Salter v. Leventhal
| Decision Date | 10 June 1958 |
| Citation | 337 Mass. 679,151 N.E.2d 275 |
| Parties | Leonard M. SALTER, Trustee in Bankruptcy, v. Harold A. LEVENTHAL et al. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Charles C. Worth and Joseph F. Coughlin, Boston, for plaintiff.
Carlton W. Spencer, Frank G. Allen, Jr. and Alfred Sigel, Boston, for defendants.
Before WILKINS, C. J., and SPALDING, WILLIAMS, COUNIHAN and WHITTEMORE, JJ.
This is an action by a trustee in bankruptcy to recover damages from a nominal mortgagee, Sarah Mogul, and the owner of the beneficial interest in the chattel mortgage, Harold A. Leventhal, for alleged wrongful foreclosure of a mortgage of personal property of the bankrupt, Henry A. Nelson, shortly prior to the bankruptcy. Count 1 alleged that the foreclosure was illegal because there was no default and count 2 that the sale was improperly conducted.
An auditor, and thereafter the jury, found for the plaintiff. The jury verdict under each count was in the amount of $92,160. The case is here on the defendants' exceptions to the denial of motions for directed verdicts, mistrial and new trial, to the admission and exclusion of evidence by the auditor and at the jury trial, to the judge's charge, and to the failure to instruct in respect of the deduction of the amount of the mortgage debt from the amount of the verdicts. We next state the facts as the jury could have found them in the view most favorable to the plaintiff. So much of the conflicting evidence as it relevant to the review of the charge is referred to in the opinion.
Nelson in 1952 and 1953 was in the trucking business with his wife. Beginning in March, 1952, Nelson borrowed money from the defendant Leventhal, a lawyer who engages in money landing, on the security of mortgages on Nelson's real estate and trucks. In November, 1952, the Nelsons brought suit against Leventhal to determine their indebtedness to him, and for other relief. In May, 1953, in settlement of the suit, it was agreed that Leventhal would lend an additional $8,447.37, thus making the total of the indebtedness to Leventhal $40,007.51, and that the Nelsons would sign a secured note for $44,008.26. The extra $4,000.75 was a finance charge. The note was to be secured by a chattel mortgage on trucks and equipment and by certain real estate mortgages then outstanding to the defendant Mogul, Leventhal's bookkeeper. This settlement was carried out; the note was dated May 26, 1953, and the new chattel mortgage was given to Mogul as a straw for Leventhal. The new note was payable $2,000 each month beginning June 26, 1953, and the entire principal was due within one year from date 'with the right to anticipate payments in whole or in part at any time with a proportionate rebate on the basis of a charge of $4,000.'
In June the attorney who had brought the suit for the Nelsons and negotiated the settlement sent a bill to the Nelsons for his services which had been substantial and valuable. The cash resources of the Nelson business were then low and Nelson was distraught. He was worried that he could not pay the attorney's bill and objected to the amount. The June instalment of the mortgage was not paid when due.
On July 6, 1953, Leventhal talked with Nelson and later in the day with Mrs. Nelson about the sale of two mortgaged trucks. The conversations were such that it could have been concluded that Leventhal not only agreed to the sale, but also agreed to apply the proceeds ($4,350) on the instalments of the note, due and to come due. The proceeds were paid Leventhal on July 9, 1953.
At the July 6 conference Nelson complained of his attorney's bill, and told Leventhal he was pressed for money and pretty much disgusted. While he was still in Leventhal's office on July 6 Nelson was handed by a clerk a writing dated July 6, on the letterhead of Leventhal's associate, Joseph E. Levine, Esquire, notifying him of a sale on July 21, 1953, to foreclose the chattel mortgate for breach of its conditions. This took Nelson by surprise and he spoke to Leventhal about it. Leventhal told him in substance, Nelson did take the notice home, said nothing to his wife and left it in a bureau drawer. On July 7 Mrs. Nelson found that notice and called Leventhal 'who said it was just a formality, to forget about it--be wasn't going to do anything about it.'
