New Milford Sav. Bank v. Jajer

• Decision Date: 31 March 1998
• Docket Number: No. 15695,15695
• Citation: 244 Conn. 251,708 A.2d 1378
• Parties: NEW MILFORD SAVINGS BANK v. Maurice J. JAJER et al.
• Court: Connecticut Supreme Court

Page 1378

708 A.2d 1378

244 Conn. 251

NEW MILFORD SAVINGS BANK v. Maurice J. JAJER et al.

No. 15695.

Supreme Court of Connecticut.

Argued Jan. 13, 1998.

Decided March 31, 1998.

Kenneth J. Bartschi, with whom were Wesley W. Horton, Hartford and Michael J. Mannion, New Milford, for appellant (plaintiff).

George M. Purtill, with whom was Seth Jacoby, Glastonbury, for appellees (named defendant et al.).

Before CALLAHAN, C.J., and BORDEN, BERDON, NORCOTT, KATZ, PALMER and PETERS, JJ.

PETERS, Associate Justice.

The issue in this appeal is whether General Statutes §§ 49-15 and 49-1 ¹ deprive the Superior Court of jurisdiction to open a foreclosure judgment in order to correct the inadvertent omission of a parcel of the mortgaged property from the judgment. The plaintiff, the New Milford Savings Bank (bank), brought an uncontested action against the defendants Maurice and Maria Jajer, ² for foreclosure of a mortgage that they had executed as security for a $270,000 loan. Although the mortgage conveyance included three parcels of land, two vacant parcels and a third parcel containing the defendants' residence, the bank mistakenly had referred only to a description of the two vacant parcels in its foreclosure complaint and lis pendens. ³ On August 22, 1994, the trial court, Pickett, J., rendered a judgment of strict foreclosure against only the two parcels described in the bank's complaint. The court found the mortgage debt to be $308,181.11 and the value of the property to be $170,000 based on an appraisal of all three parcels. In the absence of redemption of the property by the defendants or any other lien holder, title vested absolutely in the bank with the passage of the last law days on September 26, 1994.

Soon thereafter, the bank discovered its mistake in the course of federal bankruptcy proceedings initiated by the defendants' prayer for relief under chapter 11 of the Bankruptcy Code. 11 U.S.C. § 362. In order to enforce its state court judgment, the bank moved the United States Bankruptcy Court, Krechevsky, J., to lift the automatic stay provision of the Bankruptcy Code. Relying on the defendants' concession that the bank's mortgage remained in effect on the omitted third parcel, the Bankruptcy Court found that the defendants retained no equity in the third parcel. The court concluded that the bank had a colorable claim to the third parcel and, on February 23, 1995, lifted the stay ⁴ to enable the bank "to take whatever action is appropriate in state court under the circumstances." ⁵

Returning to Superior Court, the bank moved to open the judgment of strict foreclosure. Despite the defendants' objection, the court, R. Walsh, J., granted the motion and permitted the bank to file an amended complaint requesting new law days for the omitted third parcel. On May 15, 1995, the trial court, Pickett, J., granted the bank's motion to render "judgment of strict foreclosure upon the amended complaint containing all other terms previously entered...." ⁶

Before the law day on the third parcel had passed, the defendants appealed to the Appellate Court, which reversed the judgment of the trial court in light of its conclusion that the trial court lacked jurisdiction to open the 1994 foreclosure judgment. The court construed the last sentence of § 49-15 ⁷ to preclude further trial court jurisdiction after title has vested in the foreclosing mortgagee with respect to any part of the mortgaged property. New Milford Savings Bank v. Jajer, 44 Conn.App. 588, 594-95, 691 A.2d 598 (1997). In addition, the court construed § 49-1 ⁸ to preclude the bank from seeking further relief because its failure to pursue a deficiency judgment had the effect of discharging the defendants from further liability on the underlying note. Id., at 595-96, 691 A.2d 598.

The bank filed a petition for certification to appeal to this court. We granted certification to consider only the following question: "Did the Appellate Court properly conclude that the trial court lacked jurisdiction to open the judgment of foreclosure, based on General Statutes §§ 49-15 and 49-1?" New Milford Savings Bank v. Jajer, 241 Conn. 906, 695 A.2d 540 (1997). ⁹ We disagree with the conclusion of the Appellate Court that the trial court lacked jurisdiction to render the 1995 foreclosure judgment. ¹⁰

I

We consider, first, the defendants' claim that § 49-15 deprived the trial court of jurisdiction to grant the bank's motions to open the judgment of foreclosure and to file an amended foreclosure complaint to correct the bank's inadvertent omission of the third parcel from its original complaint. Relying on the language of § 49-15 that "no such judgment [of strict foreclosure] shall be opened after title has become absolute in any encumbrancer," the Appellate Court agreed with the defendants that the statute applied to any mortgage foreclosure, total or partial. New Milford Savings Bank v. Jajer, supra, 44 Conn.App. at 594, 691 A.2d 598. We construe the statute differently.

