Farmers and Mechanics Sav. Bank v. Sullivan

• Decision Date: 21 August 1990
• Docket Number: No. 13629,13629
• Citation: 579 A.2d 1054,216 Conn. 341
• Court: Connecticut Supreme Court
• Parties: FARMERS AND MECHANICS SAVINGS BANK v. Martin F. SULLIVAN, et al. 1

Page 1054

579 A.2d 1054

216 Conn. 341

FARMERS AND MECHANICS SAVINGS BANK v. Martin F. SULLIVAN, et al. ¹

No. 13629.

Supreme Court of Connecticut.

Argued Jan. 31, 1990 and May 29, 1990.

Decided Aug. 21, 1990.

Robert W. Heagney, with whom, on the brief, were Thomas C. Austin, Jr., and, on the brief, Ronald P. Sherlock, East Hartford, for appellants (named defendant et al.).

Rodger C. Boe, with whom, on the brief, was Donna M. Case-Rossato, West Hartford, Legal Intern, for appellees (defendant Peter H. Wirtz et al.).

Gregory M. Harris, Middletown, for appellees (defendant Michael F. Sullivan et al.).

Stanley M. Krupa, Middletown, for appellee (plaintiff).

Before PETERS, C.J., and SHEA, CALLAHAN, GLASS, COVELLO, HULL and BORDEN, JJ.

SHEA, Associate Justice.

The dispositive issue in this appeal is whether the trial court erred when it denied a motion to open and modify a judgment of strict foreclosure pursuant to General Statutes § 49-15. ² We conclude that the motion should have been granted and accordingly reverse.

The relevant facts are not in dispute. On May 15, 1986, the defendants Martin F. and Patricia M. Sullivan (younger Sullivans) executed a mortgage deed on their property located in East Hampton to the plaintiff, Farmers and Mechanics Savings Bank, to secure a promissory note in the amount of $72,000. In December, 1986, the defendants Peter H. and Laura B. Wirtz (Wirtzes) recorded in the land records a contract to purchase the property for $116,000. In February, 1987, the defendants Michael F. and Cleasse G. Sullivan (elder Sullivans) recorded a mortgage deed of the property to secure a purported $60,000 loan to the younger Sullivans. Later that month the Wirtzes recorded a lis pendens and a certificate of attachment for $30,000 which related to an action brought by the Wirtzes against the younger Sullivans for breach of the contract for sale of the property.

On October 6, 1987, the plaintiff bank commenced an action to foreclose its mortgage. On November 23, 1987, a default was entered against the younger Sullivans, the owners of the equity, for failure to appear. On the same day the plaintiff filed a motion for a judgment of strict foreclosure. On January 19, 1988, the trial court granted the plaintiff's motion and set law days of February 29, 1988, through March 4, 1988. The court found that the fair market value of the property was $170,000 and the debt owed to the plaintiff was $80,663.91. At this point, the younger Sullivans still had not appeared in the action.

On February 8, 1988, the elder Sullivans filed a motion to open and modify the judgment of strict foreclosure. Their motion was not heard prior to the passing of the law days. On March 4, 1988, the Wirtzes satisfied the judgment by paying the plaintiff $82,013.91 in order to redeem their interest. Thereafter the plaintiff filed a satisfaction of judgment. The younger Sullivans filed their appearance on March 14, 1988, and, at the same time, filed a motion to open and modify the judgment of strict foreclosure. Later, on May 20, 1988, they filed a motion to set new law days. All the motions of both the younger and elder Sullivans were heard on June 2, 1988, and denied by the trial court on July 22, 1988. On August 11, 1988, the younger Sullivans appealed the denial of their motions and the judgment of strict foreclosure rendered January 19, 1988, to the Appellate Court. The elder Sullivans, however, did not appeal. The Wirtzes filed a motion to dismiss the appeal, which was denied by the Appellate Court on November 3, 1988. We thereafter transferred the appeal to this court pursuant to Practice Book § 4023. We conclude that the trial court should have granted the younger Sullivans' motion to open the judgment of strict foreclosure and remand the case with direction to open the judgment and to order a foreclosure by sale.

The trial court denied the motion to open the judgment of strict foreclosure on three grounds: (1) the exercise by the Wirtzes of their right to redeem by payment of the mortgage debt on March 4, 1988, under the terms of the judgment, vested them with absolute title to the property, so that § 49-15 thereafter prohibited opening the judgment; (2) the failure of the elder Sullivans to have their motion acted upon before the law days had passed rendered their motion ineffective to actuate the automatic stay provided by Practice Book § 4046; and (3) a strict foreclosure was appropriate because it was the only way to protect the Wirtzes right to specific performance of their contract to purchase the property. On appeal the Wirtzes advance essentially the same reasons for affirming the judgment, but also claim that the delay of the younger Sullivans in filing their motions until after the Wirtzes had redeemed should bar relief under the doctrine of laches.

