Mariners' Savings Bank v. Duca

• Decision Date: 27 November 1922
• Citation: 118 A. 820,98 Conn. 147
• Parties: MARINERS' SAVINGS BANK v. DUCA et al.
• Court: Connecticut Supreme Court

118 A. 820

98 Conn. 147

MARINERS' SAVINGS BANK v. DUCA et al.

Supreme Court of Errors of Connecticut.

November 27, 1922

Appeal from Superior Court, New London County; James H. Webb, Judge.

Action by the Mariners' Savings Bank against Giosue Duca Tomasso Di Maggio, Apolonio Serafin, and others to foreclose a mortgage by sale. From a judgment directing the return of a deposit made by defendant Serafin on account of his bid defendant Di Maggio appeals. No error.

Judgment of foreclosure by sale was rendered by the court in this case on March 24, 1922, and a committee appointed to make sale. The judgment filed followed substantially the form provided in the practice book, with the usual provisions for advertisement, return to the court by the committee of his doings, and submission of the proposed deed and payment of proceeds of sale into court. Pursuant to the directions of the judgment the committee sold the mortgaged real property to said Serafin for the sum of $16,000, and received from him a deposit of $1,600 required by the committee as an initial payment, which last-named sum was by the committee paid to the clerk of the court, and was held by the latter until the conclusion of the action and the making of the order of the court which is the subject-matter of the present appeal. Due return was also made of the advertisement and of compliance with the other provisions of the judgment. The report of the committee concludes as follows:

" I make further return that I have notified said Opolonio Serafin that I was prepared to deliver to him, the said Opolonio Serafin, a deed under the order of said superior court, but that said Opolonio Serafin has failed and refuses to make the final payment for said premises.

" I, the said Thomas C. Dillon, as committee as aforesaid, am satisfied that said Opolonio Serafin will be unable to complete said sale."

This report and return was filed in court and accepted June 9 1922.

On the last-named day, upon the application of the plaintiff in the action, the court made an amendment and modification of the judgment of sale reciting the inability of the committee to make sale under the original judgment and ordering a resale of the property by the committee on June 17, 1922. The amount of payment to be required in way of redemption included the original debt, interest and costs, as previously adjudged and also the expense of the prior sale. Sale was made pursuant to the amended judgment to Tomasso Di Maggio, the appellant herein, for $11,500. The latter was a party defendant to the action by virtue of his holding a third mortgage upon the property in question. Serafin, the appellee herein, was also a party to the action by virtue of holding a fourth mortgage on said property.

Return of sale was made by the committee on June 30, 1922, and on the same day the return was accepted by the court and supplemental judgment rendered confirming the sale and distributing the proceeds. After payment of expenses of sale and all prior claims there was paid over to Di Maggio on account of his third mortgage indebtedness $262.72. The total due him on said mortgage was $4,466.56. The supplemental judgment concludes with the provision that the payments ordered therein " are to be paid without prejudice to the disposition under a petition now pending of the $1,600 paid by Apolonio Serafin to said committee and by said committee brought into this court."

The property described in the judgment of sale consisted of a lot of land in the town of New London. Connected with the description of the lot is a reservation of the use of a grape arbor by the grantor of the mortgagor; also a covenant for the erection by the grantee, his heirs and assigns, of a private residence in the middle of the property at a cost of not less than $12,000, to be not more than 2 1/2 stories high, and " not to be constructed as a two-tenement house, but it is to be built and used as a single private residence, it being expressly agreed that the above is sold on these terms and conditions, and would not be sold on any other terms." It was further stipulated in the deed that any garage erected on the property should not be used to store more than two cars. These covenants and restrictions were to continue in force as long as the grantor in the original deed resided on property adjoining the conveyed lot, or until the adjoining property should be sold.

