The Federal Savings Bank (the "Bank"), owner of the property located at 44 Bow Road, Belmont ("Locus"), brought this action to remove an alleged cloud on the title of Locus and to obtain a declaration that its title is good and valid as against all defendants.
1. The Bank is a banking institution organized under the laws of the Commonwealth, with a principal place of business at 716 Main Street, Waltham.
2. Defendant Russell Casella ("Casella") is an individual residing at 100 Powder Mill Road, Sudbury.
3. The Bank is the owner of Locus by virtue of a foreclosure sale (the "Foreclosure Proceeding") conducted pursuant to a Power of Sale contained in a Mortgage (the "Mortgage") encumbering Locus given by Henry J. Joyal and Doreen Burke Joyal to the Bank. The Mortgage was dated December 3, 1987 and recorded with Middlesex County (South District) Registry of Deeds (to which all recording references hereinafter refer) in Book 18735, Page 439. The sale held on April 23, 1991 and the foreclosure deed was recorded on October 23, 1991, as Instrument No. 459.
4. Casella is the holder of a $85,000 Mortgage on Locus dated February 16, 1989, recorded the same day at Book 19653, Page 136.
5. On or about April 22, 1991, just prior to the Foreclosure Proceeding, Casella filed a verified complaint requesting that the Court declare the Mortgage void and order the Mortgage stricken from the record.
6. On or about April 23, 1991, prior to the Foreclosure Proceeding, Casella's complaint was voluntarily dismissed without prejudice, based on an agreement of counsel that the Bank would post a bond for $85,000 with this Court.
7. The filing of Casella's complaint has created a continuing cloud on the title of Locus.
8. The Bank requests that the Court judge the Mortgage to be valid and its foreclosure deed a valid conveyance and that its title to locus is good and free of any rights in any Defendant.
9. Casella counterclaimed and alleged that the acknowledgement on the Mortgage is fraudulent and that the Mortgage is thereby invalid and was accordingly improperly recorded.
Casella further alleged that the Bank knew of the problem but went ahead with the Foreclosure Proceeding and that Casella received no funds from the Foreclosure Proceeding. Casella alleged that he suffered damages by reason of the Bank's foreclosing an improperly recorded mortgage; Casella also requested interest, costs, attorney's fees, and punitive damages.
10. In its Answer to Counterclaim, the Bank denied that the acknowledgement was fraudulent and that the Mortgage was improperly recorded, denied that it owes Casella any damages and raised various affirmative defenses.
11. In addition to Casella, there originally were six other defendants, Walpole Woodworkers, Inc. and five banks and trust companies. Those six had attachments and executions of record subsequent to the Mortgage. On March 10, 1992 I entered a Judgment, upon the default of the Defendants other than Casella, and upon Casella's stipulation, that the Mortgage was valid and that title to Locus is vested in fee simple in the Bank free from any rights therein in favor of Defendants. The Judgment, however, contained the following:
Defendant Casella's right to pursue his action for money damages only against Plaintiff in this action is hereby reserved and the judgment shall not be used as an estoppel to the presentation of evidence by Defendant Casella with respect to said damage action.
As this action now solely for damages, I requested, and received, appointment to the Superior Court Department for purposes of this action.
12. The Bank has moved for Summary Judgment. It filed Affidavits of Henry J. Joyal, Jr. ("Mr. Joyal") and Doreen Burke Joyal (the "Joyals", the mortgagors under the Mortgage), James A. Scanlon ("Scanlon"), who allegedly took the acknowledgment of the Mortgage (Mr. Scanlon's Affidavit was filed in Case 137193 of this court, of which I take Judicial Notice), and Lauren E. Duca, Esq., an Attorney in the law firm which represents the Bank. Counsel for the Bank and Casella argued the motion on February 28, 1992 and have submitted Memoranda of Law.
13. In December 1987, Scanlon was a notary public and an attorney practicing in the law office of Edward T. Bigham in Waltham. Mr. Joyal, also an attorney, practiced law in the same office.
14. The Bank was a client of Mr. Bigham and Mr. Bigham regularly requested Scanlon to handle real estate closings on Bank loans. Both Scanlon and Mr. Joyal had on occasion borrowed money from the Bank. Mr. Bigham had adopted the practice of allowing the attorneys in his office to prepare their own mortgage loan transactions with the Bank and thereby avoid legal fees in transactions handled by the Bigham Office.
15. On December 3, 1987, the Joyals borrowed $445,000 from the Bank in a refinancing of the mortgage loan on the Joyals' home at Locus. The loan was handled by the Bigham office. At the closing, the Joyals executed and delivered an Adjustable Rate Note in the amount of $445,000 (the "Note") and the Mortgage. The Joyals verbally acknowledged the mortgage as their free act and deed before Scanlon in his capacity as a notary public, on December 3, 1987.
16. Scanlon signed the Note, as witness, and a Report of Title. He also notarized other closing documents including the urea-formaldehyde foam insulation certificate. Although he did take the Joyal's acknowledgment of the Mortgage, Mr. Scanlon missed signing the certification as notary on the Mortgage.
17. Mr. Joyal took the Mortgage to the Registry to record. At the Registry, he noticed Scanlon's omission in not signing the notarization. He immediately called Mr. Scanlon.
18. During that telephone call, Scanlon orally authorized and specifically directed Mr. Joyal to sign the certification of the acknowledgment on the Mortgage. Scanlon also provided Mr. Joyal with the expiration date for his notary commission which Mr. Joyal inserted on the notarization form. Mr. Joyal signed Mr. Scanlon's name and the Mortgage was immediately recorded, on December 3, 1987.
19. Casella's claim is that the acknowledgement is fraudulent. There is nothing in the evidence before me that suggests any "intent to injure or defraud", within the meaning of G. L. c. 267 §1 or, within the civil context, any knowledge of falsehood or reckless disregard as to truth or falsehood. The Affidavits of the Joyals establish that they acknowledged the Mortgage. Mr Joyal's Affidavit establishes that Scanlon authorized Mr. Joyal to affix Scanlon's signature as notary. Scanlon's Affidavit does not expressly corroborate Joyal's assertions, but does not dispute them. Scanlon does state that he believes he took the acknowledgement and he reaffirms that the execution of the Mortgage was the free act and deed of the Joyals.
20. The Mortgage is valid beyond question. The only doubt relates to the validity of its recording and on the facts before me and for purposes of this action I rule that the Mortgage was validly recorded. Were the Joyals or Scanlon to be objecting to the acknowledgement, there might be another resolution of the question, but those are not the facts. What happened here is certainly irregular procedure but that does not avail Casella.
21. I note in passing that the evidence does not indicate whether, proposing to advance $85,000 secured by a troubled title, Casella or his attorneys searched the title and had actual knowledge of the Mortgage (which would sink his case beyond dispute). It strains belief that they would not have, but I have not assumed that in deciding this case.
22. Casella's counterclaim for damages is dismissed.