Silver v. First Nat. Bank of Hillsborough

• Decision Date: 29 December 1967
• Docket Number: No. 5678,5678
• Parties: Roland SILVER et al. v. FIRST NATIONAL BANK OF HILLSBOROUGH.
• Court: New Hampshire Supreme Court

Page 493

236 A.2d 493

108 N.H. 390

Roland SILVER et al. v. FIRST NATIONAL BANK OF HILLSBOROUGH.

No. 5678.

Supreme Court of New Hampshire.

Argued Oct. 4, 1967.

Decided Dec. 29, 1967.

SYLLABUS BY THE COURT

1. While a mortgagee under a power of sale mortgage is not a trustee or a fiduciary, a foreclosure sale thereunder is required to be conducted in the exercise of good faith and due diligence to protect the interest of the owner of the equity of redemption who has authorized the mortgagee to act.

2. In an action for damages by non-resident mortgagors for loss of their equity of redemption resulting from foreclosure of the power of sale mortgage, evidence that the mortgagee was aware two days before the sale that the mortgagors had not received notices of the date of foreclosure and that the mortgagee had received an interest payment warranted the finding that due diligence required an adjournment of the sale for a reasonable time.

3. The fact that a mortgagee under a power of sale mortgage received an interest payment just prior to foreclosure of the mortgage and returned it did not constitute a waiver of its right to foreclose, but was held to be evidence properly to be considered with other evidence on whether due diligence required an adjournment of the foreclosure sale for a reasonable time.

4. Damages resulting from the failure of a mortgagee to use due diligence to postpone foreclosure of a power of sale mortgage are determined by the price obtainable on a fair sale reasonably adjourned rather than the price obtainable when the season for selling is most favorable.

5. Where it appeared from the record that the Trial Court granted defendant's request that its exceptions be transferred and the reserved case stated that all exceptions taken by the parties were reserved and transferred it was held that defendant's exceptions were properly before the Supreme Court.

Bill in equity by the plaintiffs for an accounting to recover damages arising out of a foreclosure by the defendant bank under a power of sale mortgage of real estate belonging to the plaintiffs and located in the town of Washington, New Hampshire. The plaintiffs do not question that the defendant complied with the requirements of the mortgage foreclosure statute (RSA 479:25-27) and seek damages for the loss of their equity of redemption instead of seeking to set aside the foreclosure sale. The Superior Court (Morris, J.) after hearing awarded the plaintiffs a verdict of $2,390.04 and reserved and transferred the exceptions of the parties to the Court's findings, rulings and verdict.

The plaintiffs were notified on August 7, 1961 by the bank that unless payment in full of the mortgage was made by September 15, foreclosure proceedings would be instituted. On September 15 following a conversation with the bank's employee plaintiffs forwarded a check covering interest. On September 19 the bank sent notices of the foreclosure by certified mail to the plaintiffs at their Massachusetts address. They were not at home and did not receive them and the notices were returned to the bank's attorney on October 14. On that date, a Saturday, the attorney for the bank sent a telegram to the plaintiffs that the foreclosure sale would take place 'as scheduled.' The sale was held at 11 A.M., October 16 and the property was sold to the bank's auctioneer for $2,400.

Hall, Zellers, Morse & Gallagher, Concord (Charles T. Gallagher, Concord, orally), for plaintiffs.

Cleveland, Waters & Bass, Concord, and Douglas S. Hatfield, Jr., Hillsboro (Robert P. Bass, Jr., Concord, orally), for defendant.

KENISON, Chief Justice.

The Trial Court found 'there was a lack of due diligence on the part of the defendant in not adjourning the sale in that the ordinary person of average prudence under the circumstances would have adjourned the sale for a reasonable time.' Accurately speaking a mortgagee under a power of sale mortgage is not a trustee. 1 Scott, Trusts, s. 9 (3d ed. 1967); Restatement (Second), Trusts, s. 9; 1 Bogert, Trusts & Trustees, s. 29 (2d ed. 1965). 'The mortgagee on whom the power is conferred is not, of course, a trustee or fiduciary within an accurate use of those terms.' 4 American Law of Property, s. 16.207, p. 505 (1952). See also, Osborne, Mortgages, 1003 (1951). Nevertheless it has been recognized in this jurisdiction and elsewhere that the mortgagee is required to conduct the foreclosure sale 'in the exercise of good faith and due diligence to protect the mortgagor's interest.' Wheeler v. Slocinski, 82 N.H. 211, 213, 131 A. 598, 600; Armille v. Lovett, 100 N.H. 203, 206, 122 A.2d 265; Reconstruction Finance Corp. v. Faulkner, 101 N.H. 352, 143 A.2d 403. While in exercising the power of sale granted by the mortgage, the mortgagee acts to enforce his own interest, he is required to do so with due regard for the interest of the owner of the equity of redemption who has...