THE QUINCY CO-OPERATIVE BANK vs. VILLAGE GARRISON CORPORATION, CHARLES J. CONNELLY, FRANCIS R. FRANO

This is a petition brought by The Quincy Co-operative Bank (the "Bank") as the registered owner named in and the holder of Certificate of Title No. 104734 issued by the Norfolk County Registry District, seeking the cancellation of said certificate of title and the reinstatement of its predecessor certificate, Certificate of Title No. 101141, issued by said Registry District, in which the individual defendants, Charles J. Connelly and Francis R. Frana, both of Braintree in the County of Norfolk, are named as the registered owners. They have answered in opposition to the allowance of the petition.

The facts are largely uncontroverted and are as follows:

1. Village Garrison Corporation executed a mortgage to the Bank on May 19, 1972 to secure its note in the amount of $150,000 (the "note"). The mortgage was filed as Document No. 324063 with said Registry District and was noted on Certificate of Title No. 93151.

2. The note was signed on behalf of the maker by its president, Charles J. Connelly and its clerk, Francis R. Frano, both of whom also signed individually.

3. Under even date therewith an assumption of mortgage was executed by Mechanical Realty Inc. with Francis R. Frano signing as its president; Messrs. Frano and Connelly also signed the assumption individually.

4. On March 15, 1977 the Bank commenced proceedings pursuant to the Soldiers' and Sailors' Civil Relief Act in the Norfolk County Superior Court for authority to foreclose the mortgage by entry and exercise of the power of sale. A decree authorizing the foreclosure was entered on May 10, 1977.

5. Thereafter the premises were sold at public auction on July 19, 1977 and were purchased by the Bank for $100,000. The entry and sale were approved by the Superior Court on July 29, 1977.

6. The entry, deed and affidavit of sale were filed for registration on August second of last year, the then outstanding Certificate of Title No. 101141 in the names of the defendants Connelly and Frano was cancelled and a new Certificate of Title No. 104734 was issued to the Bank.

7. On November 10, 1977 the Bank applied to the Superior Court for relief under Rule 60 from the Decree Approving Entry and Sale [Note 1]. The docket entries recite "Judgment vacated, execution superceded. Hearing on Foreclosure Ordered."

8. A Lis Pendens was filed by the individual defendants and noted on the outstanding Certificate of Title No. 104734. The notice in essence recites that the Bank had commenced a district court action against the defendants; that the defendants have counterclaimed asserting, among other matters, a claim against registered land; and that the action has been transferred by the defendants to the Superior Court where it now is pending.

9. The Bank through counsel admitted in the Land Court that the foreclosure proceedings were in order and that it had invoked Rule 60 for relief from a mistake made prior to the sale, i.e., its failure to give a deficiency notice pursuant to G. L. c. 244, §§17A-17C to the individual defendants.

The Bank has not argued in this Court the substantive questions a) as to whether a mortgage foreclosure sale which has been consummated by the mortgagee and is in no way defective can be set aside in any event and b) if the answer is in the affirmative whether this can be done solely to enable the mortgagee to give the deficiency notice above referred to and c) whether a deficiency notice given prior to a second sale would comply with the requirements of the applicable statute. Rather, this Court only has been asked to cancel its outstanding certificate of title and to reinstate the predecessor certificate. I have concluded that such action would be premature until the Superior Court (or this Court upon request) decides the questions of law, determinative of the case. The decree entered by the Superior Court on July 29, 1977 and subsequently revoked established only that there was no party entitled to the benefits of the Soldiers' and Sailors' Civil Relief Act. The procedure established by St. 1943, Chapter 57, as amended, by which mortgagees are able to protect the title to the mortgaged premises from possible claims of individuals entitled to the benefit of the Act by taking appropriate steps in this Court or the Superior Court is divorced from the actual process by which the mortgage is foreclosed. This was explained at length by the Supreme Judicial Court in Beaton v. Land Court, 367 Mass. 385 (1975) [Note 2] where it is said:

"The point to be made here is that actions taken to comply with the 1940 Relief Act, such as the steps prescribed by St. 1943, c. 57, as amended, are not in themselves mortgage foreclosure proceedings in any ordinary sense. Rather, they occur independently of the actual foreclosure itself and of any judicial proceedings determinative of the general validity of the foreclosure. Statute 1943, c. 57, as amended, simply establishes procedures whereby mortgagees, in addition to taking all steps necessary to foreclose, can make certain that there will be no cloud on the title following the foreclosure as a result of an interested party having been in, or just released from, military service and thus under the protective umbrella of the 1940 Relief Act. See Lynn Inst. for Sav. v. Taff, 314 Mass. 380 , 386 (1943). If a foreclosure were otherwise properly made, failure to comply with the 1940 Relief Act would not render the foreclosure invalid as to anyone not entitled to the protection of that act. Guleserian v. Pilgrim Trust Co. 331 Mass. 431 , 433-434 (1954). See Park, Conveyancing, § 406 (1968 and Supp. 1974).

The Bank, if it had so elected, might have foreclosed its mortgage without resort to judicial proceedings and thereafter by a bill to remove a cloud pursuant to G. L. c. 240, §6 cured any title problem. Since the title to the property in question has, however, been registered, this approach if adopted by the mortgagee, would have restricted the issuance of a new certificate of title until there had been a judgment in judicial proceedings, see Institution for Savings in Newburyport and Its Vicinity, Petitioner, 309 Mass. 12 , 14-15 (1941). The present posture of the case is essentially the same. So far as the documents before this Court show, the mortgage foreclosure sale was property conducted, and title thereto has passed to the purchaser at the sale, the mortgagee and the plaintiff herein. The power of sale accordingly may well have been exhausted. See Pilok v. Bednarski, 230 Mass. 56 , 58 (1918); Childs v. Stoddard, 130 Mass. 110 , 111 (1881). It was the preliminary failure to give the deficiency notice which the Bank claims is a mistake entitling it to undo the sale even though such failure does not affect the validity of the sale. It relies on North Easton Co-operative Bank v. MacLean, 300 Mass. 285 (1938). Until this question is decided, title should remain in the plaintiff. To cancel the outstanding certificate of title and reinstate its predecessor would prejudge the issue. Moreover, steps to cancel an outstanding certificate and reinstate another are not ones which this Court lightly takes.

The Superior Court order revoking its decree recites that a hearing on the foreclosure is to be held. Until this is done, the status quo should be preserved. If either party wish to expedite the determination, then it is possible to apply for a transfer of the Superior Court case to this Court.

It follows that the plaintiff's petition is dismissed.

Decree accordingly.