Guleserian v. Pilgrim Trust Co.

• Decision Date: 04 June 1954
• Citation: 331 Mass. 431,120 N.E.2d 193
• Parties: GULESERIAN v. PILGRIM TRUST CO. PILGRIM TRUST CO. v. GULESERIAN.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 193

120 N.E.2d 193

331 Mass. 431

GULESERIAN v. PILGRIM TRUST CO.

PILGRIM TRUST CO. v. GULESERIAN.

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Dec. 9, 1953.

Decided June 4, 1954.

John A. Daly, Boston (Gregory Mooradkanian, Boston, with him), for guleserian.

Francis T. Leahy, Boston, for Pilgrim Trust Co.

Before QUA, C. J., and LUMMUS, WILKINS, and SPALDING, JJ.

SPALDING, Justice.

These are two actions of contract. The first is brought by Guleserian, hereinafter called the buyer, and the second, a cross-action, is brought by the Pilgrim Trust Company, hereinafter called the seller. The buyer sought to recover $10,000 representing a $5,000 deposit on a contract to purchase real estate and a $5,000 deposit on a contract to purchase personal property. The buyer's declaration contains six counts. The basis for recovery under counts 1 and 5 is that the seller could not transfer a good title to the real property, and the basis for count 2 is that it could not convey a good title to the personal property. Counts 3, 4, and 6 are framed on the theory that even if title to one of the properties was good the plaintiff did not have to accept it since the contracts were interdependent. The seller sought damages for the buyer's refusal to accept a deed and bill of sale of the real estate and personal property respectively.

The cases come here on exceptions by the buyer to the action of the judge in directing a verdict for the seller on all counts in the buyer's declaration, in denying motions by the buyer for directed verdicts on these counts, and in limiting the issue on the first count of the seller's declaration to damages only, and on the seller's exception to the exclusion of certain evidence offered under that count touching the question of damages.

The contracts which gave rise to this litigation grew out of a public auction to foreclose mortgages on certain real and personal property owned by Wayland Ten Acres, Inc., hereinafter called Wayland. The seller as mortgagee held title to both the real and the personal property as security for the same mortgage debt. There was in addition a second mortgage on the personal property held by the trustees under a trust for the benefit of Wayland's creditors.

1. The buyer contends that the foreclosure of the personal property mortgage was defective by reason of the seller's failure to obtain the court order required by the Soldiers' and Sailors' Civil Relief Act of 1940. U.S.C.(1946 ed.) Title 50, Appendix, § 532, 50 U.S.C.A. Appendix, § 532. It is conceded that no order of court for the foreclosure of this mortgage was ever obtained. Admittedly the mortgagor, Wayland, could not be in the military service, and it is conceded that the trustees who held the second mortgage were not in the military service. The sole basis for invoking the Soldiers' and Sailors' Relief Act is that the seller failed to prove that no assenting creditor of the trust for the benefit of creditors was in the military service. Furthermore, it is urged, an assenting creditor might have assigned his claim to a serviceman who could invoke the relief act to invalidate the foreclosure.

The act by its terms applies to personal property as well as real property, and there is no question that in a proper case a foreclosure held without a court order would be open to attack by one in the military service. We are of opinion, however, that § 532 of the act does not apply to persons such as the assenting creditors under the trust or their assignees, though they may be in the military service. Section 532(1) reads in part, 'The provisions of this section shall apply only to obligations secured by mortgage * * * upon real or personal property owned by a person in military service * * *.' In this Commonwealth a mortgagee has the legal title to the mortgaged property, subject to defeasance, and in this aspect he is the 'owner,' but for most purposes and according to popular understanding the mortgagor is considered the 'owner' of the mortgaged property. Crowley v. Adams, 226 Mass. 582, 583, 116 N.E. 241; Harlow Realty Co. v. Cotter, 284 Mass. 68, 70, 187 N.E. 118; City of Boston v. Quincy Market Cold Storage & Warehouse Co., 312 Mass. 638, 648-649, 45 N.E.2d 959. This view of the respective interests of the mortgagor and the mortgagee is inherent in those cases which have arisen under the act. The mortgagee holds the legal title but it is clear that the mortgagor who holds the equity of redemption is the 'owner' for the purposes of § 532. See Hoffman v. Charlestown Five Cents Savings Bank, 231 Mass. 324, 328-329, 121 N.E. 15; Morse v. Stober, 233 Mass. 223, 227, 123 N.E. 780, 9 A.L.R. 78; John Hancock Mutual Life Ins. Co. v. Lester, 234 Mass. 559, 561-562, 125 N.E. 594; Lynn Institution for Savings v. Taff, 314 Mass. 380, 386, 50 N.E.2d 203. No case has been brought to our attention, and we have found none, which holds the contrary. The beneficial owners of the second mortgage whether they were assenting creditors or assignees of such creditors cannot fairly be said to be 'owners' of the property within the intendment of the act and would not be entitled to invoke it. It follows, therefore, that the seller could give a good title to the personal property without obtaining a court order, and that the seller would be entitled to a directed verdict on count 2 of the buyer's declaration except for the question of the interdependency of the contracts which will be discussed hereinafter.

2. We now turn to the question whether the judge erred in directing verdicts for the seller on counts 1 and 5 to recover the deposit on the contract to purchase the real estate. The answer to that question turns on whether the title offered by the seller was marketable. The notice of sale set forth the terms of the mortgage which disclosed that the conveyance was subject to the reservations contained in a deed from H. J. Seiler Company, hereinafter called Seiler, dated September 21, 1945. Under that deed Seiler conveyed the real estate in question to Wayland and reserved 'a right of way to pass and repass over the road now existing on the Westerly part of the granted premises for ingress and egress to said Recreation Grounds from Route No. 20, for purposes of its business * * *.' Two other instruments having to do with rights over a roadway on the property were recorded simultaneously on July 15, 1946. One, executed on July 10, 1946, was a release by the seller as mortgagee to Wayland as mortgagor of 'A right of way over the * * * premises for all lawful purposes.' The other, executed on July 11, 1946, was a grant by Wayland of that easement for all lawful purposes to Seiler, and four persons who owned land adjacent to the property of either Seiler or Wayland. It is conceded that this right of way is the same as that reserved by Seiler in its deed to Wayland. These instruments or the contents thereof were not mentioned in the notice of sale, nor at the time of the auction, and there is no evidence that the buyer had any knowledge of their existence before he agreed to purchase the property. Whether the land is substantially the same as that described in the notice of sale depends on whether these undisclosed instruments created a...