JUNE M. TURCOTTE vs. BARBARA LYON LAWRENCE

Introduction

Defendant Barbara Lawrence is the holder of an undischarged note and mortgage on the residence at 51 Phillips Place in Northampton (the “Lawrence mortgage”) currently occupied by plaintiff June Turcotte. June’s interest in the property, [Note 1] acquired through her receipt (by assignment) and subsequent foreclosure (by entry pursuant to G.L. c. 244, §§ 1, 2) of a junior mortgage, is subject to the Lawrence mortgage if and to the extent Barbara is still owed money on the note.

The Lawrence mortgage was granted by the then-owners of the property, Dr. Rodolph Turcotte and his wife Claire (June’s parents), to Barbara and her mother Jorann Lawrence. The Lawrence mortgage was security for an $8,000 loan made by Jorann at Dr. Turcotte’s request. Dr. Turcotte, now deceased, was a psychiatrist at the time the loan was made. [Note 2] Jorann, also now deceased, was his patient.

June contends that the note secured by the mortgage has been paid in part and, to the extent it was not paid, it was more than offset by Dr. Turcotte’s allegedly unreimbursed services to Jorann (therapy, room, and board), the money and meals he gave her from time to time, and the occasional housekeeping, errand-running, and transportation that were provided to her by others at his request. In the alternative, June argues that the note has either been forgiven or its collection is now barred by laches, estoppel, or the statute of limitations. She thus brought this action seeking discharge of the mortgage. [Note 3] Barbara denies each of June’s contentions and seeks a declaration of the mortgage’s validity and the amount she is owed.

The claims outside the land court’s jurisdiction were transferred to the superior court and I was interdepartmentally assigned to hear and decide them. G.L. c. 211B, § 9 (xix); Order of Assignment (Mulligan, CJAM) (Mar. 28, 2006). A trial on all issues was held before me, jury-waived. Based upon the agreed facts contained in the parties’ pre-trial memorandum, the testimony, exhibits, and stipulations admitted into evidence at trial, the parties’ admissions in their post-trial memoranda, matters of which I may take judicial notice, my assessment of the credibility, weight, and inferences to be drawn from all of the evidence, and as more fully set forth below, I find and rule that the mortgage is valid, has not been forgiven, has not been offset, and the balance owed is the original $8,000, plus interest at an annual rate of 18% from the date of the note, [Note 4] less the cash payments identified in detail below, all to be credited at the times they were made. The defendant is directed to calculate the total amount due accordingly and submit it to the court by January 29, 2010. If the plaintiff disagrees with that calculation, she shall so notify the court (with an explanation of the grounds for her disagreement) by February 9, 2010 and a hearing shall be held thereafter to resolve that disagreement. Final judgment shall enter promptly after that resolution.

Findings of Fact

The Property and the Parties

As noted above, the property at issue is located at 51 Phillips Place in Northampton. It was previously owned by the plaintiff’s parents, Dr. Rodolph and Claire Turcotte, and is now owned by the plaintiff as a result of her foreclosure of a mortgage junior to the Lawrence mortgage that was assigned to her by a family friend. [Note 5] Dr. Turcotte, now deceased, was a psychiatrist whose registration was revoked in 1986 for “gross misconduct in the practice of medicine.” In the Matter of Rodolph Turcotte, M.D., Adjudicatory Case #85-21, Final Decision and Order at 34 (Board of Registration in Medicine, Nov. 19, 1986). After his license was revoked he still practiced as an unlicensed therapist until his death in May 2000. His wife Claire is still living, but because of severe Alzheimer’s, she was neither called nor competent to testify at trial.

Both the defendant and her late mother Jorann were patients of Dr. Turcotte. Jorann, who suffered from severe depression and obsessive-compulsive disorder, was seen by Dr. Turcotte from 1975 until close to the time of her death in June 1996. Barbara participated in family therapy with Dr. Turcotte from 1975 to 1979. Dr. Turcotte thus had a fiduciary duty to both of them. See, e.g., Warsofsky v. Sherman, 326 Mass. 290 , 292 (1950) (physician/patient is a fiduciary relationship); Forziati v. Bd. of Registration in Medicine, 333 Mass. 125 , 127 (1955) (noting physicians’ “high moral duty to serve the public who seek their assistance before they serve themselves”).

