Hudson County Nat. Bank v. Southworth
| Decision Date | 08 December 1942 |
| Docket Number | 138/413. |
| Citation | 132 N.J.Eq. 521,29 A.2d 312 |
| Parties | HUDSON COUNTY NAT. BANK v. SOUTHWORTH et al. |
| Court | New Jersey Court of Chancery |
Syllabus by the Court.
1. A valid release of claim is an effective defense.
2. In equity it is the substance and not the form which controls. Equity will always in a proper case pierce through fiction to the reality.
3. The original mortgagee executed a general release to the mortgagor who is a party defendant to the instant foreclosure proceedings. The release is alleged in the defendants' answer. The premises were sold by the sheriff to satisfy the amount due under the mortgage. The mortgagor thereupon filed a petition herein seeking to bar confirmation of the sale until a credit for fair value was had and applied to the mortgage indebtedness. Held: that the general release precludes the relief sought by the petitioner.
Suit by Hudson County National Bank against Florence L. Southworth and others to foreclose a purchase money mortgage. After a final decree was entered directing sale of mortgaged premises and the sale thereof, the defendant Isaac J. Walsh, original mortgagor, filed objections to the confirmation of sale and made application for an order to show cause why confirmation of the sale should not be withheld until complainant would allow a credit for the fair and reasonable value of the mortgaged premises. On defendant Walsh's application and complainant's application to strike the objections to the confirmation.
Application of defendant Walsh denied, and complainant's motion to strike granted.
Abner W. Feinberg, of Jersey City, for complainant.
William R. Gannon, of Jersey City, for defendants.
EGAN, Vice Chancellor.
A bill was filed herein to foreclose a purchase money mortgage dated July 1, 1924, executed by the defendant, Isaac J. Walsh, to Martin A. Adams. The mortgage was later assigned to the complainant. A final decree was entered on September 4, 1942, directing the sale of the mortgaged premises to satisfy the sum of $15,868.57 with interest and costs. The premises were sold by the Sheriff of Hudson County on October 15, 1942, to the complainant for the sum of $100. Walsh filed objections to the confirmation of sale. The matter is now here on two applications as follows: (1) Walsh presented a petition, and thereon obtained, on November 9, 1942, an order to show cause why confirmation of the sale should not be withheld until complainant would allow a credit for the fair and reasonable value of the mortgaged premises as of the date of the sale; and (2) the complainant filed and served a notice of motion upon Walsh to strike his "objections to confirmation".
Adams, the original mortgagee, conveyed the premises to Walsh on July 1, 1924, at the time of the execution of the mortgage; thereupon, Walsh executed a deed of conveyance of the premises to the defendant, Hudson County Buick Company, a corporation of New Jersey. The deed to the corporation recited that "the said Isaac J. Walsh being a mere conduit of title * * * the said Hudson County Buick Company hereby assumes and agrees to pay (said mortgage) in accordance with the terms and provisions thereof."
The defendant Buick Company paid the interest on the mortgage and the taxes on the property from the year 1924 to January, 1942.
After the complaint was filed herein and the defendants were served with process, the defendants' solicitor informed the complainant's solicitor that the defendant mortgagor Walsh held a "general release" from the mortgagee Adams. The defendants then served notice of motion on complainant of an application to this court for an order directing the complainant to amend its bill of complaint "so that in all truth and honesty the bill will exhibit the true and complete state of facts known to complainant * * *," and attached to the notice of the motion affidavits of the defendants Walsh and Augustus R. Southworth (one of the principal stockholders of the Buick Company) recite the issuance of the general release by Adams to Walsh. The affidavits are dated the 29th and 30th days of June, 1942, respectively. See Tansey v. Belleville Relief Association, 99 N.J. Eq. 894, 133 A. 423.
On July 31, 1942, an order was issued herein granting leave to Walsh and the other defendants to file an answer in lieu of plea pleading the aforementioned general release, which among other things says: (Italics mine)
The last quoted order was consented to by the solicitor of the defendants. On August 6, 1942, Walsh and the Buick Company filed an answer in lieu of plea, alleging therein that Walsh had been released from all liability by the aforementioned general release. On October 13, 1942, the defendants' solicitor moved to amend the final decree of September 4, 1942, by inserting therein the reservation of questions granted to the answering defendants in paragraph 4 of the order of July 31, 1942, above quoted, and reserved in and by the said final decree. The said decree was so amended on October 14, 1942.
No one but the defendant Walsh has raised objections to the confirmation of sale. In his petition he alleges that he was a mere nominee, dummy, or agent of the defendant Buick Company; and his affidavit annexed to the petition carries the same statement—as does his affidavit of June 29, 1942. The Southworth affidavit of June 30, 1942, conveys the same information. The answer in lieu of plea filed by Walsh and the Buick Company also presents the same allegation.
The complainant contends in its notice and argument that:
1. Walsh has an adequate remedy at law;
2. He is not a distressed debtor;
3. He is estopped by his answer in lieu of plea to object to confirmation of the Sheriff's sale;
4. He is estopped by the order of July 31, 1942, and by the amended final decree to object to confirmation of the Sheriff's sale, or to petition for set-off...
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