Davis v. Newburyport Five Cents Sav. Bank

• Decision Date: 02 April 1942
• Citation: 41 N.E.2d 188,311 Mass. 377
• Parties: DAVIS v. NEWBURYPORT FIVE CENTS SAV. BANK et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

311 Mass. 377

41 N.E.2d 188

DAVIS

v.NEWBURYPORT FIVE CENTS SAV. BANK et al.

Supreme Judicial Court of Massachusetts, Essex.

April 2, 1942.

Suit in equity by Howard Clark Davis against the Newburyport Five Cents Savings Bank and others for an accounting and to enjoin named defendant from prosecuting an action to recover from plaintiff a deficiency upon a note. From a final decree dismissing his bill, plaintiff appeals.

Reversed.Appeal from Superior Court, Essex County; Collins, Judge.

Before FIELD, C. J., and DONAHUE, QUA, and RONAN, JJ.

W. Powers, of Boston, for plaintiff.

J. W. Sullivan and J. J. Leonard, both of Lynn, for Newburyport Five Cents Sav. Bank.

W. Hartstone and H. N. Hartstone, both of Boston, for defendants Mahony.

RONAN, Justice.

Davis obtained a loan of $100,000 from the Newburyport Five Cents Savings Bank, in 1926, which was secured by a mortgage upon two apartment houses, on Newbury Street, in Boston. He paid $10,000 on the principal in 1929, and the bank extended the term of the mortgage to July 15, 1932. The interest was paid regularly up to January 2, 1932. In August, 1932, Davis paid $100 on account of the mortgage. He made no other payments. The bank began to press him for payments and to insist upon more security. The receipts from the property were far from sufficient to pay the carrying charges. Davis had offered, in 1932, to convey the property to the bank but the latter did not desire to take over the property. In July, 1933, the defendant Dyer, who was associated with the defendants Ward and Mahony in a corporation engaged in the management of apartment properties, made, at the request of the bank, a survey of these premises. The bank made an entry on August 17, 1933 to foreclose its mortgage and on August 21, 1933, wrote Davis to that effect. It made extensive repairs on the premises, about one half of which were completed on October 27, 1933, when the foreclosure sale was held and the property sold to it upon its bid of $50,000. The property was conveyed to the bank on November 14, 1933. It conveyed the premises to the Ward Realty Trust, which was composed of the individual defendants, on January 10, 1934, taking the demand note of the trust for $130,000 secured by a mortgage upon the premises. The bank sued Davis for a deficiency upon his note, and he filed this bill in equity for an accounting and to enjoin the bank from prosecuting the action at law. The suit and action were tried together under a stipulation that the judge should make such an order as would effectually dispose of the entire matter. The judge made findings in the suit in equity and ordered the bill dismissed. He also found that, if the decree in equity ‘ultimately prevails,’ the bank was entitled to a judgment of $40,658.15 with interest at the rate of six per cent per annum from August 25, 1932. The plaintiff appealed from a final decree dismissing the bill.

The plaintiff contends that he is entitled to an accounting in which he should be credited with $130,000 as the price at which the property was sold or ought to have been sold at the foreclosure sale. The bill, however, was brought not to set aside the sale or to redeem the property but to recover for any surplus in the hands of the bank from the foreclosure sale. Clark v. Simmons, 150 Mass. 357, 23 N.E. 108;Bon v. Graves, 216 Mass. 440, 103 N.E. 1023;Russell v. Bon, 221 Mass. 370, 108 N.E. 1048. The plaintiff by bringing this bill affirms the sale and by this bill seeks an accounting of the alleged surplus arising from the sale. The validity of the sale is not open to attack upon such a bill. O'Connell v. Kelly, 114 Mass. 97;Alden v. Wilkins, 117 Mass. 216;Cook v. Basley, 123 Mass. 396;Goldman v. Damon, 272 Mass. 302, 172 N.E. 226;Chute v. Cronin, 273 Mass. 471, 174 N.E. 722;Brooks v. Bennett, 277 Mass. 8, 177 N.E. 685;Barry v. Dudley, 282 Mass. 258, 184 N.E. 815. The bill in equity was tried together with an action at law to recover the balance due upon the mortgage note, and Davis in his answer alleged that the bank acted in bad faith and improperly conducted the foreclosure sale and had received therefrom an amount in excess of the amount of the note. The good faith and diligence of the bank in the foreclosure proceedings taken by it were thus presented for decision. Vahey v. Bigelow, 208 Mass. 89, 94 N.E. 249;Johnston v. Cassidy, 279 Mass. 593, 181 N.E. 748;Cambridge Savings Bank v. Cronin, 289 Mass. 379, 194 N.E. 289;Chartrand v. Newton Trust Co., 296 Mass. 317, 5 N.E.2d 421;Ross v. Vadeboncoeur, 298 Mass. 523, 11 N.E.2d 430;Atlas Mortgage Co. v. Tebaldi, 304 Mass. 554, 24 N.E.2d 554.