Jorann’s condition was severe. She was in and out of mental institutions when Barbara was young. She had a major nervous breakdown when Barbara was eight, received twenty-seven electrical shock treatments, and never touched or held Barbara thereafter without wearing gloves. Jorann’s cleansing rituals took hours. When Barbara came home from school, Jorann would force her to sit in a designated chair and not allow her to move. If Barbara cast a shadow on the wall, Jorann would scream.

Jorann’s condition did not appreciably improve during her treatment with Dr. Turcotte. She continued her hours-long cleansing rituals. When friends of Dr. Turcotte helped clean her apartment, she required them to wear slippers, mop and re-mop the floors, and vacuum and re-vacuum every light bulb, fixture, table, bed, curtain, sink, and even the vacuum cleaner itself — watching them “like a hawk, and mak[ing them] redo every task over and over again until she was satisfied.” Trial Transcript, Day 3 at 13 (Mar. 8, 2007).

Dr. Turcotte’s treatments were unorthodox, especially with Jorann. He did not maintain a clear boundary between his roles as her psychiatrist and as her friend and it is difficult to discern when he was acting as which. Jorann, for example, lived with the Turcottes at 51 Phillips Place from late November 1976 [Note 6] to March/April 1979 and paid monthly room and board. It is not clear (there was conflicting evidence) whether this was because she needed a place to live, she and Dr. Turcotte considered it part of her therapy, or some combination of both. At least one other patient of Dr. Turcotte also lived with them during part of that time. Since Dr. Turcotte kept no notes of the length, purpose, substance, or outcome of any of his sessions, [Note 7] many sessions took place outside of his office over lunch and in other informal settings, [Note 8] and much (and perhaps all) of his therapy was conversational in nature, it is unclear which of his interactions with Jorann were mutually viewed as therapeutic counseling (and whether or not such counseling was free or was to be billed) or simply as friendly conversation. [Note 9]

This intermingling and confusion of roles continued even after Jorann moved from Dr. Turcotte’s home to a different residence. A July 1983 letter from Dr. Turcotte to Barbara is illustrative. In that letter (on the letterhead of the World Fathers’ Association [Note 10]), Dr. Turcotte wrote at length about the meals and gifts he claimed to have given Jorann, stated that he loved both Barbara and Jorann, stated that he thought of Barbara “as a daughter,” wondered if it would be “too far [for Barbara] to come out here to visit me, as well as Jo,” and ended with a request that Barbara participate in family therapy sessions. Trial Ex. 102. In addition, Dr. Turcotte would often ask his family members and friends to do things for Jorann (housekeeping, errand-running, and transportation), which they did as a favor to him. There is no record of Dr. Turcotte ever charging Jorann personally for any of his visits or sessions above any insurance or Medicare/Medicaid payments he received [Note 11] and he neither instituted a lawsuit nor made any claim in writing against Jorann or Barbara for any allegedly unpaid balances. Even his letters noting the money he spent on Jorann (e.g., Trial Ex. 102) never asked for reimbursement and were clear that he was looking to Jorann’s insurance and Medicare/Medicaid benefits as the sole source of payment for his therapeutic services.

The Lawrence Loan, Note, and Mortgage

Dr. Turcotte was often short of money. [Note 12] In April 1977, he approached Jorann and asked to borrow $8,000, which she lent him. [Note 13] In exchange, he and his wife Claire gave Jorann and Barbara as co-payees an $8,000 promissory note at 27% annual interest, payable on demand, and secured by a mortgage on 51 Phillips Place. Interest was due and payable twice a year (April 1st and October 1st), with the first payment due October 1, 1977. At the time, both Jorann and Barbara were patients of Dr. Turcotte’s and he was still a licensed psychiatrist.

Jorann and Barbara did not have legal representation at the closing, which took place at the offices of a lawyer chosen by Dr. Turcotte and lasted no more than ten to fifteen minutes. [Note 14] Based on the evidence at trial, I find that the terms of the note and mortgage were set by Dr. Turcotte and the documents were drafted in their entirety at Dr. Turcotte’s instruction with no substantive input by either Jorann or Barbara.

The Lawrence mortgage has neither been discharged of record nor, as more fully explained below, has a discharge or release ever been agreed to or signed.

