Opinion
DOCKET NO. A-3531-13T3
09-02-2015
HELEN C. GODBY and MARY HOY AKERSTEN, Plaintiffs-Appellants, v. WELLS FARGO BANK, N.A. Defendant-Respondent, and ESTATE OF JAMES M. DOCHERTY, Defendant.
James F. Villeré, Jr., attorney for appellant. Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel; Molly Q. Campbell, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Sabatino and Guadagno. On appeal from the Superior Court of New Jersey, Chancery Division, Morris County, Docket No. C-30-12. James F. Villeré, Jr., attorney for appellant. Reed Smith, LLP, attorneys for respondent (Henry F. Reichner, of counsel; Molly Q. Campbell, on the brief). PER CURIAM
Plaintiffs, Helen C. Godby and her now-deceased sister Mary Hoy Akersten, appealed the trial court's orders dated February 26, 2014 denying their motion for summary judgment and granting defendant Wells Fargo Bank, N.A. ("Wells Fargo") its cross-motion for summary judgment dismissing plaintiffs' complaint seeking to vacate a mortgage lien held by Wells Fargo. We affirm.
This matter concerns a two-unit residential property located in Morristown. Plaintiffs and James Docherty (who was then Godby's husband) jointly acquired the property in 1986.
It is undisputed that in April 2002, plaintiffs and Mr. Docherty took out a prime equity line of credit for $50,000, secured by a mortgage recorded against the property ("the 2002 Mortgage"). Docherty was an attorney, as is Godby.
Plaintiffs alleged that Docherty, who was then dealing with various personal difficulties including alcohol abuse, thereafter engaged in several transactions concerning the line of credit without their knowledge or consent. According to plaintiffs, in 2003 Docherty increased the line of credit to $70,000 and modified the 2002 Mortgage accordingly. They claim that Docherty forged their signatures on the related documents. Plaintiffs further contend that in June 2006, Docherty refinanced the line of credit, replacing it with a new line of credit for $250,000, secured by another mortgage recorded against the Property (the "2006 Mortgage"). Plaintiffs similarly allege that Docherty forged their signatures on the 2006 Mortgage documents.
The 2006 Mortgage discharged and satisfied the 2002 Mortgage. Payments continued to be made on the 2006 Mortgage for several years.
By December 2008, plaintiffs had discovered the 2006 Mortgage and that Docherty had forged their signatures on it. Godby discussed the situation with Akersten, who apparently deferred to Godby's advice and left the situation to her to address.
Concerned that her husband Docherty could be prosecuted or disbarred for his forgeries, Godby did not report his forgeries to Wells Fargo or the authorities. Instead, she made her own periodic payments on the mortgage after Docherty conveyed his interest in the property to Godby by a quitclaim deed in January 2009. She did so for a period of approximately two-and-a-half years through September 2011, by which point it was clear that Docherty was never going to be able to work again.
Docherty took his own life in October 2011. He left a signed statement admitting that he had forged the signatures of Godby and Akersten on the 2006 Mortgage. According to plaintiffs, they no longer reside at the property, which is now leased to tenants.
Although Docherty's estate was named as a co-defendant in plaintiffs' complaint, the estate never responded to the complaint and is not participating in this appeal. --------
Less than a year after Docherty's death, plaintiffs filed a complaint in the Chancery Division seeking to quiet title and obtain a declaratory judgment that Wells Fargo's lien against the premises was null and void because of the forgeries. Although it did not refute that the signatures of plaintiffs had been forged, the bank maintained that its lien associated with the 2006 Mortgage is valid.
After the depositions of Godby and Akersten were conducted, both sides moved for summary judgment as to the validity or non-validity of the bank's mortgage lien. The motion judge agreed with Wells Fargo that, despite the forged signatures, the bank's lien on the property remained valid.
In his written statement of reasons, dated February 26, 2014, the motion judge, Hon. Stephan C. Hansbury, noted that the bank "had every reason[] to believe [that the plaintiffs' notarized signatures] were properly executed when it advanced the loan money" on the 2006 Mortgage. The judge also found instructive Freda v. Commercial Trust Company, 118 N.J. 36 (1990), an opinion that we construed in Sagi v. Sagi, 386 N.J. Super. 517, 526 (App. Div. 2006), to support the proposition that "where an innocent bank granted a mortgage on realty based on the husband's forgery of the wife's signature, the bank's claim would not be defeated by a subsequent transfer of the realty to the wife as equitable distribution in a divorce proceeding." Judge Hansbury recognized that although the present facts are not identical to those in Freda, the general principles set forth in that case supported the validity of the bank's lien. Judge Hansbury took pains, however, to make explicit that Wells Fargo "does not seek collection as to the plaintiffs," confining his determination to a declaration that the 2006 Mortgage "remains a valid lien against the property."
On appeal, plaintiffs argue that the trial court misapplied the law and reached an inequitable outcome in light of the decedent's acts of forgery. They insist that the forged documents are null and void, and that Godby's payments after discovering the forgeries did not operate as a ratification of the mortgage. Plaintiffs also contend that the 2011 quitclaim deed from Docherty to Godby did not comprise an act of ratification or enable the mortgage lien to attach to the entire property. We review these legal issues arising out of the trial court's rulings on summary judgment de novo. Town of Kearny v. Brandt, 214 N.J. 76, 92 (2013).
Having considered these and other various contentions of plaintiffs in their brief, we affirm the trial court's dismissal of their quiet title action, substantially for the reasons articulated by Judge Hansbury. Although we appreciate that plaintiffs were placed in a difficult situation upon the discovery of Docherty's fraudulent acts, we agree with the trial court that the lien on the property stemming from the 2006 Mortgage remains valid.
Both plaintiffs received some benefit through the 2006 Mortgage in having their conceded obligations under the 2002 Mortgage, on which payments were due, extinguished. After discovering her husband's defalcations, Godby elected to make payments on the mortgage for over two years, thereby forestalling sooner collection measures by the bank. See Thermo Contracting Corp. v. Bank of N.J., 69 N.J. 352 (1976) (applying principles of ratification to a party's conduct after learning that payments had been made on fraudulently endorsed checks).
Although we agree that Docherty's 2011 quitclaim deed did not affect Akersten's liability, Godby took Docherty's own property interest subject to the recorded mortgage. See N.J.S.A. 46:26A-12; see also Freda, supra, 118 N.J. at 38. Although the circumstances regarding co-plaintiff Akersten are somewhat less compelling, her benefit in having the 2002 Mortgage discharged and her chosen course of inaction after learning of the forgeries in 2009 likewise warrants rejection of her attempt to nullify the mortgage.
In affirming the trial court on this appeal, we underscore that the issues that have been adjudicated are confined to the validity of the 2006 Mortgage. The trial court did not address, nor do we, what possible setoffs or defenses might be interposed if Wells Fargo pursues a collection action. All we decide is that the trial court had a sound basis to conclude that the bank's lien stemming from the 2006 Mortgage is valid.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION