O'Brien v. Slefkin

• Decision Date: 17 December 1958
• Docket Number: No. 9916,9916
• Citation: O'Brien v. Slefkin, 147 A.2d 183, 88 R.I. 264 (R.I. 1958)
• Parties: Vincent O'BRIEN et ux. v. Hyman L. SLEFKIN et ux. Ex.
• Court: Rhode Island Supreme Court

Page 183

147 A.2d 183

88 R.I. 264

Vincent O'BRIEN et ux. v. Hyman L. SLEFKIN et ux.

Ex. No. 9916.

Supreme Court of Rhode Island.

Dec. 17, 1958.

On Show Cause Jan. 7, 1959.

R. deB. LaBrosse, Pawtucket, Walter J. Hennessey, Providence, for plaintiffs.

Philip M. Hak, Pawtucket, for defendants.

PAOLINO, Justice.

This is an action of assumpsit which was brought by mortgagors against second mortgagees to recover a surplus of the proceeds of a foreclosure sale under a second mortgage. After a hearing in the superior court before a justice thereof sitting with a jury, each party moved for a directed verdict. The trial justice granted the plaintiffs' motion and denied that of the defendants. The case is before us on the defendants' exceptions to such rulings and also on the plaintiffs' exceptions to the refusal of the trial justice to award them the amount of a third mortgage of $500 and interest on the verdict from the date of the foreclosure sale to the date of the writ.

It appears from the evidence that plaintiffs, husband and wife, bought a home in Seekonk in the Commonwealth of Massachusetts for $10,500; that they borrowed $7,000 from the Woodlawn Credit Union in Pawtucket and executed and delivered to said credit union a note for $7,000 and a first mortgage on their home as security for the loan; that they also borrowed $2,000 from defendants Hyman L. Slefkin and his wife Anna Slefkin and gave them a note for $2,000 and a second mortgage as security for such loan; that the second mortgage recited that it was subject to the $7,000 first mortgage; that subsequently plaintiffs defaulted in their payments on both mortgages; that defendants foreclosed the second mortgage; and that a foreclosure sale was held on September 3, 1954 under the statutory power of sale granted to said mortgagees by the terms of the mortgage.

Although the premises are located in Massachusetts and a Massachusetts statutory form of mortgage was used, it is admitted that the loan was made and the note and mortgage were executed and delivered in Rhode Island. It is also conceded by both parties that it is unnecessary for this court to determine whether the Massachusetts law or the Rhode Island law applies, since the law governing the issues presented is substantially the same in both states.

It is undisputed that the second mortgagees' sale was advertised as being subject to a prior mortgage of record. Among those present at the sale were the plaintiffs, the defendant Hyman L. Slefkin, and his attorney. Mr. Slefkin testified that he bid $9,000 at the sale and it appears from the evidence that he and his wife executed and delivered to Hyman L. Slefkin a mortgagees' deed dated September 9, 1954 naming him as the grantee. Said deed contained a copy of the mortgagees' sale and an affidavit that the property had been sold by the auctioneer to Hyman L. Slefkin for $9,000. The defendant Slefkin testified that although he did the property in for $9,000, and notwithstanding the fact that he accepted and recorded the mortgagees' deed with revenue stamps attached thereto, he did not actually pay $9,000 or any money to himself or to anyone else for the deed.

The premises were subsequently sold by Hyman L. Slefkin to a third party. The balance of $6,985.90 plus interest due on the first mortgage to the Woodlawn Credit Union was paid off on February 26, 1955 by the Attleboro Savings and Loan Association. Although it does not appear clearly who authorized such payment, Mr. Slefkin testified in effect that he had nothing to do with it and the representative of the credit union testified that it was not paid by plaintiffs.

It is undisputed that plaintiffs have received no part of the $9,000 for which defendants sold the premises to Mr. Slefkin at the foreclosure sale. The parties have agreed that the amount due defendants under their second mortgage, including principal, interest and foreclosure expenses, is $2,054.14 as of September 3, 1954, the date of foreclosure. The plaintiffs concede that defendants are entitled to this amount, but they contend that plaintiffs are entitled to the surplus after this amount is deducted from the $9,000.

On the record before him the trial justice directed a verdict for plaintiffs for $7,482.64. In arriving at this figure he deducted from the $9,000 which Mr. Slefkin had bid at the auction sale the sum of $2,054.14 which was admittedly due defendants, and $500 which he stated was due on a third mortgage. To the balance remaining, namely, $6,445.86, he added interest at 6 per cent from the date of the writ to the date of the verdict. Such interest amounted to $1,036.78.

We shall first consider the question of defendants' liability which is raised by their exceptions to the direction of the verdict for plaintiffs and to the denial of defendants' motion for a verdict in their favor. Since these exceptions raise the same legal issue we shall consider them together. They contend in substance that by their testimony defendants rebutted any presumptions which may have existed in favor of plaintiffs by reason of the recitation of consideration in the mortgagees' deed to defendant Hyman L. Slefkin. They further contend that the failure of plaintiffs to go forward with the evidence on the narrow issue of whether or not defendant Hyman L. Slefkin had actually paid any money for the conveyance to him by the mortgagees' deed in question resulted in a failure on the part of plaintiffs to prove their case by a fair preponderance of the evidence.

They conclude therefore that the trial justice erred in granting plaintiffs' motion for a directed verdict, and that he should have either directed a verdict for the defendants or submitted the case to the jury for its determination. In addition, defendants contend that the instant case is distinguishable from the cases of Brunette v. Myette, 40 R.I. 546, 102 A. 520, and Fudim v. Kane, 48 R.I. 155, 136 A. 306, and that therefore the trial justice misconstrued the law in deciding that the case at bar is governed by those cases.

We cannot agree with any of defendants' contentions. The mortgage in question is a Massachusetts form of statutory mortgage and contains a statutory power of sale substantially similar to the Rhode Island statutory form. The powers of sale conferred upon mortgagees are specifically set forth in said statutes. See General Laws 1956, § 34-11-22; Mass.Ann.Laws c. 183, § 27. There is no evidence in the instant case of any special agreement between the parties waiving any of the provisions contained in such statutory power of...