Premier Capital, LLC v. Skaltsis

• Decision Date: 30 March 2007
• Docket Number: No. 2005–441.,2005–441.
• Citation: 934 A.2d 496,155 N.H. 110
• Court: New Hampshire Supreme Court
• Parties: PREMIER CAPITAL, LLC v. Nickolas SKALTSIS and another.

155 N.H. 110

934 A.2d 496

PREMIER CAPITAL, LLC

v.Nickolas SKALTSIS and another.

No. 2005–441.

Supreme Court of New Hampshire.

Argued: July 19, 2006.

Opinion Issued: March 30, 2007.

Law Offices of Randall L. Pratt, of Portsmouth (Randall L. Pratt on the brief and orally), for the plaintiff.

Law Office of James H. Schulte, of Dover (James H. Schulte on the brief and orally), for the defendants.

BRODERICK, C.J.

The defendants, Nickolas and Lorraine Skaltsis, appeal an order of the Superior Court (Fauver, J.) entering judgment for the plaintiff, Premier Capital, LLC, on a promissory note in the amount of $703,504.99. They argue that the trial court erred in ruling that: (1) the applicable statute of limitations on the note was twenty years; (2) the plaintiff had standing to bring this action; (3) there was sufficient evidence of the amount due under the note; and (4) the plaintiff's claim was not barred by laches. Following oral argument before this court, the parties were allowed to file supplemental memoranda on or before August 28, 2006, further addressing the statute of limitations issue. We affirm.

I

On March 12, 1990, the defendants executed a promissory note in the amount of $565,000 in favor of First NH Banks, Exeter Banking Company. The note provided for a variable interest rate equal to the Bank of Boston base rate plus 1.50% adjusted daily, and provided for amortization over twenty-five years. The note was secured by first mortgages on 3A Rose Street and 124 Broadway in Dover, together with an assignment of leases and rents on those properties. In 1992, the promissory note and mortgages were assigned to Hilco Realty Corp., and in 1993 they were further assigned to AMRESCO New Hampshire, Inc.

The defendants defaulted on the note in 1992 and filed unsuccessfully for bankruptcy protection. In December 1993, AMRESCO New Hampshire, Inc. made a demand upon the defendants for the balance then due on the note, which was $659,632.79. Subsequently, AMRESCO New Hampshire, Inc. advertised and conducted a mortgage foreclosure sale in June 1994 on both properties. In March 1996 AMRESCO New Hampshire, Inc. assigned the original promissory note to AMRESCO New Hampshire, L.P. On September 23, 1997, AMRESCO New Hampshire, L.P. assigned the note to Premier Capital, Inc. On September 10, 2003, the plaintiff commenced this action, alleging that it had been assigned the promissory note originally given by the defendants to Exeter Banking Company in March 1990. Following a bench trial, the court entered judgment for the plaintiff in the amount of $703,504.99. This appeal followed.

II

The defendants first argue that the trial court erred in applying the twenty-year statute of limitations under RSA 508:6 (1997) rather than the three-year statute of limitations under RSA 508:4, I (1997). They contend that our decision in Cross v. Gannett, 39 N.H. 140 (1859), "squarely holds that once the mortgage has been foreclosed, even if no discharge is recorded, the mortgage is no longer enforceable and no action may be brought on it within the meaning of the statute." The defendants also argue that our recent holding in Cadle Co. v. Dejadon, 153 N.H. 376, 904 A.2d 605 (2006), is in conflict with Cross and should be overruled.

A brief review of the legislative history of RSA 508:6 and our early decisions interpreting that statutory provision is necessary to determine whether the defendants are correct that our decision in Cadle effectively overruled Cross "without actually citing [it] and without stating why the Cadle decision was stating new law."

When New Hampshire's general statute of limitations was first enacted in 1791, "notes secured by mortgages were completely exempt from the statute." Del Norte, Inc. v. Provencher, 142 N.H. 535, 538, 703 A.2d 890 (1997). In 1842, the statute was amended to provide that "[a]ctions upon notes secured by mortgage, may be brought so long as the plaintiff is entitled to commence any action upon the mortgage." RS 181:6 (1842). "[T]he only change intended by the 1842 revision was that, rather than being completely exempt from the statute of limitations, a mortgage note would thereafter only be exempt for the same amount of time as the mortgage securing it." Del Norte, 142 N.H. at 538, 703 A.2d 890. Although the statute "has been reenacted a number of times since 1842 ... [t]he only material change is that since 1878, application of the statute has been limited to notes secured by mortgages of real estate." Id. at 538–39, 703 A.2d 890. The statute, now codified as RSA 508:6, currently provides: "Actions upon notes secured by a mortgage of real estate may be brought so long as the plaintiff is entitled to bring an action upon the mortgage." Read in conjunction with RSA 508:2 (1997), which provides that "[n]o action for the recovery of real estate shall be brought after 20 years from the time the right to recover first accrued," RSA 508:6 "establishes a twenty-year statute of limitations for notes secured by mortgages on real property." Del Norte, 142 N.H. at 537, 703 A.2d 890.

