Investors Sav. & Loan Ass'n v. Ganz
| Decision Date | 30 April 1980 |
| Citation | 416 A.2d 918,174 N.J.Super. 356 |
| Parties | INVESTORS SAVINGS & LOAN ASSOCIATION, Plaintiff, v. Emil GANZ, Elizabeth Ganz, his wife, Marshall S. Galex, Joseph Serpa, Cherie Serpa, his wife, Princeton Consumer Discount Corp. and State of New Jersey, Defendants. |
| Court | New Jersey Superior Court |
Augustus Dreier, Plainfield, for plaintiff (Dreier & Dreier, Plainfield, attorneys).
Herbert Blaustein, Union, for defendants Emil and Elizabeth Ganz.
Plaintiff moves for an order granting summary judgment and for an order striking defendants' answer on the grounds that the answer sets forth no defense sufficient in law or, in the alternative, granting plaintiff leave to proceed to enter judgment pursuant to R. 4:64.
This action was brought to foreclose a mortgage in the sum of $50,000 made by defendants on the premises located at 611 Carlyle Place, Union. The suit is based on an alleged default in the terms of the mortgage arising out of defendants' failure to occupy the premises as their primary place of residence.
The mortgage loan application asked, "Will you occupy the property?" Defendants responded by checking "yes." The application also asked "When" and defendants answered by writing "passing of title."
The mortgage loan commitment contained the following language:
2. All statements made in the application submitted by the borrowers are incorporated herein and made part of this commitment, which shall be subject to cancellation if such statements are not correct;
8. The mortgage shall become immediately due and payable at the option of the Association upon any change in ownership of the mortgaged premises; or, if the mortgaged premises are not owner occupied and are not the primary place of residence of the owners during the term of mortgage.
The mortgage contained the following condition And it is further agreed that, if the mortgaged premises are not used as the primary place of residence and are not occupied by the Mortgagor during the term of the mortgage loan, then and in such event, the aforesaid principal sum with accrued interest shall, at the option of the Mortgagee, become due and payable immediately, anything herein contained or contained in the Bond to the contrary notwithstanding.
The mortgage loan commitment was dated on April 4, 1979 and the mortgage and bond were executed on April 20, 1979. On or about October 2, 1979 plaintiff learned that the premises were not occupied by the owner but rather were occupied by tenants. There is nothing in the record to indicate that plaintiff waived the conditions or obligations contained in the mortgage commitment or the mortgage. Upon discovering that the premises were not owner-occupied, plaintiff called the mortgage and demanded that the balance due thereon be paid in full no later than November 9, 1979. Defendants have not made this payment and the premises continue to be tenant occupied.
Defendants have filed an amended answer which states by way of an affirmative defense that the acceleration clause and mortgage requirement that defendants reside in the mortgaged premises are unconscionable, inequitable, create a forfeiture and thus are of no force and effect.
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment as a matter of law. R. 4:46-2. The moving party must sustain the burden of showing that there are no genuine issues of material fact. All inferences of doubt are drawn against the movant and in favor of the opponent of the motion. Judson v. Peoples Bank & Trust Co. of Westfield, 17 N.J. 67, 74-75, 110 A.2d 24 (1954).
It is undisputed by defendants that they executed the mortgage loan commitment and the mortgage, that the mortgage contained the owner occupancy requirement and that defendants are not living at the mortgaged premises. Thus, there appears to be no genuine issues as to any material fact remaining to be decided at trial. What must next be decided is whether plaintiff is entitled to judgment as a matter of law.
Where an acceleration clause is express and certain in its terms, such a clause requiring the payment of the entire balance due on the mortgage upon default in the performance of any covenant or condition of the mortgage is held to be a legitimate contractual obligation for credit on condition and not a penalty or forfeiture clause. These clauses have generally been enforced except where the default of the mortgagor is attributable to the conduct of the mortgagee. Weiner v. Cullens, 97 N.J.Eq. 523, 526, 128 A. 176 (E. & A.1925); Poydan, Inc. v. Kiriaki, 130 N.J.Super. 141, 150, 325 A.2d 838 (Ch.Div.1974), aff'd. 139 N.J.Super. 365, 354 A.2d 99 (App.Div.1976). The acceleration clause here is express and certain in its terms and there is no evidence that the default in the occupancy condition of the mortgage is attributable to the conduct of the plaintiff.
The only remaining issue is whether the enforcement of the acceleration clause because of the violation of the owner occupancy requirement would be unconscionable or inequitable. This question appears to be one of first impression in this State.
Defendants contend that before such a clause can be enforced there must be shown some jeopardy or threat to the plaintiff's security and that plaintiff has demonstrated none. Defendants argue that unlike cases in which the mortgagor has defaulted on payments due or in which the identity of the mortgagor changes, defendants here remain responsible for the payments and are ready, willing and able to pay. Thus, they maintain that there is no jeopardy to plaintiff's security in the mortgage by virtue of the fact that they are not living in the premises.
Plaintiff states by affidavit that historically the purpose of a savings and loan association has been to assist persons in acquiring a home in which to reside and that this has always been plaintiff's policy. Plaintiff represents that in keeping with this policy it has not knowingly made any mortgage loans on one- or two-family dwellings which were not owner-occupied. Plaintiff contends that from its experience nonoccupying owners tend to restrict and minimize property maintenance and unkeep in order to enhance their financial return. Plaintiff argues that such conduct leads to an unreasonable depreciation of the property and...
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...rather than according to terms an expert (or judge) thinks they ought to have contained. See Investors Savings & Loan Ass'n v. Ganz, 174 N.J.Super. 356, 416 A.2d 918, 920 (N.J.Super.Ch.1980); Kham & Nate's Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351, 1356-57 (7th Cir.1990); Ev......
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