 |
 |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|
|
|
|
Cromartie v. Carteret Sav. & Loan11/4/1994
The opinion of the court was delivered by
BROCHIN, J.A.D.
The subject of this appeal is a mortgagee's liability for failing to pay premiums for hazard insurance on the mortgaged property with funds paid by the mortgagor and escrowed for that purpose.
In 1970, plaintiffs Ruby and Anthony Cromartie purchased a house in Newark, New Jersey for $26,750. To finance their purchase, they borrowed $25,000 from J.I. Kislak Mortgage Corporation, securing their loan by an F.H.A. insured first mortgage on the property. Their mortgagee assigned the mortgage to defendant Carteret Savings and Loan Association. Carteret, although continuing to service the mortgage, thereafter assigned it to Federal Home Loan Bank of New York.
As required by the mortgage, the Cromarties also purchased fire insurance from Allstate Insurance Company. They did not introduce their insurance policy into evidence. However, Carteret introduced an Allstate "Deluxe Homeowners Policy" for a one-year period beginning July 7, 1977, which insured the Cromarties and their mortgagee against various risks, including fire damage to the extent of $32,000 for the dwelling, $3,200 for appurtenant private structures, and $16,000 for unscheduled personal property. This 1977 insurance policy was one of the annual renewal policies which replaced their original policy.
The terms of the Cromarties' mortgage required them to make a single monthly payment to the mortgagee each month in an amount which would include a pro rata portion of the annual real estate taxes, assessments and premiums for "policies of fire and other hazard insurance covering the mortgaged property." The mortgage also provided that these payments would be "held by Mortgagee in trust to pay said . . . premiums, taxes and special assessments; and . . . [would] be applied by the mortgagee to the following items in the order set forth: . . . taxes, special assessments, fire, and other hazard insurance premiums."
The Cromarties made the monthly payments due under the mortgage. From 1970 to some time in 1978, the mortgagees paid the taxes on the property to the City of Newark and the hazard insurance premiums to Allstate Insurance Company out of the escrowed funds which they collected from the Cromarties. During that period Carteret, first on its own behalf and then as servicing agent for Federal Home Loan Bank of New York, obtained annual renewal policies from the insurer without any action on the part of plaintiffs. These renewal policies were received and retained by Carteret. However, beginning some time in 1978, although Carteret continued to collect the monthly sums to pay the insurance premiums, it stopped paying them to Allstate Insurance Company. Consequently, the fire insurance on plaintiffs' property lapsed. Carteret did not report the termination of coverage to plaintiffs and, in fact, continued to send them periodic statements of their escrow account. These statements reflected the amounts which Carteret collected from plaintiffs to pay premiums. Since the statements did not show an accumulation of undisbursed funds in the escrow account, they implied that Carteret was continuing to pay premiums to maintain hazard insurance on the property.
On November 10, 1983, plaintiffs' house was so severely damaged by fire that it became uninhabitable. Mrs. Cromartie reported the fire to Allstate Insurance Company and then to Carteret. Allstate responded by informing her, for the first time, that her fire insurance policy had lapsed. Veronica Errico, who was then the manager in charge of Carteret's insurance department, told Mrs. Cromartie that Allstate was at fault for terminating the policy and that Carteret would ta
Page 1 2 3 4 5 6 7 8 9 10 New Jersey Personal Injury Attorneys
Personal Injury Lawyers
|
| |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|