Columbia Federal Sav. Bank v. International Site Consultants, Inc.

• Citation: 669 A.2d 594,40 Conn.App. 64
• Decision Date: 09 January 1996
• Docket Number: No. 14346,14346
• Court: Appellate Court of Connecticut
• Parties: COLUMBIA FEDERAL SAVINGS BANK v. INTERNATIONAL SITE CONSULTANTS, INC., et al.

Page 594

669 A.2d 594

40 Conn.App. 64

COLUMBIA FEDERAL SAVINGS BANK v. INTERNATIONAL SITE CONSULTANTS, INC., et al.

No. 14346.

Appellate Court of Connecticut.

Argued Sept. 28, 1995.

Decided Jan. 9, 1996.

Joseph A. Kriz, Trumbull, for the appellant (defendant Newbrook Associates, Inc.).

Roy H. Scharf, Branford, for the appellee (substitute plaintiff).

Before LANDAU, SPEAR and FRANCIS X. HENNESSY, JJ.

SPEAR, Judge.

The defendant Newbrook Associates, Inc. (Newbrook), appeals from the judgment of foreclosure rendered after the trial court granted the named plaintiff's motion for summary judgment. On appeal, Newbrook asserts that the trial court improperly granted summary judgment because (1) Newbrook held an equitable lien on the subject premises that was superior to the mortgage being foreclosed, (2) the equitable lien was a charge on property and not an interest in property and thus not subject to the time limitations of General Statutes § 47-33a, ¹ (3) Newbrook commenced a timely action on its statutory lien pursuant to General Statutes § 49-92c, ² and (4) genuine issues of material fact existed. We disagree with Newbrook's assertions and affirm the judgment of the trial court.

The relevant facts are as follows. On December 16, 1986, Newbrook entered into a real estate contract to purchase a parcel of real estate from the named defendant, International Site Consultants, Inc. (International). The contract provided for a deposit of $120,000. On February 26, 1987, International and Newbrook executed an addendum to the contract that provided for Newbrook to purchase a second parcel and to make an additional deposit of $45,000. ³ The contract and addendum were recorded on March 12, 1987. The contract clause at issue is termed "Buyer's Lien" and provides that "[a]ll sums paid on account of this Agreement are hereby made liens thereon, but such liens shall not continue after default by the Buyer under the terms of this Agreement."

In addition, paragraph eleven of the contract makes Newbrook's obligation to purchase the parcels contingent on International's obtaining the necessary approvals for the development of a thirteen lot subdivision. The contract further provided that should International fail to obtain such approvals by December 1, 1987, Newbrook could elect to accept title, rescind the contract or provide International with additional time, not to exceed three years, to seek the necessary approvals.

The first parcel of land was subsequently mortgaged by International to the named plaintiff, Columbia Federal Savings Bank (bank), to secure a $250,000 note. The mortgage was dated February 27, 1987, and recorded on March 2, 1987. As further collateral for the note, International assigned to the bank the December 16, 1986 contract entered into by International and Newbrook. Although the contract was not recorded until March 12, 1987, the bank conceded that it had actual notice of the contract and addendum at the time the bank and International executed the February 27, 1987 mortgage.

The second parcel was then mortgaged by International to the bank to secure a $130,000 note. This mortgage, dated July 21, 1987, and recorded on July 22, 1987, also covered the first parcel of land as a second mortgage.

The record reflects that International did not obtain the necessary approvals by December 1, 1987. Newbrook terminated the real estate contract on December 5, 1989, and demanded the return of the deposits it had paid. After International refused to return the deposits, Newbrook brought suit against International seeking rescission of the contract and money damages. The bank brought an action to foreclose the mortgages because International had defaulted on its payments. Newbrook was made a party to that action because of its claim that it possessed both a common law equitable lien and a purchaser's lien pursuant to the provision in the contract.

The bank filed a motion for summary judgment as against Newbrook only. The trial court, in granting the bank's motion, concluded that Newbrook possessed only a purchaser's lien, not an equitable lien, and that such lien had expired prior to the commencement of the action pursuant to General Statutes §§ 49-92c ⁴ and 47-33a. ⁵ Thereafter, the trial court rendered a judgment of strict foreclosure in favor of General Financial Services, Inc., which had been substituted as plaintiff after the mortgage was transferred to it. This appeal followed.