Dr. Turcotte’s Payments on the Note and the Plaintiff’s Claim of “Offsets”

There is no record of any deduction from the loan balance. Joint Pre-Trial Memorandum at 22, ¶ 27. No master ledger was kept. There are scattered records of interest payments, but they are not applied toward any recorded balance. Id. The parties stipulated that no accounting is now possible under these circumstances. Id. at 22, ¶ 28. Having considered all the evidence, however, I find that the following payments, and no others, were made by Dr. Turcotte towards the loan and that Jorann received and understood them as such. [Note 15]

I find that the note and mortgage are neither offset in any amount by Dr. Turcotte’s therapeutic services nor by the services provided to Jorann by Dr. Turcotte’s family, friends, and patients at Dr. Turcotte’s request. As previously noted and discussed again below, Dr. Turcotte looked exclusively to Jorann’s insurer and Medicare/Medicaid to pay for her therapy and neither he nor Jorann ever intended for her to have any personal liability for any services that were not covered by insurance or Medicare/Medicaid. [Note 17] The services and small amounts of money provided to Jorann from time to time by Dr. Turcotte and his family, friends and other patients (the groups overlapped) were voluntary gifts and were neither intended nor received as payments or offsets.

I also find that the note and mortgage are not offset in any amount by Jorann’s room and board while she was a resident with the Turcottes for the following reasons. First, she began living there over four months before the note and mortgage were signed and the plaintiff has not shown that Jorann ever failed to make the agreed payments of $250 per month for her room and board. Indeed, the evidence is to the contrary. Barbara testified that she wrote the room and board checks for her mother and every month was paid. Such payments were initially made from Jorann’s savings (the original $12,000 amount and then the amount that was left after Dr. Turcotte borrowed the $8,000) and, thereafter, from Jorann’s monthly disability checks. Moreover, even if such room and board payments were not made (a suggestion contrary to the evidence), there is nothing in the note or mortgage that suggests Dr. Turcotte could forego interest payments in exchange for full or part payment of room and board and no witnesses testified that such an offset was discussed at the time the loan was made. [Note 18]

Second, on the occasions when an offset clearly was intended (January, February, March, and April 1978), Dr. Turcotte wrote a check to Jorann for $250 towards interest on the note (specifically noting on the check that it was for that purpose) and Barbara (signing for Jorann) immediately turned around and endorsed the check back to him with the specific notation that it was for room and board. [Note 19] These payments are likewise the only months that the rent ledger states were “paid out of interest due on 2nd mortgage.” Trial Ex. 97.

Third, with the exception of these four payments, there is nothing to indicate that Dr. Turcotte, Jorann, or Barbara ever considered unpaid room and board (if any, and there is no proof of any) as credits towards note and mortgage payments. Indeed, given the fact that, years later, Dr. Turcotte, [Note 20] June, [Note 21] and Jorann [Note 22] all considered the note to be unpaid, the evidence is otherwise.

Requests that the Lawrences Assign or Release the Mortgage

Jorann died on June 24, 1996 after a long battle with cancer. Beginning in 1987 and continuing through December 1995, [Note 23] June periodically asked Jorann to release the mortgage. Jorann refused on each occasion. Initially, she said she would not release it because she needed the money and was afraid that she would be abandoned without it. Later, after being assured that she would not be abandoned, she continued to refuse, claiming that Barbara would release the mortgage after Jorann’s death. No one contacted Barbara for confirmation of this arrangement and, indeed, Jorann never spoke with Barbara about it. [Note 24] I find that Jorann never had any intention of forgiving or releasing the note and mortgage and her statements that Barbara would release them after her death were made simply to end the conversation. She may also have made them in an attempt to retain the Turcottes’ and their friends’ attentions, but this is of no legal consequence. Jorann was a very ill woman, both physically and mentally. The Turcottes and their friends knew this and, to their great credit, went considerably out of their way to help her. [Note 25] But these were voluntary efforts and were never offered, understood, or agreed as anything other than gifts. They certainly were not payments, credits or offsets towards the note or mortgage.

In July 1996, soon after Jorann’s death, Barbara found the mortgage and promissory note in her own papers. That same month, based on her erroneous assumption that the loan had been repaid, she sent the mortgage and promissory note to Dr. Turcotte with a letter stating, “I thought you might want to have this. Thank you for your loving support of my mother all these years.” Trial Exs. 1 & 2. Based upon all of her testimony and other evidence in this case, I find that she did not intend this to be a release or discharge.

