Plaintiff prays for the issuance of a new Certificate of Title to real property at 120 Howard Street, Lawrence, Essex County, Massachusetts subject only to mortgage document No. 25076, Essex County Registry of Deeds (Northern District) [Note 1] noted on Certificate of Title 7629 issued in the name of Damian Management Co., Inc., Trustee of the Howard Trust. Plaintiff bases his claim to title to the premises under a second mortgage granted to him by Ignatius R. J. Piscitello, Trustee of the Howard Trust, dated December 31, 1976 as document No. 26091 and noted on Certificate of Title 7629 under which Plaintiff, for breach of condition, made an entry March 28, 1978, and filed a certificate thereof registered as Document No. 27469 in the said Registry District. Plaintiff alleges that possession has continued uninterruptedly and peaceably for more than three years and that none of the parties in interest are in the military service entitled to the benefits of the Soldiers' and Sailors' Civil Relief Act of 1940.
An answer was filed by the Defendant, Lowell Bank and Trust Company, (hereinafter the Bank), in effect denying this foreclosure of the above mentioned mortgage. By way of counter claim the Bank alleged that it had a third mortgage on the premises and had notified Plaintiff that it desired to protect its third mortgage; that on March 1, 1981 prior to the expiration of three years from the Plaintiff's entry, the Bank sought to determine the exact amount due on the Plaintiff's mortgage which the Bank believed was the sum of $13,000. plus interest; that the Bank was informed that the amount due was $30,000; and that the Bank now be given the right to purchase Plaintiff's interest under said mortgage to protect its third mortgage on the same.
An amended answer was filed by "Howard Trust, by its trustee, Salvarose (sic) Lagana" in effect calling upon the Plaintiff to prove these allegations claiming further that the Howard Trust and Damian Management Co., Inc. and one Anthony Petronio have interests in the property, that Plaintiff is estopped and has committed fraud against the Defendant. In addition, by way of counterclaim, it is alleged that the said Howard Trust continued in possession of the premises after the entry and has made tender to Plaintiff which has been refused; and that Plaintiff was guilty of a breach of trust towards the Howard Trust.
The Plaintiff denies the allegations of the Howard Trust counterclaim, and specifically sets forth that the Howard Trust has no power to prosecute actions in the courts of the Commonwealth; that said trust is not an entity of its own but must act through a trustee; that Damian Management Co., Inc., named as Trustee of Howard Trust is a dissolved Massachusetts Corporation and claims the statute of frauds.
The principal involved in these proceedings is one Salvatore Lagana who acted as his own attorney through all but the very last of the pleadings herein and the trial itself. As will appear Lagana was for all intents and purposes the Howard Trust, Damian Management Co., Inc., and Sherwood Development Co., among others.
The case came on for trial on October 6, 7, November 2, and November 3, 1982. A stenographer was sworn to record and transcribe the testimony in the case. Seven witnesses testified and 30 exhibits were admitted into evidence and are incorpoated herein for the purpose of any appeal. Briefs were filed by Plaintiff on February 8, 1983 and by Howard Trust on February 7, 1983. No brief was filed by Defendant Lowell Bank and Trust Company.
Upon all the evidence the Court finds and rules as follows:
1. At some time in the early 70's Lagana, a builder and developer, operating as Sherwood Development Co. or Trust, built apartments in Chelsea and in the course of building purchased floor covering from Circle Floors, Inc., owned and operated by Plaintiff. Lagana could not pay the amount due on the floor covering. On May 9, 1974, he, along with a partner, Fred A. Pappalardo, presumedly a Trustee of Sherwood Development Trust, gave a note to Circle Floors, Inc. for $13,817.69 payable in or within 15 months at 10 per cent interest. (Exhibit 7) It would appear that this note was secured by a second mortgage on real estate in Lawrence, Massachusetts, at 120 Howard Street.
2. At about the same time that Lagana built the Chelsea project, he also built the project at 120 Howard Street, Lawrence, Massachusetts. On this Lawrence project Lagana had a mortgage with the Watertown Savings Bank. The Watertown Bankforeclosed this mortgage and plaintiff Vesprini, being the principal of Circle Floors, Inc. which was owed $13,817.69 plus interest on its note set forth above, bid in the property at the foreclosure sale in December, 1975 for the sum of $145,000. Plaintiff obtained a first mortgage from the Everett Savings Bank for $120,000 which he used as part of the purchase price. The Court specifically finds that Plaintiff did not bid this in as a straw for Lagana but to protect himself as the principal owner of Circle Floors, Inc. The mortgage was registered as Document No. 25076 noted on Certificate of Title 7406.
