Rogers v. Barnes

• Decision Date: 13 September 1897
• Citation: 47 N.E. 602,169 Mass. 179
• Parties: ROGERS v. BARNES.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

169 Mass. 179

47 N.E. 602

ROGERS v. BARNES.

Supreme Judicial Court of Massachusetts, Suffolk.

September 13, 1897

COUNSEL

W.H. Baker, for plaintiff.

Moses S. Case, for defendant.

OPINION

FIELD C.J.

The plaintiff's declaration contained three counts. The substance of the first count, which is in tort, is that the plaintiff made a mortgage dated March 2, 1893, to the defendant, of a parcel of land to secure the payment of $1,200 in one year from said date, with interest thereon payable semiannually; that there was no default in the performance of the conditions of the mortgage, but that on October 16, 1893, the defendant sold the mortgaged premises at public auction for an alleged breach of condition, and conveyed them to some person to the plaintiff unknown, after occupying them a long time for his own use, whereby the plaintiff has been greatly damaged, and has lost his said premises. It is unnecessary to describe the second and third counts, because it is conceded that the second is out of the case in some manner not disclosed by the papers before us and the demurrer was sustained as to the third count. The demurrer was overruled as to the first count, and the defendant appealed. The case was afterwards tried on the first count.

On the appeal from the order overruling the demurrer as to the first count, the defendant contends that the cause of action there stated is local, and that the count is defective in not alleging good faith on the part of the purchaser of the premises from the defendant. The land mortgaged was in the county of Middlesex, and the action was brought in the county of Suffolk. We think that the gist of the cause of action alleged in the first count is the wrongful execution of the power of sale contained in the mortgage; there having been at that time in fact no breach of the conditions of the mortgage. Under the power of sale contained in the mortgage it was not necessary for the defendant to enter upon the premises before executing the power, although it is provided in the mortgage that the sale must be on or near the granted premises. The cause of action alleged does not arise from any injury to the real property, but from misconduct in executing a power of sale. We think that the action is transitory. The objection that it is not alleged in the count that the person to whom the defendant conveyed the premises was a purchaser in good faith was not specifically pointed out in the demurrer, and, if such an allegation is material, we think that it is material only on the question of damages. The exceptions recite as follows: "It appeared that on the 16th day of October, 1893, the defendant made an entry on the premises for purposes of foreclosure, and attempted on the same day to execute the power of sale. It was not disputed that at this time there was no breach of the conditions of the mortgage by the mortgagor. It also appeared that, so far as the records showed, the foreclosure was apparently proper in form. It also appeared that the property was purchased at the sale by Hammond Reed, and afterwards conveyed by said Reed to the defendant; that the purchase by said Reed was on behalf of the defendant. It also appeared that on September 3, 1894, the defendant sold and conveyed the property to one Thomas Rice by warranty deed, which deed was recorded September 10, 1894. All of the above-mentioned conveyances were duly recorded, together with the power of sale, foreclosure deed, and affidavit, as required by law."

The defendant requested the following instructions to the jury: "First. This action cannot be maintained, for the reason that the attempt to foreclose a mortgage of real estate, when there has been no breach of its terms, is absolutely void, and no damages can result therefrom. Second. No subsequent act of either party can make a foreclosure of a mortgage of real estate, which foreclosure is void at its inception, valid. Third. A Recovery in an action of the case, founded upon the attempt to foreclose a real-estate mortgage, when there was no breach of its terms, will not have the effect to make the attempted foreclosure valid, or the title conveyed thereby good." These instructions the court declined to give, except so far as they were embodied in the charge to the jury. In the charge to the jury the court said: "This action is brought by two people who had title and interest in certain real estate owned by one of them, the title to which was in one of them, the other being the husband of that person. A mortgage had been given by the plaintiff to the defendant for $1,200. By the terms of that mortgage, the interest upon the principal sum was to be paid semiannually. The mortgage was given March 2, 1893. It appears that the last payment or advance of the $1,200 to the plaintiff was made by the defendant shortly after August 14, 1893, at which time the total amount advanced under the $1,200 mortgage was $1,128. It is admitted that $36 of the difference between that and $1,200 was detained and retained as interest for the first six months, and that the balance, $36, was retained for the payment of a commission. *** It being admitted now that there was no breach of any of the conditions of that mortgage at the time of the pretended sale, the sale operated to convey no title under it. It was an absolute nullity, as if nothing had taken place. If it remains there, and that is all there is to it, then the only damage which the plaintiff has suffered is a nominal damage. But if you are satisfied that, prior to the commencement of this action, the property had been conveyed by the defendant to one Rice, without any knowledge on the part of Rice or notice to Rice of this unlawful act of the defendant, and that Rice bought it for value, then that would operate as conveying a good title to Rice; so that the plaintiff would have no means of getting himself back into possession of that property, it having gone into the possession, by that conveyance, of some one who purchased it for value, in good faith, and without notice of the unlawful act by which the record title of that property came into the defendant. The obligation upon the mortgagee is to deal with the utmost good faith with the mortgagor. If you are satisfied that this defendant knew, or ought to have known, that there was no breach of the condition of that mortgage at the time specified when he foreclosed, or attempted to, [when he] took the foreclosure proceedings, and that subsequently, before this action was brought, title had been conveyed to an innocent purchaser for value without notice, then this action can be maintained for more than nominal charges, if you find more to exist." The jury returned a verdict for $1,108.87.

There seems to be no doubt that such an action can be maintained if, in consequence of the sale, the absolute title to the premises has passed to Rice. Fenton v. Torrey, 133 Mass. 138; Bennett v. Bailey, 150 Mass. 257, 22 N.E 916; Sherwood v. Saxton, 63 Mo. 83. Even if Rice has not acquired an absolute title as against the plaintiff, but should be held, on the facts found in this case, to be only an assignee of the mortgage, still the sale and the subsequent deeds we think have done some injury to the plaintiff. They constitute a cloud upon the title of the plaintiff to an equity of redemption in the premises, which cannot be removed without some expense to the plaintiff, and the damages might be more than nominal. When the sale under the power was made, it was apparent that there might have been a breach of the conditions of the mortgage, because more than...