The opinion
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2601-10T3
JPMORGAN CHASE BANK, N.A.,
Plaintiff-Respondent,
v.
JEFFCO CINNAMINSON CORPORATION
D/B/A STAN ESPOSITO FINE CARS
and PAUL T. ANDREWS,
Defendants-Appellants,
and
ALFRED SCIUBBA,
Defendant.
_____________________________________
Submitted March 7, 2012 - Decided March 27, 2012
Before Judges J. N. Harris and Haas.
On appeal from the Superior Court of New
Jersey, Law Division, Camden County, Docket
No. L-002840-09.
Marchetti Law, P.C., attorneys for
appellants (Anthony L. Marchetti, Jr., on
the brief).
Maselli Warren, P.C., attorneys for
respondent JPMorgan Chase Bank, N.A. (Paul
J. Maselli, of counsel and on the brief).
PER CURIAM
This appeal concerns a national bank's alleged imperfect
release of security interests in two high performance
automobiles —— a Ford GT40 (the Ford GT) and a Ferrari
Scaglietti (the Ferrari) —— held as collateral, without first
waiting for two payoff checks to clear. Plaintiff JPMorgan
Chase Bank, N.A. (JPMorgan) irreversibly released its liens and
returned the title papers for the automobiles to the owner's
consignee, only to learn just days later that both checks were
dishonored for insufficient funds. Defendants Jeffco
Cinnaminson Corporation (Jeffco) and Paul T. Andrews claim that
JPMorgan's precipitous conduct resulted in the impairment of
collateral, which requires the discharge of their obligations to
the bank.
Jeffco and Andrews appeal from the December 10, 2010
judgment entered in favor of JPMorgan for $305,215.33 plus
$40,822.52 in reallocated attorneys fees and costs. We reverse
and remand for further proceedings.
I.
A.
We begin with familiar principles of law:
Our review of the meaning of a statute is de
novo, and we owe no deference to the
interpretative conclusions reached by the
trial court . . . . Zabilowicz v. Kelsey,
2 A-2601-10T3
200 N.J. 507, 512-13 (2009); see also
Manalapan Realty, L.P. v. Twp. Comm., 140
N.J. 366, 378 (1995). In determining
whether summary judgment was properly
granted based on the record, we apply the
same standard governing the trial court --
we view the evidence in the light most
favorable to the non-moving party. See
Henry v. N.J. Dep’t of Human Servs., 204
N.J. 320, 330 (2010); Brill v. Guardian Life
Ins. Co. of Am., 142 N.J. 520, 523 (1995);
see also R. 4:46-2(c).
[Wilson ex rel. Manzano v. City of Jersey
City, ___ N.J. ___, ___ (2012)(slip op. at
5).]
Here, the Law Division granted summary judgment against Jeffco
and Andrews, the non-moving parties. With these principles in
mind, we turn to the facts, viewing them in the light most
favorable to those defendants.
B.
In late 2005, Jeffco and Andrews applied to JPMorgan,
through the Jim Golden Ford-Lincoln-Mercury car dealership, for
a loan to pay for Jeffco's acquisition of the Ford GT. On
December 6, 2005, Jeffco and Andrews signed a document entitled,
"Promissory Note and Security Agreement – Consumer Paper," in
favor of JPMorgan in the amount of $177,373, which referred to
Andrews as a "co-borrower." In a separate disclosure entitled,
"Cosigner Notice," Andrews was advised that he was "being asked
to guarantee [the] debt," and he signed the document above a
line labeled, "Cosigner's Signature."
3 A-2601-10T3
In July 2006, a similar transaction occurred involving the
Ferrari. On July 27, 2006, Jeffco and Andrews signed a document
entitled, "New Jersey Retail Installment Contract," in favor of
Ferrari Maserati of Central N.J. agreeing, as "Buyer and Co-
Buyer," to pay a total of $255,507 for the Ferrari. Andrews
again signed a separate "Cosigner Notice," which contained the
identical boilerplate language as the December 2005 disclosure.
The retail installment sale contract evidenced by these
instruments was assigned to JPMorgan.
In due course, both automobiles were entrusted to
automobile dealer Alfred Sciubba for the purpose of finding a
buyer for each vehicle. Andrews and Sciubba had known each
other for several years and previously engaged in similar
arrangements. The record does not contain any writings
evidencing the nature of the bailment and it appears that
Sciubba and Andrews transacted business mostly through oral
handshake agreements. Sciubba owned and operated a specialty
car business at a number of locations under the trade name Auto
Toy Store, which, among other things, sold motor vehicles on
consignment.