Thereafter, on July 7, 1922, Serafin, the appellee herein, preferred his petition to the court that said sum of $1,600 be returned to him, setting forth in substance the foregoing facts and adding the following:

" At said auction held on the 17th day of June, 1922, said Thomas C. Dillon gave notice that the house upon said mortgaged property could be used only as a single private residence, and that any deposit accepted on said sale would be forfeited if the party making said deposit subsequently defaulted as to the payment of the balance of the purchase price. Notice of said restriction was not given to those who were present at the auction held on the 1st day of May, 1922, and no statement as to the forfeiture of said deposit was made."

All the allegations of the petition were admitted by the appellant Di Maggio, and thereupon the petition was heard by the court, which ordered the said sum of $1,600 to be returned to the petitioner, appellee in this court. From this adjudication Di Maggio appealed. Further facts appear in the opinion.

Arthur T. Keefe, of New London, for appellant Di Maggio.

Charles L. Smiddy, of New London, for appellee Serafin.

KEELER, J.

The petitioner based his application for return of the deposit made by him on two grounds: First, that the sale to him had never been ratified by the court; and, second, that the notices given by the committee at the time of the second sale of the mortgaged property disclosed the existence of the restrictive covenant as set forth in the finding of facts, and also that a forfeiture of any deposit made would occur in case the purchaser failed to complete the sale and take title, as to both of which provisions no mention was made at the earlier sale at which the petitioner bid in the property.

It is claimed by the appellant that no confirmation of the sale was necessary to hold the money deposited, and that a fair construction of the record discloses that the property to be sold and the restrictions connected therewith were as fully disclosed at the first sale as at the second, and that the requirement of a deposit at the first sale was equivalent to the statement at the second sale that a forfeiture would ensue if the purchaser failed to comply with the terms of the sale.

A foreclosure by sale is an equitable proceeding and governed by the general law pertaining to judicial sales consequent upon an equitable decree, unless in some way modified by statute, or a proper rule of court having a like effect, as has been done in some jurisdictions. It has been generally held that an equitable judicial sale requires confirmation or ratification before it can become complete, and create legal rights and liabilities between or among the parties legally interested therein.

" As a rule, the sale must be finally confirmed before any action can be taken to hold the bidder to his liability for the purchase price, by resale or otherwise. For until confirmation the bids are mere offers to purchase, the contract is not complete, and the purchaser cannot be in default thereunder." 16 R. C. L. Judicial Sales, § 123.

To the same effect are 24 Cyc. 33; Rorer on Judicial Sales, § § 2, 3, 122, 124; 2 Daniell's Chancery Practice (6th Am. Ed.) 1281.

For the rule as specifically applied to foreclosure sales, see Jones on Mortgages (7th Ed.) § 1637; 2 Wiltsie on Mortgage Foreclosures (3d Ed.) § 656.

We do not find that the point just considered has been passed upon by any decision by this court. In G. S. Rev. 1918, c. 316, are collected various statutory provisions as to the sale of property under order of court, and section 6077 of this chapter provides that such sales shall be made by a committee appointed by the court, and there is no requirement of confirmation, yet it has certainly been the practice to report all such sales to the court and secure confirmation. Among the varieties of sale included in said Chapter that of most frequent occurrence is a sale in partition, and in such a case we find in the practice book a form of supplemental judgment which confirms the sale. It can hardly be questioned that the provision of such a form reflects a long-existing practice in that regard.

Passing to the express terms of our statute relating to foreclosure sales, we find that G. S. Rev. 1918, § 5227, provides as follows:

" When a sale has been made pursuant to a judgment therefor, and ratified by the court, a conveyance of the property sold shall be executed by the person appointed to make the sale. ***"

And section 5228 further provides:

" The proceeds of every such sale shall be brought into court, there to be applied if the sale be ratified, in accordance with the provisions of a supplemental judgment then to be rendered in said cause specifying the parties who are entitled to the same and the amount to which each is entitled. ***"

So we see that the ratification of the sale is in a way the focal point of the proceeding after the judgment therein. As regards what has gone before, it makes valid the advertisement of the sale, the proper conduct of the same pursuant to the original judgment and notice and, if such be the case, the fact of money paid into court. Regarding what follows, it fixes the various disbursements and expenses of the sale and regulates the disposal of the net proceeds among the parties thereto. It makes operative...