Plaintiff Stephen Montana filed his unverified complaint on January 6, 2010, pursuant to the provisions of G.L. c. 237 and c. 240, §§ 6-10, seeking to clarify the status of title to property located at 759 Union Street, Franklin, MA ("Locus"), which is dependant upon a levy of execution by sheriff's sale. [Note 1] Defendants filed their Answer on February 18, 2010. [Note 2] A case management conference was held on April 23, 2010. A pre-trial Conference was held on August 1, 2011, at which time the parties discussed whether a trial or summary judgment was required. The parties attended additional status conferences on September 20, 2011, and October 14, 2011, at which time it was determined to hold a trial. Trial took place at the Land Court in Boston on February 6, 2012; there was no site view. [Note 3] Post-trial briefs were filed by Defendants on March 23, 2012, and by Plaintiff on March 27, 2012, and at that time the matter was taken under advisement.
Testimony at trial was given by Anita Kintigos (Deputy Sheriff for Norfolk County), Leonard French (Defendant), and Steven Montana (Plaintiff). There were twenty exhibits submitted into evidence.
Based on the sworn pleadings, the evidence submitted at trial, and the reasonable inferences drawn therefrom, I find the following material facts:
1. A Joint Venture Agreement (the "Agreement") titled Motel Realty Associates, dated August 1, 1985, was established for the purpose of developing Locus. The Agreement was executed by Leonard S. French, Shirley A. French, Sally J. Winters, Julie A. French D'Amelio, and Michael J. French (the "French Group"), Carmen A. Barletta, Trustee, J. Kenneth Barletta, Linda A. Barletta, Robert A. Barletta, and Joseph N. Verna (the "Barletta Group"), and Stephen C. Montana.
2. John A. Brunelli and Nelsi Brunelli, Trustees of the King Street Realty Trust, conveyed Locus to Sally J. Winters ("Winters"), Trustee of the Motel Realty Trust (the "Trust"), by deed dated August 1, 1985, and recorded with Norfolk County Registry of Deeds (the "Registry") at Book 6747, Page 451. [Note 4] The beneficiary of the Trust was the Agreement. Plaintiff, the French Group and the Barletta Group each held a 1/3 interest in the Agreement. [Note 5] Pursuant to the terms of the Trust, Winters, as Trustee, held legal title to Locus for the sole benefit of the beneficiary (the Agreement).
3. By Judgment (the "2005 Judgment") issued in Stephen Montana v. Sally Winters, Trustee of Motel Realty Trust, Norfolk Superior Court (No. CV2002-00691) (the "Superior Court Case"), and dated January 18, 2005, an arbitration award of $75,043.00 plus interest (the "Award") was confirmed for the benefit of Plaintiff against the Trust. The suit arose as a result of a sale of certain real estate (not Locus) in March, 1999, by the Trust to the Milford Whitinsville Regional Hospital, Inc. [Note 6] Plaintiff alleged that he did not receive his 1/3 share of the proceeds from the sale. The Judgment states "Plaintiff, Stephen Montana, shall recover from Defendant, Sally Winters, Trustee of Motel Realty Trust."
4. On September 11, 2006, the Norfolk Superior Court issued an execution #02-691 (the "Execution") in the Superior Court Case. [Note 7] Based on the Execution, on November 1, 2006, the Deputy Sheriff levied upon, seized, and took all right, title, and interest that Winters, Trustee of the Trust, had in Locus and recorded the Execution with the Registry at Book 24232, Page 18. Pursuant to the terms of the Execution, the Trust's interest in Locus was levied upon and seized for the sum of $119,131.40.
5. A notice of public auction for February 14, 2007, was published in the Milford News on November 1, 8, and 15, 2006, which read:
By virtue of the Execution #02-691 issued by the Dedham Superior Court wherein, Stephen Montana named Judgment Creditor(s) and Sally Winters, Trustee of the Motel Realty Trust named Judgment Debtor(s), on the 1st day of November in the year 2006, having levied upon seized and taken all right, title and interest which the said Sally Winters, Trustee of the Motel Realty Trust had in and to the lands in the Town of Franklin hereinafter described in Book: 6747 Page: 451 at the Norfolk County Registry of Deeds...On Wednesday, February 14, 2007, at 1:00 P.M. at the Deputy Sheriff's Office located at 2015 Washington Street, Braintree, MA I will sell said right, title and interest at public auction, for cash, to the highest bidder, together with all costs and fees thereon.
A certified copy of such notice was sent to Sally Winters, Trustee of the Trust, on November 1, 2006, informing Winters that the sheriff's sale would occur on February 14, 2007, at 1:00 PM. The foreclosure sale was postponed.
