This action was commenced by plaintiff, Paul Norton, Executor of the Estate of Richard McDonald, on March 17, 2008 seeking to reform a mortgage to include a power of sale and seeking also a declaratory judgment that the mortgage is in default and that he, as current holder of the mortgage, has the power to conduct a foreclosure sale. The mortgage encumbers real property known and numbered as 8 McLean Drive in Scituate. Defendant Baron K. Joseph, as Trustee of the Cherry Tree Realty Trust, is the current owner of the property, having purchased it from Michael McDonald, the son of Richard.
The parties have previously been involved in litigation in this Court relating to issues arising out of the same mortgage. In Land Court Miscellaneous Case No. 299191, Mr. Joseph, plaintiff in that action, sought to remove the encumbrance by having the mortgage invalidated. On July 27, 2006, the Court (Trombly, J.) issued a decision and judgment ruling that the mortgage was valid. The Appeals Court affirmed this judgment in a Rule 1:28 Decision entered on July 25, 2007 ( 69 Mass. App. Ct. 1113 ).
On October 20, 2008, in the present action, plaintiff filed a motion for summary judgment. On November 17, 2008, defendant filed an opposition to the plaintiffs motion. Plaintiff filed an amended appendix to his motion on December 10, 2008, containing a copy of the back of the mortgage document as well as a reply brief to defendants opposition. The motion was argued on January 6, 2009, and is the matter presently before the Court.
After reviewing the record before the Court, I find the following facts:
1. In 1983, Richard McDonald conveyed a parcel of land known and numbered as 8 McLean Drive in Scituate (the Property) to his son, Michael McDonald.
2. On September 18, 1997, Michael McDonald granted a mortgage to Richard McDonald to secure the repayment of eighty-five thousand ($85,000.00) dollars which Richard had loaned to Michael over a period of years (the Mortgage). The mortgage is registered as Document 415524 and was noted on the Memoranda of Encumbrances attached to Transfer Certificate of Title No. 68141 issued by the Plymouth Registry District of the Land Court. Michael McDonald did not execute a note to memorialize the debt.
3. On July 1, 2001, Richard McDonald passed away. His estate, including the mortgage, passed to his heirs. Plaintiff is the Executor of Richards estate.
4. On August 14, 2003, Michael McDonald conveyed the Property to defendant, Baron K. Joseph, Trustee of the Cherry Tree Realty Trust. Defendant was aware of the outstanding mortgage at the time he purchased the property and the mortgage is listed on the encumbrance sheet of the certificate of title issued to him.
5. The mortgage document contains language granting the Property to mortgagee, [ ] with mortgage covenants [ ].
6. The mortgage document does not contain provisions for repayment of the mortgage proceeds, either a due date or a payment period.
7. The back side of the mortgage document (a Hobbs and Warren form) contains a reprint of G.L. c. 183, §§ 18-21 having to do with mortgage deeds, mortgage covenants, statutory conditions, and statutory powers of sale. There is no language on the front page of the document adopting or referring to those sections.
8. Other than the reprint of § 20, the mortgage document does not contain any language concerning conditions for the default of the mortgage agreement.
9. Other than the reprint of § 21, the mortgage document does not contain the phrase Statutory Power of Sale, the language of § 21, or any other provision for the power of sale in the event of default.
10. No payments have been made on the mortgage since its execution. Plaintiff now desires to foreclose the mortgage by exercise of a power of sale of the mortgaged property.
Summary judgment is granted where there are no issues of material fact and when the moving party is entitled to judgment as a matter of law. Mass. R. Civ. P. 56(c); Cassesso v. Commr of Corr., 390 Mass. 419 , 422 (1983); Cmty. Natl Bank v. Dawes, 369 Mass. 550 , 553 (1976). The moving party bears the burden of demonstrating affirmatively the absence of a triable issue, and its entitlement to judgment as a matter of law. Pederson v. Time, Inc., 404 Mass. 14 , 16-17 (1989).
In weighing the merits of a summary judgment motion, the court must address two questions: (1) whether the factual disputes are genuine, and (2) whether a fact genuinely in dispute is material. Anderson v. Liberty, 477 U.S. 242, 247-48 (1986). As to materiality, the substantive law will identify which facts are material. Only disputes over facts that might affect the outcome of the suit under the governing law properly preclude the entry of summary judgment. Id. at 248. In order to determine if a dispute about a material fact is genuine, the court must decide whether [ ] the evidence is such that a reasonable [fact finder] could return a verdict for the non-moving party. Id.