At his deposition, Sciubba testified that he regularly
accepted consignments from Andrews's personal stock of
automobiles, but that the placements of the Ford GT and Ferrari
4 A-2601-10T3
were not true consignments because the vehicles were owned by
Jeffco, and Sciubba claimed to have a part ownership interest in
Jeffco. Andrews disputes this. However, according to Sciubba,
because he was tasked to sell his own automobiles —— albeit
titled in the name of Jeffco —— these were not consignment
transactions, at least as far as he was concerned.
In general, when Sciubba (or his staff) sold a consigned
automobile, it was his responsibility, through the Auto Toy
Store, to obtain clear title for the buyer. If the automobile
had been financed and there was a lien on the title, it was
Sciubba's responsibility to forward the unpaid balance due on
the indebtedness to the creditor, usually a bank or credit
union. In return, the creditor endorsed the lien paid and
returned the title papers to Sciubba, who would then obtain new
title papers and forward them to the buyer. Among the documents
Sciubba required from consignors to facilitate this payoff
process was a power of attorney authorizing the procedure.
In the summer of 2006, a prospective buyer for the Ford GT
emerged. At that time, Sciubba still maintained a Jeffco
checking account and was in possession of some of its blank
checks.1 One of Sciubba's employees prepared and mailed to
1
The record contains documentary evidence suggesting that
Sciubba had transferred his entire interest in Jeffco to Andrews
(continued)
5 A-2601-10T3
JPMorgan a payoff check from the Jeffco account. This employee
also signed Andrews's name to a document entitled,
"Authorization For Payoff" and directed the bank to send the
"lien release" to Jeffco at an address in West Berlin, New
Jersey, which was one of Sciubba's Auto Toy Store locations.
On August 29, 2006, JPMorgan received the check in the
amount of $162,066.51. On September 1, 2006, before waiting to
ensure that the check cleared, JPMorgan endorsed its lien as
paid, and mailed the Ford GT's title papers to the designated
address. Presumably, upon receipt, clear title to the
automobile was delivered to the purchaser.
The Jeffco check, however, never cleared. It was
dishonored due to insufficient funds on September 6, 2006.
Thus, not only did the principal amount of the indebtedness
remain unpaid, but interest on the loan continued to accrue.
Andrews did not learn of these circumstances until a
representative of JPMorgan later called him saying that the bank
wanted a payment for the loan.
The Ferrari transaction took a similar course. After a
purchaser paid for that automobile, a Jeffco check in the amount
of $243,170 was prepared by one of Sciubba's employees and sent
(continued)
in December 2004 and his right to utilize this checking account
eighteen months later was dubious.
6 A-2601-10T3
to JPMorgan on December 15, 2006. JPMorgan received the check
four days later. One day after that, it endorsed the lien as
paid, and mailed the Ferrari's title papers to the West Berlin
address. The check did not clear. It was dishonored on
December 29, 2006, for insufficient funds.
Thus, as far as JPMorgan was concerned, it now held two
unpaid loans in Jeffco's and Andrews's names, both of which were
now unsecured. After Andrews was made aware of this turn of
events, he and Sciubba attempted to resolve their multi-faceted
dispute. Not only were these underlying loans in arrears, but
Andrews had not been paid his appropriate share of the
automobiles' net profits.
In July 2007, Andrews and Sciubba executed an agreement
entitled, "Partial Agreement of Understanding," which provided
that Sciubba would "make complete and timely monthly payments on
any and all amounts due and owing on the . . . Ferrari . . . and
the Ford GT." Sciubba performed these obligations for
approximately one year. In September 2008, supposedly due to
challenging economic conditions, Sciubba closed the Auto Toy
Store and stopped paying the loans. In short order, JPMorgan
commenced this lawsuit to recover the amounts due.
The record is unclear when JPMorgan actually filed its
initial complaint. However, an amended complaint was filed in
7 A-2601-10T3
February 2009, naming Jeffco, Andrews, and Sciubba as
defendants. Jeffco and Andrews defended on the ground, among
others, that because JPMorgan had failed to protect the
collateral, their two loans were discharged. They filed cross-
claims against Sciubba, and also asserted a counterclaim against
JPMorgan claiming negligence in the handling of the collateral.
