Bancroft Trust Co. v. Canane

• Decision Date: 26 April 1930
• Citation: 171 N.E. 281,271 Mass. 191
• Parties: BANCROFT TRUST CO. v. CANANE.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

271 Mass. 191

171 N.E. 281

BANCROFT TRUST CO.

v.CANANE.

Supreme Judicial Court of Massachusetts, Worcester.

April 26, 1930.

Appeal from Superior Court, Worcester County; Whiting, Judge.

Suit by the Bancroft Trust Company against Ellen J. Canane. From a decree dismissing the bill, plaintiff appeals.

Reversed.

J. A. Crotty and G. H. Mason, both of Worcester, for appellant.

D. Burstein, of Boston, for appellee.

CARROLL, J.

The plaintiff was the holder of two real estate mortgages given by the defendant. Each mortgage was in the sum of $20,000 and covered the same tract of land; they were dated October 3, 1927. On January 1, 1929, the plaintiff entered to foreclose under the first mortgage, and on March 10, 1929, began foreclosure proceedings under the power of sale in this mortgage, fixing the time of sale as April 2, 1929. On March 26, 1929, the defendant brought a writ of entry in the Land Court to recover the premises described in the mortgage. The plaintiff completed the foreclosure proceedings and the property was sold to the plaintiff. In August, 1929, the plaintiff brought the present suit in equity. The defendant's demurrer to the plaintiff's bill was sustained, and the plaintiff appealed from a final decree dismissing the bill.

The plaintiff seeks by this suit in equity to restrain the defendant from prosecuting the writ of entry. It asks for an accounting and that the validity of the mortgages and the sum due thereon be adjudicated. In the writ of entry specifications were filed by the demandant, the defendant here; these specifications assert that the mortgages and notes given to the Bancroft Trust Company were illegal because they were procured by the extortion, duress, threats of criminal prosecution, and in condonation of an alleged crime, by certain officers of the trust company.

After describing the mortgages and the notes secured by the mortgages, the bill alleges that when the mortgages were executed the real estate was subject to certain mortgages described in the bill including a mortgage to one Donoghue who was acting for the plaintiff.

It is further alleged that the defendant and members of her family were interested in a corporation known as the Canane Motor Company, hereinafter called the motor company, to which the plaintiff had given credit upon indorsements of its commercial paper by the defendant's two sons; that the mortgage to Donoghue was given by the defendant as security for the money lent and the accommodations the plaintiff had granted and as security for the future accommodations to the motor company and to the two sons of the defendant; that in August, 1927, Rozefsky, the holder of the fourth mortgage, was about to foreclose; that as a result of conferences between officers of the plaintiff and the defendant the defendant agreed to a loan of $40,000 secured by mortgages ‘out of which it [the plaintiff] was to pay off the mortgages then existing against the property and fix the extent of her liability for the monies and accommodations which had been furnished’ to the motor company and to the defendant's sons; that thereupon the notes and mortgages were executed; that at the defendant's request and according to her direction, the plaintiff paid out the $40,000.

It is also stated in the bill that this sum of $40,000 was used in paying the mortgages to the People's Savings Bank and to Rozefsky; that the plaintiff delivered to the defendant and transferred by indorsement certain notes of the motor company indorsed by the defendant's sons, and credited itself with the sum of $13,424.55, the amount due on certain promissory notes; that the balance of the $40,000 amounting to $3,341.65 was applied according to the directions of the defendant in reduction of the amount due the plaintiff upon notes of the motor company indorsed by the defendant's two sons; that discharges of the mortgages of the People's Savings Banks, Rozefsky and Donoghue were recorded in the registry of deeds and delivered to the defendant; that the notes, mortgages and other evidences of debt were delivered to the defendant.

