S. ELIZABETH COHEN, Successor Trustee of Madison Realty Trust vs. CITY OF BOSTON et al.

S. Elizabeth Cohen, successor trustee of Madison Realty Trust (Madison), has petitioned this court under G. L. c. 60, §69A to vacate a tax foreclosure decree entered in favor of the City of Boston (the City) which foreclosed Madison's right of redemption to premises at 96-100 Mountfort Street in Boston, Suffolk County, Massachusetts (the premises). The court allowed a motion for leave to intervene filed by the Trustees of Boston University (the University) and the case was heard upon motions to dismiss the petition filed by the City and the University.

In considering the petition it is helpful to review the uncontroverted matters of record in the files of the tax lien case before this court which develop the chronology of events that preceded the present petition. The court, therefore, judicially notices the following facts contained in documents of record in Tax Lien Case No. 52545.

On October 20, 1976, the City filed in this court a petition to foreclose a tax lien on the premises which had been taken by the City on August 1, 1975, by instrument dated on said date and recorded on September 2, 1975, in Suffolk County Registry of Deeds in Book 8813, Page 349. The taking by the City was for nonpayment of 1973 taxes assessed to Joel Shapiro and Morris Shapiro, Trustees of Madison Realty Trust under Declaration of Trust dated April 18, 1972. After proper notice was sent by the court to all parties appearing of record to have an interest in the premises, on June 20, 1977, an answer was filed on behalf of S. Elizabeth Cohen, Successor Trustee of Madison Realty Trust claiming the right to redeem.

On January 18, 1978, the City's motion to assign the case for hearing on Madison's redemption answer was allowed and a hearing was scheduled for April 6, 1978. Between April 6, 1978 and May 3, 1979, judges of this court granted continuances to Madison on eight occasions upon its repeated requests that it be given an opportunity to obtain mortgage financing to enable it to pay the outstanding taxes or in the alternative to find a prospective purchaser of the premises. The last continuance was granted on April 5, 1979, upon Madison's representation to the court that it had reached an agreement to sell the premises to Boston University for $155,000.00 and the hearing was set down for May 3, 1979 to give Madison the opportunity to consumate the execution of a purchase and sale agreement with the University.

On May 3, 1979, this court was advised by Madison that its negotiations with the University had broken down and that it, at that time, had no other prospective purchasers. Accordingly on that date, this court entered a finding that the amount of $117,638.31 was due to the City for unpaid taxes and interest in its tax title account on the premises and the court found that Madison be allowed to redeem upon payment to the City of that amount on or before September 28, 1979, with interest allowed by statute from May 3, 1979, to the date of payment, together with costs of $184.05. On October 4, 1979, the City filed its motion for a decree of foreclosure and after hearing on October 16, 1979, and a determination that redemption had not been made, a judge of the court under the provisions of G. L. c. 60, § 69, allowed a decree foreclosing Madison's right of redemption in the premises. The final decree entered on November 6, 1979.

On January 9, 1980, Madison filed in this court a petition under the provisions of G. L. c. 60, § 69A to vacate the decree foreclosing the tax title on the premises which was seasonably filed under the one year limitation provisions of § 69A. In its petition Madison alleged that on January 7, 1980, it had executed a purchase and sale agreement with a potential buyer who had agreed to purchase the premises on February 4, 1980, for $195,000.00.

On January 9, 1980, Madison also filed a motion for an ex parte order staying the City's pending sale of the premises at auction. This court immediately notified the City of the filing of the motion for a stay and set the motion down for hearing at its motion session on the morning of January 9, 1980. At the hearing on the motion, at which Madison and the City were represented by counsel, it appeared that the City had duly advertised the auction sale to be held at 12:00 Noon on January 9, 1980, and that the auctioneer had been engaged and was on his way to the premises. After hearing, the court denied Madison's motion that the auction be stayed and suggested that at the sale the auctioneer announce to all bidders that the petition to vacate the decree had been filed.

On January 25, 1980, this court heard the University's motion to intervene, which it allowed and also heard argument on Madison's petition to vacate and on motions to dismiss Madison's petition which had been filed by the City and the University.

