Burlington Building And Loan Association v. George J. Cummings

• Decision Date: 17 January 1941
• Parties: BURLINGTON BUILDING AND LOAN ASSOCIATION v. GEORGE J. CUMMINGS ET AL
• Court: Vermont Supreme Court

17 A.2d 319

111 Vt. 447

BURLINGTON BUILDING AND LOAN ASSOCIATION v. GEORGE J. CUMMINGS ET AL

Supreme Court of Vermont

January 17, 1941

May Term, 1940.

Foreclosure.---1. Power of Attorney, P. L. 2600.---2. Exceptions to Findings and Failure to Find.---3. Rule Same at Law and in Equity.---4. P. L. 1269 Applies to Trials and not Decrees.---5. Appeal Tests Decree on Pleadings and Findings.---6. Appeal Does not Examine Evidence.---7. Answer Raising Is- sue not in Complaint.---8. Mortgagee's Duty to Examine Record.---9. Inference from Findings.---10. Correction of Agreements.---11. Mortgage Substituted for Prior One May Take Its Place.---12. Attaching Creditor's Rights Against Mortgage Discharge.---13. Land Records as Notice to Attaching Creditors.---14. Record of Decrees, P. L. 1320.---15. Notice of Continuation of Old Mortgage.---16. Bill of Exceptions Construed against Excepting Party.

1. A power of attorney for the sale of real estate is defective when it bears no seal and is attested by only one witness---P. L. 2600.

2. Exceptions to the findings of fact and to the failure to find in accordance with the defendant's requests as being unwarranted and unjustified under the evidence are too general to be available.

3. The rule as to the exception to findings or failure to find is the same whether the proceeding is at law or in equity.

4. P L. 1269 which provides for the procedure with respect to exceptions taken in hearings before a chancellor applies only to rulings made on trial and does not make the propriety of a decree the subject of an exception.

5. An appeal in chancery apart from a bill of exceptions raises the question as to whether the decree is warranted by the pleadings and supported by the findings.

6. Whether the evidence supports a decree is not made an issue by an appeal in chancery.

7. If a defendant has made an issue by his answer he can not claim to be harmed by the omission of such issue from a complaint.

8. A mortgagee who takes a new mortgage upon the discharge of an old one is not necessarily required to examine the records.

9. It will be assumed that a chancellor drew an inference which is fairly inferable from his findings.

10. Courts of chancery often interfere for the purpose of correcting agreements and contracts where the legal effect is entirely different from what the parties intended at the time it was made, and such is done in cases where the mistake was relative to the effect merely, rather a mistake of law than fact.

11. If a mortgagee through fraud or mistake takes a new mortgage in place of an old one, not in payment, but in continuation of the old indebtedness and cancels the old mortgage without knowledge of an intervening lien, he does not thereby subordi-

nate his security to the intervening lien of one who had actual or constructive knowledge of the mortgage.

12. When intervening attaching creditors will be in the same position and with the same rights as of the time of attachment if a discharge of a mortgage, made under mistake is cancelled it is unconscionable for them to set up the discharge on the record as an extinguishment of the mortgagee's interest.

13. Attaching creditors are charged with notice of what land records reveal.

14. It will be assumed in the absence of evidence to the contrary that a decree of a court of chancery is properly recorded as required by P. L. 1320.

15. The record of the discharge of two mortgages and the attempted execution, just before such discharges, of a third mortgage which was invalid on its face, was held sufficient, under the circumstances, to put the defendants on inquiry as to whether the debt might remain unpaid with a consequent continuation in equity of the mortgagee's rights and such knowledge thereof as could be obtained by reasonable diligence.

16. A bill of exceptions must be construed strictly against the excepting party.

PETITION FOR FORECLOSURE brought against George J. Cummings John Seith, Martin S. Vilas and Charles R. Harvey. Amendments to the petition and various pleadings were made. Heard by Cushing, Chancellor, at the September Term, 1938, of Chittenden County Court of Chancery. Findings of fact were made and decree entered for foreclosure of mortgages. After opinion was rendered, motion was filed and granted for reargument and original opinion was withdrawn. Other facts appear in the opinion.