In mid-2009, JPMorgan and Sciubba settled their part of the
dispute and entered into a stipulation of settlement. This
agreement called for Sciubba to make scheduled payments to
JPMorgan for one year, and then make a balloon payment for the
balance due.
In September 2010, JPMorgan filed a motion for partial
summary judgment. Jeffco and Andrews responded with a cross-
motion for summary judgment. As part of their response and
cross-motion, Jeffco and Andrews submitted Thomas Bonneville's
expert report and opinion. Bonneville opined that JPMorgan's
release of the liens violated financial industry standards and
was contrary to JPMorgan's policies and procedures. Bonneville
stated that not only should the liens not have been released
until JPMorgan could verify that the loans had been paid in full
with good funds, but JPMorgan failed to properly verify that the
documents submitted along with the payoff checks –- the power of
attorney and Authorization For Payoff -– were genuine.
8 A-2601-10T3
Furthermore, Bonneville contended that JPMorgan failed to
properly monitor and manage the Jeffco loan portfolio after the
first payoff check (for the Ford GT) bounced.
In an oral decision, the Law Division recited the mostly
undisputed facts, ultimately holding the following:
My best understanding of the facts here is
that [JPMorgan] implicitly knew that [the
entity transmitting title to the vehicles
was in the business of selling vehicles]
because [it] received a check from Auto Toy
Store, an entity that appeared in all
respects to be a business that was in the
business of selling motor vehicles.
It therefore reasonably concluded, or
should have concluded, that [these]
vehicle[s] had been consigned to an entity
that was in the business of selling motor
vehicles; that the only way that the
vehicles could have reached that location
was through the actions of Mr. Andrews in
allowing the vehicle[s] to be placed into
the stream of commerce through this motor
vehicle dealership; and that in consequence,
to the extent that payment was presented to
the bank, that payment was, from the
dealership, adequate and sufficient to
constitute the basis for the release of
title.
In terms of the release of the title in
each of the two instances to the Auto Toy
Store in connection with the bona fide
purchaser, . . . Andrews and Jeffco can't be
heard to complain about that release because
they set in motion the very facts that led
to the consignment of the vehicle to this
dealership. They can't therefore assert
that they are entitled to the same
protection under [N.J.S.A.] 12A:3-605 where
the bank has impaired their collateral
9 A-2601-10T3
because under Section I of that section,
they created the very circumstance that
produced the basis for the discharge of the
collateral.
. . . .
For those reasons, the Court finds that
the defense that's asserted by the
defendant[s] to the indebtedness is simply
based upon the facts that are acknowledged
by the defendant[s], even where the Court
construes the facts in the light most
favorable to the defendant[s], is not
available to [them] because the defendant[s]
acknowledge[] this knowing consignment of
the vehicle[s] to the Auto Toy Store.
For all of those reasons then, the
Court concludes that the motion for partial
summary judgment by JPMorgan Chase Bank as
against Jeffco and Andrews must be granted.
There was an appropriate and proper and
mandatory release of the collateral in
connection with the sale of [these]
vehicle[s] by an entity appointed by Andrews
acting as the Jeffco principal, that
consigned [these] vehicle[s] for sale -–
which would result in a sale to a bona fide
purchaser who presented fair and reasonable
documentation to the bank in regard to
payment, and therefore there was an
obligation to release the title instrument.
A few weeks later, the court entered a judgment against
Jeffco and Andrews adding approximately $40,000 in attorneys'
fees to the unpaid balance of the loans. This appeal followed
after a default judgment was entered in favor of Jeffco and
Andrews against Sciubba on the cross-claims.
10 A-2601-10T3
II.
The parties have chosen to engage their dispute at the
arcane intersection of Chapters Two (Sales), Three (Negotiable
Instruments), and Nine (Secured Transactions) of New Jersey's
Uniform Commercial Code (the UCC). We are not sanguine that
their legal analyses properly harmonize the disparate purposes
of each chapter of the UCC. First, the parties' arguments about
the statute and the limited decisional law in this state
relating to consignments revolve around situations concerning
priority disputes between buyers and consigners, not, as here,
between secured creditors and consigners. Second, the UCC does
not exclusively control the duties of secured creditors vis-à-
vis the management, control, and release of their liens. See
N.J.S.A. 39:10-10 (providing that when a security agreement
noted on a certificate of ownership has been performed the
secured party shall deliver to the buyer the certificate of
ownership thereto, with proper evidence of satisfaction of the
termination of the security interest). Cf. N.J.S.A. 39:10-9
(noting that its provisions relating to security interests do
not "apply to security interests in motor vehicles which
constitute inventory held for sale, but such interests shall be
subject to chapter 9 of Title 12A of the New Jersey Statutes.").