The account could be stated and adjudicated in the bill in equity, and a decree could be entered ordering the party found to be indebted to the other to pay the amount of such indebtedness or, if the balance was found in favor of the bank, judgment could be entered upon the action at law for such balance, and a decree could then be entered dismissing the bill with costs. The plaintiff, of course, could not be credited in both the suit and the action with the items for which the bank was found to be indebted to him. Hebert v. Dewey, 191 Mass. 403, 77 N.E. 822;Raymond Syndicate, Inc., v. American Radio & Research Corp., 263 Mass. 147, 160 N.E. 821;Poorvu v. Weisberg, 286 Mass. 526, 190 N.E. 804.

The judge made a report of the material facts and refused to adopt the suggestions of the plaintiff to add certain other matters to his report. We do not know what was contained in these suggestions, but a judge cannot be compelled to include in the report matters that he did not consider material in reaching a decision. The report according to the statement of the trial judge contained all the material facts found by him. There is nothing in this respect for a judicial review. Plumer v. Houghton & Dutton Co., 277 Mass. 209, 178 N.E. 716;Merrill v. Everett, 293 Mass. 327, 199 N.E. 735. The appeal is before us with not only a report of the material facts but also a full report of the evidence. The plaintiff has argued that the findings of fact are obscure unless explained by the exhibits or testimony and are incomplete as not containing facts that he submits are essential. The appeal with a full report of the evidence brings before this court not only all questions of law but all questions of fact, and this court will examine the evidence and decide the case according to its own judgment, giving due weight to the findings of the trial judge, which are not to be reversed unless plainly wrong. The evidence has been studied in the light of these familiar principles. It need not be fully summarized. A careful examination of the testimony furnishes no reason for doubting the soundness of these findings apart from the finding as to the amount due on the note which will be hereafter discussed. These findings, with the single exception just referred to, must be adopted as true.

The plaintiff admits that there was a literal compliance with the terms of the mortgage in making the foreclosure sale, but he alleges that the bank was not acting in good faith; that, having an opportunity to sell the property for $130,000, it should not have did it in for $50,000; and that it entered into a conspiracy with the remaining defendants to sell them the property at the larger amount after the bank had become the owner. Of course, mere formal compliance with the provisions of the mortgage would not be a defense if the bank did not act in good faith or with reasonable diligence to protect the rights of the plaintiff. White v. Macarelli, 267 Mass. 596, 166 N.E. 734;Krassin v. Moskowitz, 275 Mass. 80, 175 N.E. 269;Sandler v. Silk, 292 Mass. 493, 198 N.E. 749.

The plaintiff contends that the three individual defendants, or the trust which they represented, were willing at the time of the foreclosure sale to purchase the property for $130,000 and that the bank had knowledge of this fact. Whether such a contention could be supported by the evidence depended to a considerable extnet upon the market value of the premises at the time of the foreclosure sale. There was testimony that the property was in a dilapidated condition in the middle of July, 1933. All but one of the twenty-four apartments were vacant, and the single tenant was an old lady who, although in arrears for rental, was allowed to continue in occupancy. The plaintiff testified that he had given notice to quit to all the tenants and a notice to the janitor to leave as he had a plan to change the property into fortyeight suites; and that he had shown a blue print of the proposed changes to the president of the bank who refused to furnish $25,000 which the plaintiff estimated would be the cost. The judge, however, in view of the attitude, promises and dealings of the plaintiff with the bank after he had ceased to pay interest when due, the various activities of the plaintiff and his financial situation, was not required to believe that the plaintiff was able to secure the necessary cost of making these improvements or that they were feasible, or that they would not have cost considerably more than the amount mentioned or, in fact, that the plaintiff intended to make the improvements. There was evidence that when the bank took possession on August 17, 1933, the roof was in bad condition; that all or a part of the ceilings in every room under the leak on each of the four stories was on the floor; that the floors were warped; that the fixtures in many instances were broken and tarnished; that the plumbing was not in working condition; that parts of the steam boiler were missing; and that the painting and paper were in bad condition. There was considerable evidence of the market value of the property when the bank took possession and when it held the foreclosure sale. The bank was the only bidder at the sale and its bid of $50,000 was subject to unpaid taxes which amounted to several thousand dollars. The judge found that the...