OUTPOST CAFE, INC. vs. FAIRHAVEN SAVINGS BANK & others. [Note 1]

GRANT, J. At some unspecified point in 1972 the plaintiff was in breach of one or more of the conditions contained in a mortgage of certain premises in Dartmouth which it had given to the defendant savings bank (defendant) in 1970. On January 16, 1973, the defendant made an entry on the premises for the purpose of foreclosing the mortgage. On the same day, pursuant to a power of sale contained in the mortgage, [Note 2] there was conducted on the premises a duly advertised auction sale at which the premises were struck off to the highest bidder, which put down a deposit in accordance with the terms of the sale and entered into a memorandum of sale with the attorney for the defendant. Six days later, on January 22, 1973, the plaintiff tendered to the defendant an amount which the plaintiff claimed was in excess of the amount then due under the terms of the mortgage; the defendant refused to accept the tender. The plaintiff brought the present bill to redeem on the following day, by which time the defendant had executed but had not yet delivered a deed of the premises to the purchaser at the foreclosure sale. The plaintiff has appealed from a final decree of the Superior Court dismissing the bill on the ground that the tender came too late because the equity of redemption had already been foreclosed.

The disposition of this case turns on when "the land has been sold pursuant to a power of sale contained in the mortgage deed" (emphasis supplied) within the meaning of G. L. c. 244, Section 18, [Note 3] and on when a "sale [occurs] pursuant

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to a power contained in the mortgage" (emphasis supplied) within the meaning of G. L. c. 244, Sections 21 and 22. [Note 4] The defendant and the purchaser contend that the premises were "sold" within the meaning of those sections at least as early as the time when they executed the memorandum of sale at the foreclosure sale; the plaintiff contends that a "sale" is not complete until a deed is delivered to the purchaser at the foreclosure sale and that it may redeem the premises at any time prior to the delivery of such a deed.

An auction sale is complete, in the generally understood sense, when the auctioneer signifies his acceptance of the highest bid, and this is so whether the subject of the sale be real estate (Conway Sav. Bank v. Vinick, 287 Mass. 448, 453 [1934]) or personal property (G. L. c. 106, Section 2-328[2] [Note 5]). A study of various of the sections of G. L. c. 244 preceding those already cited yields a number of indications that such is the sense in which the words "sold" and "sale" are employed in the statutory provisions concerned with the foreclosure of a mortgage by the exercise of a power of sale contained therein. Thus, Section 12 ("within ten days after the sale"), Section 15 ("within thirty days after the sale"), Section 17A ("within two years after the date of the foreclosure sale") and Section 17B ("not less than twenty-one days before the date

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of the sale under the power in the mortgage") all serve to pinpoint and identify the "sale" in terms of what happens on the date advertised for the sale of the premises at public auction, while Section 14 [Note 6] carefully distinguishes between (a) a "sale" and (b) the "deed" to the purchaser thereunder, the delivery of which "complete[s] the purchase."

If we were to be guided solely by the ordinary principles of statutory construction, we would unhesitatingly conclude that the premises in this case were "sold" within the meaning of Section 18 on the date of the foreclosure sale and that the plaintiff's tender came too late because not made until after the equity of redemption had been barred by virtue of the concluding provision of that section. We believe that a careful analysis of the pertinent cases leads to the same conclusion.

The plaintiff places great reliance on the following language appearing in the case of Way v. Mullett, 143 Mass. 49 (1886): "If the sale is complete, and the conveyance made of the estate, in accordance with the terms of the mortgage, the mortgagor loses his equitable right of redemption, and an unconditional estate passes to the purchaser. But, until the power is executed, the relation of the mortgagor and mortgagee remains independent of the power to sell. . . . The power in the mortgage to sell, unexecuted, leaves the estate as it would be if no such power existed" (143 Mass. at 52; emphasis supplied). The precise, and only, question decided by the majority of the court in that case was whether a mortgagor who had brought a bill to redeem before the foreclosure sale could maintain his bill

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without having made a prior tender of the amount due under the mortgage. [Note 7] The plaintiff has apparently overlooked the significance of the majority's quotation (143 Mass. at 52-53) of Pub. Sts. (1882) c. 181, Section 21 (a direct ancestor of G. L. c. 244, Section 18), and the following comments with respect thereto: "The last clause of Section 21 [Note 8] was evidently enacted for the purpose of fixing the time when a foreclosure is complete, under the execution of a power of sale in a mortgage. The section treats of those who may redeem, and when they may redeem, and of nothing more. It does not change the law which was in force when this provision was enacted, except to determine when the mortgagor may redeem the mortgaged premises. By its terms, until a sale of the premises is completed, the mortgagor, or any person claiming under him, may redeem the same" (143 Mass. at 53; emphasis supplied). We believe the fair implication of the italicized words, when they are considered in conjunction with the language of the last clause of Pub. Sts. (1882) c. 181, Section 21,8 is that the "foreclosure is complete" at the time of the auction sale. Indeed, the use of the conjunctive "and" in the portion of the opinion relied on by the plaintiff strongly suggests that the "sale" is to be regarded as complete before a conveyance to the purchaser.

