Vander Weert v. Vander Weert

• Decision Date: 25 September 1997
• Citation: 304 N.J.Super. 339,700 A.2d 894
• Parties: Wendy VANDER WEERT, Plaintiff-Respondent, v. Jeffrey VANDER WEERT, Defendant-Respondent, v. COHN LIFLAND PEARLMAN HERRMANN & KNOPF, ESQS., Intervenor-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 339

304 N.J.Super. 339

700 A.2d 894

Wendy VANDER WEERT, Plaintiff-Respondent, v. Jeffrey VANDER WEERT, Defendant-Respondent, v. COHN LIFLAND PEARLMAN HERRMANN & KNOPF, ESQS., Intervenor-Appellant.

Superior Court of New Jersey Appellate Division.

Argued Sept. 9, 1997.

Decided Sept. 25, 1997.

Albert L. Cohn, for intervenor-appellant (Cohn Lifland Pearlman Herrmann & Knopf, attorneys; Mr. Cohn, of counsel and on the brief with Audra DePaolo).

Marvin H. Sunshine, River Edge, for plaintiff-respondent Wendy Vander Weert (Sunshine, Atkins, Minassian & Tafuri, attorneys; Stephen A. Gallo, on the brief).

Defendant-respondent Jeffrey Vander Weert did not file a brief.

Before Judges PRESSLER, WALLACE and CARCHMAN.

PRESSLER, P.J.A.D.

Appellant Cohn Lifland Pearlman Herrmann & Knopf, Esqs. (Cohn Lifland), a New Jersey law firm, appeals from the denial of its post-judgment motion to intervene in this divorce case. We reverse the order denying the motion, and since the merits of appellant's legal position and claim for relief have been fully argued, we have opted to decide the question raised. We now dismiss appellant's application for relief as without merit.

The issue before us is the extent of the interest in the marital residence obtained by an attorney for one of the parties who, during the pendency of a divorce action and in order to secure payment of his legal fees, takes from his client a mortgage on property owned by the parties as tenants by the entirety. We hold that in these circumstances the lien created by the mortgage extends only to that portion of the property, if any, awarded to the attorney's client by way of equitable distribution.

Appellant was retained by defendant Jeffrey Vander Weert in July 1992 to represent him in the divorce action brought against him by plaintiff Wendy Vander Weert. As security for appellant's fees, defendant, in October 1992, gave appellant a mortgage on the marital residence owned by him and plaintiff as tenants by the entirety evidencing a debt of $16,363.87 and "such other sums as become due Lender subsequent to September 29, 1992." Plaintiff did not execute the mortgage documents, which did not, in express terms, limit the lien to defendant's interest in the property. Defendant was represented in the mortgage transaction by other counsel. The mortgage was promptly recorded.

When plaintiff learned of defendant's unilateral execution of the mortgage and its recording, she brought a motion seeking its vacation and discharge. By order entered in September 1993, the motion was denied "without prejudice to plaintiff's right to collection of all arrearages and monies due her pursuant to any Orders, decrees and judgments of this Court; the said Mortgage being preserved only as to defendant's interest, if any." Appellant continued to represent defendant until January 1994 when other counsel was substituted. An ensuing fee dispute between appellant and defendant was ultimately resolved by fee arbitration, which awarded appellant a fee of $124,596.13. In August 1995, that sum was reduced to judgment.

Meanwhile, the contested divorce trial had concluded in February 1995. The court rendered its oral decision in June 1996, at the same time entering a dual judgment of divorce, but leaving all its other dispositions respecting custody, support and equitable distribution to later memorialization. Finally, a conforming judgment, denominated "Amended Judgement of Divorce" to account for the separate June 1996 dual divorce decree, was entered in September 1996. With respect to the marital residence, the divorce judgment directed its sale, specified the parties' joint obligations by which the gross proceeds of sale were to be reduced, and granted each party fifty percent of the net proceeds, providing, however, that defendant's share was to be further reduced by credits owing from him to plaintiff for counsel fees, equitable distribution of other property, unreimbursed medical costs and a joint obligation to plaintiff's father. That portion of the judgment further provided, in no uncertain terms, that these credits were to be paid by defendant to plaintiff "before any liens imposed by the defendant's lawyers against him are satisfied from defendant's share."