3. The twelve apartments at 120 Howard Street, Lawrence were managed by Plaintiff Vesprini through an arrangement with a tenant, one Mary Spero, who collected the rents and oversaw maintenance and repairs.
4. In December of 1976 Plaintiff Vesprini agreed to reconvey 120 Howard Street, Lawrence, to Lagana and on December 31, 1976 conveyed the premises to one Ignatius R. J. Piscitello, Trustee of the Howard Trust under an Indenture of Trust dated December 26, 1976 (Exhibit 2) by a deed not in evidence. The said Piscitello acted as Trustee of the Howard Trust. The beneficiary of this trust, one Anthqny Petronio, the brother-inlaw of Lagana, was a straw for Lagana who was the real principal throughout.
5. The consideration paid for the conveyance from Vesprini to Piscitello was $168,000. This was paid by the assumption of the first mortgage to the Everett Savings Bank in the amount of $118,961.99, $40,000 by the conveyance of two houses by Piscitello to Vesprini located at 14 and 14 1/2 Annis Street, Methuen and the balance of $13,071.82 by a promissory note signed by Piscitello, Trustee Howard Trust (Exhibit 1). This note, dated December 31, 1976, recites that it was secured by a mortgage of property at 120 Howard Street, Lawrence and at 73 Baltic Street, Methuen. The mortgage securing the same was registered as Document 26091 noted on Certificate of Title 7629, Book 51, Page 321, running from Piscitello, Trustee to Vesprini dated December 31, 1976. It recites that it is subject to a mortgage to the Everett Savings Bank, Document 25076 noted on Certificate of Title No. 7406. (Exhibit 3) This was the first mortgage given by Vesprini the year before for $120,000.
6. The note of December 31, 1976 for $13,071.82 (Exhibit 1) was payable $5,000 on or before October 1, 1977 and all within five years from December 31, 1976 with interest at the rate of 10% per annum. The note further provided "that if any default shall be made in any of the covenants or conditions contained in any mortgage given as security herefor or in the payment of any installment of principal or interest and such default continues for fifteen days, the whole principal sum then remaining, together with interest, shall, at the option of the holder hereof, and without notice, become due and payable on demand." No payments on this note were ever made by Lagana, in any capacity, Piscitello or anyone else.
7. On January 13, 1977 Salvatore Lagana endorsed on the back thereof the first mortgage note in the amount of $120,000. ofVesprini to the Everett Savings Bank as set forth in paragraph 2 herein. (Exhibit 17)
8. The said Piscitello acted as a Trustee of the Howard Trust until he was replaced as Trustee by David Bain, Jr. by a "nomination" dated February 15, 1977 recorded in Book 1303, age 458, (Exhibit 4). Bain in turn served as Trustee until some time in 1979. He performed few, if any, services, never made a payment on the Everett National Bank mortgage or the second mortgage to Plaintiff (nor did Piscitello when he was trustee). He was in receipt of a notice dated March 31, 1978 (Exhibit 6) notifying him that Plaintiff had made an open, peaceable and unopposed entry on the premises for the purpose of foreclosing the mortgage securing the $13,071.82 note (Exhibit 1).
9. Plaintiff was notified in March, 1978 by the Everett Savings Bank that the first mortgage note (Exhibit 17) was seriously in arrears. In addition, no payments were ever made on the second mortgage note by anyone. Both mortgage payments were in default on March 28, 1978 when Plaintiff made an open, peaceable and unopposed entry on the Howard Street, Lawrence, and Baltic Street, Methuen property. The Certificate of Entry (Exhibit 10) recited that Gerald F. Lucy and William M. Provost witnessed the entry and the Certificate of Entry, dated March 28, 1978 was registered as Document 27469, noted on Certificate 7629, Book 51, Page 321. Foreclosure by sale was never made by Plaintiff of this mortgage.
