Opinion
06-11-1930
STEEBER et al v. RESH et al.
Riker & Riker, of Newark, for defendant Resh. Precker & Precker, of Newark, for defendant Wendorf.
Syllabus by the Court.
Mortgage obtained by false representations of the agent of the mortgagee held unenforceable and ordered discharged.
Mortgage foreclosure suit by John C. Steeber and others against David T. Resh and others, in which named defendant and others filed counterclaim.
Counterclaims that mortgage be discharged sustained.
Riker & Riker, of Newark, for defendant Resh.
Precker & Precker, of Newark, for defendant Wendorf.
BACKES, Vice Chancellor.
William Resh borrowed $13,500 of Wendorf on mortgage covering his one-half interest in property on Clinton street, Newark. Resh owned a $5,000 mortgage which he assigned as further security. The value of this mortgage was questioned and to insure its payment, Resh's father, David, joined in the $13,500 mortgage and included therein his property on Hillside avenue, Newark, upon the agreement that if and when the $5,000 mortgage was paid his property should be discharged. The mortgage has been paid. William's interest in the Clinton street property was sold in foreclosure, under a prior mortgage, and the surplus yielded Wendorf $5,000 plus, so that there is now due to him approximately $3,500 and interest. David conveyed the Hillside avenue property to William's wife. The complainant's bill is to foreclose a prior mortgage on the Hillside avenue property, and David and William's wife counter-claimed against Wendorf to discharge the lien of his mortgage.
William negotiated the loan with one Shapiro, Wendorf's son-in-law, then a lawyer, now disbarred and in prison. Wendorf, upon the representation of Shapiro that he had a call for a loan on good security, intrusted the money to him to make the loan and get the security. He knew neither the borrower nor the security, nor concerned himself with either, but relied upon Shapiro and left the Investment entirely to him. Shapiro arranged the terms of the loan, and that the lien of mortgage on David's property should be collateral to the $5,000 mortgage, but intentionally omitted the defeasance in that respect from the $13,500 mortgage and falsely represented that it was incorporated. Assured and believing, the elder Resh executed the mortgage without reading it. That the mortgage was obtained by fraudulent imposition is established beyond question. That it cannot be enforced is settled law. Dunston Co. v. Bo rgo, 84 N. J. Law, 03, 878 L2thoi Litho. Co. v. Borgo, 84 N. J. Law, 623, 87 A. 334. Shapiro was Wendorf's alter ego. His fraud must be imputed to Wendorf. Reitman v. Fiorillo, 76 N. J. Law, 816, 72 A. 74.
The counterclaim that the mortgage be discharged as to the property involved is sustained.