DIME SAVINGS BANK OF NEW YORK, F.S.B. vs. JOHN W. SULLIVAN, CAROL A. SULLIVAN and others.

Plaintiff, Dime Savings Bank of New York, F.S.B., (Dime, which term shall also include its affiliate, Dime Real Estate Services - Massachusetts, Inc.) seeks to reform a deed to real estate known as 100 Copeland Road, Lynn, (the Premises), title to which is in Defendants, John W. Sullivan (Mr. Sullivan) and Carol A. Sullivan (Mrs. Sullivan, they together being referred to as the Sullivans) as tenants by the entirety, by deed (the Sullivan Deed) recorded in Book 9014, Page 369 of Essex South District Registry of Deeds. (Exhibit 1) In the alternative, Dime seeks to reform a mortgage (the Sullivan Mortgage) (Exhibit 7) to Dime (and the Note secured thereby) which had been executed and delivered by only Mr. Sullivan. Dime's problem is that it holds the Sullivan Mortgage, running solely from Mr. Sullivan, whereas title, at the time the Sullivan Mortgage was given, was in both Sullivans. In addition to the counts addressed to the Sullivans, there were Counts against New Bank of New England, N.A. and Janet A. Constantine, junior lienors, but those were both dismissed by stipulation, leaving the Sullivans as the sole Defendants. Mr. Sullivan's motion to add a third party Defendant, Lawyers Title Insurance Corporation, filed two days before the trial, was denied at trial.

A trial was held on May 14, 1992. A stenographer was appointed and recorded the testimony. Twenty-three Exhibits were introduced into evidence and are incorporated in this Decision.

The following witnesses testified: the Sullivans; Leslie J. Orlando (a paralegal who prepared the closing documents); and Dana S. Cohen (an Attorney who represented Dime at the closing).

I find and rule as follows:

1. The Sullivans executed a purchase and sale agreement for the Premises dated April 8, 1987. (Exhibit 2) The Sullivans applied to Dime for a $175,000 purchase money mortgage. Upon review of the application, a representative of Dime called Mr. Sullivan and told him Dime would not write the mortgage in both names because of problems which came up on Mrs. Sullivan's credit report. Dime agreed to write the mortgage in Mr. Sullivan's name alone and asked for a letter authorizing it to remove Mrs. Sullivan's name from the application. Exhibit 3 is a letter to Dime from both the Sullivans stating: "We have applied for a mortgage under the names of Carol A. & John W. Sullivan. This letter authorizes you to withdraw Carol A. Sullivan from the application and said mortgage."

2. Dime issued a loan commitment addressed to Mr. Sullivan dated May 5, 1987 (Exhibit 4). A special condition of that was: "An Amended Purchase & Sale Agreement with carol Sullivan's name omitted." Mr. Sullivan signed an extension to the purchase and sale agreement as the sole buyer, dated May 28, 1987 (Exhibit 6).

3. Mr. Sullivan testified that: On June 9, 1987, the Sullivans attended the closing for the Premises, at Attorney Dana Cohen's office;in addition to the Sullivans, the seller's daughter, Dana Cohen, Esq., representing the Dime, Carol Perry, Esq., representing the sellers, and Leslie Orlando, the Cohens' paralegal, were present; Attorney Cohen asked the Sullivans if they wanted the deed as tenants by the entirety and they said yes; they were not aware of the legal significance of the term, and were not represented by counsel at the closing; and the Sullivans left the closing without seeing the Sullivan Deed. I accept all that testimony as fact.

4. Each of the closing documents (Exhibits 7-18) was executed solely by Mr. Sullivan, either as the "Borrower" or the "Buyer" including, particularly, the Sullivan Mortgage and the "Adjustable Rate Note" (Exhibit 10, the Note) secured by the Sullivan Mortgage. Mr. Sullivan admitted in testimony that in return for receiving the Sullivan Mortgage, he intended that it would have a valid enforceable security lien on the Premises. As part of the transaction, Dime Real Estate assigned (Exhibit 20) the Sullivan Mortgage to Plaintiff. The Sullivan Mortgage is recorded at Essex South District Registry of Deeds at Book 9014, Page 370.

