Glorsky v. Et Ux.
| Decision Date | 20 May 1948 |
| Docket Number | 159/387. |
| Citation | 59 A.2d 233 |
| Parties | GLORSKY et al. v. WEXLER et ux. |
| Court | New Jersey Court of Chancery |
OPINION TEXT STARTS HERE
Suit by Lewis Glorsky and Isidore Glorsky against Bennet Wexler and Ethel Wexler, his wife, to foreclose a mortgage.
Decree for complainants.
Syllabus by the Court.
1. The so-called acceleration clauses in mortgages are regarded as legitimate contractual stipulations for a period of credit on condition, and a mortgagee has the right to insist upon a strict observance of their terms unless the default of which the mortgagee complains has been attributable to the conduct of the mortgagee himself.
2. In confirming the legal validity of such contractual agreements no line of distinction save in certain exceptional circumstances is drawn between those relating to a default in the payment of interest and those pertaining to a dereliction in the discharge of tax assessments.
3. A mortgagee may pursue a course of conduct with respect to such stipulations which will induce a court of equity to excuse the alleged delinquencies.
4. The contractual rights of a mortgagee are no less entitled to the recognition and protection of this court than those of the mortgagor.
5. An improper motive cannot defeat the enforcement of a lawful right.
6. Query: Does a stipulation in a bond and mortgage that the debt shall mature ‘one year after hostilities in the present World War cease and peace is declared’ operate to postpone the collection of the principal until the ratification of formal treaties of peace between the United States of America and the nations against which it had declared war?
Berry & Whitson, of Toms River, for complainants.
Albert Kushinksy, of Toms River, for defendants.
JAYNE, Vice Chancellor.
I have before me a real estate mortgage executed by the defendants on March 11, 1946, which in conformity with the terms of its associated bond provides that the principal shall be paid ‘one year after hostilities in the present World War cease and peace is declared thereupon to be computed from 29th day of July 1943 at and after the rate of six percent (6%) per annum, and to be paid semi-annually.’ The foregoing quotation is precisel transcribed.
The bond and mortgage also contain the stipulations commonly incorporated in such instruments which accord the mortgagees the option to accelerate the maturity of the debt in the event of a stated delinquency in the payment of interest or taxes.
A brief narrative of prior occurrences will serve to exhibit the background of the case. On or about July 29, 1943, the defendant Bennet Wexler, having received notice of his imminent induction into the United States Army, joined with his wife in the execution of a bond and mortgage to secure the payment to the complainants of an antecedent indebtedness. Those instruments contained the covenant and stipulation which I have quoted.
In August 1943 the defendant entered the military service, and by reason of some disability he was honorably discharged on July 24, 1945. Shortly thereafter he and the complainants organized a business corporation in which Wexler acquired one-third of the capital stock. In March 1946, while the parties were thus associated in business, the defendants found it necessary or desirable to re-finance the first mortgage lien upon their premises then held by the Prudential Insurance Company of America. In the accomplishment of that purpose, the complainants cancelled their existing mortgage and received from the defendants the bond and mortgage of March 11, 1946. It was agreed that the substituted bond and mortgage would embrace the same terms as the former instruments. And so it was, even to the pattern of requiring interest to be computed from July 29, 1943.
Friendships, however, are fragile things and it is not always possible to keep them in constant repair. Discord intervened between these parties. Wexler sought in this court the appointment of a receiver of the business corporation. The complainants retaliated by the institution of proceedings to have the company adjudged to be bankrupt. Thereafter the complainants demanded payment of the bond and mortgage and inaugurated the present foreclosure suit.
It is said by the defendants that this proceeding is purely the creature of animosity. If so, the answer is that an improper motive cannot defeat the enforcement of a lawful right. Weiner v. Cullen, 97 N.J.Eq. 523, 128 A. 176.
The so-called acceleration clauses in mortgages are regarded as legitimate contractual stipulations for a period of credit on condition, and a mortgagee has the right to insist upon a strict observance of their terms unless the default of which the mortgagee complains has been attributable to the conduct of the mortgage himself. Gilbert v. Pennington Trap Rock Co., 135 N.J.Eq. 587, 39 A.2d 647, and cases therein cited.
In confirming the legal validity of such contractual agreements no line of distinction save in certain exceptional circumstances is drawn between those relating to a default in the payment of interest and those pertaining to a dereliction in the discharge of tax assessments. Cf. Arkenburgh v. Lakeside Residence Ass'n, 56 N.J.Eq. 102, 38 A. 297; Bergman v. Fortescue, 74 N.J.Eq. 266, 69 A. 474; Weiner v. Cullens, supra; Derechinsky v. Epstein, 98 N.J.Eq. 79, 130 A. 720, affirmed 99 N.J.Eq. 447, 131 A. 922; K. S. S. Realty Co. v. Ostroff, 100 N.J.Eq. 128, 135 A. 869, affirmed 101 N.J.Eq. 771, 138 A. 921; Marneil Realty Corp. v. Twin Brook Realty Corp., 119 N.J.Eq. 205, 181 A. 882; 1 Pom.Eq.Jur. (5th ed.) 216, § 439.
It is true that a mortgagee may pursue a course of conduct with respect to such stipulations which will induce a court of equity to excuse the alleged delinquencies. Vide, De Groot v. McCotter, 19 N.J.Eq. 531, 533; Wilson v. Bird, 28 N.J.Eq. 352; Bell v. Romaine, 30 N.J.Eq. 24; Security curity Trust, & c., Co. v. New Jersey Paper Boards, § c., Co., 57 N.J.Eq. 603, 607, 42 A. 746; Derechinsky v. Epstein, 98 N.J.Eq. 79, 130 A. 720, affirmed 99 N.J.Eq. 447, 131 A. 922; Freund v. Weisman, 101 N.J.Eq. 244, 248, 137 A. 885, 53 A.L.R. 522; Engler v. Buesser, 106 N.J.Eq. 173, 176, 150 A. 576; Schwed v. Budrecki, 110 N.J.Eq. 47, 158 A. 418.
In the present cause it is acknowledged that the defendants have not paid the principal and have never paid any interest thereon. It seems to me to be evident that all of the parties supposed...
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