WINCHESTER SAVINGS BANK [Note 1] vs. OLIVER D. FERNANDEZ, JR. and WILLIAM F. HARKINS.

The Soldiers' and Sailors' Civil Relief Act is designed to protect the interests of servicemen on obligations incurred by them before the commencement of military service and to afford creditors protection of their security. In Hoffman v. Charlestown Five Cents Savings Bank, 231 Mass. 324 (1918) and Lynn Institution for Savings v. Taff, 314 Mass. 380 (1943) the Supreme Judicial Court made clear the extent to which rights of unascertained persons might be entitled to the benefits of the federal law. As a result the General Court adopted St. 1943, chapter 57, as amended, which provides a judicial forum for determining whether in fact any service person is entitled to protection. See Beaton v. Land Court, 367 Mass. 385 (1975) for a description of the history of the process. It has been accepted practice in the Commonwealth to follow the statutory procedure prior to a foreclosure sale in order to dispel a possible cloud on title. Since only those entitled to the benefits of the act are authorized to answer, the process involves litigation only where an actual individual is in the service and affected by the foreclosure. However, compliance with the Act is necessary for title to be passed as marketable by conveyancers, and the bar has followed this course for approximately forty years at great expense to the litigants and the Commonwealth and long delay in completing the foreclosure.

The economic downturn in certain areas of the real estate market has increased the number of foreclosures and led to an avoidance by some attorneys of the statutory procedure. The mortgagee has proceeded to enter on the mortgaged premises and to exercise the power of sale and thereafter has brought a bill of complaint to remove a cloud on title. That happened in the four cases now before the court where the published notice of the sale recited that it was subject to the Act, and after its consummation the mortgagee proceeded in this Court to attempt to remove the cloud. The issues are not limited in this proceeding, however, as they are under the statutory process, and the second mortgagee has answered and counterclaimed. The gravamen of his counterclaim is breach of the fiduciary duty to exercise good faith and reasonable diligence for the protection of junior lienors. He also seeks in Count III a declaratory judgment as to whether a sale without compliance with the Soldiers' and Sailors' Civil Relief Act enables the mortgagee to give marketable title. Count II alleges a fraudulent conveyance and as to this allegation the defendants' position is vulnerable. I therefore allow the plaintiff's motion to dismiss as to Count II and deny it otherwse.

I also deny the defendants' motion for judgment on the pleadings in the light of Guleserian v. Pilgrim Trust Co., 331 Mass. 431 , 435 (1954) since there are factual issues to be determined at a trial. See also Union Market National Bank of Watertown v. Derderian, 318 Mass. 578 (1945) and Sher v. South Shore National Bank, 360 Mass. 400 (1971).

By the court.