I

As the trial court noted, § 49-15, which allows the opening of a judgment of strict foreclosure "upon the written motion of any person having an interest therein, and for cause shown," provides that "no such judgment shall be opened after the title has become absolute in any encumbrancer." We have held that to open a judgment after the time fixed in the statute is erroneous but that the error may be waived. Ferguson v. Sabo, 115 Conn. 619, 622-23, 162 A. 844 (1932). If title had become absolute in the Wirtzes as a result of their payment of the mortgage debt on March 4, 1988, the trial court would not have been authorized, without a waiver, to grant a motion to open the foreclosure judgment after that date.

Because the elder Sullivans filed their motion to open the judgment within the twenty days allowed for an appeal, however, "the period of time for filing an appeal [would] commence from the issuance of notice of the decision upon the motion." Practice Book § 4009. ³ The filing of that motion also activated the automatic stay under Practice Book § 4046, ⁴ providing that "proceedings to enforce or carry out the judgment shall be automatically stayed until the time to take an appeal has expired." The effect of these provisions was to stay the enforceability of the foreclosure judgment until the motion of the elder Sullivans was decided on July 22, 1988. Because of this automatic stay, the Wirtzes could not have acquired title to the property pursuant to the judgment when they paid the mortgage debt.

This court has often recognized that the law days established in a foreclosure judgment are ineffective while an appeal is pending. In Zinman v. Maislen, 89 Conn. 413, 94 A. 285 (1915), the holding of the court is summarized in the headnote as follows: "The seasonable filing of a notice of appeal ... operates as a stay of further proceedings under a judgment of foreclosure; and therefore, pending such appeal, the parties respondent are not obliged to redeem on or before the expiration of the law-day fixed by the judgment, nor can the plaintiff, under such circumstances, acquire title absolute under a certificate of foreclosure." "Upon the filing of [the defendant's] appeal ... Practice Book [1934] § 366, ⁵ became operative to stay further proceedings under the judgment ... precluding the passage of title upon any of the law days provided for in that judgment." Milford Trust Co. v. Greenberg, 137 Conn. 277, 278, 77 A.2d 80 (1950). "Because of delays incident to the legal process of appeal, the judgment of the trial court became ineffective in an essential respect, and what is in effect a new judgment became necessary." Hartford National Bank & Trust Co. v. Tucker, 195 Conn. 218, 222, 487 A.2d 528, cert. denied, 474 U.S. 845, 106 S.Ct. 135, 88 L.Ed.2d 111 (1985). Practice Book § 340 ⁶ recognizes the necessity for setting new law days or other dates for performance of acts specified in a judgment that is affirmed on appeal. "This court has on occasion itself set new law days in similar situations," but ordinarily leaves this to the trial court on remand. Tilden v. Century Realty Co., 112 Conn. 439, 442, 152 A. 707 (1930). The view of the trial court that the law days established by the foreclosure judgment in this case, which were stayed while the motion of the elder Sullivans was pending, could be given effect, and that title had already vested in the Wirtzes by the time that motion was heard is wholly at variance with these precedents as well as the express provisions of our rules of practice.

II

The trial court declared that the failure of the elder Sullivans to have their motion to open heard and decided before the law days had passed meant that those law days remained in effect. The court relied on this statement in a treatise: "A critical factor to be recognized in connection with a motion to reopen a judgment of strict foreclosure is that the motion must be heard, and not merely filed, prior to the vesting of title." D.R. Caron, Connecticut Foreclosures (2d Ed.) § 9.01C. This observation would be correct if limited to a motion made after the expiration of the time to appeal from the initial foreclosure judgment, because no automatic stay would result from its filing. In a later section of his treatise, the same commentator confirms the general understanding of the bar that, when a timely motion to open the judgment is filed, "any redemption ... would be violative of the automatic stay, and any title derived through such stayed proceedings would be subject to defeasance." Id., § 17.06. ⁷

Apart from the plain applicability to the elder Sullivans' motion of § 4046, which automatically stays proceedings "to enforce or carry out the judgment," it must be remembered that an attempt to schedule a hearing on the motion was made before the law days had run, but the hearing was postponed until afterward with the full knowledge of the Wirtzes. After the younger Sullivans had filed their motion to open, the court requested transcript of the earlier proceeding, which resulted in delaying the hearing until June 2, 1988. It does not appear that either the...