Home DIANE B. MOORE, BETSY B. DAVIS, CAROL ANN BANQUER, as Trustees of Banquer Children Trust v. CUSTOM HOUSE HOLDING CORP., EMILE N. DUPONT, EMILE N. DUPONT, as Trustee of DuPont Real Estate Trust.

MISC 87984

October 12, 1978

Suffolk, ss.

Sullivan, J.


Diane B. Moore, Betsy B. Davis and Carol Ann Banquer, as Trustees of Banquer Children Trust, the plaintiffs, seek in this case to reform a mortgage to them dated December 14, 1971 and recorded with Suffolk Deeds, Book 8497, Page 603 (Exhibit No. 4) by inserting the statutory condition and the statutory power of sale [Note 1] which it is alleged were stricken from the form by a scrivener's error. The premises described in said mortgage (the "premises") are known as and numbered 74-76 Broad Street in Boston in the County of Suffolk. The defendant, Custom House Holding Corp., is the mortgagor named in said mortgage, and the defendant, Emile N. DuPont, as trustee of the DuPont Real Estate Trust, is the holder of a second mortgage on the mortgaged premises. The answer filed on behalf of all the defendants alleges that the omission of the statutory condition and the statutory power of sale was intentional and that there was no mutual mistake. The answer does not set up as a defense that Emile N. DuPont, as trustee of the DuPont Real Estate Trust, is a second mortgagee of the premises and as such has the protection of a bona fide purchaser for value. There being no evidence as to the status of this defendant it will not be considered further. Compare General Builders Supply Co. v. Arlington Co-operative Bank, 359 Mass. 691 (1971), where Justice Quirico wrote as follows:

Almost as important as the general rule, and perhaps almost as frequently applied, is the limitation thereon to the effect that reformation will not be allowed where the rights of intervening lienors will be adversely affected thereby. The limitation has been applied in numerous cases to protect persons standing in the position of innocent purchasers for value without notice of the mistake of fact on the basis of which reformation is sought. In the following cases reformation was either denied or limited so that it would not adversely affect the rights of subsequent attaching creditors: Woodward v. Sartwell, 129 Mass. 210 , 212. Waltham Co-op. Bank v. Barry, 231 Mass. 270 , 272-273. Hillside Co-op. Bank v. Cavanaugh, 232 Mass. 157 , 161 (involving a mistake in lot numbers in describing mortgaged premises). Hendricks v. Shaw, 262 Mass. 284 (denying reformation by way of an increase in amount to a first attaching creditor because it would prejudice the rights of the second attaching creditor when both were seeking payment out of the surplus from a foreclosure sale of the attached real estate). In the Hillside Co-op. Bank case, the court, quoting in part from the Woodward case, said at p. 161: "It is the settled rule that the decree of reformation takes effect from and relates back to the day of the first execution of the reformed instrument, except as to purchasers for value without notice and those standing in similar relations. It is contended that attachment creditors cannot stand in the relation of bona fide purchasers for value without notice. However the law may be elsewhere it is settled in this Commonwealth that 'An attaching creditor stands in the position of a purchaser for value, and, as a deed duly recorded takes precedence of a prior deed unrecorded, so an attachment, when duly made, has the effect of a prior purchase and takes precedence of a prior recorded deed.'" See Jeselsohn v. Park Trust Co. 241 Mass. 388 , 390; Burke v. McLaughlin, 246 Mass. 533 , 538; Stoneham Five Cents Sav. Bank v. Johnson, 295 Mass. 390 , 394; Kahler v. Marshfield, 347 Mass. 514 , 516.

A trial was held at the Land Court on August 8, 1978 at which a stenographer was appointed to record the testimony. While not formally consolidated, Miscellaneous Case No. 87983, Diane B. Moore, et al, Trustees, v. 37 India St., Inc., a corporation affiliated with Custom House Holding Corp., and others, was tried with the present case. All exhibits introduced into evidence are incorporated herein for the purpose of any appeal.

