State Mut. Bldg. & Loan Ass'n v. O'Callaghan

• Decision Date: 01 March 1904
• Citation: 67 N.J.E. 103,57 A. 496
• Parties: STATE MUT. BUILDING & LOAN ASS'N v. O'CALLAGHAN et al.
• Court: New Jersey Court of Chancery

57 A. 496

67 N.J.E. 103

STATE MUT. BUILDING & LOAN ASS'N

v. O'CALLAGHAN et al.

Court of Chancery of New Jersey.

March 1, 1904.

Bill to foreclose a mortgage by the State Mutual Building & Loan Association against Edward A. O'Callaghan and others. On petition of defendant O'Callaghan to set aside a sheriff's sale under the mortgage foreclosure. Heard on petition and answer of complainant. Denied.

Edward A. Armstrong, for complainant.

J. R. Bowen, for Goldstein and Fineburg.

Mr. Fiske, for Commercial Trust Company.

Warren Dixon, for Edward A O'Callaghan.

PITNEY, V. C. This matter comes before the court under peculiar and unusual circumstances. The object of the bill is to foreclose a mortgage made by O'Callaghan and wife to complainant, dated November 9, 1900, to secure the payment of $40,000 in one year, with interest, payable monthly. The bill was filed November 2, 1901, and alleged complete default in payment of interest, and also of dues, under complainant's charter and bylaws, in accordance with the terms of the mortgage and the terms of the bond given to secure the same debt Besides the defendant O'Callaghan and his wife, three judgment creditors of O'Callaghan were made parties defendant and duly served with process, and, no answer having been filed, a decree pro confesso was taken December 24, 1901, and notice, under the rule, having been duly given by two of the judgment creditors that they desired to have their judgments passed upon by the master, an order of reference to a master was incorporated in the decree pro confesso. In pursuance of that order the master made a report dated January 8, 1902, by which he found that there was due to the complainant on that day the sum of $45,132.92, which included dues, fines, interest and premiums in arrear to the amount of $8,753.32, less the withdrawal value of stock held by O'Callaghan in complainant's corporation, amounting to $3,620.40, being the full value thereof. He also found that there was due to one Judgment creditor $175.77, and to another $3,328.89, which, after adding costs of $155.33, made a total incumbrance of $48,792.91, with interest from January 8, 1902, besides sheriff's execution fees. Upon that report final decree was made January 18, 1902, and execution issued accordingly to the sheriff of Hudson county. He duly advertised the property for sale on March 20, 1902, at a place specified. At that time and place the defendant O'Callaghan appeared with his counsel, and at his request the sheriff adjourned the sale for one week to March 27th. On that day the defendant O'Calla ghan and his counsel again appeared, and pro cured an adjournment from week to week for four weeks to April 24th. On April 21, 1902, counsel for defendant O'Callaghan presented to me a petition, in which he set up briefly the proceedings in the cause, and in which he asserted that the decree was erroneous and oppressive "in that the amount of the interest due, together with the principal, from November 9, 1900, less the amount of $000, paid by your petitioner thereon, would be the sum of $2,000 only, and that the decree should have been for the sum of $42,155.33, principal, interest and costs." The prayer was that the decree might be opened, and that he might have such relief in the premises as equity and justice require, and all proceedings under the fieri facias be stayed until the further order of the court Annexed to that petition was an affidavit by Mr. O'Callaghan, stating "that there is due on said bond and mortgage for principal and interest as aforesaid on January 8, 1902, the sum of $42,000." That petition was sworn to on April 15, 1902, and an order was prepared to be presented with the petition to a vice chancellor, which order bears date April 17, 1902, and was in fact on or shortly after that date presented to a vice chancellor, who declined to advise an order thereon. On the presentation of that petition to mo, and not being informed of the fact that the petition had been refused by another judge, and failing to observe the date wnitten in the order, I advised an order returnable on Monday, April 28, 1902, calling on the complainant to show cause why the decree should not be opened, and ordered that all proceedings thereunder be stayed until the further order of the court, and that the sheriff adjourn the sale from week to week until the further order of the court. The hearing on that order was adjourned by consent to May 22d, and at that hearing I was informed for the first time that there were defendants who had decrees in their favor who had not been, as I recollect brought into the bearing on the present petition by notice or otherwise, and that the sale had been adjourned for nine weeks. I also learned that the amount found due by the master was actually due upon the bond executed by the defendant, and which was mentioned in the mortgage, but that the defendant claimed that certain fines, premiums, and monthly payments on stock which were covered by the bond were not specifically included in the verbiage of the mortgage. It was also stated and admitted by counsel that the premises covered by the mortgage were what is known as "tenement house property," bringing in a large rent and that the defendant was in possession, receiving the rents and profits. I asked the counsel of the defendant the petitioner herein, if he was willing that a receiver should be appointed at once to take the rents and profits pending the proceedings before the master to restate the account and ascertain the amount due. This he positively declined, whereupon, being of the opinion that, inasmuch as the petitioner admitted that there was $42,000 due upon the mortgage on January 8th, which, with interest up to the time when the sale could take place and the deed be delivered, would be at least $1,000 more, besides costs and sheriff's execution fees, and inasmuch as the judgment creditors clearly, by the practice of this court were entitled to and had not received notice of the present proceedings, and the largest one of them, the Second National Bank of Jersey City, was a strong institution, with a considerable sum of money at stake, and entirely able to take care of itself, and that it would probably bid the property up to its full value, and that complainant would naturally feel inclined to bid it up to the amount of its decree, it would be unfair and inequitable, not to say unlawful, to stay the sale. Therefore I discharged the rule, but with my own hand inserted in the order of discharge the words, "Without prejudice to defendant's right to renew the application after the sale of the premises."