11 A-2601-10T3
JPMorgan relies upon Martin v. Nager, 192 N.J. Super. 189
(Ch. Div. 1983) and N.J.S.A. 12A:9-320(a) for the proposition
that "the UCC entitles buyers in the ordinary course of business
to take ownership of automobiles without being subject to
liens." In so many words, JPMorgan argues that whenever an
"innocent purchaser" is involved in the acquisition of an
automobile, the rights of a secured lender must almost-
instantaneously (and inexorably) bend to the will of the buyer.
Even if that were nothing more than an exaggerated
overstatement, it is not what occurred in this case, at least
from JPMorgan's vantage point.
JPMorgan justifies the breakneck speed of its lien-
releasing activities based upon the mere appearance of an
alleged good faith purchaser on the scene. However, JPMorgan
had no knowledge about the identity or status of the purchasers
at the time of the futile payoffs. When bank employees received
the first payoff check from Jeffco, with its accompanying
request to release the lien that had allegedly been signed by
Andrews, JPMorgan was neither aware that the Ford GT had, in
fact, been sold, nor was it privy to any other details of the
transaction between the Auto Toy Store and the buyer.
In fact, contrary to the Law Division's conclusion,
JPMorgan could not have "implicitly kn[own] that [the entity
12 A-2601-10T3
transmitting title to the vehicles was in the business of
selling vehicles] because [JPMorgan] received a check from Auto
Toy Store, an entity that appeared in all respects to be a
business that was in the business of selling motor vehicles."
JPMorgan never received a check from the Auto Toy Store.
Instead, the check came from Jeffco, which from the evidence
available at the time was not an entity that was in the business
of selling motor vehicles.2 For all JPMorgan's employees knew,
there was no sale involved at all, and Jeffco simply was
restructuring its liabilities and changing lenders. The UCC
does not require a secured lender to blindly release a lien
without conducting reasonable due diligence, including ensuring
that the proffered payoff is sufficient to extinguish the
outstanding amount due on the loan or there are other sufficient
lawful grounds for freeing the collateral.
Martin does not hold otherwise. In that case, the only
issue that was decided involved the rights of a buyer and seller
of a consigned automobile where the consignee converted the
purchase price and became insolvent. Martin, supra, 192 N.J.
2
The Jeffco checks that Sciubba's employee sent to JPMorgan are
not part of the appellate record. We do not know, for example,
whether those checks contained Jeffco's trade name, Stan
Esposito Fine Cars, which might have been an indication that the
money to pay off each loan came from an automobile dealer. Even
if that were the case, however, it would not have demonstrated
that the buyer was a "bona fide purchaser."
13 A-2601-10T3
Super. at 193. The court did not address the rights of a
secured creditor and did not hold that a lien holder must
endorse the lien paid-in-full before making sure that the loan
is, in fact, paid in full.
N.J.S.A. 12A:9-320(a) also is inapplicable to JPMorgan's
actions. This statute provides, in pertinent part, as follows:
Except as otherwise provided in subsection
(e), a buyer in ordinary course of business,
other than a person buying farm products
from a person engaged in farming operations,
takes free of a security interest created by
the buyer's seller, even if the security
interest is perfected and the buyer knows of
its existence.
[N.J.S.A. 12A:9-320(a)(emphasis added).]
Under N.J.S.A. 12A:9-315(a)(1) and (2), a perfected security
interest continues in collateral upon any disposition, unless an
exception in the UCC applies. N.J.S.A. 12A:9-320(a) is one such
exception because it automatically discontinues the security
interest so that the goods purchased are no longer encumbered by
the lender's security interest. The effect ensures that a buyer
acquires the goods with clear title.
The purpose of N.J.S.A. 12A:9-320(a) is to facilitate sales
transactions between a debtor and its customers. If the
debtor's customers can freely purchase, without having to worry
about security interests, the debtor's cash flow is more likely
14 A-2601-10T3
enhanced by the concomitant ability to pay the indebtedness to
the secured party in a timely fashion.
