Brockton Sav. Bank v. Shapiro

• Decision Date: 22 June 1942
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: BROCKTON SAVINGS BANK v. ISAAC SHAPIRO & others.

311 Mass. 695

42 N.E.2d 826

BROCKTON SAVINGS BANK v. ISAAC SHAPIRO & others.

Supreme Judicial Court of Massachusetts, Suffolk.

June 22, 1942

April 10, 1942.

Present: FIELD, C.

J., DONAHUE, DOLAN COX, & RONAN, JJ.

Mortgage Conveyance subject to mortgage. Contract, Assumption of mortgage. Surety. Savings Bank. Evidence, Competency. Deed Consideration. Practice, Civil, Exceptions: what questions open.

In an action by a savings bank against a mortgagor of real estate for a deficiency remaining after a sale in foreclosure of the mortgage, where the mortgagor had conveyed the equity of redemption and contended that the grantee had agreed with him to assume and pay the mortgage note, that the bank without the mortgagor's consent had made an agreement with the grantee for an extension of the note and that the value of the property had depreciated between the time of the extension and the time of the foreclosure, evidence was admissible in the discretion of the judge of appraisals made by the bank's board of investment under G. L.

(Ter. Ed.) c. 168 Section 54, First, as amended by St. 1937, c. 180, five years and five months and two years and eight months before, and about five months after, such extension.

At the trial of an action by a savings bank, payee of a note secured by a mortgage of real estate, against the mortgagor for a deficiency following a sale in foreclosure, an issue, whether a grantee of the mortgagor had assumed and agreed with the mortgagor to pay the mortgage debt, properly was submitted to the jury upon evidence that the bank knew of the conveyance, that, after the conveyance, all payments of interest to the bank upon the note had been made by the grantee and the loan was stated on certain of the bank's records as being to the grantee, and that at some time a notation had been made upon the note that it had been assumed by the grantee.

Certain instructions to a jury, relating to an issue whether a grantee of an equity of redemption from a mortgage had assumed and agreed with the mortgagor to pay the mortgage debt so that the mortgagor became surety and the grantee the principal debtor, constituted error in view of the state of the evidence.

Upon the evidence at the trial of an action by a mortgagee against a mortgagor of real estate for a deficiency after foreclosure, where the defendant contended that he had conveyed the equity of redemption to one who had assumed and agreed with him to pay the mortgage debt, that the plaintiff had without his consent made an agreement with the grantee for an extension of the note and that his right as consequent surety had been impaired because of a depreciation in the value of the mortgaged property during the period of the extension, there was no error in a refusal to instruct the jury as a matter of law that the right of the defendant was unaffected by the extension agreement.

CONTRACT. Writ in the Municipal Court of the City of Boston dated April 5, 1939.

On removal to the Superior Court, the action was tried before Dowd, J.

W. P. Murray, (M.

J. Zieman with him,) for the plaintiff.

S. B. Stein, for the defendants.

RONAN, J. This is an action of contract to recover the balance alleged to be due on a promissory note of the defendants dated March 15 1926, for $100,000, payable in five years to the plaintiff and secured by a mortgage upon certain real estate in Brookline. The jury found for the defendants. The case is here upon the plaintiff's exceptions taken to the admission of the appraisals of the board of investment of the plaintiff and to portions of the instructions to the jury.

The property was transferred to the Williamsons on July 8, 1926, by a quitclaim deed which recited that the conveyance was made subject to the mortgage. One of the defendants, Shapiro, testified that the property was sold to Adam and Annie Williamson for the price of $135,000. There was an entry upon the back of the mortgage note where, after the printed words "Assumed by," there was typewritten the words "Adam and Annie Williamson," but there was no direct testimony as to when these names were put upon the back of the note other than it was "sometime after July, 1926," after the Williamsons had purchased the property -- a fact which the plaintiff learned in 1926. The Williamsons, hereinafter called the grantees, entered into a written agreement with the plaintiff on April 15, 1937, whereby the rate of interest on the mortgage note was reduced and the time for payment extended to September 1, 1939. The grantees agreed to pay the interest on the note, the taxes and insurance upon the mortgaged premises, and to pay the note on the last mentioned date. The agreement also contained this provision: "Be it expressly understood and agreed that nothing herein contained shall be construed to impair the security of said Bank, its successors and assigns, under said mortgage, nor affect, nor impair any rights or powers which it may have under the said note and mortgage for the recovery of the mortgage debt, with interest, in case of nonfulfillment of this agreement by said Equity Owners." The mortgage was foreclosed on February 24, 1939, but the proceeds from the foreclosure being insufficient to pay the note, the plaintiff brought this action of contract against the defendants to recover the balance amounting to $34,154.47. The jury in answer to a question submitted to them found that the grantee had assumed and agreed to pay the mortgage and that the mortgaged realty had depreciated $5,000 in value between the date of the extension agreement and the date of the foreclosure sale.