Dr. Turcotte was “elated” to receive the documents from Barbara, but did nothing further at that time. Trial Transcript, Day 3 at 19-20. He did not, for example, contact Barbara to ask what her intentions were. One year later (July 20, 1997), he wrote a letter to Barbara thanking her for sending him the documents (“I’m sure this is an act of love for Jorann and for us”) and asking her as a favor to assign the note and mortgage to June. Trial Ex. 24. His explanation was as follows:

It is helpful for this mortgage to remain in place in the Registry of Deeds because it keeps other creditors back in line who might want to force a foreclosure [or] bankruptcy. In this way a member of the family might be able to collect the value of the mortgage first before these other creditors which include over $100,000 of liens by the IRS, and liens by the Electric and Gas companies currently above the $15,000 total. And a variety of other items including a $40,000 lien by the Hartford law firm which defended me from legal attacks in the 80’s. . . . Enclosed are the legal papers for your signature. I will look forward to receiving them, I hope in the near future, at your convenience. . . . Sincerely, R.H. Turcotte, M.D.

Id. I conclude from this that Dr. Turcotte knew the note was unpaid and owed at the time he wrote the letter (he apparently believed that $15,000 was owed) and that he intended to use the note and mortgage, once assigned, to trump the collection efforts of his junior creditors by enabling June to foreclose. [Note 26]

Barbara was uneasy about Dr. Turcotte’s request for an assignment to June, did not sign the papers he enclosed with his letter (a proposed assignment to June “in consideration of $1”), and did not agree to assign the mortgage even after a follow-up phone conversation with Dr. Turcotte. Dr. Turcotte was not shy about exploiting his relationship with Barbara, her guilt about Jorann, [Note 27] and portraying his circumstances as dire (see Trial Ex. 25), and Barbara was willing to consider releasing the mortgage if it would help him. But he continued to insist on an assignment.

There matters stood until February 2000, when the Turcottes’ friend Susan Smith wrote to Barbara, enclosing assignment and release papers with a request for Barbara to sign one or the other (she pressed for the assignment). Trial Ex. 52. The letter recognized that Barbara did not want to do so (or, at least, did not want to sign an assignment) [Note 28] and contained a suggestion, intended or not, that Jorann’s ashes might not be forwarded to Barbara until Barbara signed and returned the assignment/release documents. [Note 29] Id. Barbara’s husband Jim Mesthene certainly interpreted it as such and Jim wrote back in March demanding the ashes, stating that “[n]othing is more important to Barbara than the proper disposition of her mother’s ashes” [Note 30] and “[p]lease assemble all evidence that the debt has been repaid, as I’m sure my lawyer will want to review it before advising me.” Trial Ex. 57. June responded in May 2000 without providing any evidence that the loan had been repaid. Trial Ex. 53. Nor did she contend that it had been repaid. Id. Instead, she again requested the assignment of the mortgage, asking Barbara “to do the right thing” for Dr. Turcotte’s “comfort and respect.” Id. June also telephoned Barbara from Dr. Turcotte’s hospital room to make the same request. Barbara refused, lawyers were retained, Barbara commenced foreclosure proceedings, and this lawsuit was filed in response in March 2006.

Other facts pertinent are included in the analysis section below.

Analysis

Payments towards the Note and Mortgage

As noted above, I find (as a factual matter) that a total of $4,055.27 was paid towards the note on the dates previously listed. The note provided for interest at 27% per annum, but because the value of the house securing the mortgage was less than $40,000 (its assessed value was $16,030 at the time, Trial Ex. 28), that interest is capped at 18% (1.5% per month). G.L. c. 140, §§ 90A & 90D. Interest is simple, not compound. Payments are to be credited first towards unpaid interest and, to the extent that no interest was owed at the time a payment was made, towards principal. This potentially is a month-by-month calculation, which, as an initial matter, the parties can far more easily accomplish than me. Accordingly, the defendant is directed to make that calculation and submit it to the court by January 29, 2010. If the plaintiff disagrees with that calculation, she shall so notify the court (with an explanation of the grounds for her disagreement) by February 9, 2010, and a hearing shall be held thereafter to resolve that disagreement.