With respect to any claim on which the party moving for summary judgment does not have the burden of proof at trial, it may demonstrate the absence of a triable issue either by submitting affirmative evidence that negates an essential element of the opponents case, or [ ] by demonstrating that proof of that element is unlikely to be forthcoming at trial. Flesner v. Technical Communications Corp., 410 Mass. 805 , 809 (1991). However, the party opposing summary judgment [ ] cannot rest on his or her pleadings and mere assertions of disputed facts to defeat the motion for summary judgment. LaLonde v. Eissner, 405 Mass. 207 , 209 (1976). However, where appropriate, summary judgment may enter against the moving party. Mass. R. Civ. P. 56(c).
When the court considers the materials accompanying a motion for summary judgment, the inferences to be drawn from the underlying facts contained in such materials must be viewed in the light most favorable to the party opposing the motion. Attorney Gen. v. Bailey, 386 Mass. 367 , 371 (1982). The court does not [ ] pass upon the credibility of witnesses or the weight of the evidence or make its own decision of facts. Id. at 370. However, the court may only consider evidence which meets the requirements of Mass. R. Civ. P. 56(e). That evidence must come from [ ] pleadings, [Note 1] depositions, answers to interrogatories, and responses to requests for admissions under Rule 36, together with [ ] affidavits, if any [ ]. Mass. R. Civ. P. 56(c).
In the present case, plaintiff argues that because the Mortgage does not contain the terms upon which repayment is due, these terms are defined by the common law standard of reasonableness. The plaintiffs argument continues that the eleven years in which no payments have been made is beyond a reasonable time and that the mortgage is therefore in default. It is basic contract law that where a material term is omitted from a contract, the common law defines it. Where time for performance is the omitted material term, the common law imposes a reasonable time for performance. Warren v. Ball, 341 Mass. 350 , 352-54 (1960); see Barber v. Fox, 36 Mass. App. Ct. 525 , 528 (1994); Charles River Park, Inc. v. Boston Redev. Auth., 28 Mass. App. Ct. 795 , 814 (1990). When the underlying facts are undisputed, what constitutes a reasonable time is a question of law. See Warren, 341 Mass. at 352-54. Here, the Court need not determine the precise limit of reasonableness; it is clear that defendant exceeded any limit that might be established. Eleven years is well beyond any standard of reasonable period for payments under a mortgage in the view of this Court, and I therefore rule that this Mortgage is in default.
Plaintiff further seeks both to reform the Mortgage to include the Statutory Power of Sale, as defined under G.L. c. 183, § 21, and a declaratory judgment of his right under this power to conduct a foreclosure sale of the now defaulted property. In addition, plaintiff has reported to the Court in his amended appendix that he has only recently discovered that the back side of the Mortgage document contains a copy of G.L. c. 183, §§ 18-21. At oral arguments on his motion for summary judgment on January 6, 2009, plaintiff, by his counsel, argued that the Court should find that this reprint of § 21 is sufficient to incorporate the statutory power by reference. The Court disagrees with each of these alternative arguments.
Section 21 states that the Statutory Power of Sale [ ] may be incorporated in any mortgage by reference: [ ]. G.L. c. 183, § 21. It is well-settled law that the statutory power, as defined in this section may be incorporated into a mortgage in three ways: (1) incorporating the exact language that defines the Statutory Power of Sale of § 21 into the text of the mortgage; (2) referring to this definition, generally by use of the term Statutory Power of Sale; or (3) language in the mortgage defining a power substantially similar to that of the statutory power. The Massachusetts Co. v. Midura, 3 LCR 138 , 138 (1995) (Misc. Case No. 214697) (Cauchon, C.J.). It is undisputed that, other than the copy on the back of the document, the Mortgage at issue in this action does not contain the phrase Statutory Power of Sale, nor is any such power defined in the text of the document either as § 21 verbatim or a substantially similar power. The statutory power is not applied by default in the event of its omission; failure to invoke the power in some way results in no such power. See Wendover Funding, Inc. v. Grey, 6 LCR 35 , 36 (1998) (Misc. Case No. 224304) (Green, J.).
To support an action for reformation, it is plaintiffs burden to establish an intent that would be frustrated unless the instrument is reformed. Franz v. Franz, 308 Mass. 262 (1941); Cf. Hallowell v. Ames, 165 Mass. 123 (1895) (absent special facts, the Court has no jurisdiction in equity to decree foreclosure sale where mortgage does not contain power of sale); Summit Securities, Inc. v. Saviolo, 6 LCR 79 , 80 (1998) (Misc. Case No. 239069) (Green, J.). Compare Old Colony Trust Co. v. Great White Spirit Co., 178 Mass. 92 (1901) (where mortgage contained elaborate provisions for protection of parties upon breach of condition and foreclosure by action would have required separate proceedings in two courts, equitable considerations warranted decree in equity for sale of property). Here, plaintiff has not met his burden; he has presented no evidence that the parties intended the mortgage to contain a power of sale.