The only exception to evidence relates to the admission of the appraisals of the value of the mortgaged property on November 12, 1931, August 9, 1934, and September 28, 1937, by the board of investment of the plaintiff. The board was authorized by G. L. (Ter. Ed.) c. 168, Section 54, First, as amended by St. 1937, c. 180, to revalue premises upon which the bank held a mortgage and to file its statement of value with the records of the bank. The plaintiff was charged with notice of these statements, Walsh v. Lowell Trust Co. 245 Mass. 455; New England Trust Co. v. Bright, 274 Mass. 407, and these representations of the board made in the performance of its duties were admissible in evidence. Augello v. Hanover Trust Co. 253 Mass. 160. Schleifer v.

Worcester North Savings Institution, 306 Mass. 226 . The earlier appraisal would appear to be remote upon the valuation of the mortgaged premises upon the date of the extension agreement, but the matter rested to a large extent, but not entirely, in the sound discretion of the judge. Commonwealth v. Abbott, 130 Mass. 472 . Jenkins v. Weston, 200 Mass. 488 . Arabia v. John Hancock Mutual Life Ins. Co. 301 Mass. 397 . There was no reversible error in the admission of these appraisals.

One of the issues at the trial was whether the grantees had agreed with the defendants to assume and pay the mortgage debt. The plaintiff excepted to the judge permitting the jury to pass upon the question whether the grantees had assumed the mortgage at the time of the conveyance to them. The plaintiff knew in 1926 that this conveyance had been made. All payments of interest upon the mortgage note subsequent to the conveyance were apparently made by the grantees. The appraisal made by the plaintiff's board of investment on November 12, 1931, was captioned "Loan No. 2346 Brockton Savings Bank Name. Adam Williamson et ux." The loan number was the same number as that of the loan made to the defendants. We think that with this background a jury under appropriate instructions could reasonably infer that the entry on the back of the mortgage note referred to an assumption of the mortgage debt by the grantees when they purchased the property, and could consider the entry as an admission of this fact made by the bank upon its records in the usual course of business. The issue was properly left to the jury. City Institution for Savings v. Kelil, 262 Mass. 302. Chadwick & Carr Co. v. Smith, 293 Mass. 293 .

Various exceptions were taken to portions of the charge dealing with the issue of the assumption of the mortgage debt by the grantees wherein the jury were told that the grantees paid $135,000 for that property; that, if the deed alone is considered, the grantee simply acquired the equity of redemption; that, regardless of what was contained in the deed, the jury were to consider the conduct, the relationship and actions of the grantees with reference to whether or not they assumed the mortgage and agreed to pay it; that the jury had the mortgage note with the indorsement on the back of it; that there was testimony "that whatever the amount was the grantee[s] assumed and agreed to pay with the bank," and that "you also have the grantee[s] paying the interest on the mortgage." The jury were also instructed that if the grantees did not assume the mortgage there was no responsibility on them in law to pay the interest, because if they did not assume the mortgage, the mortgagors were obliged to pay the interest; that by their conduct the grantees paid $135,000 for the property; and that, by the evidence and the mortgage note, "you may take it for what it is worth, whether it was put there soon or late, it is for you to determine, but it is there, the fact that they assumed this note and mortgage and paid the interest on that mortgage up to foreclosure." These instructions were erroneous.

The plaintiff did not concede that the grantees had paid $135,000. The testimony of Shapiro that the property was sold for "the price of $135,000" was not binding upon the plaintiff. Neither were the jury required to believe it. But this testimony, which was all the evidence there was concerning the...