Union Market Nat. Bank of Watertown v. Derderian

• Decision Date: 20 September 1945
• Citation: 318 Mass. 578,62 N.E.2d 661
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court
• Parties: UNION MARKET NATIONAL BANK OF WATERTOWN v. MISSAK DERDERIAN & others.

318 Mass. 578

62 N.E.2d 661

UNION MARKET NATIONAL BANK OF WATERTOWN v. MISSAK DERDERIAN & others.

Supreme Judicial Court of Massachusetts, Middlesex.

September 20, 1945

May 8, 1945.

Present: FIELD, C.

J., LUMMUS, QUA RONAN, & WILKINS, JJ.

Mortgage, Of real estate: foreclosure. Auction.

A finding, that a mortgagee of real estate, in conducting an auction sale in foreclosure of the mortgage, failed to use reasonable diligence to protect the interests of the mortgagor, was warranted by evidence that the published notice of the sale stated a requirement of a cash deposit of $500 "by the purchaser at the time and place of the sale . . . Other terms to be announced at the sale," and the auctioneer announced at the opening of the sale that anyone desiring to bid must first deposit $500 in cash with the auctioneer which would be returned to the bidder at the conclusion of the sale if his bid were unsuccessful; that such later requirement was not applied by the auctioneer to the mortgagee as a bidder; that a bid was refused by the auctioneer because the bidder declined to comply with such requirement, although the mortgagee knew that the bidder was amply worth the amount of his attempted bid; and that, after alternate bids by the mortgagee and by the mortgagor, who had made the required deposit, the property was sold to the mortgagee for an amount less than its fair value and substantially less than the amount of the refused bid.

The mere fact, that a mortgagor of real estate, defendant in a suit for a deficiency alleged to be due after a sale in foreclosure of the mortgage attended by him with his attorney, failed to protest against the imposition by the auctioneer of a certain condition respecting bidding announced for the first time at the sale did not as a manner of law require a finding of waiver by the mortgagor of all objections to the manner in which the sale was conducted.

BILL IN EQUITY, filed in the Superior Court on November 22, 1943. A jury issue was tried before Greenhalge, J.

Certain of the plaintiff's requests for rulings, refused by the judge, were as follows: "2. I instruct you as a matter of law that the announcement by the auctioneer at the foreclosure sale that a person desiring to bid would have to make a $500 deposit before bidding does not constitute a failure on the part of the plaintiff to exercise good faith or reasonable diligence in protecting the interests of the mortgagor." "3. I instruct you as a matter of law that the requirement of the auctioneer that a person desiring to bid should make a $500 cash deposit before bidding does not constitute a failure on the part of the plaintiff to exercise good faith or reasonable diligence in protecting the interests of the mortgagor." "5. I instruct you as a matter of law that the auctioneer's acceptance of a bid from the mortgagee, in this case the plaintiff, without first requiring the plaintiff to deposit $500 in cash, does not constitute a failure on the part of the plaintiff to exercise good faith or reasonable diligence in protecting the interests of the mortgagor." "7. I instruct you as a matter of law that if you find that the defendant . . . mortgagor . . . attended the auction sale and made no request of the plaintiff or of the auctioneer that the auction sale should be postponed or adjourned, then you shall find that the defendant has waived all objections to the manner in which the auction sale was conducted, and you shall find for the plaintiff."

R. D. Swaim, for the plaintiff. G. A. McLaughlin, for the defendants.

WILKINS, J. This is a bill in equity to establish the amount of a deficiency upon a mortgage note following a foreclosure sale and to reach and apply certain shares of capital stock and other property. G L. (Ter. Ed.) c. 214,

Section 3 (7). The defendant Missak Derderian (hereinafter called the defendant) set up in his answer that the foreclosure sale was improperly conducted, and claimed a trial by jury. Stockbridge v. Mixer, 215 Mass. 415. To the question, "Has the plaintiff established its debt against the defendant in the amount of $2,107.72?" the jury answered, "No." The case is here on report of the correctness of the denial of the plaintiff's motion for a directed verdict and of the denial of the plaintiff's requests for instructions. G. L. (Ter. Ed.) c. 231, Section 111.

On November 2, 1928, the defendant for a loan executed a promissory note in the amount of $18,000 payable in one year to the plaintiff and secured by a mortgage of real estate in Watertown.

The mortgage was in the usual statutory power of sale form. G. L. (Ter. Ed.) c. 183, Sections 8, 18, 21, and appendix. The mortgage being in default, the plaintiff duly advertised the property for foreclosure sale on the premises "at 9:00 o'clock in the morning, War Time," on June 26, 1943. At the time of the sale the mortgage covered the real estate at 208 Common Street (which was but one of the lots originally covered), and the balance due on the note was $9,808.81. It was agreed at the trial that if the sale was properly conducted, the deficiency thereafter was $1,957.94, and if the plaintiff was entitled to recover, it would be entitled to that sum with interest at six per cent from the date of the sale.

The evidence most favorable to the defendant was as follows: Those present at the sale were the auctioneer; two vice-presidents of the plaintiff; Virgil Brink, Esquire, attorney for the plaintiff the defendant; his attorney, David S. Kunian, Esquire; his brother, Setrak Derderian; Setrak's attorney, Walter H. McLaughlin, Esquire; and an unknown stranger, who stood on the sidewalk and took no part in the proceedings. The auctioneer and the representatives of the plaintiff arrived at 9:07, and the sale started at 9:10. Mr. Kunian protested the delay of ten minutes. No one left the premises between 9 and 9:10. The auctioneer first read the published notice of the sale, which was in part: "Five Hundred Dollars ($500.00) to be paid in cash by the purchaser at the time and place of the sale and the balance in twenty (20) days thereafter. Other terms to be announced at the sale." The auctioneer then announced the "other terms," which were to the effect that anyone desiring to bid should deposit $500 in cash with the auctioneer before he could bid, and that if he should be an unsuccessful bidder, this sum would be returned to him at the conclusion of the sale. Mr. Kunian on behalf of the defendant made a deposit of $500. Neither the plaintiff nor Setrak made any deposit. Mr. McLaughlin on behalf of Setrak constantly protested both the requirement of a deposit as a condition of bidding and the failure of the auctioneer, acting under the advice of Mr. Brink, to cause the plaintiff to comply with this requirement. The first bid was $2,500 made by Mr. McLaughlin. It was refused by the auctioneer upon the advice of Mr. Brink. Mr. Kunian bid $2,600. Mr. Brink on behalf of the plaintiff bid $6,500. Mr. McLaughlin made a bid of $10,073.68, which was refused. Mr. Kunian and Mr. Brink alternated in bidding until Mr. Kunian bid $8,400. Mr. Brink then bid $8,500. Mr. McLaughlin again protested the refusal to accept his bid, and when Mr. Brink told the auctioneer to proceed, the...