6. A notice of public auction for July 18, 2007, was posted in the Town Halls of Franklin, Wrentham, and Norfolk on June 14, 2007. Notice was also published in the Milford News on June 26, July 3 and July 10, 2007 (the "Advertisement"), that read:
By virtue of the Execution #02-691 issued by the Dedham Superior Court wherein, Sally Winters, Trustee of the Motel Realty Trust named Judgment Creditor(s) and Stephen Montana named Judgment Debtor(s), on the 1st day of November in the year 2006, having levied upon seized and taken all the right, title and interest which the said Stephen Montana had in and to the lands in the Town of Franklin hereinafter described in Book: 6747 Page: 451 at the Norfolk County Registry of Deeds...On July 18, 2007 at 11:00 A.M. at the Deputy Sheriff's Office located at 2015 Washington Street, Braintree, MA I will sell said right, title and interest at public auction, for cash, to the highest bidder, together with all costs and fees thereon.
On June 14, 2007, Deputy Kintigos sent written notice of the sheriff's sale and a copy of the Execution to Sally Winters, Trustee of the Trust, informing Winters that the sheriff's sale would occur on July 18, 2007, at 11:00 AM. [Note 8]
7. The foreclosure sale was held on July 18, 2007, and three bidders appeared at the sale, including Plaintiff and Defendant Leonard French ("French"). The winning bid of $155,000.00 was made by Plaintiff. A sheriff's deed to Plaintiff dated July 18, 2007 (the "Sheriff's Deed"), was prepared by the Deputy Sheriff and was recorded at the Registry on August 9, 2007, in Book 25066, Page 509.
Defendants argue that the levy and sheriff's sale were invalid and that they therefore retain their 2/3 interest in Locus. In support of their position, Defendants contend that they did not receive proper notice of the sheriff's sale because Winters, as the trustee of the Trust, did not have an interest in Locus and was therefore not the correct person to receive notice, and that the Sheriff's Deed was not valid because the Advertisement was defective when it named Plaintiff as Judgment Debtor and the Trust as the Judgment Creditor. Plaintiff contends that all of the statutory requirements for a sheriff's sale have been satisfied and therefore the Advertisement and the Sheriff's Deed were valid.
The two central issues raised by the facts are: 1) whether notice of the sheriff's sale went to the proper party, and 2) whether the incorrect language in the Advertisement invalidates the Sheriff's Deed. I shall discuss each of these issues in turn. [Note 9]
Notice Given to Proper Person
G.L. c. 236 § 28 sets forth the proper procedure for providing notice of a sheriff's sale:
The officer, thirty days at least before the sale, shall deliver to the debtor...a written notice of the time and place of sale and shall post such a notice in a public place in the town where the land lies and also in two adjoining towns...The officer shall also publish such notice once in each of three successive weeks, the first publication to be not less than twenty-one days before the day of the sale, in a newspaper published in the town where the land lies.
The issue raised by Defendants is whether Winters, as trustee of the Trust, was the proper person as debtor to receive notice of the sheriff's sale. [Note 10] G.L. c. 236 § 28 requires that notice only be delivered to the "debtor." [Note 11]
Defendants argue that the status of the Trust as a nominee trust means that the beneficiaries should have received notice of the sheriff's sale rather than the trustee (Winters) because the trustee holds title for the benefit of the beneficiaries. Under nominee trust law, however, the Trustee is the legal holder of title to Locus. Morrison v. Lennett, 415 Mass. 857 , 860 (1993) ("A nominee trust is often used to hold legal title to real estate so that the identity of the trust beneficiary may remain undisclosed"); citing Birnbaum, The Nominee Trust in Massachusetts Real Estate Practice, 60 Mass. L.Q. 364, 364-365 (1976); Malaguti, Hazardous Use of Nominee Realty Trust, 1 MSL L. REV. 63, 63-64 (1993). [Note 12] Moreover, Defendants' argument that the status of the Trust as a nominee trust means that the beneficiaries should have received notice of the sheriff's sale, contradicts one of the purposes of a nominee trust: to conceal the identities of the beneficiaries. [Note 13]
In addition to trust law, the Trust itself maintains that "the Trustee shall hold any and all property, real and personal, that may be transferred to him as Trustee hereunder IN TRUST for the sole benefit of the person or persons listed in the Schedule of Beneficiaries." [Note 14] Winters, as Trustee of the Trust, was the record title holder to Locus. The 1985 deed conveying Locus to Winters, Trustee of the Trust, was recorded with the Registry in Book 6747, Page 451. As record title holder, Winters was properly named the Judgment Debtor in the 2005 Judgment and the Execution. Therefore, Winters was the proper person to receive notice of the sheriff's sale. [Note 15]
As a result of the foregoing I find that Winters was the holder of legal title to Locus, and the Judgment Debtor identified in the 2005 Judgment, and therefore she was the only party entitled to notice of the sheriff's sale. [Note 16]
Validity of the Sheriff's Deed
The remaining question regarding notice is whether the Advertisement was sufficient in light of the erroneous language contained therein. Neither party contests the presence of an error in the language of the Advertisement. The names of the parties were reversed in the Advertisement. The issue is whether this error is material in light of the notice requirements and purpose of G.L. c. 236 § 28, and therefore invalidates the Sheriff's Deed. To determine the materiality of the error in the Advertisement this court must look to the express requirements of G.L. c. 236 § 28, as well as the purpose of the notice requirement.
