Cent. Mortg. Co. v. Lee
| Decision Date | 10 May 2017 |
| Docket Number | 15–P–1629 |
| Citation | 91 Mass.App.Ct. 1121,86 N.E.3d 246 (Table) |
| Parties | CENTRAL MORTGAGE COMPANY v. Daniel C. LEE & others. |
| Court | Appeals Court of Massachusetts |
The defendant, Daniel C. Lee, appeals from a judgment declaring a mortgage to be valid and enforceable. He contends that a number of complications, errors, and misunderstandings rendered the mortgage invalid and unenforceable. We affirm.
Background. We summarize the facts found by the trial judge. Lee and his wife owned a house in Acton. They held the property as tenants in common. Lee's wife died intestate, and he inherited one-half of her interest in the property (or twenty-five percent of the total interest), while their two minor daughters inherited the other half (or twelve and one-half percent of the total interest each). Lee did not probate the estate immediately, as he believed (incorrectly) that he and his wife held the property by tenancy in the entirety with right of survivorship.
In 2004, Lee attempted to refinance the home. Lee received a loan commitment, but the bank's attorney requested that Lee probate his wife's estate and petition the Probate and Family Court (probate court) to appoint Lee as his minor daughters' guardian. The bank's attorney explained that the mortgage must extend to his interest and his daughters' interests in the property. Otherwise, lenders would not grant a mortgage because the bank would only be able to foreclose on the seventy-five percent of the property owned by Lee in the event of default. Lee accepted the advice, and the attorney initiated guardianship proceedings in the probate court.
Lee was appointed guardian of his daughters on December 30, 2004. The probate court had not yet, however, issued an order decreeing that Lee could mortgage the property. The bank's attorney, who also represented Lee in the guardianship proceedings, advised the parties to sign the mortgage documents on December 30, 2004, and represented that he would hold the documents and proceeds in escrow until Lee obtained permission to mortgage the daughters' interests in the property. After a hearing and the appointment of a guardian ad litem, a judge of the probate court granted Lee the power to mortgage the property on January 6, 2005. The mortgage was then released from escrow and recorded.
When the attorney recorded the mortgage, he added the handwritten annotation, "and as Guardian of Diane S. Lee and Nancy M. Lee" to the typed definition of "Borrower," which referred to "DANIEL C. LEE INDIVIDUALLY." The trial judge found that the attorney wrote in this annotation between the closing and the recording as "a clarification." The mortgage proceeds from the escrow account were distributed shortly afterward.
In May of 2010, Lee defaulted on the mortgage. Central Mortgage Company (Central) brought an action in Superior Court to quiet title to declare the mortgage valid and enforceable as to all interests in the property. Lee and his two then-adult daughters were named as defendants in the quiet title action. All the defendants appeared pro se. The trial judge entered a declaration finding the mortgage valid and enforceable as to all interests in the property.
Discussion. 1. Standing. As a threshold matter, we must consider whether Lee has standing to pursue this appeal on behalf of his daughters. "Standing can be addressed by an appellate court sua sponte even if not raised properly on appeal." Pugsley v. Police Dept. of Boston, 472 Mass. 367, 371, 34 N.E.3d 1235 (2015).
Lee does not have standing to appeal the validity of the mortgage as to his daughters' interests in the property. The daughters, now adults, are parties in their own right. The guardianship terminated by operation of law upon their majority. See G.L.c. 201, § 4, as in effect prior to the passage of the Massachusetts Uniform Probate Code, St. 2008, c. 521, § 21 () Cf. G.L.c. 190B, § 5–210 (2008) (); Eccleston v. Bankosky, 438 Mass. 428, 433–434, 780 N.E.2d 1266 (2003) (). The daughters have not appealed, and Lee no longer has authority to appear on their behalf.3
Because, however, Lee appears at various points to request that the entire mortgage be declared void, we address his arguments to the extent that they apply to his interest in the property.
2. Identity of the mortgagor. Lee claims that the annotation on the recorded mortgage, adding the phrase "as Guardian of Diane S. Lee and Nancy M. Lee" to the definition of "Borrower," was an unauthorized material alteration that voids the mortgage. He maintains that the trial judge erred in crediting the attorney's testimony regarding the intent of the parties, and that the trial judge's determination that the annotation was a clarification is unsupported by the evidence and an error of law.
"We will not disturb the findings of [a] trial judge ... unless they are clearly erroneous." Woodward Sch. For Girls, Inc. v. Quincy, 469 Mass. 151, 159, 13 N.E.3d 579 (2014), citing Mass.R.Civ.P. 52(a), as amended, 423 Mass. 1402 (1996). "We review the judge's conclusions of law de novo." Kitras v. Aquinnah, 474 Mass. 132, 139, 49 N.E.3d 198 (2016).
Unauthorized postexecution material alterations to a deed are invalid. See Smigliani v. Smigliani, 358 Mass. 84, 90–91, 260 N.E.2d 917 (1970) ; Lima v. Lima, 30 Mass. App. Ct. 479, 487–488, 570 N.E.2d 158 (1991) ; Kurak v. South Point, Inc., 409 B.R. 259, 266–267 (D. Mass. 2009), aff'd 433 B.R. 52 (D. Mass. 2010). An alteration is material when it "change[s] the legal effect of the instrument." Mindell v. Goldman, 309 Mass. 472, 474, 35 N.E.2d 669 (1941). Nonetheless, an unauthorized material alteration does not void the entire instrument; the original terms of the instrument may still be enforced against the original parties to it. See Smigliani, supra at 90–91, 260 N.E.2d 917. Thus, even if the annotation was unauthorized, it would invalidate the mortgage only as to the daughters' interests. Lee has not made a reasoned appellate argument why the alteration would invalidate the interest Lee held and pledged in his own right. Again, since Lee is without standing to assert a claim of invalidity affecting only the daughters' interests, we need not consider the claim. For the following reasons, however, it is without merit even were we to consider it.
The trial judge determined that the handwritten annotation was a clarification, not a material alteration. The trial judge found that the attorney had explained to Lee that he would be encumbering the daughters' shares in the property and that Lee understood this at the time he signed the mortgage. Furthermore, Lee signed the mortgage in multiple places in his capacity as his daughters' guardian. Finally, the trial judge found that Lee was declared the guardian of his daughters because it was his intent to mortgage their interests in the property. The trial judge's finding that the annotation was a clarification intended to accurately reflect the understanding of the parties was not clearly erroneous.4
Lee cites Kurak, supra, and Riley vs. InstaMortgage.com (In re Smith), Bankr. Ct., 07–14013–FJB, slip op. at 28, 2015 WL 4330312 (D. Mass. July 15, 2015) ( Smith ), for the proposition that "[w]here a mortgage goes to the trouble of clearly and expressly defining a term, a court should not read other parts of the document to implicitly amend the definition[.]" In Smith, supra at 8, nothing in the mortgage outside of interlineations indicated that the debtor, a tenant in common with the named mortgagee, was a party to the mortgage. Here, Lee signed in his capacity as guardian on the original mortgage form without any interlineation. Furthermore, the named mortgagee in Smith had no authority to bind the tenant in common. Ibid. Here, by contrast, the guardianship was intended to vest Lee with the power to mortgage his minor daughters' interests in the property.5 Finally, in contrast to both Kurak and Smith, the trial judge here made a determination that the annotation was a clarification, not a material alteration. The...
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