On all the evidence I find and rule as follows:

1. The purchase and sale agreement between the plaintiffs, as the sellers, and Felix Orlandella, Jr., as the buyer, dated October 20, 1971 and covering the premises (Exhibit No. 3) provided for the payment of a deposit of $500.00, of $4,500.00 in cash or by certified or bank check at the time of the delivery of the deed and of $15,000.00 by purchase money mortgage.

2. Paragraph 31A of said purchase and sale agreement provided for the payment of said sum of $15,000.00 (subject to such adjustment as might be required by the provisions of the agreement) by the buyer's promissory note in the form attached as Exhibit B secured by a first mortgage on the premises in the form attached thereto as Exhibit A. Exhibit A was a statutory form of mortgage for execution by an individual. It contained both a statutory condition and a statutory power of sale as well as a provision for release by the mortgagor's wife, if applicable, of all rights of dower and homestead and other interests in the mortgaged premises.

3. The deed delivered pursuant to the purchase and sale agreement ran to the defendant, Custom House Holding Corp., as grantee, and the mortgage delivered to the sellers pursuant to the provisions of the purchase and sale agreement (Exhibit No. 2) was a statutory form of mortgage for execution by a corporation.

4. Prior to the closing counsel for the plaintiffs instructed his inexperienced secretary to eliminate the paragraph as to dower and homestead, but finding no such provision in a corporate form of mortgage, she presumably inadvertently eliminated the provisions of the form relative to statutory condition and to statutory power of sale. The error was not discovered until foreclosure proceedings were instituted immediately prior to the commencement of the present case.

5. After the execution of the agreement there were no further negotiations relative to the provisions incorporated in Exhibit A thereto, specifically there was no subsequent understanding by the parties that the mortgage as executed was not to provide for a power of sale upon breach of the statutory condition.

6. The contention by Felix Orlandella, Jr., President of the defendant, Custom House Holding Corp., that he wished to be personally liable rather than having the promissory note secured by the real estate and that the buyer would not otherwise have consummated the transaction is bizarre, is not representative of usual commercial practice and is not worthy of belief.

7. For approximately five years, the mortgagor made payments pursuant to the promissory note (Exhibit No. 6) secured by said mortgage, but the monthly payments of principal and interest due thereon ceased in January, 1977, and the default has not been cured.

At the trial the defendants claimed a trial by jury, see Mass. R. Civ. P. 38(b), which was disallowed by the Court. As is said in the Reporters' Notes,

While Rule 2 merges law and equity into one form of action, Rule 38(b), by using the language "of any issue triable of right by jury," retains the principle that in an action seeking purely equitable relief, neither party has a constitutional right to a jury trial. See Parker v. Simpson, 180 Mass. 334 , 346 ....

And this proceeding historically embraces equitable relief so the defendants had no constitutional right to a trial by jury. As the Supreme Judicial Court noted in Beaton v. Land Court, 367 Mass. 385 , appeal dismissed, 423 U.S. 806 (1975), a court acting under general principles of equity jurisprudence has broad power to reform, rescind or cancel written instruments, including mortgages, on grounds such as fraud, mistake, accident, or illegality. The operative ground in this case is mutual mistake on the facts I have found. The purchase and sale agreement called for a mortgage embodying both a statutory condition and statutory power of sale, there were no negotiations after its execution relative to the elimination thereof, a mortgage without such provisions would have been highly unusual, both parties anticipated the execution of a power of sale mortgage, the scrivener crossed out the relevant provisions by error and the failure of the mortgage executed at the closing to accord with that in the purchase and sale agreement was due to a mutual mistake. The plaintiffs are entitled to reformation of the mortgage by the inser- tion immediately prior to the signature of the following: "This mortgage is upon the statutory condition for any breach of which the mortgagee shall have the statutory power of sale." See Franz v. Franz, 308 Mass. 262 , 265-67 (1941); Hermanson v. Seppala, 255 Mass. 607 , 609 (1926); American Discount Corp. v. Hall, Land Court Misc. Case No. 66991, summary affirmance, Mass. (1978). [Note 2]

Judgment accordingly•.


[Note 1] G. L. c. 183, §20 and §21 respectively.

[Note 2] Mass. Adv. Sh. (1978) 429.