Sandler v. Silk

• Decision Date: 02 December 1935
• Citation: 198 N.E. 749,292 Mass. 493
• Parties: SANDLER v. SILK et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

292 Mass. 493

198 N.E. 749

SANDLER v. SILK et al.

Supreme Judicial Court of Massachusetts, Suffolk.

December 2, 1935

Exceptions from Superior Court, Suffolk County; Weed, Judge.

Action of tort by Fannie Sandler against Max Silk and others. Finding for plaintiff at a hearing without a jury in the sum of $3,486, and defendant brings exceptions.

Exceptions overruled.

H. E. Ehrlich and T. H. Mahony, both of Boston, for plaintiff.

S Sigilman, of Boston, for defendants.

RUGG Chief Justice.

The declaration in this action of tort contains two counts for the same cause of action. In the first count there is alleged a conspiracy by the defendants fraudulently to foreclosue a second mortgage upon certain real estate without protecting the rights of the mortgagor or persons taking under him, including the plaintiff, in order to defeat an attachment held by the plaintiff; in the second count there is alleged a fraudulent foreclosure of such mortgage in the same circumstances. The present defendants are Silk, Tefft and Trachtenberg. They pleaded a general denial and res judicata. The plaintiff previously brought a suit in equity to set aside this mortgage as void against the present defendants and two others, Smith and Marcus, which was dismissed by final decree after rescript. Sandler v. Silk, 269 Mass. 562, 169 N.E. 431. At the trial of the present action the parties agreed to submit the issue as to liability upon the record of the proceedings in that suit in equity, exclusive of the testimony of witnesses but inclusive of the findings of the trial judge. No other evidence was introduced on liability.

The trial judge in the case at bar found that the material facts alleged in the declaration were true, made a finding in favor of the plaintiff, and assessed damages in a substantial sum. He ruled as matter of law that the issues here raised were not adjudicated in the suit in equity. The finding as to damages rests upon unreported evidence. No question is now raised on that branch of the case.

The defendants contend that upon the evidence this finding of the trial judge was unwarranted. Summarily stated, the evidence, which consisted mainly of admissions by pleadings and the findings made by the trial judge in the equity suit, was to this effect: In 1923 Marcus purchased the premises in question, subject to a first mortgage of $4,000, taking title in the name of Smith. Thereafter in July, 1923, Smith gave a mortgage for $1,000 to Marcus for which there was no consideration and no mortgage note was executed. On March 25, 1924, the plaintiff made an attachment of this real estate in an action of tort in which at first Smith alone was defendant and subsequently Marcus was joined as a defendant. On July 24, 1924, Marcus assigned the second mortgage without consideration to one Lewis, a brother-in-law of Silk. He in turn assigned it to Silk who in October, 1926, assigned it to Tefft. During that same month a third mortgage was given to Tefft and a fourth of Silk for which there was some consideration. In July, 1927, the fourth mortgage was foreclosed and the property ultimately deeded to Silk. On January 21, 1928, Tefft foreclosed the second mortgage and purchased the property at the foreclosure sale for $1,200. On January 23, 1928, judgment for $3,000 damages and $30.70 costs was entered in favor of the plaintiff in her action against Smith and Marcus, in which this property described in the second mortgage had been attached. On January 25, 1928, proceedings to sell the property on execution on that judgment were begun. Notice of the sheriff's sale was sent to Tefft by registered mail. Prior to the entry of judgment and to the foreclosure sale, the plaintiff, on December 27, 1927, requested Silk to inform her of any foreclosure, in the event that there should be one, in order that she might protect her interest by purchase. The attorney for the plaintiff was told by the attorney for Tefft that there would be no foreclosure without notifying the attorney for the plaintiff. No notice was given. The trial judge in the equity suit found that the testimony of Silk, Tefft and Trachtenberg was vague, evasive and highly unsatisfactory and found on all the evidence that the original assignment of the second mortgage and the subsequent dealings of the defendants with the property were designed to defeat the attachment of the plaintiff and were carried out in pursuance of a common purpose to vest the beneficial interest if not the title to the property the Silk.

The trial judge in the case at bar upon evidence which is not reported found that the fair market value of the property at the time of the foreclosure sale in January, 1928, was $7,800, and that the fair market value of the equity over the first and second mortgages was $2,800.