On or about July 10 the Nelsons, having been information that interests friendly to the former attorney, who had indicated hi intention to sue for his bill, were seeking to procure an assignment of the chattel mortgage, gave to Leventhal, at his suggestion, a written request not to give such an assignment 'now or at any future date.' On July 7 the attorney sued the Nelsons and attached their real estate. On July 15 the attorney, having learned of the foreclosure notice, and being anxious in his own interest to prevent foreclosure, wrote a letter to both defendants stating that he had been informed that the foreclosure notice had been revoked and demanding notice of the sale, a public auction and notice in the Boston papers. This letter was not answered and Mr. Levine thereafter on several occasions evaded a direct answer to the attorney's questions as to whether the sale had been cancelled. Leventhal was with Mr. Levine in the last of these conversations, held over the telephone.
In the period from July 6 to July 20 'the Nelsons had placed themselves in the hands of Leventhal partly because of his assurance that he would take care of them * * * and partly because they were willing to see * * * [the attorney's] claim defeated.' They made no effort to prevent a foreclosure sale. Nelson testified he was 'leaving it all in Leventhal's hands, which Leventhal told him to do.'
On July 20 Leventhal called Mrs. Nelson on the telephone and said he would be at the Nelson plant in Framingham at 9 a. m. on July 21 and that he wanted her there. Mr. and Mrs. Nelson both went. Leventhal arrived with an auctioneer and two men, Newman and Wood. Leventhal said he was going to have a sale. Mrs. Nelson said 'it was the first she'd known of it.' The auctioneer put up a flag, and bidding started. Neither of the Nelsons protested. Leventhal at some time 'said he was doing it for the Nelsons' protection and that the Nelsons had nothing to worry about.'
Only Wood, Leventhal and Newman bid at the sale. There were some other persons there. The property was sold to Leventhal for $18,000. Newman's high bid was $17,500. Newman was 'highly experienced in the line of used trucks and road equipment and [knew] their value.' Within ten days after the sale Newman bought from Leventhal so much of the mortgaged equipment as had been removed from the Nelson yard (not all of the mortgaged equipment) for $33,000. There was an agreement or understanding between Leventhal and Newman that Newman would not outbid Leventhal. The attempt was not made at the sale to receive the highest possible price. Through the use of two bills of sale (one purporting to show a sale for $11,200 of other equipment of Leventhal not covered by the mortgage and which was reconveyed by Newman for $1) Leventhal attempted to make the consideration of the sale of Newman appear to be $21,800.
On July 25 an attorney acting for one Mulhall, who was apparently ready to back Nelson in becoming restablished in business, and, through Mulhall, acting for Nelson, asked Leventhal what he meant by telling Nelson he 'was not putting him out of business and that the foreclosure was for Nelson's protection' and said that Nelson had told the attorney that Leventhal had said that he would make an agreement so that Nelson could operate. After another call Leventhal told him to call with Mulhall but not with Nelson. On Sunday, July 26, 1953, the attorney and Mulhall called on Leventhal, and in response to the attorney's statement that his purpose was to learn what Leventhal meant by saying he wanted to protect Nelson, Leventhal said that there had been negotiations with one Leahy with reference to Leahy's taking an assignment of the mortgage and that he had only told Nelson that if that went through there would be no foreclosure. Leventhal gave the attorney a figure of $40,658.26 plus his expenses for an assignment of Leventhal's entire interest. The attorney was unable to learn from Leventhal the total of these expenses and was finally told by Leventhal that Mrs. Nelson objected to his turning over the whole or any part of the equipment to Nelson without her approval and that he, Leventhal, felt bound by her objection. Nelson and Mrs. Nelson had had some domestic difficulties. The last talk of the attorney with Leventhal was on July 29, 1953, and within two days the trucks and trailers had been removed from Nelson's yard and the deal with Newman consummated.
Nelson at the sale
Mrs. Nelson purchased from Leventhal, after the sale, the Cadillac automobile covered by the mortgage. She later sold this and bought an Oldsmobile from Leventhal. She testified that she 'was still friendly with Leventhal after the foreclosure sale and saw him after that frequently.'
There was evidence that some of the claimed breaches of the mortgage existed on May 26, 1953, and were then known to Leventhal....
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