It is alleged that the two mortgages to the plaintiff were duly recorded October 3, 1927; that on October 4 of that year all of the shares of stock of the motor company, except two, were transferred to the defendant; that the defendant at this time and for a long time prior thereto was an ‘undisclosed partner or the undisclosed principal of the Canane Motor Company’ and was directly benefited by the discharge of the mortgages on her property, by the loans to the motor company, and by the discharge of its obligations to the plaintiff; that the interest due on the two mortgages given to the plaintiff was paid on January 1, 1928, on April 1, 1928, and in part on July 1, 1928; that on January 1, 1929, because of the defendant's default, the plaintiff made an entry and took possession to foreclose its mortgage on the premises described in the first of the two mortgages; that the plaintiff is in possession and received rents and profits and incurred obligations; that in March, 1929, the plaintiff began foreclosure proceedings under the power of sale in the first mortgage and thereunder sold the property on April 2, 1929, to the plaintiff for the sum of $12,000; that a deed of foreclosure was duly recorded and the plaintiff is in possession of the property.

The bill further alleges that the defendant has at no time offered to pay the interest due or the taxes, nor has she in any way ‘cured the breach of the conditions of her mortgage’; that on March 26, 1929, the defendant caused to issue from the land court a writ of entry against the plaintiff, alleging she had a right of entry on the premises held by the plaintiff; that she caused an attachment of $10,000 in connection with the writ of entry to be made against the plaintiff's property and caused notice of the pendency of her writ of entry to be recorded in the registry of deeds; that no claim of duress or other claim affecting the validity of the mortgage under which the plaintiff is in possession or the debt secured by it was made by the defendant ‘until shortly before the issuance of her said Writ of Entry’ and no disaffirmance of the mortgages or notes was ever made by the defendant before the writ of entry was brought; that no tender was made or offer to restore the moneys paid out for her benefit.

The bill states that the plaintiff denies that any duress or extortion was used or that any condonation of crime was practiced; that the defendant affirmed and ratified the validity of her mortgages; that she is financially irresponsible and has no property that can be attached; that the proceedings in the land court cannot adjudicate the ‘issues which she has raised or alleged in her claim’; that these proceedings in the land court cannot settle the question of the plaintiff's right to possession on and after April 3, 1929, the date of the foreclosure deed, nor the extent to which the plaintiff is entitled to be subrogated to the rights of the holders of the mortgages paid by the plaintiff; that the land court cannot require as a condition precedent to the entry of judgment payment or tender of payment by the defendant of the sum due the plaintiff in justice and equity.

It is also alleged that if the defendant should prevail in her writ of entry this would not be an adjudication in equity of the validity of the mortgage under which the plaintiff claims title by foreclosure; that the notice of lis pendens is a cloud on the plaintiff's title; that if the defendant does not prevail in the land court she intends to bring a suit in equity to redeem and demand an accounting from the plaintiff as mortgagee in possession from January 1 to March 26, 1929, and thereafter; that the land court proceedings cannot settle the rights of the plaintiff under its second mortgage for $20,000; that even if the defendant prevails in the land court the plaintiff can take possession and sell under the power in the second mortgage, and can proceed to collect the sums due it under the two notes which the mortgages secure; that numerous actions and suits ‘are imminent and all relate to the respective rights and obligations of the transaction entered into on October 3, 1927, for which your plaintiff has no complete and adequate remedy at law’; that the prosecution of the writ of entry is an attempt to rescind her mortgages and escape the making of restitution, and to circumvent ‘her rights and duties' under G. L. c. 244. The bill also contains an offer to permit the defendant in this proceeding to have adjudicated any claim affecting the validity of the mortgage or mortgages and to execute to the defendant a deed of the premises upon payment of the sums due the plaintiff and secured by the two mortgages.

[2] In the consideration of the questions raised by the defendant's demurrer the allegations of the bill must be taken to be true. Granara v. Italian Catholic Cemetery Association, 218 Mass. 387, 392, 105 N. E. 1073;Willett v. Herrick, 242 Mass. 471, 477, 136 N. E. 366. Without repeating the averments of the plaintiff's bill, it appears that the proceedings in the land court cannot finally and completely settle all the rights of the parties. The only question to be settled by the writ of entry is the defendant's right to possession as of the date of that...