Of course, it was within the power of the court to control the disposition of the proceeds of the sale, and on the (as it now ap pears, erroneous) view I then took of the rights of the parties and the proper mode of enforcing them I should have added an order to the sheriff to withhold enough of the proceeds of the sale to cover the amount in dispute. The premises were sold May 29, 1902, to Messrs. Goldstein and Fineburg for $40,505. The sale was duly reported and confirmed without objection on June 9, 1902, and the deed was delivered to Messrs. Goldstein and Fineburg, and they paid the consideratin money, and in aid of such payment obtained a loan from the Commercial Trust Company, which is now a mortgagee of the premises. The amount paid and bid was some $362.60 less that the amount duo the complainant by the decree at the date of the delivery of the deed. No evidence wan offered before me on the hearing of the preset matter to show that the property did not bring its full value at the sale. If defendant after the sale, had pursued the remedy reserved by him by the order of May 22d, and had made prompt application to the court, an inquiry would have been made into the correctness of the master's report, and any error found therein corrected, and the amount which the proceeds of the sale exceeded the amount really due the complainant would have been applied to the payment of the junior incumbrances, and, if it exceeded the amount due thereon, would have been paid as surplus money to the petitioner. There was ample time to arrest the purchase money in the hands of the sheriff. (It was admitted by his counsel that he paid no attention to and did not attend the sale, and gave no notice thereat of his appeal.) The defendant, however, who is an attorney of the Supreme Court, was not advised to take that course but on May 36th, appealed from the order of May 22d to the Court of Errors and Appeals. His notice of appeal is as follows: "The defendant Edward A. O'Callaghau hereby appeals from an order made on the 22d day of May, 1902, discharging an order to show cause why the final decree entered in this cause should not be opened, and from the whole and every part thereof. And the said defendant hereby appeals from so much of the final decree made in this court in the above-stated cause as declares that there is due to the complainant on the said mortgage the sum of $45,132.92, and directing sale of said property to realize said amount, to the Court of Errors and Appeals in the last resort in all causes." The petition of appeal is to the same effect. After the hearing of that appeal the Court of Errors and Appeals entered a decree as follows: "It is thereupon * * * ordered, adjudged, and decreed that the order of the chancellor made on the 22d day of May, 1902 (filed May 23, 1902), discharging the order to show cause returnable on the 28th day of April, 1902, be, and the same hereby is, in all parts reversed, and that the record and proceedings be remitted to the Court of Chancery, to be therein proceeded on according to law and the practice of said court." Thus it will be seen that, though the final decree was brought directly before the Court of Errors and Appeals for review, it was not disturbed by that court.

After the entry of this decree of reversal the petitioner moved, upon...