The opinion in the case of Clark v. Griffin, 148 Mass. 540 (1889), merely reiterated the holding in the Way case, while noting that the bill to redeem had been brought before the time advertised for the foreclosure sale. The case of Judge v. Pfaff, 171 Mass. 195 (1898), is of no assistance in pinpointing the actual moment of "sale" for purposes of G. L. c. 244, Section 18.

Of all those cases which have discussed the predecessors of G. L. c. 244, Sections 18, 21 and 22, the one of Brown v. Wentworth,

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181 Mass. 49 (1902), bears the closest factual resemblance to the case at bar, as the bill to redeem in that case was brought after the foreclosure sale but prior to any conveyance to the purchaser. The court relied on the Way case as authority for upholding the denial of the plaintiff's request for a ruling to the effect that, having brought her bill and offered to pay the amount due before the conveyance to the purchaser, she was entitled to redeem as of right (181 Mass. at 50), saying, "In the first place, the plaintiff claims a right to redeem as matter of law because the bill, although filed after the sale, was brought before the conveyances were executed to carry it out. We are of opinion that she has no such right. Unless there was some defect in the proceedings, her rights were gone when the contract was made [Note 9]." (181 Mass. at 52). The case of Matthews v. Dinner, 237 Mass. 153, 154 (1921), also relied on the Way case to reach the same result as in the Brown case.

We would regard the Wentworth and Matthews cases as decisive of the issue in the present case were it not for the following statements in Beal v. Attleborough Sav. Bank, 248 Mass. 342 (1924), on which the plaintiff places its greatest reliance: "The auction sale was in effect a mere contract for a sale. The sale was not executed until the deed was delivered, when the title passed to the purchaser" (248 Mass. at 343). What follows the quoted statements suggests that the author of the opinion misunderstood the true implications of the Way case which have been outlined above. In any event, what was said must be regarded as dictum, as the only issue in the Beal case was whether the mortgagor was entitled to be credited with certain rents and profits received by the mortgagee during the period intervening between the foreclosure sale and the date of the delivery of the deed to the purchaser.

The author of the opinion in the Beal case appears to

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have had second thoughts on the correctness of what he had said in that case. In White v. Macarelli, 267 Mass. 596 (1929), he relied on the Brown case as authority for the following statements: "The intervener [a second mortgagee who sought to set aside a foreclosure sale for alleged irregularities therein] contends that he has a right to redeem after the auction sale and before the conveyance is made. If a foreclosure sale is fairly conducted and there is no defect in the proceedings, the right of the intervener to redeem is gone when the contract of sale was made with the purchaser at the auction" (267 Mass. at 598-599). The Beal case was specifically distinguished as involving a form of equitable ownership other than the equity of redemption, and the opinion concluded with the specific statement that "[t]he mortgagor, after a valid auction sale under a power of sale in the mortgage deed, has no right to redeem, although he has an ownership of the equity" (267 Mass. at 599; emphasis supplied).

The foregoing distinction was specifically noted in the subsequent case of Schanberg v. Automobile Ins. Co. of Hartford, 285 Mass. 316 (1934), where the court appears to have agreed with the contention of the purchaser at the foreclosure sale that the White case stands for the proposition that "the equity of redemption . . . [is] barred as soon as the property . . . [is] knocked down at the foreclosure sale" (285 Mass. at 318). The opinion in the Schanberg case cited that in the Beal case with approval, but principally for the proposition that "[u]ntil the deed is given, the mortgagor has a right to an accounting for rents and profits" (285 Mass. at 319).

We are of the opinion that the cases, when considered in their entirety, support the conclusion which should be reached by the ordinary processes of statutory construction and which we have already outlined above. Accordingly, we hold that the plaintiff's equity of redemption was barred under the concluding clause of G. L. c. 244, Section 18, at least as early as the point in time when the memorandum of sale was executed with the purchaser at the foreclosure sale. It follows that the plaintiff's tender and bill came too late under

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either Section 21 or Section 22. The tender was properly refused, and the bill was properly dismissed.

Decree affirmed.