Jeselsohn v. Park Trust Co.

• Decision Date: 19 May 1922
• Citation: 241 Mass. 388,135 N.E. 315
• Parties: JESELSOHN v. PARK TRUST CO. et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

241 Mass. 388

135 N.E. 315

JESELSOHN

v.PARK TRUST CO. et al.

Supreme Judicial Court of Massachusetts, Middlesex.

May 19, 1922.

Case Reserved from Supreme Judicial Court, Middlesex County.

Suit by Louis Jeselsohn against the Park Trust Company and others for rescission of an assignment of a mortgage and other relief, in which the Medford Trust Company filed a cross-bill for reformation of certain mortgages and deeds. Reserved by a single justice on the pleadings, the master's report, and the exceptions of plaintiff thereto, for the determination of the full court. Decree in favor of plaintiff against the defendant Medford Trust Company and dismissing the cross-bill.

The mortgages were given on several lots to secure building loans, and the suit grew out of a mistake as to the lots on which the buildings were erected; all parties understanding that the mortgage assigned to plaintiff covered a lot on which there was a building, and plaintiff paying for the assignment on that understanding. All of the other mortgages except one had been foreclosed and the property sold to the Park Trust Company. The lot covered by the remaining mortgage and which the parties mistakenly supposed did not have any building had been sold upon foreclosure of a superior mortgage and with another lot conveyed to the Park Trust Company.E. Philip Finn, of Boston, for plaintiff.

Eaton & McKnight, of Boston, and William M. Quade, of Gardner, for respondent Medford Trust Co.

E. H. Vaughan, E. T. Esty, Jay Clark, Jr., and James A. Crotty, all of Worcester, for defendant Park Trust Co.

CROSBY, J.

This is a suit in equity praying for the cancellation of an assignment of a note and a real estate mortgage assigned to the plaintiff by the defendant Medford Trust Company, or in the alternative to have the mortgages and deeds referred to in the bill reformed by reason of a mutual mistake respecting the lots of land therein described. The case is before us on a reservation made by a single justice of this court. It is plain that the plaintiff is not entitled to have the mortgages reformed as it appears that since the assignment to him the rights of subsequent purchasers for value without notice have intervened. Nickerson v. Massachusetts Title Insurance Co., 178 Mass. 308, 59 N. E. 814;Livingstone v. Murphy, 187 Mass. 315, 72 N. E. 1012,105 Am. St. Rep. 400;Hillside Co-operative Bank v. Cavanaugh, 232 Mass. 157, 161, 122 N. E. 187.

The question then is whether the plaintiff on the facts found by the master is entitled to a decree for a rescission of the transaction. The facts so far as material to the issues involved are, that on April 7, 1919, the defendant New England Realty Company, Inc., hereafter called the realty company, owned a large tract of land in Somerville, which included five lots fronting on Gordon street, numbered 157 to 161, both inclusive; the entire tract was subject to a mortgage held by one Robinson, by the terms of which any lot might be released therefrom by the payment of $200.

On April 7, 1919, the realty company executed and delivered to the Medford Trust Company a mortgage for $3,800 on each of the five lots; each mortgage purported to be given to secure the payment of the grantor's note of the same date and amount with interest. Contemporaneously with the delivery of the notes and mortgages, the grantor and grantee entered into five separate agreements in writing, by the terms of which the realty company was to erect a building on each of the lots, and the sum of $3,800 was to be advanced by the trust company to the realty company in nine installments, the same to be paid as the work progressed, and upon reports in writing to be made to the trust company by one Lovering, who was to be employed by the company for that purpose. At the same time the realty company took out five insurance policies, each of which insured in the sum of $5,000 the building to be erected on the several lots, each policy being payable in case of loss to the trust company, as mortgagee, as its interest might appear. Although it was understood by the parties that five houses should be erected, only four in fact were constructed; they were on lots 157 to 160, both inclusive, no work being done on lot 161; the trust company advanced $3,800 on each of the four houses erected.

When the work on the houses was commenced, one Brown, the treasurer and manager of the realty company, instructed its foreman to lay out the first cellar on lot 161, and afterwards on lots 160, 159, and 158. By mistake work was started on lot 160, and then successively on lots 159, 158, and 157; when Lovering went to the premises to make inspection of the work, he had with him a plan of the lots, but he made no measurements and took no precautions to ascertain whether the houses were being erected upon the respective lots which he designated in his certificates. The officials of the realty company and of the trust company believed that the houses were being erected on lots 161, 160, 159, and 158.

On or about January 14, 1921, the trust company began foreclosure proceedings under each of the four mortgages covering lots 158, 159, 160, and 161, and advertised a sale of the lots to be held on February 8, 1921. The sales were adjourned from time to time to April 14, 1921, when lots 158, 159, and 160 were sold to the defendant, the Park Trust Company, for $4,250 each; the mortgage on lot 161 had been previously assigned to the...