Bloch v. Budish

• Decision Date: 22 April 1932
• Citation: 180 N.E. 729,279 Mass. 102
• Parties: BLOCH v. BUDISH et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

279 Mass. 102

180 N.E. 729

BLOCH

v.BUDISH et al.

Supreme Judicial Court of Massachusetts, Worcester.

April 22, 1932.

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

Suit by Minnie Bloch against Louis Budish, and John P. Halnon and another, executors. From a decree for plaintiff, John P. Halnon and another appeal.

Reversed and rendered.

A. M. Hillman, of Worcester, for plaintiff.

C. W. Proctor, of Worcester, for defendants.

SANDERSON, J.

This is an appeal from a final decree allowing a mortgagee to reach and apply in satisfaction of a balance due on a mortgage debt the mortgagor's right to require the grantee of the property, who purchased it from the mortgagor subject to the mortgage, to carry out his agreement to assume and pay the mortgage debt. The bill was filed October 21, 1930.

The prayers asked that the indebtedness of the plaintiff against Louis Budish and the executors of the grantee arising from the deficiency in the foreclosure of the mortgage be established; that the plaintiff be given any rights Budish may have against the executors of the grantee under the deed; that the executors be ordered to pay the amount found due the plaintiff from Budish upon the note; and that the plaintiff be ordered to reach and apply in satisfaction of her claim against Budish any sums the court may find to be due from the executors of the grantee to Budish. The answers of the executors set up the defense of the pendency of the bankruptcy proceedings of Budish and that the rights set forth in the bill, if any, are no longer vested in the plaintiff but inure to the benefit of the trustee in bankruptcy of Budish. The answer of Budish alleged the filing by him of a petition in bankruptcy listing as a creditor the plaintiff; that the claim of the plaintiff is dischargeable in bankruptcy, and in it he pleads his discharge or the pendency of his bankruptcy as a defense to the suit.

The facts found, briefly summarized, are that on February 8, 1928, the plaintiff conveyed to the defendant Louis Budish a tract of land with the buildings thereon and received in partial consideration therefor a note of Budish secured by a first mortgage upon the premises conveyed, payable in semiannual installments of $50 and the balance at the end of five years payable on demand. On March 13, 1928, Budish conveyed the premises in question to Julia A. Barrett by deed containing the following provision: ‘Said premises are conveyed subject to a first mortgage in one Bloch in the sum of $9100.00 * * * which the grantee herein named assumes and agrees to pay.’ On January 2, 1930, Julia Barrett died, and on February 10, 1920, the defendants Keating and Halnon were duly appointed and qualified as executors of her will. The plaintiff will be referred to as the mortgagee, Budish as the mortgagor, and Barrett and her executors as the grantee, unless they are otherwise designated. In February, 1930, default was made in the payments of principal and interest then due on the mortgage. The unpaid balance of principal at this time was $8,950. Neither the note nor the mortgage provided that the balance of the debt should become due upon default in payment of any installment. On June 10, 1930, the premises were sold by the mortgagee for breach of the condition of the mortgage and purchased by her for the sum of $4,721. Prior to foreclosure notice was served upon all the defendants herein that the mortgage was about to be foreclosed, that the mortgagee would look to them for any deficiency and each of the defendants received a copy of the foreclosure advertisement and was informed of the time and place of sale. On June 17, 1930, the mortgagor executed a release under seal to the defendants Keating and Halnon, as executors, purporting to release and discharge the estate of Barrett from all rights that he then had or ever had against her on account of the assumption of the mortgage debt in question, and received a specified sum for such release, one-half of which was paid by the estate of Barrett and the other half by the Booth Realty Company, to which corporation Barrett had conveyed the premises in question at some time between March 13, 1928, and January 2, 1930.

The trial judge found that in executing this release the mortgagor intended to hinder and delay the mortgagee in collecting the mortgage debt and that the other defendants knew this. He found that the release was fraudulent as to the mortgagee.

On November 17, 1930, the mortgagor filed a petition in bankruptcy and on the same day was adjudicated a bankrupt,and on February 25, 1931, he was granted a discharge in bankruptcy. The mortgagee's claim was included among the debts scheduled, but she filed no proof of claim.

A decree was entered ordering the executors of the grantee to pay the mortgagee the installments of the mortgage debt which were overdue at the date when the bill was filed. The discharge of the mortgagor in bankruptcy pleaded in the case made it impossible to establish any indebtedness of the mortgagor to the mortgagee in those proceedings, Federal National Bank v. Koppel, 253 Mass. 157, 148 N. E. 379, 40 A. L. R. 1443, and no such indebtedness on his part was referred to in the decree.

The first question is whether a bill to reach and apply under G. L. c. 214, § 3(7), is available to a creditor when no indebtedness of the debtor to the creditor can be established in the suit. There is nothing in the statute to indicate that the proceeding could be made available to deprive a debtor of the full benefit of a defense like the statute of limitations, and it cannot be so used as to deprive the debtor of the full protection of a discharge in bankruptcy. In Chapman v. Banker & Tradesman Publishing Co., 128 Mass. 478, 479, the court referred to a bill to reach and apply under Gen. St. c. 113, § 2, cl. 11, as ‘in the nature of an equitable attachment.’ The purpose of the Legislature in enacting the original statute (St. 1851, c. 206) was to permit creditors who had been unable to satisfy their judgments to come into equity for the purpose of reaching property which could not be taken on execution at law. Pettibone v. Toledo, Cincinnati & St. Louis Railroad, 148 Mass. 411, 19 N. E. 337,1 L. R. A. 787. In H. G. Kilbourne Co. v. Standard Stamp Affixer Co., 216 Mass. 118, 122, 103 N. E. 469, the remedy was referred to as in the nature of an equitable trustee process. In Consolidation Ordinance Co. v. Marsh, 227 Mass. 15, 22, 23, 116 N. E. 394, 396, the...