The security interests in this case were created by Jeffco
and Andrews, not by the Auto Toy Store. The buyers of the Ford
GT and Ferrari were dealing with the Auto Toy Store. Thus,
those buyers would take free of any security interest created by
Auto Toy Store, but not those created by Jeffco and Andrews.
See Ocean Cnty. National Bank v. Palmer, 188 N.J. Super. 509
(App. Div. 1983) (applying former N.J.S.A. 12A:9-307(1), the
source of N.J.S.A. 12A:9-320(a)).
Furthermore, the statute describes nothing about the
secured party's duty to release its perfected security interest
and is silent as to the speed within which that must be
accomplished. In this case, there is no evidence of a need for
a speedy release of JPMorgan's security interests. The record
neither identifies the buyers of the Ford GT and Ferrari nor
discloses their demands for obtaining the paperwork necessary to
comply with the title transfer provisions of the motor vehicle
certificate of ownership law, N.J.S.A. 39:10-1 to -25. Had
JPMorgan waited a few more business days before robotically
processing the lien releases, its discovery of the checks'
dishonor might have enabled Jeffco and Andrews to prevent the
conversion of the purchase proceeds. We, of course, cannot know
15 A-2601-10T3
the outcome of this hypothetical scenario. However, in light of
Bonneville's expert opinions, we cannot say that Jeffco and
Andrews would have inevitably suffered the same harm. That
determination is for the trier of fact to make.
JPMorgan further argues that Jeffco and Andrews are co-
makers of the instruments that evidence the loans related to the
Ford GT and Ferrari. Accordingly, it claims that they are not
entitled to raise the defense of impairment of collateral under
N.J.S.A. 12A:3-605, because such defense is available only to
accommodation parties (see N.J.S.A. 12A:3-419), not to makers
(see N.J.S.A. 12A:3-103(a)(5)) of instruments. The UCC's
impairment of collateral section, in pertinent part, provides as
follows:
e. If the obligation of a party to pay an
instrument is secured by an interest in
collateral and a person entitled to enforce
the instrument impairs the value of the
interest in collateral, the obligation of an
indorser or accommodation party having a
right of recourse against the obligor is
discharged to the extent of the impairment.
The value of an interest in collateral is
impaired to the extent the value of the
interest is reduced to an amount less than
the amount of the right of recourse of the
party asserting discharge, or the reduction
in value of the interest causes an increase
in the amount by which the amount of the
right of recourse exceeds the value of the
interest. The burden of proving impairment
is on the party asserting discharge.
16 A-2601-10T3
f. If the obligation of a party is secured
by an interest in collateral not provided by
an accommodation party and a person entitled
to enforce the instrument impairs the value
of the interest in collateral, the
obligation of any party who is jointly and
severally liable with respect to the secured
obligation is discharged to the extent the
impairment causes the party asserting
discharge to pay more than that party would
have been obliged to pay, taking into
account rights of contribution, if
impairment had not occurred. If the party
asserting discharge is an accommodation
party not entitled to discharge under
subsection e. of this section, the party is
deemed to have a right to contribution based
on joint and several liability rather than a
right to reimbursement. The burden of
proving impairment is on the party asserting
discharge.
g. Under subsection e. or f. of this
section, impairing value of an interest in
collateral includes failure to obtain or
maintain perfection or recordation of the
interest in collateral, release of
collateral without substitution of
collateral of equal value, failure to
perform a duty to preserve the value of
collateral owed, under chapter 9 or other
law, to a debtor or surety or other person
secondarily liable, or failure to comply
with applicable law in disposing of
collateral.
[N.J.S.A. 12A:3-605(e), (f), and (g)].
Also,
[a] person signing an instrument is presumed
to be an accommodation party and there is
notice that the instrument is signed for
accommodation if the signature is an
anomalous indorsement or is accompanied by
17 A-2601-10T3
words indicating that the signer is acting
as surety or guarantor with respect to the
obligation of another party to the
instrument. Except as provided in 12A:3-
605, the obligation of an accommodation
party to pay the instrument is not affected
by the fact that the person enforcing the
obligation had notice when the instrument
was taken by that person that the
accommodation party signed the instrument
for accommodation.
[N.J.S.A. 12A:3-419(c).]
