Springfield State Bldg. Corp.. v. Massachusetts Mut. Life Ins. Co.

• Citation: 287 Mass. 317,191 N.E. 383
• Parties: SPRINGFIELD STATE BLDG. CORPORATION v. MASSACHUSETTS MUT. LIFE INS. CO.
• Decision Date: 30 June 1934
• Court: United States State Supreme Judicial Court of Massachusetts

287 Mass. 317

191 N.E. 383

SPRINGFIELD STATE BLDG. CORPORATION

v.MASSACHUSETTS MUT. LIFE INS. CO.

Supreme Judicial Court of Massachusetts, Hampden.

June 30, 1934.

Appeal from Superior Court, Hampden County; H. P. Williams, Judge.

Suit in equity by Springfield State Building Corporation against the Massachusetts Mutual Life Insurance Company. From the final decree, plaintiff appeals, and from a decree denying defendant's motion that plaintiff's appeal be dismissed for want of prosecution, defendant appeals.

Modified and affirmed.F. H. Chase and R. P. Baldwin, both of Boston, for appellant.

R. C. Evarts, of Boston, for appellee.

PIERCE, Justice.

This is a suit in equity wherein the plaintiff asks the court in effect to determine for the parties what sum they ought to agree upon, and the plaintiff ought to pay and the defendant to accept for a partial release from a mortgage, held by the defendant upon real estate said to be owned by the plaintiff, of a portion of the premises described in said mortgage. The judge dismissed the suit and the case is before this court on appeal of the plaintiff.

The pertinent facts found by the trial judge are in substance as follows: On February 1, 1928, the defendant sold and conveyed to the Republican Company, a domestic corporation, certain land with the building thereon located at the corner of Main and State Streets in the city of Springfield, Massachusetts, and by this same deed conveyed certain other land adjoining on the west of State Street and extending to Bliss Street for the sum of $925,000. The Republican Company paid $800,000 of this sum by its note of February 1, 1928, secured by a first mortgage upon the entire real estate, which was described in both deed and mortgage as one parcel. By the terms of this note the Republican Company promised to pay interest at the annual rate of 5 per cent. on the first days of February and August, and to pay the principal of said note in instalments, the first of which was to be $25,000, payable February 1, 1933. The sale on these terms was approved by the commissioner of insurance of the commonwealth. See G. L. (Ter. Ed.) c. 175, §§ 63(7), 65, 66.

The mortgage deed contains this language: ‘In the event that the mortgagor shall sell a portion of the aforesaid premises, the mortgagee shall release the portion so sold from the lien of this mortgage upon the payment by the mortgagor of a sum to be mutually agreed upon by said mortgagor and mortgagee.’

On June 12, 1930, the Republican Company conveyed the mortgaged premises to the plaintiff, subject to the mortgage. The plaintiff's deed does not contain any promise or agreement on its part to assume and pay the mortgage or to perform any of the obligations of the mortgagor, and the plaintiff has not signed any collateral or guarantee note or otherwise in any manner obligated itself in respect to the mortgage or note.

The plaintiff was incorporated under the laws of this commonwealth in May, 1930, ‘to acquire by purchase * * * lands or any interest therein; to erect buildings * * * on any land of the company. * * *’ Its incorporators were employees of the Republican Company. The plaintiff's authorized capital is five thousand shares without par value, none of which has ever been issued. The plaintiff paid nothing and furnished no consideration for the conveyance. The real estate conveyed by the defendant to the Republican Company and conveyed by the latter to the plaintiff is bounded easterly by Main Street about eighty-six feet, northerly by State Street about three hundred twelve feet, westerly by other owners about two hundred seventeen feet, and southerly by Bliss Street nearly one hundred sixty-nine feet. A portion of the mortgaged premises, bounded easterly by Main Street eighty-six feet and northerly on State Street one hundred and ninety feet, had been occupied since 1908 by an eight-story office building which the defendant erected. In the years 1919 to 1922 the defendant acquired, in five separate parcels, the remainder of the estate later sold to the Republican Company, and soon after acquiring the additional land on State and Bliss streets razed the buildings thereon, and all said additional land, which was vacant at the time of the sale to the Republican Company, remained vacant until built upon by that company.

In the spring or summer of 1927, the defendant put the entire property on the market and the Republican Company shortly thereafter entered upon negotiations for its purchase. These negotiations were conducted for the Republican Company by one Sherman H. Bowles with William W. McClench, then president, and with other officers of the defendant. It was contemplated by both parties that the buyer would probably build on the vacant land, and during the preliminary negotiations Bowles inquired what sum would be required for a partial release thereof in that event. McClench said that his company would probably require that about $187,000, representing the net cost of the vacant land, be paid, but Bowles said that his principal could not agree to pay what the vacant land had cost the defendant; and no agreement relative thereto was reached. On October 1, 1927, the negotiations culminated in the execution of a written agreement for sale and purchase on the terms which were subsequently carried out. The only reference in this contract to a partial release is in these words: ‘The party of the first part further agrees that the mortgage herein referred to, to be given as part consideration of the purchase price, shall provide that in the event that party of the second part shall sell a portion of the premises, that a partial release of mortgage shall be given by party of the first part upon the payment therefor of a sum to be mutually agreed upon by said parties.’

Pursuant to this agreement the Republican Company immediately took possession of the building and began making extensive alterations and improvements, and as a result it secured many new tenants. It erected a garage building on the Bliss Street said of the premises, and refunded the cost of its erection by borrowing $125,000 from a local savings bank. In January, 1929, the Republican Company began the erection on the State Street land of a store and office building. This building, called the new State Building, has a frontage on State Street of about one hundred and sixty-three feet, and a depth of about seventy feet. It easterly wall is built about thirty and one-half feet easterly of the west wall of the old office building, and rests, in part, on massive steel, brick and concrete pillars which are built about through the center of the defendant's former engine and machinery room. The cost of the building, about $400,000, was refunded out of the proceeds of a loan made by a local trust company. The judge finds that ‘The Republican Company began and completed the erection of the Auto Park Garage and the new State Building knowing that it had not agreed with the defendant upon a sum to be paid for a partial release of the land occupied by them’; that ‘No false or fraudulent representations of any kind were made by the defendant to The Republican Company as an inducement to its proceeding as it did’; and that the defendant ‘never agreed that the partial release clause should be construed as entitling the mortgagor or the plaintiff to a partial release only of the so-called vacant land.’ In the summer of 1930, Bowles again took up with the defendant the matter of a partial release mentioning $100,000 as the price to be paid, but this offer was declined as inadequate.

According to the terms of the note, the Republican Company was obligated to pay the defendant on February 1, 1933, an installment of $25,000 on account of principal. The Republican Company did not pay this amount when due and was in default after February 1, 1933, not only for this instalment of principal but also for a balance of interest. The defendant never agreed to postpone payment of the instalment of principal that come due February 1, 1933, and never did anything amounting to a waiver of, or to estop itself from, asserting the right to the payment when due. On May 8, 1933, the defendant entered upon the mortgaged premises for the purpose of foreclosing its mortgage and caused a certificate of such entry to be duly recorded. On May 11, 1933, it notified the Republican Company that, because of the default in the payments due on the note, it demanded...