On all the information furnished to the court, I find the uncontroverted facts to be as follows:

On January 9, 1980, the City conducted a public auction sale of the premises to which it had acquired absolute title on November 6, 1979, pursuant to G. L. c. 60, § 64. At the sale the University became the purchaser with a high bid of $241,000.00, paying a deposit of $10,000.00 with the balance to be paid in full to the City not later than January 30, 1980. The University has also agreed, as a payment in lieu of taxes, to pay to the City the sum of $45,000.00 to be applied to future taxes through June, 1981.

The premises consist of twenty-one residential apartment units at 96-100 Mountfort Street in Boston, Massachusetts. The building is fully occupied by twenty tenants with one year leases, one apartment being occupied by the building superintendent. The rental units produce monthly rental incomes ranging between $205.00 and $450.00. Since the City foreclosed its tax title, Joel A. Shapiro, beneficiary of the Madison Realty Trust, has continued to collect all of the rentals from the premises. The University has no present intention to convert the premises to student dormitories but plans to include them in its stock of residential dwellings.

At the auction sale on January 9, 1980, the auctioneer announced before taking any bids that Madison had that morning filed a petition to vacate the tax foreclosure decree and that bids to purchase would be accepted subject to the court's disposition of the petition and that if the decree was vacated the successful bidder's deposit would be returned in full without any further obligation.

At the time of hearing, outstanding taxes from 1973 through fiscal year 1978 certified to the City's tax title account on the premises with interest to January 18, 1980 were $125,604.20. All unpaid taxes due the City from 1973 through the first half of fiscal year 1980, together with interest to January 18, 1980 totalled $161,697.26.

Since the City filed its petition to foreclose its tax title on October 20, 1976, Madison has paid $6,000.00 to the City in equal payments of $2,000.00 on October 20, 1978; November 29, 1978 and January 22, 1979.

On January 7, 1980 Madison entered into a purchase and sale agreement with Burton Brooks of Bedford, Massachusetts, by which Madison agreed to sell and Mr. Brooks agreed to buy the premises for $195,000.00, the deed to be delivered and payment to be made on February 4, 1980. The agreement provided that Brooks was to obtain a first mortgage in the amount of $125,000.00 at prevailing rates on or before February 4, 1980, which was to be amortized over a twenty year period. Madison had been negotiating this agreement since the latter part of November, 1979. At the hearing on January 25, 1980, it was represented to the court by counsel for Madison that Brooks had not yet acquired first mortgage financing.

Prior to the entry of the finding by this court on May 3, 1979, Madison had negotiated the sale of the premises to the University for a purchase price of $155,000.00. The University agreed to purchase subject to various conditions, one of which was that a zoning variance authorizing conversion of the premises to student dormitories was obtained. This was a condition which Madison would not accept and negotiations thereupon ceased.

By non-letterhead letter dated January 16, 1980, to "Joel A. Shapiro, c/o Avenue Associates, 1408 Beacon Street, Brookline, MA. 02146," Vendco Financial Corp. of Newton agreed to provide Joel A. Shapiro with a five year first mortgage loan on the premises in the amount of $165,000,00 at an annual interest rate of 21 percent. This letter of commitment to Mr. Shapiro, a beneficiary of Madison, was to be void if the loan was not closed within thirty days.

The principles which control in consideration of a petition to vacate a tax foreclosure decree are well established. The granting of such a petition rests largely but not exclusively in the discretion of the court. Bucher v. Randolph, 307 Mass. 391 (1940). Russell v. Foley, 278 Mass. 145 (1932). A petition to vacate is extraordinary in nature and ought to be granted only after careful consideration and in instances where it is required to accomplish justice. Russell v. Foley, id. at 148. "There must appear some merit in the contentions subsequently to be made, or proceedings later to be undertaken, by the party invoking the exercise of that discretion. Neither the public nor the adversary party ought to be put to further expense unless the ends of justice require the reopening of the litigation. The petitioner ... must show that he has a substantial and meritorious cause which requires further inquiry or trial in the courts. Such a cause means one worthy of judicial investigation because raising a material question of law meriting discussion and decision, or a real controversy as to essential facts arising from conflicting or doubtful evidence." Id. at 148.