The Mortgage Indebtedness is Not Offset by the Alleged Unpaid Room and Board

As noted above, I find (as a factual matter) that all of Jorann’s room and board for her residence with the Turcottes has been paid in full. Even had it not been paid, there was never an agreement (beyond the four occasions previously noted) that it would be an offset against payments due under the note. Anything unpaid was a gift to Jorann. Moreover, the statute of limitations for recovery of such a debt had long since past at the time this action commenced, and there was no demand, payment or acknowledgement of indebtedness to toll that statute. G.L. c. 260, § 2.

The Mortgage Indebtedness is Not Offset by the Allegedly Unpaid Therapeutic Services

As noted above, I find (as a factual matter) that Jorann was never, and was never intended to be, personally liable for any unpaid therapeutic services provided her. Dr. Turcotte exclusively looked to Jorann’s insurance and Medicare/Medicaid for any payments he deemed appropriate. Moreover, there is no credible evidence to support a claim for personal liability. All that currently exists is a list of names and dates, June’s testimony that such lists were used to submit bills to insurers, and the fact that many of those bills were paid by insurance and Medicare/Medicaid (although when, at what rates, and in what amounts is unclear). This is insufficient, both in contract and quantum meruit. A contract requires an agreement between the parties. Quasi-contract requires the “unjust enrichment of one party and unjust detriment to the other party.” Salamon v. Terra, 394 Mass. 857 , 859 (1985) (citations omitted). “The injustice of the enrichment or detriment in quasi-contract equates with the defeat of someone’s reasonable expectations.” Id. (internal citations and quotations omitted).

Again, there is no evidence of any written or oral agreement between Dr. Turcotte and Jorann for her to pay for therapy herself. It is stipulated that no written demand was ever made for such payment and no lawsuit was ever filed. There also is no evidence of any oral demand. Thus, a contract-based claim does not exist.

Recovery in quasi-contract against either Jorann or Barbara also is not supported by the evidence. [Note 31] There is no unjust detriment to Dr. Turcotte because there is no evidence that he ever had a reasonable expectation of being compensated by Jorann for these services and no credible evidence that they ever agreed services would be offset against the note. [Note 32] Furthermore, there is no persuasive or credible evidence that Jorann ever expected (or was ever asked) to pay for them personally.

For Barbara’s part, she was not unjustly enriched because she was under no legal obligation to care for her mother. More fundamentally, there is no credible, persuasive evidence of enrichment. Judged by the evidence before me, Jorann’s condition did not appear to improve while she was being treated by Dr. Turcotte. Without expert testimony regarding the content, quality, professional standard, expected outcome, and value of Dr. Turcotte’s therapy, a claim based on either quantum meruit or unjust enrichment is not supportable.

Finally, as with the claim for allegedly unpaid room and board, the statute of limitations for recovery of such a debt had long since past at the time this action commenced and there was no demand, payment, or acknowledgement of indebtedness to toll that statute. G.L. c. 260, § 2.

The Mortgage Indebtedness is Not Offset by the Gifts and Occasional Services Provided to Jorann by Dr. Turcotte, His Friends, and His Family

While I find their claimed frequency and amount to be exaggerated, I have no doubt that Dr. Turcotte occasionally bought meals for Jorann, gave her small amounts of money, and enlisted his family and friends to help her. June herself certainly did so. But, as noted above, I find (as a factual matter) that these were voluntary gifts, understood by both sides as such. While they may create a moral obligation, they do not create a legal one.

Barbara’s Delivery of the Note Did Not Discharge the Mortgage

G.L. c. 106 § 3-604 states that “[a] person entitled to enforce an instrument, with or without consideration, may discharge the obligation of a party to pay the instrument . . . by an intentional voluntary act, such as surrender of the instrument to the party, destruction, mutilation, or cancellation of the instrument. . . .” (emphasis added). The delivery of a promissory note to the other party thus creates a rebuttable presumption of discharge and it is the burden of the party who surrendered the note to show that it had no such intention. See NationsBanc Mortgage Corp. v. Eisenhauer, 49 Mass. App. Ct. 727 , 732-33 (2000) (construing predecessor statute). Whatever is the burden of proof to rebut the presumption — either preponderance of the evidence or “full, clear and decisive proof” (see, e.g., Nissan Auto. of Marlborough, Inc. v. Glick, 62 Mass. App. Ct. 302 , 306 (2004) — Barbara has met it. As noted above, I find (as a factual matter) that she did not intend her letter and enclosure of the note to be a release, discharge, or forgiveness of its indebtedness, but rather did so under the mistaken belief that the note had been paid. [Note 33] Joint Pre-Trial Memorandum at 21, ¶ 11.