In Cross, we considered the application of RS 181:6. In that case, the maker-obligor gave defendant Gannett promissory notes secured by a mortgage. Cross, 39 N.H. at 140. Shortly thereafter, Gannett endorsed the notes and transferred them and the mortgage to Joseph Bell. Id. Some years later, Bell sold and delivered the notes and mortgage to the plaintiff, Cross. Id. Cross later foreclosed upon the mortgage but was unable to satisfy the balance due on the notes. Id. at 140–41. Some fifteen years later Cross sued Gannett on the notes, which had become due more than ten years before commencement of the suit. Id. at 141. We held that the action was barred based upon the fact that "[t]he mortgage ... was given to secure the liability of the maker [obligor] [and that Cross' action was] brought on the liability of the endorser." Id. at 142. Because the endorser, Gannett, did not give a mortgage to secure his liability, his obligations were not subject to the twenty-year statute of limitations. We noted that the decision left open the question "whether the statute can be construed to mean any thing more than that an action may be brought, on account of any specific liability, upon the note, so long as the plaintiff is entitled to maintain an action upon the mortgage, as security for the same liability. " Id. at 142–43 (emphasis added). Left unanswered by the Cross decision, therefore, was "whether the specific liability, on account of which the right of action on the note is to be considered as extended by [RS 181:6], must not be the same as that which the mortgage is given to secure." Id. at 142.

One year later, we cited Cross as support for the conclusion that the twenty-year statute of limitations did not apply to parties who did not, themselves, give security for their obligations. See Savings Bank v. Ladd, 40 N.H. 459, 471 (1860). In Savings Bank, the plaintiff claimed the benefit of the twenty-year statute of limitations for a promissory note signed by seven individuals, including J.T. Cheney and Jesse Ladd. Id. at 460. Six days after the note was signed, Cheney's father, who had not signed the note, executed a mortgage of his homestead to the plaintiffs to secure it. Id. We held that the twenty-year statute of limitations did not apply to individuals who had no knowledge of the existence of the mortgage. Id. at 470–71. We reasoned:

[U]nless it was the design and intention of the legislature to make all persons who sign a note liable upon it so long as the creditor may bring an action upon any mortgage which has been given him to secure it, whether given by a party to the note or a stranger; whether given at the date of the note or at any time after; and whether given by the consent and with the knowledge of the signer of the note, or without either of them, this defendant cannot be held liable, if he chooses to avail himself of the statute bar; and that such could have been the intention of the legislature we have before seen to be impossible.

Id. We found "some views in the opinion in Cross v. Gannett ... which, we think, favor the construction of the statute which we have given it," id. at 471, quoting with approval the statement in Cross that " ‘the object of [RS 181:6] is manifestly to make the remedy of the holder of the note, by suit upon it, coextensive with that which he has by action upon the mortgage, for the purpose of making application of the land pro tanto, for the payment of the debt secured by it.’ " Id. at 471 (quoting Cross, 39 N.H. at 141).

Four years later, in Alexander v. Whipple, 45 N.H. 502 (1864), we relied upon and extended the holding in Savings Bank that the statute applies "only to such persons as should sign both the note and the mortgage given to secure it." Id. at 503. We rejected the suggestion that under the decision in Cross,

an action may be maintained upon the note so long as the payee may have any available remedy under his mortgage upon the property thus pledged to secure the note; and when such property is destroyed and the security by way of the mortgage is no longer available, that the right of action both upon the note and the mortgage shall be barred in six years.

Id. Rather, we held that the statute meant that it "shall not be a bar to any action upon the note until the statute of limitations might be properly pleaded as a bar to any action upon the mortgage given to secure it." Id. at 504. Thus:

If the mortgage were discharged so that no action could be maintained on it, then, by the terms of the act, the statute of limitations would run against the note. If the mortgage had been foreclosed and the note thereby paid, no action could be maintained on either. But if the note remains unpaid by foreclosure of the mortgage or otherwise, and the mortgage is not discharged, an action may be maintained upon the note without being barred by the statute, until such time as the statute of limitations might

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