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St. Mary Hospital v. Scardigno

A-6694-99T2 (N.J. Super. App. Div. 2001) (Unpublished)

MORTGAGES—A reasonable inference of payment may be drawn from the passage of a long time since maturity of a note without any collection efforts or demands.

About fourteen years after final payment on a five year mortgage loan was due, the personal representative of two estates that were successors to the mortgagee alleged that the mortgage remained in full force and that the lower court should not have ordered cancellation of the mortgage. According to the Court, “[t]here are at least two ways to obtain cancellation of a mortgage of record, (1) ‘satisfactory proof’ of payment; or (2) ‘special circumstances’ as to satisfy the court that the mortgagees have no further interest in the mortgage.” According to the lower court, there were three mortgagees, two of whom had died and whose estates had not listed the mortgage as an asset. Further, the living mortgagee asserted that she had no knowledge of the subject mortgage. In addition, she did not assert that she was owed any money or that the mortgage was in default. The mortgagor asserted that there had been no attempt to collect on the mortgage for fourteen years and there was no evidence to the contrary. In addition, according to the Court, there was competent proof of payment, specifically a certified, audited financial report of the mortgagor’s financial records, which essentially “documented full payment on a thirteen percent mortgage payable ... “and which the Court considered as an admissible business record. It was created in the regular course of the mortgagor’s business, prepared contemporaneously with an accounting firm’s order to review of the mortgagor’s books and records, conducted under generally accepted accounting principles, and under circumstances indicative of trustworthiness. As a consequence, the Court held that there were “special circumstances” in this case including the absence of any proof from the mortgagees that the mortgage was unpaid, the absence of any collection efforts, and the absence of the mortgage being carried as an asset of the deceased mortgagees’ estates. Lastly, the Court stated, “[i]ndeed, a reasonable inference of payment may be drawn from the passage of fourteen years since the maturity date without any collection efforts or demands ... .”

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