10. The tenants at 120 Howard Street were notified of the entry on March 28, 1978, (Exhibit 16), as was the Trustee, Bain. (Exhibit 6) Attempts were made to notify Mr. Lagana by registered or certified mail but Lagana did not pick up registered mail and his whereabouts would appear to have been uncertain. In addition, Lagana's note dated May 9, 1974 for $13,817.69 to Circle Floors, Inc., (Exhibit 7) paid as it was as part of the transaction transferring 120 Howard Street, Lawrence from Plaintiff Vesprini to Lagana on December 31, 1976 (see paragraph 5), was enclosed in the registered mail notice to Lagana which was unclaimed. (Exhibit 8).
11. After the entry on March 28, 1978, Plaintiff collected the rents on the Howard Street property by using the same tenant who had collected them prior thereto for Lagana and himself, namely one Mary Spero. He paid the expenses and taxes, maintained and managed the property filling vacancies as they occurred. Any profits or losses from this operation have been declared on Plaintiff's income tax returns, both federal and state.
12. Lagana claimed that he, acting for himself, the Howard Trust and Damian Management continued in possession of the premises at 120 Howard Street, Lawrence after the entry. The Court finds that this was not so; that the only act Lagana carried out was to remove coins wrongfully from the coin boxes of the laundry machines on the premises, something he was admonished for and told to cease by letter from Plaintiff's attorney dated May 23, 1979. (Exhibit 11)
13. Lagana at some time caused to be formed or acquired the Damian Management Co., Inc., a Massachusetts corporation of which he was recited as being the President and Treasurer on a mortgage instrument on the premises at 120 Howard Street, Lawrence to the Lowell Bank and Trust Co. dated January 9, 1979. (Exhibit 22). Damian Management Co., Inc. was evidently a successor Trustee to Attorney Bain as Trustee of the Howard Trust. It granted this mortgage mentioned above to secure a note to the Lowell Bank for some $30,000.00 on 120 Howard Street subject to the $120,000.00 first mortgage to the Everett Savings Bank (Exhibit 25) and to the second mortgage of $13,071.82 to Plaintiff. (Exhi bit 7). This third mortgage was given to settle a lawsuit in the Middlesex Superior Court between Lagana, in some capacity, and the Bank. The Lowell Bank was fully aware that entry had been made by Plaintiff on the second mortgage at the time it received the third mortgage. It would appear that no payment was ever made by Lagana in any capacity to the Lowell Bank on this note.
14. The Lowell Bank by letter dated April 6, 1979, (Exhibit 28) to Plaintiff's attorney, requested being kept informed of any further proceedings by Plaintiff to foreclose his second mortgage. Again by letter dated March 12, 1981 the Lowell Bank sought to discuss the feasibility of buying the second mortgage of Vesprini. (Exhibit 29)
15. On March 13, 1981, prior to the expiration of three years from the entry made on March 28, 1978, the Lowell Bank and Trust, through their Attorney Mr. Fox, inquired as to the amount due on the second mortgage and was informed by Mr. Marcus, counsel for Plaintiff, that it was some $30,000.00, though the note itself was for $13,000.00+. Mr. Fox was stunned by the figures given to him which are those on Exhibit 13. (See exhibits 28 and 29). The Lowell Bank made no further effort to pay the sum claimed by Plaintiff or to otherwise prevent the running of the three year period to prevent the foreclosure by entry.
The question to be decided is whether or not Plaintiff properly foreclosed the second mortgage by entry.
Massachusetts General Laws, Chapter 244, Sections 1 and 2 govern the foreclosure of mortgages by entry or action. Section 1 thereof requires a breach of condition. The Court finds that there was never any payment on either the first mortgage note to the Everett Bank or to Plaintiff on the second mortgage note. These notes were completely in arrears on March 31, 1979, the date of the entry. The Court rules that this was a breach of condition. The statute provides further that the mortgagee must "recover possession of the land mortgaged by an open and peaceable entry thereon, if not opposed by the mortgagor or other person claiming it, or by action under this chapter." Here, the Plaintiff made an entry on the premises at 120 Howard Street, Lawrence, completely unopposed after giving Lagana, the principal involved, as well as Bain, Trustee of the Howard Trust notice of his intention to do so and the entry has continued to this present date without interruption. The Plaintiff, after the entry, through his agent Mary Spero collected the rents and managed the property, renting to tenants, making repairs, making payments on the first mortgage, and paying the taxes due.