Upon being advised of the provisions of the amended judgment of divorce, appellant brought this motion to intervene in order to challenge its express limitation on the scope of the mortgage. As we understand the appellant's assertion both in the trial court and in this court, it argues that its lien on defendant's fifty-percent share of the net proceeds of sale had priority over the adjudicated credits due from defendant to plaintiff. We reject that contention as entirely groundless.

To begin with, appellant does not challenge that provision of the September 1993 order limiting the efficacy of its lien to defendant's interest and defining that interest as what it would ultimately be adjudicated to be after according plaintiff the benefit of her interspousal entitlements from him--that is, defendant's share, if any, awarded him by way of equitable distribution. Indeed, appellant conceded at oral argument that when it took the mortgage from defendant, it understood that it was taking defendant's interest subject to prospective equitable distribution. Thus, it expressly conceded that had the court, by way of equitable distribution, awarded defendant, for example, only twenty percent of the net proceeds of sale, its lien would have been limited to that amount. In light of that concession, its argument seems to be that once the judge declared that the net proceeds would be equally split between the parties, its lien immediately attached to that fifty percent and, consequently, had priority over the award of credits to plaintiff out of defendant's share.

We reject that argument as entirely sophistical. Obviously, the trial court has a number of techniques available to it for distributing the marital assets between the parties. Adjusting the percentages of prospective ownership in a given asset to account for interspousal obligations, which the court could have done, is not conceptually different from an equal division subject to credits, the technique the court chose to employ here. The point, of course, is that once appellant has conceded that its lien attaches only to defendant's interest as equitably distributed, then, as a matter of logical inevitability, it must be deemed also to have conceded that it so attaches irrespective of the particular equitable distribution scheme fashioned by the court.

Although we are persuaded that appellant's concession is dispositive of the appeal before us, there are troublesome issues raised by this appeal that we are constrained to address. We do not, however, comment on the general propriety of a mortgage given by a client to an attorney to secure fees since we are aware that that subject is presently under consideration by a committee appointed by the Supreme Court.

We assume, therefore, for analytical purposes that the acceptance of a mortgage by an attorney to secure fees is not presently interdicted. The question then is to define the interest in the property that is represented by a mortgage on a tenancy by the entirety executed by only one of the spouses. The difficulty, of course, lies in the nature of a tenancy by the entirety in the context of divorce proceedings, requiring us to consider the extent to which one of the tenants by the entirety may unilaterally take action in contemplation of or pending the divorce proceedings that impairs the ability of the trial judge to deal with that property as a distributable marital asset.

We note at the outset that the problem does not arise in respect of tenancies by the entirety created after the effective date of N.J.S.A. 46:3-17.4, approved January 5, 1988, effective ninety days thereafter, and expressly applicable to tenancies by the entirety created on or after the effective date. L. 1987, c. 357, § 10. N.J.S.A. 46:3-17.4 prohibits either spouse from severing, alienating or otherwise affecting their respective interests in the tenancy during the marriage or upon separation without the written consent of the other. See Freda v. Commercial Trust Co., 118 N.J. 36, 40, 570 A.2d 409 (1990). We would assume that prospective mortgagees, who obviously have the capacity to determine by a title search if a proposed mortgage violates the statute, are chargeable with the consequences of this statutory prohibition.

As Freda, however, held, tenancies by the entirety created prior to the statute's effective date are not entitled to the statutory protection, and, accordingly, common-law and otherwise applicable principles govern the consequences of a unilateral encumbrance by one of the tenants.

The nature of a tenancy by the entirety is well established. In sum, it is, during the marriage, essentially an undivided tenancy in common for the joint lives of the spouses subject to the right of survivorship of each. Since the right of survivorship is unilaterally alienable, it is that right, together with the life estate for joint lives, that is subject to execution by a judgment creditor of one but not both of the spouses. In other words, the judgment creditor of the debtor spouse becomes a tenant in common with the non-debtor spouse during the joint lives of the spouses subject to the non-debtor spouse's right of survivorship. See generally King v. Greene, 30 N.J. 395, 412, 153 A.2d 49 (1959). It is also well settled that if the subject of the tenancy by the entirety is the marital residence, it is not partible at the behest of the judgment creditor of one spouse. And although the judgment creditor may be entitled to an accounting of rents during the non-debtor spouse's exclusive occupancy, that right must be offset by a fair contribution to the mortgage, tax, insurance, and maintenance expenses incurred by the non-debtor...