I

Newbrook first claims that it held an equitable lien that was not subject to the statutory two year time limitation provided in § 49-92c. ⁶ We disagree and conclude that any equitable lien held by Newbrook was subject to the two year time limitation and, thus, had expired prior to the commencement of the action.

Both parties agree that Newbrook once held a purchaser's lien in the amount of the deposit it had paid pursuant to paragraph ten of the contract. This paragraph of the contract, however, merely recites a statutory right already conferred upon purchasers. General Statutes § 49-92a provides in pertinent part: "A purchaser's lien is created for the amount of the deposit paid pursuant to and stated in the contract for the conveyance of land by the recording of that contract...."

The primary issue on appeal centers around the intent of this legislation and what effect the statute has on the common law equitable lien. The common law equitable lien is "a right, not existing at law, to have specific property applied in whole or in part to payment of a particular debt or class of debts." Black's Law Dictionary (6th Ed.1990). As such, it "constitutes a charge or encumbrance upon the thing, so that the very thing itself may be proceeded against in an equitable action...." 3 J. Pomeroy, A Treatise on Equity Jurisprudence (4th Ed.1918) § 1233, p. 2958.

Newbrook asserts that the enactment of § 49-92a does not abrogate or impact its common law equitable lien, and that its equitable lien retained priority over the bank's mortgage. The trial court concluded that Newbrook's claimed lien expired by the passage of the statutory two year time limitation of § 49-92c. The trial court reached this conclusion after noting that while our courts recognize the equitable lien doctrine, "Newbrook has cited no legal authority for the position that the equitable lien can exist independent of and contrary to the statutory provisions." Newbrook claims that the equitable lien does exist independent of the statutory lien and that the legislature did not intend to affect the equitable lien through its passage of § 49-92a.

We are guided by our well established rules of statutory construction in ascertaining the statute's intent and effect. It is well settled that "[i]n construing a statute, common sense must be used...." Norwich Land Co. v. Public Utilities Commission, 170 Conn. 1, 4, 363 A.2d 1386 (1975). Further, we must construe a statute to avoid results that are irrational and insensible. Caltabiano v. Planning & Zoning Commission, 211 Conn. 662, 667, 560 A.2d 975 (1989); Maciejewski v. West Hartford, 194 Conn. 139, 152, 480 A.2d 519 (1984).

Common sense dictates that the legislature intended to subject the common law equitable lien to the statutory lien provisions. One obvious purpose of § 49-92c is to ensure that a lienholder could not hold a lien over the subject property indefinitely. For this reason, the legislature enacted the statute which provides for the termination of all purchaser's liens that have continued in force for two years absent any action to foreclose the lien within that two year period. Irrational and insensible results would follow were we to conclude that an equitable lien can exist independent of and contrary to the time limitations posed by § 49-92c. Such a conclusion would allow Newbrook to circumvent the time limitations of § 49-92c, and thereby nullify the effect of the statute and thwart its purpose. We do not interpret a statute in such a way that thwarts its purpose. See Kron v. Thelen, 178 Conn. 189, 192, 423 A.2d 857 (1979).

Our Supreme Court has held that one cannot, by bringing a common law action of indebitatus assumpsit, circumvent the statutory time limitations of General Statutes § 12-117a (appeal from property tax valuation) and General Statutes § 12-119 (claim of wrongful tax assessment). Norwich v. Lebanon, 200 Conn. 697, 708-13, 513 A.2d 77 (1986). The Supreme Court reasoned that one could not resort to the equitable writ of assumpsit because "where a statute has established a procedure to redress a particular wrong a person must follow the specified remedy and may not institute a proceeding that might have been permissible in the absence of such a statutory procedure." Id., 200 Conn. at 708, 513 A.2d 77. "Although resting on the doctrine of exhaustion of remedies, our decision in Norwich recognized that the legislative purpose behind the limitation periods for challenging tax assessments would be thwarted if an action for refund of taxes paid upon a disputed assessment could be brought far beyond the time limits for contesting an assessment established by these statutes." (Internal quotation marks omitted) Wilson v. Kelley, 224 Conn. 110, 122-23, 617 A.2d 433 (1992).

Similarly, were we to accept Newbrook's theory, then once a contract for the sale of land is recorded,...