Even Dr. Turcotte’s actions subsequent to receiving the note show that he did not consider it to be forgiven and, instead, show that he knew it was still due. [Note 34] For example, he never asked Barbara what she intended by sending the note and in a later letter requested Barbara to assign the note and mortgage to June, indicating his belief that $15,000 was due and owed. Joint Pre-Trial Memorandum at 21, ¶ 13; Trial Ex. 24. Similarly, Susan Smith and June also requested that Barbara assign the note and mortgage or release them. Trial Exs. 52, 53.

Barbara’s mailing of the note also fails to discharge the mortgage under the theory that it was a gift. “It is settled in this commonwealth that an unregistered bond, a bill of exchange, a promissory note, a policy of life insurance or a savings bank book, without an assignment, like a chattel, may be the subject of a legal gift inter vivos . . . . [and that] by an unqualified delivery and acceptance the title passes, the gift becomes perfect and carries with it an implied irrevocable power to enforce it in the name of the donor.” Mangan v. Howard, 238 Mass. 1 , 5 (1921). But the recipient of a gift may renounce it, so long as the renunciation is unequivocal. Garfield v. White, 326 Mass. 20 , 27 (1950). The burden of proof is on the party claiming renunciation. Daley v. Daley, 308 Mass. 293 , 300 (1941).

Here, even if Barbara had had donative intent when she mailed the mortgage to Dr. Turcotte (which I find that she did not), Barbara has met her burden of proving that Dr. Turcotte unequivocally renounced any gift she could have made. Dr. Turcotte’s letter of July 1997 asked Barbara to assign the mortgage to June, thereby rejecting any alleged gift by making clear that he did not want the mortgage to be discharged. Trial Ex. 24.

Laches

Both parties argue that the doctrine of laches bars the other party from making their respective claims. “[L]aches will bar a party from asserting a claim if the party so unreasonably delayed in bringing the claim that it caused some injury or prejudice to the [other party].” Polaroid Corp. v. Travelers Indemnity Co., 414 Mass. 747 , 759 (1993); see also Finney v. Madico, Inc., 42 Mass. App. Ct. 46 , 52-53 (1997) (defendant did “not engage[] in delay that worked to the disadvantage of the plaintiff in the sense of an adverse change of position”). The party claiming laches has the burden of proving a detriment. Three Sons, Inc. v. Phoenix Ins. Co., 357 Mass. 271 , 278 (1970).

Laches does not bar Barbara from contesting June’s claims that the note and mortgage should be discharged. June (and, before her, Dr. Turcotte) pressed for an assignment of the mortgage so that they could take advantage of it. Barbara never agreed. Moreover, she was entitled to presume from the Turcottes’ assignment request that a balance was due and the Turcottes were maintaining records of their payments. If not, they could not foreclose (except fraudulently) on the Lawrence mortgage and effectively wipe out junior liens. If June (and before her, Dr. Turcotte) now has difficulty locating and presenting payment records, that difficulty is entirely of their own making. In the circumstances of this case, particularly with the fiduciary relationship between Dr. Turcotte and Jorann and the ethical issues surrounding the making of the loan, that difficulty is not a “change in position” to justify the bar of Barbara’s claims.

Laches also does not bar June from claiming that the mortgage has been fully paid. Barbara has no right to collect or foreclose on a fully paid note. Although the fact that June and her father failed to make an accounting on the loan for so many years made it more difficult for June to meet her burden, this injury is of June’s (and her father’s) making, not Barbara’s. Barbara has not been prejudiced.