The Plaintiff has further complied with the requirements set forth under Section 2 of Chapter 244, as the Court finds and rules that there was a "certificate, under oath, of two competent witnesses to prove the entry shall be made," (Exhibit 10). The Court finds and rules that the certificate was likewise properly recorded on March 28, 1978, the same day that the entry was made.
Under the provisions of G. L. c. 244, Section 1, the "possession so obtained, if continued peaceably for three years, shall forever foreclose the right of redemption." The Court finds that the three years have elapsed that the possession was peacefullycontinued for this period and that therefore the mortgagor's right of redemption has been foreclosed.
The Defendant Lagana claims that there was no agreement that Lagana was to assume the first mortgage to the Everett Savings Bank and that there was no default in payments due thereunder. The short answer to this is that Lagana endorsed this first mortgage note at the Everett Savings Bank on January 17, 1977. He made no payments on this first mortgage and in addition made no payments on the second mortgage note, Exhibit 1, the basis for the mortgage being foreclosed by entry.
Defendant Lagana claims that the Plaintiff never afforded the Defendant an opportunity to make a tender or was evasive. To this the Court will only say that if anybody was evasive it was the Defendant Lagana. Lagana's testimony as to his finances and to a payment made by him to one Marvin Fluster on a $24,000 mortgage (Exhibit 23) was hardly credible, to put it charitably. He first told the Court he paid a $5,000 mortgage payment to Fluster in $100.00 bills which he received from cashing a personal check. The following day he told the Court he did not cash a check but made the payment with a bearer bond, without coupons attached. (Exhibit 30). Lagana testified he could not remember who he acquired the bond from.
Both Defendant Lagana and the Defendant Bank claim that Plaintiff's management of 120 Howard St., Lawrence during his possession was anything but prudent and productive. The Court has reviewed the financial report of his stewardship (Exhibit 18) and finds nothing untoward therein. Plaintiff made payments on the first mortgage out of the income he received from the rents; his other expense payments would seem to be in order. It is true that he did not raise the rents more than once during this period but he also had few vacancies. The Court cannot find that he operated the apartment complex in anything but an acceptable manner. The Court was impressed with the meticulous records that he kept. The Plaintiff was entitled under G. L. c. 244, S. 19 to a tender of "the whole amount then due and payable on the mortgage." The Court finds and rules that no tender was ever made by Lagana or the Lowell Bank of the amount due and payable to the Plaintiff. Plaintiff complied with the provisions of G. L. c. 244, §§1 and 2 (See paragraph 9 herein) and thus was under no obligation to give actual notice to the Lowell Bank. See Sher v. South Shore National Bank, 360 Mass. 400 (1971).
To sum up, the Court rules that the second mortgage, (Exhibit 3) was properly foreclosed by entry under the provisions of Sections 1 and 2 of G. L. c. 244 and that Plaintiff is entitled to a new Certificate of Title as prayed for.
Defendant has submitted a document entitled "Defendant Howard Realty Trust, Request for Ruling" consisting of sixteen Requests for Findings of Fact and ten Requests for Rulings of Law. The Court would point out that there is no such entity as the "Howard Realty Trust" to the Court's knowledge. The Trust involved herein is entitled the "Howard Trust." (Exhibit 2) Requests for Findings of Fact numbered 2, 5, 8 9, and 10 are allowed numbers 4, 6, 7, and 11-16 are denied; numbers 1 and 3 are denied for citing facts not in evidence. Requests for Rulings of Law numbers 2, 4, 5, 6, and 7 are allowed; numbers 1, 3, 8, 9, and 10 are denied.
The Court orders cancellation of Certificate of Title number 7629, in the name of Ignatius R. J. Piscitello, Trs. of Howard Trust, in Book 51, Page 321 dated December 31, 1976 and the issuance of a new Certificate of Title to Plaintiff, subject only to mortgage document No. 25076, noted on Certificate of Title No. 7629, which is the first mortgage to the Everett Sav ings Bank.
[Note 1] All references to Documents and Certificates of Title are to those issued by the Essex County Registry of Deeds (Northern District) unless otherwise noted.