Levey v. Higginson

• Decision Date: 28 February 1929
• Citation: 266 Mass. 381
• Parties: JOSEPH LEVEY v. JOHN B. HIGGINSON.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

266 Mass. 381

JOSEPH LEVEY v. JOHN B. HIGGINSON.

Supreme Judicial Court of Massachusetts, Suffolk.

February 28, 1929

January 14, 1929.

Present: RUGG, C.

J., CROSBY CARROLL, & SANDERSON, JJ.

Mortgage, Of real estate: foreclosure. Fraud. Evidence, Relevancy and materiality.

A mortgagee who attempts to execute a power of sale contained in the mortgage is bound to exercise good faith and to use reasonable diligence to protect the rights and interests of the mortgagor.

The defendant, in his answer in an action for a balance alleged to be due on a mortgage note after a foreclosure sale, alleged bad faith of the plaintiff in the foreclosure proceedings, and that, by reason of such bad faith, he suffered damage which he was entitled to recoup. At the trial there was evidence that the plaintiff, by means of a promise to the defendant, which he had no intention of carrying out, that he would permit the defendant to remain in possession of the property and later would sell it to him at a certain price, induced the defendant not to bid at the foreclosure sale, whereby the property was bid in for a sum much less than its value. The judge refused to order a verdict for the plaintiff. Held that

(1) The evidence warranted a finding that the plaintiff had been guilty of bad faith in the foreclosure sale;

(2) A finding was warranted that the defendant had sustained the defence set up in his answer;

(3) It was proper to refuse to order a verdict for the plaintiff.

Evidence at the trial above described that, after the defendant at the plaintiff's request about four months after the foreclosure sale had vacated the premises, had sold his furniture and other goods, and had taken a lease of another house, the plaintiff several times had offered to sell the property to the defendant for the price formerly agreed upon did not entitle the plaintiff to the direction of a verdict in his favor.

At the trial of the action above described, testimony by a real estate expert, called by the defendant, as to the fair market value of the property at the time of the foreclosure sale properly was admitted; and testimony by the plaintiff as to the amount received by him when he sold the property more than a year after the foreclosure sale properly was excluded.

CONTRACT to recover a balance remaining due on a note secured by a mortgage of real estate after a foreclosure under a power of sale in the mortgage. Writ in the Municipal Court of the City of Boston dated November 8, 1927.

On removal to the Superior Court, the action was tried before Walsh, J. Material evidence is stated in the opinion. At the close of the evidence, the plaintiff moved that a verdict be ordered in his favor. The motion was denied. The judge refused to grant the following requests by the plaintiff for rulings:

"2. The evidence in the case is insufficient to show bad faith on the part of the plaintiff in the foreclosure of the mortgage."

"6. Upon all the evidence the defendant has failed to sustain any of the affirmative defences set up in his answer.

"7. The fact that the mortgaged property may have been worth more than the amount of the indebtedness is no ground for impairing the validity of the foreclosure of the mortgage, if the sale was conducted in good faith and with reasonable regard for the interests of the mortgagor.

"8. If the jury find that there was a breach in the condition of the mortgage; that the sale was legally carried out in accordance with the terms of the power and nothing done by the mortgagee to discourage attendance of bidders, the fact that the mortgagee was the only person bidding at the sale is not itself evidence of bad faith."

There was a verdict for the defendant. The plaintiff alleged exceptions.

W. Hartstone, for the plaintiff. G.W. Howe, for the defendant.

CROSBY, J. This is an action to recover the amount of a promissory note for $3,000. The note was secured by a second mortgage on real estate; both were given by the defendant to Rachel Levey, the plaintiff's wife, and by mesne assignments transferred to the plaintiff who, through one Karpas (to whom the note and mortgage had been assigned for the purpose of foreclosing the mortgage) began foreclosure proceedings, the sale to be held on January 11, 1927. The defendant admitted the making of the note, that there was default in payments on the first and second mortgages, and that the plaintiff had a right to foreclose the second mortgage; but alleges bad faith of the plaintiff in the foreclosure proceedings, and that, by reason of such bad faith, the defendant suffered damage which he is entitled to recoup in this action. At the close of the evidence a motion filed by the plaintiff that a verdict be directed in his favor was denied, subject to his exception.

The defendant testified that, on January 10, 1927, the day before the sale and while he was vacating the premises and was removing his furniture therefrom, the plaintiff asked him what he was moving for, and he replied that as the mortgage was being foreclosed that was all there was to do; that the plaintiff then said, "if you haven't got any money now won't you ever have any money?" and the defendant said, "Yes, of course, I will," and to the plaintiff's question "Well, when will you have some money?" the defendant answered "when the mortgage comes due in November"; that the plaintiff told the defendant that all he wanted was his money, and that if the defendant was going to have money in November "why didn't he stay and pay him (the plaintiff) the carrying charges, and that he (the plaintiff) would sell the house back to the defendant in November for just what he had in it . . . that all he wanted was his money back"; that in the evening of the same day the defendant called upon the plaintiff and asked...