Scarano v. Scarano

• Decision Date: 08 October 1942
• Docket Number: 138/552.
• Citation: 28 A.2d 425,132 N.J.Eq. 362
• Parties: SCARANO et al. v. SCARANO et al.
• Court: New Jersey Court of Chancery

28 A.2d 425

132 N.J.Eq. 362

SCARANO et al.

v. SCARANO et al.

138/552.

Court of Chancery of New Jersey.

Oct. 8, 1942.

[Copyrighted material omitted.]

Syllabus by the Court.

1. Courts of equity have possessed a power to suppress defensive pleadings which are manifestly sham or frivolous, similar in character and purpose to the right exercised by the superior courts of common law.

2. The evident intent of the statute, N.J.S.A. 2:29-46, was to assimilate the equity practice to that at common law, and thus motions to strike sham pleadings are summarily heard and considered on affidavits and documentary evidence.

3. On a motion to strike an answer as sham, the inquiry is addressed to whether there is an actual issue—whether that which in form and appearance seems to be an issue is a genuine and veritable issue. 4. As courts of law will not try the case on affidavits nor allow the pleading to be disregarded, if there is any reasonable probability of its truth, so likewise this court will not undertake to determine the disputable credibility of divergent and contradictory proofs submitted by means of affidavits.

5. In a mortgage foreclosure suit, the obligors on the bond are entitled to controvert the amount alleged to be due on the bond and mortgage.

6. For many years it was the established rule in this court that in a suit to foreclose a real estate mortgage other than a purchase money mortgage, the mortgagor or his assigns could not set off any demand against the mortgage debt, except payment, which operates as a release of the encumbrance pro tanto, or an agreement that the sum proposed to be set off should be received and credited as payment.

7. Notwithstanding the statutory enactments, it has been resolved that claims for unliquidated damages are not the proper subject matter of a set-off in a mortgage foreclosure suit.

8. Certain distinctions regarding claims for unliquidated damages in reduction of the mortgage debt are observed in the foreclosure of a purchase money mortgage.

9. Ordinarily, courts of equity, following the law, will not allow a set-off of a joint debt against a separate debt or, conversely, a separate debt against a joint debt.

10. In this foreclosure suit based upon a bond and mortgage evidencing a joint and several obligation of a husband and wife, the separate liquidated demand in favor of the husband against the complainants may be counterclaimed.

11. The counterclaim of the one defendant against only one of the complainants who are joint owners of the bond and mortgage, will be suppressed.

Suit by Stanley Scarano and another against Vittoria Scarano and another to foreclose a mortgage wherein defendants filed an answer and counterclaim. On complainants' motion to strike out the counterclaim and the defensive averments of the answer.

Order in accordance with opinion.

Harry R. Stern, of Bernardsville, for complainants.

Myron L. Levy, of Somerville, for defendants.

JAYNE, Vice Chancellor.

The bill of complaint in this cause is in the conventional form employed to foreclose a mortgage. An answer and counterclaim have been filed on behalf of the defendants. The subject of present consideration is the motion of the complainants for an order striking out the counterclaim and the defensive averments of the answer. The specified grounds of objection are that paragraphs 2, 3, 4 and 5 of the answer are sham; that paragraph 5 is also frivolous, and that the causes of action alleged in the counterclaim cannot be indulged in a suit to foreclose a mortgage.

Courts of equity have possessed a power to overrule and suppress defensive pleadings which are manifestly sham or frivolous similar in character and purpose to the right exercised in the superior courts of common law. Stanbery v. Baker, 55 N.J.Eq. 270, 37 A. 351; Weidmann Silk Dyeing Co. v. East Jersey Water Co., 88 N.J.Eq. 397, 102 A. 858, 1056, affirmed 89 N. J.Eq. 541, 105 A. 194; Western Realty Co. v. Kassoff, 100 N.J.Eq. 325, 134 A. 733. The practice also has been authorized by statute. P.L.1915, c. 116, p. 185; N.J.S.A. 2:29-46. The evident intent of the statute was to assimilate the equity practice in this respect to that at common law and thus motions to strike sham pleadings are summarily heard and considered on affidavits or documentary evidence. Penrose v. Absecon Land Co., 94 N.J.Eq. 436, 120 A. 207; Trumbower v. Park Attractions, Inc., 121 N.J.Eq. 284, 189 A. 65. The fundamental object of this procedure is to intercept false pleadings to the end that justice shall not be impeded. Therefore the inquiry is addressed to whether there is an actual issue—whether that which in form and appearance seems to be an issue is a genuine and veritable issue. South Camden Trust Co. v. Stiefel, 101 N.J.Eq. 41, 137 A. 91; Salter v. Reilly, 147 A. 778, 9 N.J. Misc. 979.

