Opinion
08-09-1938
SCHEERER et al. v. LIPPMAN & LOWY, Inc., et al.
Harry T. Davimos, of Harrison, for the defendant-exceptant Leonore Davimos. Hood, Lafferty & Campbell, of Newark, for complainant.
Suit to foreclose a mortgage by Paul R. Scheerer and another as trustees, and Lois Scheerer against Lippman & Lowy, Incorporated, and others, and Leonore Davimos, executrix, etc., wherein the master reported the sum of $40,284.50 to be due on the bond and mortgage. On exception of Leonore Davimos, executrix, etc., to the master's report.
Exception overruled. Affirmed 4 A.2d 273.
Harry T. Davimos, of Harrison, for the defendant-exceptant Leonore Davimos.
Hood, Lafferty & Campbell, of Newark, for complainant.
BERRY, Vice Chancellor.
The bill is to foreclose a mortgage given by the defendant Lippman & Lowy, Inc., to the Fidelity Union Trust Company on February 13, 1924. Louis Lippman, exceptant's decedent, and Harry P. Lowy joined in executing the bond of the mortgagor. The mortgage was in the sum of $33,000, payable in equal instalments of $1,000 each in each of the years following its execution to and including 1928, and the balance of principal with interest at six per cent per annum was payable on February 13th, 1929. The exceptant filed an answer alleging that her decedent was merely a surety on the bond and that the surety had been released by an extension of the due date of the bond and mortgage and a modification of the terms of payment, without the consent or approval of the surety. It is claimed that there were three extensions of the bond and mortgage, any one of which would have released the surety from his obligation on the bond. On motion to strike the answer, the motion was denied but the suit permitted to proceed to decree and sale, reserving the defenses raised by the answer in the event of a deficiency on the bond upon foreclosure sale. The masterreported the sum of $40,284.50 to be due on the bond and mortgage. The exceptant claims that the true amount due was $36,672, alleging that the master erroneously figured the interest at the six per cent. rate specified in the mortgage rather than the reduced rate fixed by the several alleged agreements or extensions. It appears that in 1933 the mortgage was in default and the mortgagee was about to foreclose it. It agreed, however, to a temporary reduction of the interest to 5% upon condition that the mortgagor should pay arrears of taxes and arrears of interest at the reduced rate, and the mortgagee agreed to withhold foreclosure of the mortgage pending such payment. In 1936, the mortgagee again agreed to a temporary reduction of interest to accrue to four per cent. and to accept past due interest at the rate of three per cent. and to hold in abeyance, pending such payments, the foreclosure proceedings which had then been instituted. In the correspondence which was carried on between the mortgagor and the mortgagee, the mortgagee expressly stipulated that no extension of the bond and mortgage was involved. It appears that all that the mortgagee did was to agree to temporarily reduce the interest which the mortgagor was already obligated to pay and that the agreement, so far as the mortgagor was concerned, was without consideration. All that the mortgagor agreed to do, in consideration of the proposed reduction in the rate of interest and the postponement of the foreclosure proceedings, it was already obligated to do under its mortgage. Under the circumstances, the agreement not having been carried out by the mortgagor, it cannot be enforced in this proceeding. The mortgagor having defaulted, the mortgagee is entitled to proceed on the original contract, which it has done. The amount found to be due by the master is based upon the agreed rate of interest fixed in the mortgage. The exception is overruled. There having been no extension of the due date of the bond and mortgage for any definite period, it is clear that the exceptant's liability on the bond has not been released. Haynes Auto Repair Co. v. Wheels, Inc., 115 N.J.L. 447, 180 A. 836; Levine v. Blumenthal, 117 N.J.L. 426, 189 A. 54. Burack v. Mayers, 122 N.J.Eq. 5, 191 A. 841. I will advise an order accordingly.