5. Leslie Orlando prepared all of the closing documents (Exhibits 7-18) for the offices of Gerald and Dana Cohen, Dime Real Estates' attorneys, with the understanding that Mr. Sullivan was the sole buyer. Initially, the buyers were to be the Sullivans but she received from Dime an amended commitment letter and loan application with Mrs. Sullivan's name deleted. Dime's instructions were that all of the closing documentation was to be prepared in Mr. Sullivan's name only. At the bottom of Exhibit 21, Ms.Orlando wrote "John, taking title, individually," which reveals her understanding of the instructions.

6. Ms. Orlando did not prepare the Sullivan Deed. That was prepared by the office of Carol Perry, Esq., the seller's attorney.

7. Attorney Dana Cohen testified that, generally, either the attorneys or the paralegals would match the deed with the mortgage and the buyer would be shown the deed at the closing. Attorney Cohen testified that he did not recall the transaction and cannot find his file; therefore he did not know whether or not those actions were taken.

8. Dime states that it did not discover the problem in its documentation until it went to foreclose in 1990 and I accept that.

9. The Sullivans owned jointly the residence they owned just prior to buying the Premises. They paid $46,000 toward the purchase of the Premises, which they obtained from the sale of that prior residence.

10. The Sullivans did not intend to hoodwink Dime. They did not realize at the closing there was a problem. They did what everyone told them to do to get the mortgage and buy the Premises. They were, "prepared to go to the closing and do whatever was necessary to consummate this deal" (Transcript, Page 64). Mr. Sullivan had had some limited exposure to real estate matters but I accept that the Sullivans joined the army of borrowers, past, present and future, who stagger glassy-eyed through suburban mortgage closings, emerging house rich and deep in debt. They can be excused for not realizing that someone had dropped the ball.

11. However, some of the sheen of their innocence has disappeared. Having discovered Dime's predicament, they are unwilling to put Dime in the position everyone intended it should be in. Mrs. Sullivan, for one thing, having signed the original mortgage application and been perfectly willing to lend her credit to the transaction, now says she wants to have her interest in the Premises, obtained only with Dime's money-free of the mortgage which was to back up that money.

12. Counsel have not produced any case on these facts, nor have I found one. I repair to general statements of the law of reformation, for instance, Franz v. Franz, 308 Mass. 262 (1941) (admittedly on much more appealing facts). Williston, Contracts (third ed.) §1585: "It is not necessary, moreover, in order to establish a mistake which may be reformed that it should be shown that particular words were misunderstood: 'It is sufficient that the parties had agreed to accomplish a particular object by the instrument to be executed, and that the instrument as executed is insufficient to effectuate their intention.'" (citation omitted)

13. Of the remedies suggested by Dime, reformation of the Sullivan Deed is overkill. One of the things the Sullivans did know is that they wanted to own the Premises jointly, as they had owned their prior house. Mrs. Sullivan's share in the proceeds of that sale went into the Premises and she should not be deprived of her ownership interest just to square Dime's position.

14. There was indeed a mutual mistake here, not between the Sullivans and their seller, but between the Sullivans and Dime. The mistake, simply stated, is that Dime did not come away with the mortgage security it and the Sullivans thought it was getting.

15. I therefore rule that the Sullivan Mortgage is reformed, effective as of the time of its execution, to include Mrs. Sullivan as a mortgagor. The Note is not to be reformed, however. Mrs. Sullivan can mortgage her interest in the Premises to secure her husband's debt and Dime should not complain-it was Dime, after all, which spurned Mrs. Sullivan's credit. In addition to the Sullivan Mortgage, the accompanying documentation (other than the Note) is to be appropriately reformed to the extent necessary to conform to the Sullivan Mortgage as reformed. However, all documents are to bear notation that Mrs. Sullivan's execution is without personal recourse. I order the Sullivans to execute such appropriate confirmatory documentation as Dime prepares to carry out this Decision.

16. He (Dime) who seeks equity must do equity. Dime or its agents created this situation and I therefore also rule that, as a condition of securing Mrs. Sullivan as a mortgagor, Dime shall pay the Sullivan's reasonable legal fees and expenses in defending this action.

17. I retain jurisdiction to pass on any disputes which may arise in the implementation of this Decision.

Judgment accordingly.