G.L. c. 236 § 28 requires that the sheriff disseminate notice in three ways: 1) written notice of the time and place of the sale to the debtor at least thirty days beforehand, 2) posting an advertisement in a public place, and 3) publishing an advertisement in a newspaper published in the town where the land lies not less than twenty-one days before the day of the sale in three successive weeks. Plaintiff met all of the notice requirements of section 28, and although there was an error in the Advertisement, the Advertisement clearly referenced the time and place of the sale as well as the Execution which correctly identifies Plaintiff as Judgment Creditor and the Trust as Judgment Debtor.
Deputy Sheriff Kintigos provided written notice to Winters (judgment debtor) of the sale and a copy of the Execution on June 14, 2007. The date of the sale was July 18, 2007. Therefore the notice was given more than thirty days before the date of the sale. The written notice included the correct time and place of the sale. The written notice provided to Winters satisfied the first part of the notice requirement. The second and third parts of the notice requirement, a public posting and the three publications in a local newspaper, both utilized the same erroneous Advertisement. Therefore, the validity of both turns on whether the error in the Advertisement was material.
A sheriff's sale is valid despite defects in the levy and sale process where such defects are immaterial. [Note 17] Errors in an advertisement for a sheriff's sale will not invalidate the sale if the correct information is contained in a recorded document referenced in the Advertisement. See Buffum v. Deane, 62 Mass. 35 (1851). In Buffum, the court held that a levy and sheriff's sale of an equity of redemption were valid despite errors in the newspaper advertisement, including an incorrect statement of the date of the mortgage and an incorrect description of the parcels being sold. The court found that these errors in the advertisement were not grounds to invalidate the levy and sheriff's sale because the correct information was in the mortgage recorded in the Registry, which recording information was referenced in the advertisement. The newspaper advertisement in Buffum included the book and page numbers where the recorded mortgage could be found in the Registry (even though the date of the mortgage was stated incorrectly); the Advertisement in the case at bar referenced the recorded Execution with the language "by virtue of the Execution #02-691 issued by the Dedham Superior Court." The absence of the Registry book and page numbers for the Execution in the Advertisement in the present case, however, does not affect the validity of the Advertisement under G.L. c. 236 § 28 because Defendants could have found the Execution which detailed the interest that was to be auctioned off at the sheriff's sale, and the time and place of the sale were correctly listed in the Advertisement.
Defendants argue that the testimony of French, who attended the sale and bid on Locus up to the value of Plaintiff's 1/3 interest ($150,000.00), rather than Defendants' 2/3 interest, demonstrates that the error in the language of the Advertisement did not provide notice of the property interest being sold. French testified that he believed he was bidding on Plaintiff's 1/3 interest in Locus because that was what the Advertisement stated. However, as discussed supra, the defects in the Advertisement were immaterial, because a copy of the Execution (with the proper information) was delivered to Winters. Moreover, only the time and place of the sale are required under G.L. c. 236 § 28 and the Advertisement satisfied the purpose of the statute.
The purpose of G.L. c. 236 § 28 is to provide notice so that the debtor has an opportunity to protect his interest at the sale. Blake, 210 Mass. at 592. [Note 18] Defendants had actual notice of the sale and were not harmed by the errors in the Advertisement. Defendants received notice of the sheriff's sale when the Deputy Sheriff delivered written notice of the sale and a copy of the Execution to Winters on June 14, 2007. In fact, French was actually present at the sheriff's sale. Defendants were given the opportunity to protect their interest or prevent the sale by paying the Judgment both through notice to their agent, Winters as Trustee of the Trust, and through French's presence at the auction.
As a result of the foregoing, I find that the defects in the Advertisement were immaterial and the Sheriff's Deed was valid.
Judgment to enter accordingly.
[Note 1] Plaintiff filed an Amended Complaint on September 26, 2011, adding as a Defendant Joseph N. Verna, individually and as Trustee of Greenspring Realty Trust.
[Note 2] Defendants filed their Answer to Plaintiff's Amended Complaint on February 6, 2012.
[Note 3] At the trial, after opening arguments, this court advised the parties that there did not appear to be any material facts in dispute. After a recess, the parties agreed to submit certain stipulated facts to this court on or before February 13, 2012. As a result, a limited trial was held on February 6, 2012.