A

The law governing strict foreclosure lies at the crossroads between the equitable remedies provided by the judiciary and the statutory remedies provided by the legislature. ¹¹ In re American Metal Products Co., 276 F.2d 701, 704-705 (2d Cir.1960); see Federal Deposit Ins. Corp. v. Hillcrest Associates, 233 Conn. 153, 164-74, 659 A.2d 138 (1995). Because "foreclosure is peculiarly an equitable action ... the court may entertain such questions as are necessary to be determined in order that complete justice may be done." Hartford Federal Savings & Loan Assn. v. Lenczyk, 153 Conn. 457, 463, 217 A.2d 694 (1966); see Chappell v. Jardine, 51 Conn. 64, 69 (1884) (court of equity can devise appropriate remedy for enforcement of lawful lien). In exercising its equitable discretion, however, the court must comply with mandatory statutory provisions that limit the remedies available to a foreclosing mortgagee. Naugatuck Savings Bank v. Fiorenzi, 232 Conn. 294, 305, 654 A.2d 729 (1995). It is our adjudicatory responsibility to find the appropriate accommodation between applicable judicial and statutory principles. "Just as the legislature is presumed to enact legislation that renders the body of the law coherent and consistent, rather than contradictory and inconsistent ... [so] courts must discharge their responsibility, in case by case adjudication, to assure that the body of the law--both common and statutory--remains coherent and consistent." (Citations omitted.) Fahy v. Fahy, 227 Conn. 505, 513-14, 630 A.2d 1328 (1993).

The equitable nature of foreclosure proceedings persuades us that § 49-15 does not preclude the trial court from exercising its discretion to open the judgment of strict foreclosure in the circumstances of this case. To apply the statutory mandate that, "after title [to real estate] has become absolute in any encumbrancer," a judgment of foreclosure cannot be opened, we must identify the property for which "title has become absolute." The statute describes the relevant property as the "real estate" that was the subject of the initial foreclosure judgment. On its face, the statute makes no distinction between partial and total foreclosures. Whether the statute bars the bank's motion to open and amend the initial strict foreclosure judgment depends, therefore, on whether the terms of the 1994 foreclosure vested title in the bank to two or to three parcels of land. The trial court has the authority to determine the scope of the initial foreclosure judgment, and, therefore, whether the foreclosure judgment properly may be opened under § 49-15.

Before exercising its discretion to open the initial foreclosure to permit the bank to amend its complaint, the trial court properly held a hearing to assist it in deciding what property was covered by the original 1994 foreclosure judgment. See Hartford Federal Savings & Loan Assn. v. Lenczyk, supra, 153 Conn. at 463, 217 A.2d 694 (inquiry into relevant circumstances was required to fulfill judiciary's equitable obligation "in order that complete justice may be done"). In this case, it was entirely reasonable for the court to conclude that the original foreclosure judgment encompassed only the two vacant parcels and not the third improved parcel. The foreclosure complaint itself was so limited, and the defendants conceded that "the Bank's mortgage remains on the third parcel...."

The legal effect of the bank's inadvertent omission was that the title to the third parcel remained under a cloud. As would be true for any mortgaged property in Connecticut before foreclosure, the bank's title was a fee simple subject to defeasance by the defendants' exercise of their equity of redemption. State v. Stonybrook, Inc., 149 Conn. 492, 496, 181 A.2d 601, cert. denied, 371 U.S. 185, 83 S.Ct. 265, 9 L.Ed.2d 227 (1962). Thus, the bank's title to the third parcel was not absolute. Because no one had absolute title to the third parcel at the time of the bank's motion to open and to amend, § 49-15 did not limit the jurisdiction of the trial court to exercise its equitable discretion and modify the scope of the 1994 foreclosure judgment with respect to the third parcel.

Moreover, as best we can determine, the legislature's purpose in enacting § 49-15 was not to preclude amendment to correct scrivener's errors, but rather to set out an orderly framework for a mortgagee's exercise of the equity of redemption. ¹² We have no access to the legislative history of § 49-15 because the original statute was enacted prior to the inauguration of published legislative history in 1945. ¹³ Legislators' remarks on subsequent amendments to § 49-15, however, emphasize that the purpose of § 49-15 is to ensure equitable foreclosure proceedings. For example, in 1967, when Public Acts 1967, No. 286 was enacted to delete a reference to the Circuit Court term, Representative Milton Caplan spoke in favor of the amendment, asserting that it "would permit a party equitably to...