Lakes Region Finance Corp. v. Goodhue Boat Yard, Inc., 7888

• Decision Date: 17 February 1978
• Docket Number: No. 7888,7888
• Citation: 382 A.2d 1108,118 N.H. 103
• Parties: LAKES REGION FINANCE CORPORATION v. GOODHUE BOAT YARD, INC. and Manelaos Makris.
• Court: New Hampshire Supreme Court

Page 1108

382 A.2d 1108

118 N.H. 103

LAKES REGION FINANCE CORPORATION v. GOODHUE BOAT YARD, INC. and Manelaos Makris.

No. 7888.

Supreme Court of New Hampshire.

Feb. 17, 1978.

Decker & Hemeon, Laconia (David R. Decker, Laconia, orally), for plaintiff.

Wescott, Millham & Dyer, Laconia (Rodney N. Dyer, Laconia, orally), for defendants.

BOIS, Justice.

Action based on a promissory note. Trial by a Master (Mayland H. Morse, Jr., Esq.) resulted in a verdict for the plaintiff in the sum of $2,247.87, with allowable court costs. During the course of trial, the plaintiff seasonably excepted to certain rulings admitting and excluding evidence. The verdict was approved by Batchelder, J. Plaintiff seasonably excepted to the denial of its motion to set aside the verdict. All questions of law raised by these exceptions were transferred to this court. We affirm.

The note in issue was given on March 21, 1975, by the defendants, who owed a balance of $8,008.88 on a $100,000 antecedent loan from the plaintiff. Attorney Colin Norberg was a stockholder, director, treasurer, chief operating officer and legal counsel of plaintiff finance corporation. At the time of the original loan he also represented the defendants; however, this attorney-client relationship had terminated before the execution of the note in question. At Norberg's suggestion, the note was secured by a second mortgage on a condominium unit owned by the defendant Makris.

Plaintiff was originally funded through a substantial loan obtained from a Pennsylvania trust company. Norberg was not personally responsible for this corporate obligation, but did have a line of credit with a Boston bank that was apparently interrelated with the affairs of the plaintiff.

During the latter part of 1975, Norberg received various communications from representatives of plaintiff's lender concerning a payment of principal due in December. He testified that the plaintiff paid $35,000 toward the installment due, that the plaintiff was being pressured to obtain the remaining $15,000, and that if he could get $10,000 from the defendants on their note (due on September 21, 1975), he could then borrow the balance to satisfy plaintiff's obligation.

Norberg repeatedly contacted Makris. Makris responded that he could not pay the note, but that one Edward Rubbico agreed to buy the condominium unit for $18,000. On December 10, 1975, Makris received from Rubbico a $3,000 advance. He deposited this advance in his bank account on December 29, 1975. Makris also received a signed sales agreement which he allegedly executed and returned to Rubbico. Norbert continued to contact Makris, reminding him the note was overdue and demanding payment.

Makris and Rubbico went to a Manchester bank to arrange for Rubbico's assumption of the first mortgage of $13,500. Not satisfied with the interest rate, Rubbico decided to seek financing elsewhere. Makris offered Norberg $3,000 to delay foreclosure long enough to permit Rubbico to obtain satisfactory financing. Norberg did not recall this offer or conversation, but in any event informed Makris that he decided to foreclose.

Norberg started foreclosure proceedings. On the day preceding the sale, Makris filed a petition for an injunction, seeking to delay the auction. On the morning of the sale, February 4, 1976, a hearing was scheduled before William Lovejoy, Esq., as Master. Norberg, Makris and his counsel, and Rubbico conferred before the hearing. They discussed the $3,000 deposit, Rubbico's desire to buy the unit, the unit's value, an unsigned sales agreement between Makris and Rubbico, Norberg's refusal to delay the sale and the reasons therefor, and the activity and interest generated by the proposed auction. Makris testified that he pleaded for a few weeks' delay to allow completion of the sale to Rubbico; Norberg allegedly advised Makris that if the plaintiff could not meet its obligations because of the pending petition for an injunction, the plaintiff might seek legal recourse against Makris.

The parties had a hearing before the court. Norberg insisted that there could be no delay because of his commitment and the pressures upon him. Makris withdrew the petition because Norberg represented that many people expressed interest in the sale, that he anticipated a bid of five or six thousand dollars above the first mortgage, and that plaintiff would sustain irreparable damage if the sale were delayed. In fact, Norberg had received only five calls for sale information, no bid price had been discussed, and the only caller whose name Norberg obtained was Mel Borrin, who eventually bought the unit. (The master found the unit was actually acquired by Borrin's corporation, Preferred Properties, Inc.)

Before the sale Norberg talked with defendants' counsel, who thought the price of the unit ranged from $18,000 to $20,000. The auction was opened on the premises at the noticed time. Makris, his attorney Edmund Hibbard, and Mel Borrin were present. Rubbico was not; the master found that the rejection of his offer may have discouraged him from attending. Hibbard requested an "upset price" of $18,500. Norberg, however, did not set an upset price, although he later testified that he would not have accepted a bid less than the first mortgage. Bidding began, and Borrin entered a bid of $500 over the first mortgage of $13,500. Hibbard objected to the bid's acceptance. Since no further bids were made, the bidding was closed. Hibbard requested that the bidding be reopened. Because Borrin objected, Norberg refused.

Of the $500 produced by the sale, $29.50 was credited against the note. The...