[Note 4] The fact that the Trust is a nominee trust is not in dispute. Although the title of the Trust indicates that it is a realty trust, the parties stipulated that the Trust is a nominee trust.
[Note 5] The Barletta Group conveyed their 1/3 interest in the Agreement to the French Group in 1991 as the result of a Judgment entered in Leonard S. French, et al v. Carmen A. Barletta, et al, Norfolk Superior Court (No. 91-1620). Joseph Verna of the Barletta Group retained an 8.33% interest in the Agreement.
[Note 6] Deed recorded in the Registry at Book 13509, Page 66.
[Note 7] The Norfolk Superior Court issued three executions on the 2005 Judgment: the initial execution on May 3, 2005, an alias execution on October 21, 2005, and another alias execution on September 11, 2006. The alias executions were subsequent executions issued to enforce the 2005 Judgment that was not fully satisfied by the original execution.
[Note 8] It is unclear whether the June 14, 2007, notice was a copy of the Advertisement; however, the stipulation of facts, the sheriff's return, and Deputy Kintigos' testimony at trial indicate that Deputy Kintigos sent notice of the sheriff's sale to Winters that included the date and time of the sale, a copy of the Execution, and incorrectly identified Plaintiff as Judgment Debtor and Defendant as Judgment Creditor.
[Note 9] Defendants also argue that their due process rights under the Massachusetts Declaration of Rights and the United States Constitution were violated when they were not given proper notice of the sheriff's sale. For the reasons stated in this opinion, however, the Defendants received proper notice of the sheriff's sale and their due process rights were not violated.
[Note 10] The 2005 Judgment issued in the Superior Court Case states "Plaintiff, Stephen Montana, shall recover from Defendant, Sally Winters, Trustee of Motel Realty Trust."
[Note 11] "Deliver" is not defined in the statute, however, G.L. c. 236 § 44 describes the method of service:
Notice to the debtor under this chapter may be served upon him personally or left at his last and usual place of abode. If the debtor does not reside within the precinct of the officer serving the execution, and is not found by him thereon, such officer shall, in addition to any other service required by law, send by mail, postpaid and addressed to the debtor at his residence as described in the execution, a copy of any notice service of which upon him would be required if he were found within such precinct.
Plaintiff complied with section 44 by mailing notice to Winters on July 14, 2007.
[Note 12] "The person holding property in trust is the trustee." RESTATEMENT (SECOND) OF TRUSTS § 3 (1959).
[Note 13] The features of a nominee trust include:
(1) the names of the beneficiaries are filed with trustees rather than being publicly disclosed; (2) a trustee may serve simultaneously as a beneficiary; (3) the trustees lack power to deal with the trust property except as directed by the beneficiaries; (4) a third party may rely on the disposition of trust property pursuant to any instrument signed by the trustees, without having to inquire as to whether the terms of the trust have been complied with; and (5) the beneficiaries may terminate the trust at any time, thereby receiving legal title to the trust property as tenants in common in proportion to their beneficial interests.
In re Grand Jury Subpoena, 973 F.2d 45, 48 (1st Cir. 1992), citing Birnbaum, 60 Mass. L.Q. at 364-365.
[Note 14] Motel Realty Trust, Clause Second.
[Note 15] Defendants cite Gardiner v. Rogers, 267 Mass. 274 (1929) in support of their position; however, Gardiner deals with a testamentary trust and is not relevant to the case at bar.
[Note 16] The Trust instrument provides requirements for the relationship between the Trustee and the Beneficiaries; however, that is a private matter governed by the Trust instrument and not applicable to the present case.
[Note 17] See Blake v. Rogers, 210 Mass. 588 , 593 (1912); Buffum v. Deane, 62 Mass. 35 (1851); Berry v. Gates, 175 Mass. 373 (1900); Ellis v. Lyford, 270 Mass. 96 (1930); MRI, Inc. v. J. Henry Schroeder Bank & Trust Co., 12 Mass. App. Ct. 903 , 904 (1981); and Quinlan v. Weeks, 332 Mass. 482 (1955).
[Note 18] In Giroux v. Palaima, 1 LCR 148 (1999) this court held that, regarding the validity of published notice of a sheriff's sale under G.L. c. 236 § 28, notice is adequately published if "defendant received actual notice and was present at the sheriff's sale" and notice conforms to the purpose of the statute: "to provide notice to the debtor to give him the opportunity to protect his interest or prevent the sale at the auction by payment of the judgment." Id. at 150 citing Blake, 210 Mass. at 292. Moreover, this court held that an inaccurate or incomplete description of the interest that was to be auctioned at a sheriff's sale did not invalidate the notice insofar as "the notice referred to the execution for its authorization to sell Locus". Giroux, 1 LCR at 150.