Madison's contentions are (1) that the University is not an innocent purchaser for value as it had alleged it was in its motion to dismiss since the auctioneer at the sale publically announced before bids were taken that a petition to vacate the decree had been filed and was pending and that the successful bidder would take subject to the court's disposition of the petition and (2) that the equities in this case favor an exercise of the court's discretion in Madison's favor. Although the court concludes that the University is not an innocent purchaser for value in view of the fact that it made its high bid after the announcement by the auctioneer of the pendency of the petition to vacate, such a determination is not controlling in this matter since Madison's petition to vacate was filed under the provisions of G. L. c. 60, § 69A which, unlike G. L. c. 60, § 69, contains no impediment barring the vacating of a decree where an innocent purchaser for value has acquired an interest in the foreclosed property.

Accordingly, the instant matter narrows to the issue of the exercise of the court's discretion. Madison argues that it would be inequitable not to vacate the decree and permit it to redeem belatedly since if the sale is permitted to be consumated with the University, all surplus funds received by the City between the amount due it of nearly $162,000.00 and the high bid of $241,000.00 may be kept by the City and not paid over to Madison. Despite the surface appeal of this contention it must be remembered that under G. L. c. 60, § 64, the City acquired absolute title to the premises upon obtaining its decree of foreclosure and was entitled to sell for the highest possible price and retain any surplus over the amount due it under its tax title. As was said in Kelley v. Boston, 348 Mass. 385 , 389 (1965) "If there should be a remedy for someone in the plaintiff's position, the matter rests in the legislative domain."

The record in this case reveals that this court continued the tax title hearing on eight separate occasions at the request of Madison between the time of the original assgnment for hearing on April 6, 1978 and the time a finding was entered on May 3, 1979, in order to give Madison the chance to obtain financing or to find a buyer. Every possible indulgence requested was given Madison by this court. Although the finding was made on May 3, 1979, the due date was deferred until September 28, 1979, to give Madison further time to redeem and the foreclosure decree was not entered until November 6, 1979. Madison, therefore, had every opportunity to redeem the property as a matter of right upon payment of all amounts then outstanding in the City's tax title account together with interest and costs between October 26, 1976, when the City filed its petition to foreclose and November 6, 1979, when the final decree was entered. It appears that Madison diligently but unsuccessfully attempted to refinance or to find a purchaser for the premises during the three year period that the matter was before this court. It is regrettable that a sales agreement with a purchaser was not entered into until January 7, 1980. This agreement, however, calls for performance on February 4, 1980, and acknowledges that the buyer must look for a mortgage commitment of $125,000.00, a commitment which the buyer did not have at the time of hearing on the petition to vacate. In any event, this agreement was entered into by Madison at a time when it had no title to the premises, absolute title being in the City as of November 6, 1979, the date of entry of the decree of foreclosure. Alternatively, Madison requests the court to vacate the decree since it, on January 16, 1980, one week after the sale of the premises at auction to the University, received a thirty day mortgage commitment for$165,000.00 from Vendco Financial Corp. of Newton at 21 percent yearly interest. Like the prospective sale of the premises to Brooks, the mortgage commitment was obtained belatedly and calls for future performance. Unlike the usual case where one seeks to vacate a decree of foreclosure and stands ready to immediately redeem by paying all outstanding taxes due, Madison's ability to redeem is completely dependent upon the performance of future events which may or may not occur. If the decree is vacated and Madison does not acquire the funds to redeem from a third party source, the City will have lost the University as a purchaser, there will be no redemption by Madison, interest on outstanding taxes will continue to increase and the City will be forced to pursue further proceedings in this court so that it may conduct another auction. The University, by payment of the balance of the purchase price on January 30, 1980, will bring these lengthy proceedings to an end.

In summary, since Madison seeks to vacate the decree, not to raise any question of law or fact but to obtain additional time to redeem, since it had no present ability to redeem at the hearing on the petition, since its potential ability to redeem is dependent upon acquiring funds from third party sources, since this court has granted Madison more than ample opportunity to redeem by agreeing to eight continuances requested by it, and since the University has now purchased the premises, this court in the exercise of its discretion does not feel that it would be in the public interest to vacate the decree of foreclosure, nor does it feel that such action is required to accomplish justice.

Accordingly, the court allows the motions to dismiss of the City and the University and orders that Madison's petition be dismissed.

Decree accordingly.