Southbridge Theatre Operating Co. v. Rosenberg

• Decision Date: 28 April 1930
• Citation: 171 N.E. 226,271 Mass. 213
• Parties: SOUTHBRIDGE THEATRE OPERATING CO. v. ROSENBERG et al.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

271 Mass. 213

171 N.E. 226

SOUTHBRIDGE THEATRE OPERATING CO.

v.ROSENBERG et al.

Supreme Judicial Court of Massachusetts, Worcester.

April 28, 1930.

Appeal from Superior Court, Worcester County; Hammond, Judge.

Suit by the Southbridge Theatre Operating Company against Harry Rosenberg and others. Decree for plaintiff, and defendant named appeals.

Reversed, and bill dismissed.

L. E. Stockwell, of Worcester, for appellant.

R. S. Smith, of Worcester, for appellee.

SANDERSON, J.

In this suit the plaintiff seeks to restrain the defendant Rosenberg, who will be referred to as the defendant, from foreclosing by sale or in any way enforcing a mortgage on the personal property used in connection with the Phelps Theatre in Southbridge. The plaintiff holds by assignment a duly recorded lease of the theatre and of its contents used in connection therewith. The personal property included in the lease is covered by the chattel mortgage. This lease, executed by the defendant Burwick as lessor and dated April 25, 1925, was to run for the term of five years and contains a covenant for a new lease of the premises demised for a further period of five years at the request of the lessees. The annual rent reserved for the first term was to be increased during the second five-year period. This rent was not apportioned between personal property and real estate. On March 2, 1925, Burwick placed on the real estate of which the theatre building forms a part, a mortgage running to the defendant to secure a note for $12,000, payable in quarterly installments of $1,200, the balance remaining due at the end of two years to become then payable upon demand. The note bore interest at the rate of ten per cent. per annum, payable quarterly. This mortgage was upon the statutory condition with the statutory power of sale in case of breach of condition. At the time it was given Burwick executed and delivered to the defendant the chattel mortgage in suit which was duly recorded and was conditioned upon the payment of ‘the real estate mortgage of twelve thousand ($12,000.00) dollars this day executed by the said Burwick * * * covering the Phelps Theatre real estate.’ No separate note was executed in connection with the personal property mortgage. The mortgagor on December 31, 1926, being in arrears in his payments, executed and delivered to the defendant a new mortgage, covering the same real estate as that described in the earlier mortgage, to secure a note for $8,000-the balance then due on the original note and mortgage. This note was made payable in monthly instalments of $300, the balance remaining unpaid becoming due and payable on demand one year from its date, with interest at the rate of twelve per cent. per annum, payable monthly. When this new mortgage was given the defendant delivered to Burwick the note for $12,000, and later executed at the registry of deeds a marginal discharge of the real estate mortgage for $12,000 in the following language: ‘Worcester, Jan. 11, 1927. I acknowledge full payment and satisfaction for the debts secured by this mortgage, and do hereby cancel and discharge the same.’ This was signed by the defendant and witnessed. See G. L. c. 183, § 54.

The master found that the chattel mortgage was purely secondary security to the real estate mortgage which was executed at the same time; that there was no evidence of fraud practised on the defendant or of any mistake on his part with reference to the discharge of the real estate mortgage; that the note and mortgage, dated December 31, 1926, were not given as a payment of the debt secured by the note and mortgage dated March 2, 1925, but as a renewal of the old note for the balance unpaid; that neither the defendant nor Burwick intended to discharge the personal property mortgage in the transaction of December 31; that when the real estate mortgage was discharged and the note secured thereby surrendered, nothin was said about the chattel mortgage which has not at any time been discharged of record; and that the fair rental value for the use of the personal property as installed and located in the theatre is $200 per month.

In July, 1927, the defendant took possession of the real estate under a mortgage dated June 14, 1927, for breach of conditions causing a certificate of entry and possession to be filed in the registry of deeds, and thereafter collected all the rents of the theatre building. In August, 1927, he took possession of the real estate under the mortgage dated December 31, 1926. It did not appear that he had at any time undertaken to take possession of the personal property described in the chattel mortgage. The master found that the defendant has begun foreclosure proceedings under his personal property mortgage for breach of conditions thereof. The plaintiff has kept and performed all the conditions of its lease, and has paid to the defendant the rent reserved therein for about eighteen months, and this rent has been received and accepted in payment for the use and occupation of the premises as well as for the use of the personal property demised by the terms of the lease.

The master refused to find as requested by the plaintiff that the chattel mortgage was discharged on January 11, 1927, that the surrender of the note and discharge of the real estate mortgage given as security raised a presumption of fact that the debt was paid, that the defendant is bound by the discharge executed by him, and that the $12,000 note was paid by the...