson County Legal Services Corp. appeared but did not argue (Mr. Diebold of counsel and on the brief).
Jamieson, Moore, Peskin & Spicer, for amicus curiae New Jersey Bankers Ass'n (Dennis R. Casale of counsel and on the brief).
Maura A. Sanders, for defendant-appellant Rebecca LittleJohn (Essex-Newark Legal Services, atty.; Ms. Sanders of counsel and on the brief).
Harold N. Kaplan for plaintiff-respondent Maryland Nat. Mortg. Corp. (Federman and Phelan, attys.; Mr. Kaplan on the brief).
Before J.H. COLEMAN, SHEBELL and CONLEY, JJ.
The opinion of the court was delivered by
COLEMAN, J.H., P.J.A.D.
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.
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.
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 Hanselman and Bagnell have surrendered possession voluntarily, the appeal is dismissed as to them.
The Josephsons contend that because they were tenants in possession under a month-to-month lease before the Chase mortgage was recorded, they are protected from eviction except for removal for cause as provided under N.J.S.A. 2A:18-61.1. They argue that "where the tenancy predates the mortgage, whether based on a written lease or an oral month-to-month lease, a foreclosing mortgagee acquires the property subject to the lease."
We begin our analysis with a determination of whether the Josephsons were month-to-month tenants, as found by the trial judge, or month-to-month lessees as contended by the Josephsons. Seymour Josephson states in his affidavit that he and his wife moved into the single family house located at 650 Prospect Avenue in West Orange, N.J., in 1973 when the Carteret School for Boys owned the property. They took possession of the house under a one year lease which was renewed annually until 1978. When the last annual lease expired in 1978, they continued in possession of the house under the same conditions on a month-to-month basis. In 1987, they began paying the rent monthly to Saul Werner and continued until June 1991 when they were informed the property had been transferred to Chase as a result of a foreclosure action.
In Steffens v. Earl, 40 N.J.L. 128, 137-138 (Sup.Ct.1878), it was observed that where "there is no evidence but the mere fact a payment [of rent] at intervals of a week or a month, the implication is that the renting is a monthly or weekly one, just as the payment is monthly or weekly." Since the Josephsons do not assert that there was any express reservation of the annual rental at the end of the last one year lease in 1978, upon expiration of the last written lease in 1978, they became month-to-month tenants. Maier v. Champion, 97 N.J.L. 493, 494-496, 117 A. 603 (E. & A.1922). See also Shield v. Welch, 4 N.J. 563, 568-569, 73 A.2d 536 (1950); N.J.S.A. 46:8-10; 22 New Jersey Practice, Landlord and Tenant Law § 53, at 59-60 (Lewine) (rev. 3d ed. 1962). Absent a lease which fixes the term of the letting, the interval of payment determines the time of the tenure. Albey v. Weingart, 71 N.J.L. 92, 93-94, 58 A. 87 (Sup.Ct.1904). More recently, our Supreme Court observed that a tenant in possession of realty without an executory lease is a month-to-month tenant. Harry's Village, Inc. v. Egg Harbor Tp., 89 N.J. 576, 583, 446 A.2d 862 (1982). Thus when Chase recorded its mortgage while the Josephsons were in possession, any inquiry of them would have revealed they were month-to-month tenants. See Carteret Properties v. Variety Donuts, Inc., 49 N.J. 116, 128, 228 A.2d 674 (1967).
Contrary to the Josephsons' assertion, Guttenberg does not accord a preference to a month-to-month tenant in possession prior to recording the mortgage. Although Guttenberg does use the words "tenant" and "tenancy," those words are always used in reference to a tenant or a tenancy under an executory lease at the time the mortgage was recorded. This is clear from the Supreme Court's statement of the issue presented as one dealing with "tenants under leases subordinate to the mortgage." Guttenberg, supra, 85 N.J. at 623, 428 A.2d 1289. The Court held that the Anti-Eviction "Act applies only to the traditional landlord-tenant relationship and not to that of a mortgagee holding a lien prior to the leasehold of a tenant in possession." Ibid. (emphasis supplied ). Also, Guttenberg...
To continue reading
Request your trial