Plaintiff argues that the Mortgage contains the phrase with mortgage covenants and that under G.L. c. 183, § 18, this phrase is sufficient to invoke the incidents and remedies of that section, including the Statutory Power of Sale. This is a mistaken reading of § 18; section 18 provides that where a mortgage uses the Form (5) Mortgage Deed found in the Appendix to G.L. c. 183, or incorporates the substance of that form, certain conditions and terms are given effect, including the Statutory Power of Sale. It is not sufficient, however, to merely title the mortgage Mortgage Deed or reference the term mortgage deed or with mortgage covenants. In order to invoke the same incidents and remedies of the Form 5 Mortgage, a mortgage must use language substantially similar to those incidents and remedies found in that form. In order to invoke the Statutory Power of Sale, a mortgage must, at least, use the phrase, Statutory Power of Sale, as Form 5 does.
As for the copy of § 21 on the back of the Mortgage, standard form mortgage agreements may often contain these statutory definitions; however, it is generally not the accepted practice to allow these provisions, alone, to invoke the terms they define. Sections 19 through 21 are primarily definitional provisions, which allow contracting parties to reference terms with a static and legally-accepted meaning, without having to define them on their own.
It is clear from the language of § 21 that the section itself is not meant to stand alone. Although it may be copied verbatim, it must be excerpted and placed appropriately in context within the language of the mortgage. An objective reading of the section reveals that the definition references and requires a condition to invoke the power: [ ] upon any default in the performance or observance of the foregoing or other condition, [ ]. G.L. c. 183, § 18 (emphasis added). When the conditionsome form of defaultis met then the power may be exercised by the mortgagee. The Form 5 Mortgage, itself, uses the phrase Statutory Power of Sale in context: [ ] for any breach of which, the mortgagee shall have the statutory power of sale. G.L. c. 183, Appendix, Form (5). In the instant case, the entirety of the section is copied and left to stand as a general law, rather than integrated into the body of the document and made contingent on a preceding condition of default.
Accordingly, for the reasons noted herein, I find and rule that there is no power of sale clause attributable to this Mortgage, either within the meaning of G.L. c. 183, § 21 or one of equivalent substance to that statutorily defined power. However, the mortgagee is not barred from foreclosure of the mortgage by this decision. Clearly, the omission of a statutory power of sale does not render the mortgage unenforceable.
Chapter 244 of the General Laws provides three methods to foreclose a mortgage. The most common, where available, and the object of plaintiffs complaint, is foreclosure under a power of sale. This court has already ruled, however, that this remedy is not available under the mortgage at issue in this case. A mortgagee may also foreclose by action pursuant to G. L. c. 244, §§ 1-10, or may make an unopposed entry upon the mortgaged premises in the presence of two witnesses and must memorialize that event by the execution and recording of a Certificate of Entry at the appropriate registry of deeds. In any case, however, the foreclosure will be delayed because, for example, the recording of the certificate of entry will not ripen into a fee for three years.
For the foregoing reasons, the Court concludes that the Mortgage is in default even though the mortgage document does not provide a specific time for repayment of the mortgage debt. In such a situation, the common law prescribes a reasonable time for performance. This court is of the opinion that the mortgagors inaction for over eleven years is beyond a reasonable time and, thus, constitutes a default of the Mortgage.
The Court does not agree, however, that the Mortgage contains a power of sale provision. The face of the document fails to provide for any such power or to incorporate by reference the statutory power of sale, as defined by G.L. c. 183, § 21. Neither does the Court agree that the Mortgage should be reformed to include such a clause, plaintiffs having failed to meet their burden of proof in this regard. Accordingly, the plaintiffs motion for summary judgment is ALLOWED IN PART and DENIED IN PART.
Judgment shall issue accordingly.
Charles W. Trombly, Jr.
Dated: January 12, 2009
[Note 1] A motion for summary judgment can rest in whole or in part on facts set forth in the moving partys pleadings if, but only if, they are conceded in the opposing partys pleadings. Cmty. Natl Bank, 369 Mass. at 557, n.6. It may also rest on the allegations contained in the opposing partys pleadings. G. L. 231, § 87 (in any civil action pleadings shall not be evidence on the trial, but the allegations therein shall bind the party making them).