Merrimack Indus. Trust v. First Nat. Bank of Boston, 80-093
| Decision Date | 16 March 1981 |
| Docket Number | No. 80-093,80-093 |
| Citation | 427 A.2d 500,121 N.H. 197 |
| Parties | MERRIMACK INDUSTRIAL TRUST v. The FIRST NATIONAL BANK OF BOSTON et al. |
| Court | New Hampshire Supreme Court |
Randall F. Cooper, North Conway by brief and orally, for plaintiff.
James R. Patten, Ossipee by brief and orally, for First Nat. Bank of Boston.
Michael E. Gould, Meredith by brief for David S. Sands.
The issue raised in this appeal is whether the trial court erred in finding that the mortgagee-bank had exercised good faith and reasonable diligence in conducting a foreclosure sale of property owned by the plaintiff and that the buyer at the sale was a bona fide purchaser for value. We find no error and affirm.
In 1972 the plaintiff, Merrimack Industrial Trust, by separate deeds, acquired two adjoining parcels of real estate in the town of Conway. Because of the unity of ownership, the town thereafter assessed real estate taxes on these properties as one parcel. On the larger of the two parcels was the Conway Shopping Plaza; on the smaller parcel was a Texaco gasoline and service station. The plaintiff had purchased both parcels subject to outstanding mortgages and the Texaco parcel was conveyed to the plaintiffs subject to a mortgage held by the defendant, the First National Bank of Boston. The language of the mortgage deed to the Texaco parcel required the mortgagor "to pay when due all taxes ... whether on the mortgaged premises or on any interest therein...." To assure the fulfillment of this obligation the mortgage instrument provided for the establishment of an escrow account, whereby the mortgagor would pay the bank an amount of money which the bank deemed sufficient to pay the property taxes. These monies were to be held in escrow and "applied by the holder to or toward the payment of said taxes...." (Emphasis added.) Because the town assessed both parcels as one unit, the escrowed amount was insufficient to pay the total taxes.
For the years 1973, 1974 and 1975, the bank forwarded directly to the town, checks drawn payable to the tax collector of the town of Conway for payment of that portion of the taxes due on the Texaco lot. In 1977 the check for the 1976 tax escrow payment was made payable to the tax collector of the town of Conway and delivered to the plaintiff's sublessee with instructions to have payment made to the town, and to provide the bank with a base tax receipt for the entire parcel. This was done because at that time the bank could not contact the plaintiff and the sublessee was dealing directly with the bank. The cancelled check was returned to the defendant bank but no evidence of a paid tax receipt was provided.
Commencing with the nonpayment of the entire 1976 tax levy, the bank began to receive notices of tax sales from the town. On October 26, 1977, the bank learned that the Texaco parcel and the shopping center parcel had been sold on June 30, 1977, at a tax sale as a single unit to the town of Conway because of the nonpayment of the entire 1976 property tax levy on both parcels. The defendant bank thereafter conditioned the release of the escrow funds on the plaintiff paying all of the property taxes and showing a receipt of payment from the town. The plaintiff failed to comply and the defendant bank, upon the continued receipt of tax sale notices, demanded payment of the "on demand" note. Upon failing to receive payment, the bank foreclosed on the Texaco parcel in 1979. The sale was subject to unpaid taxes. The plaintiff had not paid the real estate taxes assessed by the town for three years on the entire two-parcel unit, and the aggregate of all the unpaid taxes was more than the value of the Texaco parcel. The plaintiff paid the 1976 taxes shortly after the foreclosure sale.
After adjourning the sale for three weeks from the original date set for the sale to allow the plaintiff time to seek refinancing, the bank, on May 18, 1979, held the foreclosure sale on the Texaco parcel. The bank entered a bid of $9,000 and the other defendant in this appeal, David S. Sands, bid $9,050. The bank accepted Sands' bid and delivered to him a foreclosure deed which he recorded. On this date the monthly payments were current and the tax escrow account held $1,419. The master found that the bank was entitled to foreclose because the 1976, 1977, and 1978 taxes were unpaid.
The plaintiff trust brought a petition in superior court to set aside the foreclosure sale and named the bank and Sands as defendants, alleging that the bank did not use due diligence and did not exercise good faith in conducting the sale. The plaintiff also claimed that Sands was not a bona fide purchaser for value without notice because he had knowledge of the alleged misconduct of the bank. Both defendants denied these allegations, and the bank filed a motion to dismiss under RSA 479:25 II (Supp.1979), asserting that the failure of the plaintiff to seek injunctive relief prior to the foreclosure sale barred any further action by the mortgagor. The plaintiff objected to the motion, a hearing was held and Wyman, J. denied the motion with the proviso that matters leading up to the foreclosure sale could not be litigated except as they related to the bank's duty to exercise good faith in conducting the sale.
After a hearing on the merits, the Master (Charles T. Gallagher, Esq.) dismissed the petition to set aside the sale and made findings of fact and rulings of law contrary to those sought by the plaintiff. On January 4, 1980, the report of the master was approved by Wyman, J.
The plaintiff first alleges that the defendant bank breached its duty to exercise good faith in conducting the foreclosure sale because it did not have a right to foreclose. It claims that the default was caused either in whole or in part by the bank's failure to collect a sum sufficient to pay the taxes in full. The language of the mortgage instrument plainly imposed a duty upon the mortgagor...
To continue reading
Request your trial
-
Murphy v. Financial Development Corp.
...fiduciary or trustee. Compare Pearson v. Gooch, 69 N.H. 208, 209, 40 A. 390, 390-91 (1897) and Merrimack Industrial Trust v. First Nat. Bank of Boston, 121 N.H. 197, 201, 427 A.2d 500, 504 (1981) (duty amounts to that of a fiduciary or trustee) with Silver v. First National Bank, 108 N.H. 3......
-
Campo v. Maloney
...See generally Meredith v. Fisher, 121 N.H. ---, ---, 435 A.2d 536, 537-38 (1981); Merrimack Industrial Trust v. First Nat. Bank of Boston, 121 N.H. 197, 200-02, 427 A.2d 500, 503-04 (1981); Lakes Region Fin. Corp. v. Goodhue Boat Yard, Inc., 118 N.H. 103, 107-08, 382 A.2d 1108, 1111 (1978).......
-
Concord Sav. Bank v. Freitas, Civ. A. No. 90-13002-C.
...a reasonable person in the lender's position would have adjourned the foreclosure sale. Id.; Merrimack Indus. Trust v. First Nat'l Bank of Boston, 121 N.H. 197, 202, 427 A.2d 500 (1981); Wheeler v. Slocinski, 82 N.H. 211, 215, 131 A. 598 Viewing defendant's counterclaim against these two st......
-
Danvers Sav. Bank v. Hammer, 80-328
...Finance Law, supra, § 7.21 at 479-80; Meredith v. Fisher, 121 N.H. ---, 435 A.2d 536 (1981); and Merrimack Ind. Trust v. First Nat. Bank of Boston, 121 N.H. 197, 427 A.2d 500 (1981). The debtor in this case is entitled to relief. At trial, a bank official testified that the bank had "no par......