Decree modified to provide for discharge of record of the invalid mortgage of August 28, 1934, and in other respects decree affirmed. Let a new period of redemption be fixed for which purpose the cause is remanded.

Martin S. Vilas, pro se.

Nicholas A. Morwood for defendants Vilas and Harvey.

M. G. Leary and Bernard J. Leddy (M. G. Leary, Jr., on the brief) for the plaintiff.

Present: MOULTON, C. J., SHERBURNE, BUTTLES, STURTEVANT and JEFFORDS, JJ.

OPINION

BUTTLES

In this chancery proceeding, which by permission of court has been reargued, the plaintiff prays by its petition as amended, in substance, that its equitable rights in and to certain mortgaged premises be ascertained and protected; that three mortgages of real estate in the City of Burlington and the performance of the obligations therein secured be held in full force and effect as security to the petitioner under the terms of those mortgages; that said mortgages be held to be prior to all rights of any and all of the defendants in and to the mortgaged premises and that the claimed rights of the defendants in the premises be foreclosed. The defendants Vilas and Harvey were the only defendants who appeared and answered and defendant Vilas alone, hereinafter termed the defendant, has appealed to this Court. Hearing was had before the Chancellor and findings of fact were made and filed.

It appears from the findings that the three mortgages under which the plaintiff claims were dated September 15, 1930, December 2, 1932 and August 28, 1934, respectively, and that they were given to secure payment to the plaintiff of the sums of $ 1,000, $ 600 and $ 1,400, respectively; that the first two mortgages conveyed two different parcels of land and the third mortgage conveyed the same parcels that were covered by the first two mortgages; that the first two purported to be executed by John Seith and the third by George J. Cummings by John Seith having power of attorney, etc. This power of attorney had only one witness and no seal and was otherwise defective. It is further found that the first and second mortgages, hereinafter called the original mortgages, were discharged of record on October 5, 1934; that it was the intention of the parties to keep alive and on foot the original indebtedness owing by Seith to the plaintiff and that the discharge of the original mortgages resulted from the mistake of the plaintiff; that the $ 1,400 note which was secured by the third mortgage represented the balance due from Seith to the plaintiff on the day the third mortgage was executed, together with interest, costs and dues to the association and that this sum was never paid by Seith except by the execution of the note dated August 28, 1934.

It is further found that defendant Vilas obtained a judgment against Seith on August 23, 1933 and caused execution to be levied on the property here involved on September 14, 1933, and that attachment in said suit was made subsequent to the execution and recording of the plaintiff's original mortgages; that on April 2, 1933, Seith had conveyed the property to defendant Cummings by deed which this court later held to be without consideration and fraudulent in law as against the judgment-creditor Vilas (see Vilas v. Seith, 108 Vt. 526, 189 A. 862); that proceedings which resulted in this holding were commenced by Vilas after obtaining the judgment against Seith; that on July 10, 1937, the right, title and interest of Seith in the property described in the original mortgages were sold under the Vilas execution by Henry Todd, a deputy sheriff, to Charles R. Harvey and that on July 23, 1937, said Harvey by warranty deed conveyed the same property to Martin S. Vilas subject to the defendant's right of redemption and to whatever legal mortgages, if any, were then held by this plaintiff; that on January 11, 1938, the said deputy sheriff executed a deed of the same property on execution sale to the said Harvey who on the following day executed a quitclaim deed thereof, which was duly recorded, to Vilas; that on the date of hearing, November 10, 1938, there was due the plaintiff on the note of August 28, 1934, the sum of $ 1,495.45.

The decretal order is that the discharge of the two original mortgages be cancelled; that these mortgages be reinstated for the purpose of securing the amount due the plaintiff on November 10, 1938, and that the plaintiff have a decree...