It has become settled by repeated and unvarying decisions that a mortgagee in executing a power of sale contained in a mortgage in bound to exercise good faith and put forth reasonable diligence. Failure in these particulars will invalidate the sale even though there be literal compliance with the terms of the power. Krassin v. Moskowitz, 275 Mass. 80, 82, 175 N.E. 269, and cases cited; Dexter v. Aronson, 282 Mass. 124, 127, 184 N.E. 455; Boyajian v. Hart, 284 Mass. 557, 558, 188 N.E. 260; Cambridge Savings Bank v. Cronin (Mass.) 194 N.E. 289. This duty and obligation as to good faith and reasonable care extends for the benefit and is available for the protection not only of the mortgagor but of those claiming in his right, including those holding junior encumbrances or liens. He is a trustee for the benefit of all persons interested. Bon v. Graves, 216 Mass. 440, 446, 103 N.E. 1023; Winchester Rock & Brick Co. v. Murdough, 233 Mass. 50, 54, 123 N.E. 344; Clapp v. Gardner, 237 Mass. 187, 191, 130 N.E. 47; Brooks v. Bennett, 277 Mass. 8, 16, 177 N.E. 685; Markey v. Langley, 92 U.S. 142, 155, 23 L.Ed. 701.

There was ample evidence to support the finding that Tefft, working with the other defendants pursuant to a concerted plan, violated the duty resting upon him to use reasonable care and good faith in foreclosing the mortgage. The inference was permissible if not necessary that their aim was to defeat the attachment of the plaintiff in the face of her undoubted right to have the power of sale exercised conscientiously and with due regard to her interests. The price obtained at the sale was less than one-half the value of the property. Disparity between the price obtained and the true value alone is not sufficient to warrant a finding that the sale was conducted fraudulently. King v. Bronson, 122 Mass. 122, 128; McCarthy v. Simon, 247 Mass. 514, 522, 142 N.E. 806; Gordon v. Harris (Mass.) 195 N.E. 744. It may, however, be considered in connection with other evidence to support a finding of fraud. Kavolsky v. Kaufman, 273 Mass. 418, 423, 173 N.E. 499, and cases cited. Dexter v. Aronson, 282 Mass. 124, 128, 184 N.E. 455; Cambridge Savings Bank v. Cronin (Mass.) 194 N.E. 289. While the manner of conducting the sale is not disclosed in detail, it appears that no notice was given to the plaintiff although she had requested to be notified and had stated her intention to protect her interest by purchase. The trial judge rightly ruled that the plaintiff in the absence of special agreement was entitled as matter of law only to the usual published notice. Johnston v. Cassidy, 279 Mass. 593, 597, 181 N.E. 748. Nevertheless the fact that in these circumstances no notice was sent to the plaintiff is evidence that good faith was not used to obtain the best reasonable possible price. Drinan v. Nichols, 115 Mass. 353, 357; Clark v. Simmons, 150 Mass. 357, 361, 23 N.E. 108; Bon v. Graves, 216 Mass. 440, 446, 447, 103 N.E. 1023.

This form of action lies to recover damages for the wrong to the plaintiff shown on the present record. Rogers v. Barnes, 169 Mass. 179, 47 N.E. 602,38 L.R.A. 145. See Sandler v. Green, 287 Mass. 404, 407, 192 N.E. 39. The implications of several decisions not expressly to that effect are to the same point. Fenton v. Torrey, 133 Mass. 138; Dennett v. Codman, 168 Mass. 428, 47 N.E. 131; O'Brien v. Logan, 236 Mass. 507, 128 N.E. 878; Manning v. Liberty Trust Co., 234 Mass. 544, 125 N.E. 691, 8 A.L.R. 999; Freedman v. Peoples National Bank of Marlborough (Mass.) 196 N.E. 846. See Ames v. Higdon, 69 Law T. (N.S.) 292. The principle is supported by the analogy of the settled right to set up fraud in defense to an action to recover the deficiency on a mortgage note. Wing v. Hayford, 124 Mass. 249; Vahey v. Bigelow, 208 Mass. 89,64 N.E. 249; Levey v. Higginson, 266 Mass. 381, 165 N.E. 492; Gordon v. Harris (Mass.) 195 N.E. 744. There is nothing to the contrary in the decision in Cambridge Savings Bank v. Cronin (Mass.) 194 N.E. 289.

The defendants contend that the present action is barred by the final decree in the earlier suit in equity. As to this issue the burden of proof is on the defendants. Butler v Martin, 247 Mass. 112, 118, 141 N.E. 668; Rosenberg v. Peter, 269 Mass. 32, 37, 168 N.E. 166. The governing principle is that such decree on the merits is as to every issue raised by the pleadings a bar to a subsequent proceeding between the same parties or their privies upon the same cause of action. Shapiro v. Park Trust Co., 253 Mass. 383, 389, 149 N.E. 313; Westminster National Bank v. Graustein, 270 Mass. 565, 576, 170 N.E. 621; Franklin v. North Weymouth Cooperative Bank, 283 Mass. 275, 280,189 N.E. 641; Goldman v. Adlman (Mass.) 197 N.E. 632. Where the same claim or defense is involved the force of this principle cannot be avoided by seeking an alternative remedy or setting it up in a different procedural form. Sullivan v. Baxter, 150 Mass. 261, 22 N.E. 895; Harlow v. Bartlett, 170 Mass. 584,...