Barbara is Not Estopped from Contesting June’s Claims

For the doctrine of equitable estoppel to apply to Barbara, she must have intentionally induced Dr. Turcotte and/or June to take a course of conduct to their detriment. In re Donovan’s Third Case, 58 Mass. App. Ct. 566 , 568-69 (2003). June argues that Barbara’s mailing of the note to Dr. Turcotte induced the Turcottes to not make an accounting while Dr. Turcotte was still alive and thus prevented June from proving conclusively that the debt was paid. But this argument is directly contrary to the Turcottes’ actions at the time Dr. Turcotte was alive (and shortly thereafter). As noted above, Dr. Turcotte (and June) clearly believed the note was due and owing and planned to use the mortgage (once assigned) to wipe out the liens of junior creditors (which would have required proof of an outstanding balance). It was thus their responsibility to maintain records and continue recording payments. They cannot now claim prejudice by their failure to do so simply because the debt is now being enforced against them.

The Statute of Limitations Does Not Bar Collection on the Note

June contends that Barbara cannot enforce the promissory note under G.L. c. 106, § 3-118(b), a provision of the Uniform Commercial Code adopted by Massachusetts in 1998. That statute provides the following: Except as provided in subsection (d) or (e) [neither of which is relevant to this case], if demand for payment is made to the maker of a note payable on demand, an action to enforce the obligation of a party to pay the note must be commenced within six years after the demand. If no demand for payment is made to the maker, an action to enforce the note is barred if neither principal nor interest on the note has been paid for a continuous period of ten years.

G.L. c. 106, § 3-118 (b). The legislature directed that it would not apply to any causes of action that accrued before its effective date (May 13, 1998). [Note 35] St. 1998, c. 24, § 16. Here, the cause of action for the demand note accrued the day it was signed and delivered (April 12, 1977), so § 3-118(b) does not apply. See Cantor v. Newton, 4 Mass. App. Ct. 686 , 691 (1976)

Instead, the six-year statute of limitation for contracts applies in this case. G.L. c. 260, § 2. A partial payment or written acknowledgement of the debt will toll the statute of limitations, starting it anew. G.L. c. 260, §§ 13, 14; see also Kelly v. McIntyre, 323 Mass. 313 , 315 (1948) (“circumstances surrounding the part payment must support a fair and reasonable inference that the debtor intended to renew his promise of payment”). In this case, there was a partial payment or written acknowledgement of the continuing existence and validity of the debt at least every six years between 1977 and March 2006 when this lawsuit was commenced. [Note 36] Thus, the statute of limitations was tolled so that this lawsuit was timely filed.

Barbara’s Right to Collect on the Note and Foreclose on the Mortgage is not Barred by G.L. c. 271, § 49

June asks that the note and mortgage be rescinded because the interest rate (27%) violates the criminal usury statute, G.L. c. 271, § 49. Such relief is discretionary with the court. G.L. c. 271, § 49 (c); Begelfer v. Najarian, 381 Mass. 177 , 187 (1980). But, it is not appropriate in this case. Dr. Turcotte was in control of the note and mortgage and set its terms without any substantive input from Jorann or Barbara. He had a fiduciary duty towards them and it would be a complete violation of that duty if he was allowed to retain the benefit of the bargain ($8,000 from an ill woman, representing over 70% of her savings) without the burden that he chose. The law limits recovery to 18%, G.L. c. 140, §§ 90A & 90D, which is the appropriate disposition of this issue.

The Mortgage Will Not Be Reformed to Add a Cost of Collection Provision

Barbara requests that the mortgage be reformed to add a cost of collection provision to allow her to recover her attorney’s fees and other costs in the event of foreclosure. No factual basis was shown to support such a request (e.g., mistake), equity will not imply it (see, e.g., T.F., 442 Mass. at 533-34), and it is particularly inappropriate given the high interest rate on the note (18%).

Conclusion

For the foregoing reasons, I find and rule that the mortgage is valid, has not been forgiven, has not been offset, and the balance owed is the original $8,000, plus interest at an annual rate of 18% from and after the date of the note, less the cash payments identified in detail above, all to be credited at the times they were made. The defendant is directed to calculate the amount owed accordingly and submit it to the court by January 29, 2010. If the plaintiff disagrees with that calculation, she shall so notify the court (with an explanation of the grounds for her disagreement) by February 9, 2010 and a hearing shall be held thereafter to resolve that disagreement. Final judgment shall be entered promptly after that resolution.

SO ORDERED.

Keith C. Long, Justice

Dated: 12 January 2010