In light of these provisions, we conclude that there is a
factual dispute over Andrews's status. Although he signed both
the promissory note for the Ford GT and the retail installment
sale contract for the Ferrari, he was provided the Cosigner
Notice in both instances, which alerted him that he was "being
asked to guarantee the debt." These words alone might qualify,
in the language of the statute, as "indicating that the signer
is acting as surety or guarantor with respect to the obligation
of another party to the instrument." Ibid. Accordingly,
summary judgment was not appropriate as the means to determine
whether Andrews was an accommodation party.
As for Jeffco, its ability to argue for a discharge
pursuant to the impairment of collateral doctrine is controlled
by N.J.S.A. 12A:3-605(f). This section applies to "the
obligation of any party who is jointly and severally liable,"
not just accommodation parties, and permits a discharge "to the
18 A-2601-10T3
extent the impairment causes the party asserting discharge to
pay more than that party would have been obliged to pay." Ibid.
(emphasis added). Not only did the Law Division not reach this
issue, but the evidence presented on summary judgment was
insufficient to warrant a judgment in JPMorgan's favor as a
matter of law.
Finally, JPMorgan argues that regardless of whether it
impaired the collateral, both Jeffco and Andrews waived the
defense. It, along with the Law Division, asserted that because
Jeffco and Andrews had placed the Ford GT and Ferrari in
Sciubba's custody and control ("in the stream of commerce"),
which resulted in Sciubba's mishandling of the payoff checks,
they are deemed to have waived remedies for the impairment of
collateral. We view this evidence of waiver, by itself, to be
insufficient to warrant an "unequivocal" waiver as required by
Langeveld v. L.R.Z.H. Corp., 74 N.J. 45, 54 (1977) and its
progeny.
In Langeveld, the Court directly addressed the effect of
particular contract language on a guarantor's right to
unimpaired collateral. Such a result "should be permitted only
where the instrument of guaranty specifically frees the creditor
from liability for such impairment." Id. at 53. As a result,
the Court adopted the rule that when faced with a claim that a
19 A-2601-10T3
guaranty was meant to eradicate every right of a guarantor and
grant the creditor absolute immunity as to the collateral, a
court must strictly construe the language of the guarantee.
Ibid.
Here, by analogy, the mere entrustment of the Ford GT and
Ferrari to Sciubba did not, as a matter of law, constitute an
unequivocal waiver of Jeffco's and Andrews's rights to
unimpaired collateral. The two separate acts —— entrustment of
the cars and waiver of a future defense —— are independent of
each other. We do not exclude the possibility that at trial,
JPMorgan could establish grounds for waiver, but the summary
judgment record was wholly insufficient to warrant a conclusion
to the contrary.
In sum, we conclude that the Law Division improvidently
granted summary judgment in favor of JPMorgan. Whether Jeffco
or Andrews will be entitled to discharge the loans owed to
JPMorgan remains to be seen. Jeffco and Andrews will shoulder
the burden of proof on the impairment of collateral defense, and
JPMorgan will be entitled to present evidence demonstrating its
waiver. The trier of fact will also be obliged to determine,
even if an impairment of collateral occurred, the extent, if
any, of the impairment in accordance with N.J.S.A. 12A:3-605.
We recognize that the issues in this case are thorny and will
20 A-2601-10T3
present serious challenges to the court, to the parties, and to
the trier of fact.3 We are, nonetheless, confident that all will
fulfill their assigned roles in the resolution of this dispute.
Accordingly, summary judgment in favor of JPMorgan is
reversed; the reallocation of counsel fees is vacated without
prejudice; and the matter is remanded to the Law Division for
further proceedings consistent with the views expressed in this
opinion. We do not retain jurisdiction.
3
An official comment to N.J.S.A. 12A:3-605 suggests that the
impairment of collateral defense is "greatly diminished" because
"[i]t is standard practice to include . . . a waiver [of a right
to discharge] in notes prepared by financial institutions or
other commercial creditors. Thus, the defense appears only in
"the occasional case in which the note does not include . . . a
waiver clause and the person entitled to enforce the note
nevertheless takes actions that would give rise to a discharge
without obtaining the consent of the secondary obligor."
N.J.S.A. 12A:3-605, UCC Comment 9. If JPMorgan's promissory note
or retail installment sale contract provides a basis to argue
waiver, we do not preclude the employment of this argument, and
leave it to the Law Division to decide the matter.
21 A-2601-10T3