City Institution For Savings v. Kelil

• Decision Date: 14 January 1928
• Citation: 262 Mass. 302
• Parties: CITY INSTITUTION FOR SAVINGS v. CAROM KELIL.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

262 Mass. 302

CITY INSTITUTION FOR SAVINGS v. CAROM KELIL.

Supreme Judicial Court of Massachusetts, Middlesex.

January 14, 1928

November 10, 1927.

Present: BRALEY CROSBY, CARROLL, WAIT, & SANDERSON, JJ.

Mortgage, Of real estate: deficiency after foreclosure. Contract, Novation. Surety. Subrogation. Corporation, Officers and agents. Evidence, Competency. Practice, Civil, Findings by judge.

Where, at the hearing of an action of contract by a savings bank against a mortgagor named in a mortgage of real estate to the bank, to recover a balance remaining due upon the mortgage note after a foreclosure sale, the defendant contends that circumstances attending a sale of the property by the mortgagor to one who assumed and agreed to pay the mortgage note, together with conduct of bank officials toward such grantee, changed the relation of the mortgagor to the plaintiff mortgagee as to liability on the mortgage note, it was proper to admit in evidence testimony by an assistant treasurer of the plaintiff showing the plaintiff's course of business, where mortgagors sold the property subject to the mortgage, in explanation of acceptance of interest from the mortgagor's grantee and crediting of it on the mortgage note.

The rights and relation of the plaintiff mortgagee and the defendant mortgagor, above described, were not changed, even if the plaintiff had notice of the assumption of the mortgage by the defendant's grantee, unless the plaintiff thereafter extended the time of payment without the defendant's consent or made an agreement with the grantee, resting on a valuable consideration, to substitute him for the defendant as principal debtor; in the action above described there was no evidence warranting a finding of such an extension or agreement.

Acts of the treasurer and assistant treasurer of the plaintiff, even if they had warranted the finding of such an agreement with the defendant's grantee as above described, were not binding on the plaintiff, since the record disclosed no evidence that either of them had power to change the liability of the defendant so that he became surety only.

Evidence showing that, as a part of the transaction when the defendant purchased the property and gave the mortgage to the plaintiff, he received from his grantor a bond conditioned to save the defendant harmless from all losses, liabilities and counsel fees which "he may suffer by reason of an inheritance tax, or by reason of State or Federal taxes due or assessed against the mortgaged property"; that the obligor indorsed the bond "Payable to . . . [the plaintiff] mortgagee"; that the bond was in the possession of the plaintiff at the time of the conveyance by the defendant to his grantee and bore an indorsement by the defendant that, having sold and conveyed the property to his grantee, he transferred the bond to his grantee subject to the rights of the plaintiff, had no bearing as showing corporate action by the plaintiff releasing the defendant from his original contract.

Where there was no binding agreement by the plaintiff for delay, inaction or forbearance to enforce the mortgage by foreclosure, the mere facts that the defendant notified the plaintiff in June November and December that the property was depreciating, and asked it to foreclose, but the plaintiff did not enter to foreclose until January, when it began collecting rents, and did not hold a foreclosure sale until April, did not discharge the defendant, even if he had become merely a surety, although the property, which, before such notices was of sufficient value to satisfy the mortgage on a sale, thereafter depreciated so that at the sale a deficiency resulted.

At the hearing by a judge without a jury of the action above described, there was a general finding for the plaintiff which included sums paid by the plaintiff for taxes and interest thereon, for water assessments, for plumbing, for insurance premiums, for a commission of the auctioneer, and for the services of counsel and legal services in the foreclosure proceedings. It appeared that the plaintiff had been in possession of the property by entry before the foreclosure sale. Held, that in view of the finding by the judge, the allowance of the sums could not be held to have been improper under G.L.c. 183, Section 27; c.

244, Section 20.

CONTRACT to recover a balance or deficiency of $3,618.15 and interest alleged to be due after a foreclosure sale under a mortgage securing a promissory note given by the defendant to the plaintiff. Writ dated May 20, 1926.

In the Superior Court, the action was heard by Brown, J., without a jury. Material evidence is stated in the opinion. At the close of the evidence, the defendant asked, among others, for the following rulings:

"2. On the pleadings and the evidence the defendant cannot be charged in this action with $845.71, taxes and interest for 1925, paid by the plaintiff.

"3. On the pleadings and the evidence the defendant cannot be charged in this action with $76.44, paid to the city of Lowell for water assessments.

"4. On the pleadings and the evidence the defendant cannot be charged with $44.84, insurance premiums paid by the plaintiff.

"5. On the pleadings and the evidence the defendant cannot be charged in this action with $173.95, plumber's bill paid by the plaintiff.

"6. On the pleadings and the evidence in this case the defendant cannot be charged with $210.45, paid by the plaintiff for attorney's services and legal expenses.

"7. On the pleadings and the evidence the defendant cannot be charged in this action with the sum of $198.70, auctioneer's services and advertising, paid by the plaintiff."

"13. On all the evidence the defendant became a surety on the note in suit as between the plaintiff and himself on the sale of the mortgaged property to Gingras, and the latter's agreeing to assume and pay the defendant's mortgage, with the knowledge and assent of the plaintiff."

The judge denied the requests and found for the plaintiff in the sum of $3,780.96. The defendant alleged exceptions.

J.J. Hogan, (W.A. Hogan with him,) for the defendant. J.G. Hill, for the plaintiff.

BRALEY, J. The defendant, a dealer in real estate, entered into an agreement prior to May 29, 1923, to purchase certain land and buildings for $27,250, and subsequently made application to the plaintiff for a loan of $20,000 to be secured by a mortgage of the property. The loan was granted, and the mortgage and mortgage note dated May 29, 1923, maturing one year thereafter, with interest payable semiannually at the rate of six per cent, were executed and delivered to the plaintiff which duly recorded the mortgage. The defendant, while the agreement of purchase was pending, made an agreement to sell the premises to one Louis Gingras and on June 1, 1923, gave a deed to him which contained the following clause: "This conveyance is made subject to a mortgage of $20,000 running to the City Institution for Savings and to the taxes for the year 1923, all of which the grantee hereby assumes and agrees to pay." The grantee on the same date and as a part of the transaction gave a mortgage to the defendant for $6,000 which was also made subject to the first mortgage. There was evidence tending to show that the defendant requested the attorney and vice-president of the plaintiff that the plaintiff's mortgage "be made direct from Gingras," but the request was not granted, and Gingras made no application to the plaintiff for a mortgage loan. The defendant testified that, accompanied by Gingras and one Hamel, an attorney, he went to the plaintiff...