The courts of law cautiously exercise the power to strike out pleadings as sham or frivolous. Hogencamp v. Ackerman and Brown, 24 N.J.L. 133, 136; Coykendall v. Robinson, 39 N.J.L. 98; Taylor v. Hutchinson, 61 N.J.L. 440, 39 A. 664. A pleading at law is not rejected as sham unless it is clearly and palpably false. Jaeger v. Naef, 112 N.J.L. 417, 171 A. 166. As courts of law will not try the case on affidavits nor allow the pleading to be disregarded, if there is any reasonable probability of its truth (Walter v. Walter and Smith, 35 N.J.L. 262), so likewise this court will not undertake to determine the disputable credibility of divergent and contradictory proofs submitted by means of affidavits. Cf. Camden Trust Co. v. Handle, 126 N.J.Eq. 214, 8 A.2d 313. "Where the hearing is limited to the submission of ex parte affidavits, the manifestation in the affidavits of bona fides and of a supporting background of fact must sometimes, in order to guard against injustice, be deemed sufficient to carry the defense over to a time when the testimony shall be orally given and the rights of subpoena and of cross-examination may be exercised." Datz v. Barry, 115 N.J.Eq. 84, 87, 169 A. 685, 686.

Turning now to the answer filed in the present cause, it is observed that paragraph 2 denies that only $100 has been paid in reduction of the principal of the mortgage and denies that the sum of $2,900 with interest is due on the complainants' bond and mortgage. Paragraph 3 avers that $300 has been paid by the defendants on account of the principal of the mortgage. The defendants are obligors on the bond as well as owners of the mortgaged premises and liable for a possible deficiency which may arise on foreclosure sale, and they are assuredly entitled to controvert the amount alleged to be due on the bond and mortgage. Murray v. Pearce, 95 N.J.L. 104, 112 A. 314; Vanderbilt v. Brunton Piano Co., 111 N.J.L. 596, 169 A. 177, 89 A.L.R. 1080; cf. Midland Corp. v. Levy, 118 N.J.Eq. 76, 177 A. 685, affirmed 120 N.J.Eq. 197, 184 A. 516; Montclair Savings Bank v. Sylvester, 122 N.J.Eq. 518, 194 A. 811. These averments of the answer are upheld by affidavits which give them sufficient factual support to withstand the motion to strike them as sham.

Paragraph 5 of the answer is only partially true in fact, and so materially insufficient in its averments of fact as to be frivolous.

It is averred in paragraph 4 of the answer that the complainants are indcebted to one of the defendants, Pellegrino Scarano, in the sum of $1,457.50. This alleged indebtedness to one of the defendants is also the subject of the allegations of the six counts of the counterclaim filed by the defendant, Pellegrino Scarano. The sole ground upon which paragraph 4 of the answer is challenged is that its averments are sham. The affidavits seem to verify the existence of claims by the defendant, Pellegrino Scarano, aggregating the amount stated, but some of such claims are against one and others are against both of the complainants. An examination of the averments of paragraph 4 of the answer in association with the relative counts of the counterclaim of the defendant, Pellegrino Scarano, immediately reveals the defenses actually desired to be interposed. The apparent endeavor is to set off against the alleged mortgage debt certain monetary claims of the one defendant against one and both of the complainants.

The doctrine of set-off is evidently a natural descendant of the doctrine of compensation of the civil law. 24 R.C.L. 801, § 10. The right or remedy of set-off in actions at law" is, of course, the creature of statute. It was unknown at common law according to which mutual debts are distinct and inextinguishable except by actual payment, release or agreement. 57 C.J. 360. Independent of statute, the right of set-off may be said to be of equitable origin and the power to allow a set-off is inherent in a court of equity. Essentially, the doctrine rests upon equitable principles. Haynes, Outlines of Equity, p. 158; Smith's Principles of Equity, 5th Ed., p. 568; Snell's Principles of Equity, 21st Ed., p. 512.

Probably the legislation relative to set-off first adopted in this country was enacted in our State of New Jersey in 1722. The avowed purpose of the enactment of 1722 was to prevent a multiplicity of law suits. Nolin v. Blackwell, 31 N.J.L. 170, 86 Am.Dec. 206. Certainly, one of the basic objects of permitting set-offs was the prevention of circuity of action. Bispham's Principles of Equity, 10th Ed., p. 528, § 327.

Set-off, both at law and in equity, must be understood as the right which exists between two parties, each of whom, under an independent contract, owes an ascertained amount to the other, to set off their respective debts by way of mutual deduction, so that the residue only, after such deduction, shall be recovered. Scammon v. Kimball, 92 U.S. 362, 23 L.Ed. 483, 485. Since the enactment of authoritative statutes for the set-off at law, courts of equity have not had occasion to interfere unless there be some peculiar equity calling for equitable relief. Hewitt v. Kuhl, 25 N.J.Eq. 24; 24 R.C.L. 804, § 13; ...