JUNE THORNTON v. GORDON THORNTON

INTRODUCTION

Plaintiff June Thornton ("June") commenced this action in November, 2017 seeking a declaration that a March 27, 1997 mortgage granted by her and her former husband, Paul Thornton ("Paul"), on properties then owned by them and now owned by her at 18-24 School Street and 19-25 Second Street, North Andover, Massachusetts ("the Mortgage" and "the Properties" respectively) must be discharged because the March 27, 1997 note ("the Note") that the Mortgage secured is unenforceable, and the Mortgage is therefore no longer enforceable either. In January, 2018, Paul's brother and the defendant herein, Gordon Thornton ("Gordon"), the holder of the Note and Mortgage, filed an answer and counterclaims in which he asserted claims against June for unjust enrichment and "bad faith." After failed attempts to mediate, a return to the Probate and Family Court Department of the Trial Court (Middlesex County) for a determination as to whether June's obligation to pay the Note derived from the divorce decree entered in that court, the dismissal of this action without prejudice to the parties' proceeding in the Probate and Family Court, the reconsideration and reversal of that order of dismissal, and the setting of a discovery deadline of March 12, 2019, June filed Plaintiff's Motion For Summary Judgment ("the Motion").

In the Motion, June argued that the Note is unenforceable by virtue of the twenty-year statute of limitations for contracts under seal set forth in G. L. c. 260, § 1 and, as a result, the Mortgage is unenforceable and must be discharged. In response, [Note 1] Gordon argued (1) that he required the depositions of two witnesses, June and one unidentified witness, "in the interest of justice;" [Note 2] (2) that there were disputes of material fact regarding the Mortgage, the Note and the purported modification of the Note by Paul; and (3) that promissory estoppel applied to these facts. After hearing, the court allowed the parties additional time to address Supreme Judicial Court cases, most recently summarized in In Re Fortin, 598 B.R. 689, 691-692 (Mar. 5, 2019), to the effect that "the inability to recover directly on a note due to the expiration of the statute of limitations is no bar to recovery under a mortgage, so long as the underlying debt remains unpaid." In response, June now relies on G. L. c. 260, § 33, the obsolete mortgage statute, as an additional ground for declaring the Mortgage unenforceable. For the reasons set forth below, this court DENIES the Motion and enters summary judgment in favor of Gordon pursuant to Mass. R. Civ. P. 56(c).

UNDISPUTED FACTS

The following facts established in the record and pertinent to the motion for summary judgment are undisputed or are deemed admitted.

1. By deeds dated November 19, 1973 and October 18, 1974, June and Paul purchased the Properties by deeds recorded in the Essex County Registry of Deeds, Northern District ("the Registry") at Book 1231, Page 696 and Book 1250, Page 548 respectively. Plaintiff's Statement Of Undisputed Facts In Support Of Plaintiff's Motion For Summary Judgment ("PSUF") ¶ 1. [Note 3]

2. On March 27, 1997, June and Paul signed the Note, in which they agreed to pay Gordon the original principal sum of $33,276.54. PSUF ¶ 2.

3. The Note further provides that it is due and payable on October 1, 1997, that the amount due is $33,276.54 (there is no provision for interest), and that "the Lender shall hold a Deed returning the property which is the collateral for this note, if the Note shall fall into default the Lender at it's [sic] option may record the Deed held in escrow in consideration of forgiveness of the outstanding balance." Plaintiff's Appendix ("App.") Ex. C.

4. The Mortgage on the Properties was also dated March 27, 1997 and was recorded at the Registry at Book 7536, Page 81. PSUF ¶ 5.

5. The Mortgage is signed by June and Paul and states that it secures the payment of $33,276.54 "on demand as provided in a note of even date." App. Ex. D.

6. By deeds dated March 22, 2000 and March 29, 2000 and recorded in the Registry at Book 5705, Page 67 and Book 5711, Page 311, Paul conveyed his interest in the Properties to June. PSUF ¶ 7. [Note 4]

STANDARD OF REVIEW

Generally, summary judgment may be entered if the "pleadings, depositions, answers to interrogatories, and responses to requests for admission … together with the affidavits … show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Mass. R. Civ. P. 56(c). In viewing the factual record presented as part of the motion, the court draws "all logically permissible inferences" from the facts in favor of the non-moving party. Willitts v. Roman Catholic Archbishop of Boston, 411 Mass. 202 , 203 (1991). "Summary judgment is appropriate when, 'viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to a judgment as a matter of law.'" Regis College v. Town of Weston, 462 Mass. 280 , 284 (2012), quoting Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117 , 120 (1991).

"Summary judgment, when appropriate, may be rendered against the moving party." BourgeoisWhite, LLP v. Sterling Lion, LLC, 91 Mass. App. Ct. 114 , 118-119 (2017) quoting Mass. R. Civ. P. 56(c) and Reporter's Notes to Rule 56(c) ("Because by definition the moving party is always asserting that the case contains no factual issues, the court should have the power, no matter who initiates the motion, to award judgment to the party legally entitled to prevail on the undisputed facts"), and cases cited.

DISCUSSION

The note at issue here appears to be a negotiable instrument. G. L. c. 106, § 3-104(a) defines a negotiable instrument as "an unconditional promise or order to pay a fixed amount of money, with or without interest or other charges described in the promise or order, if it:

"(1) is payable to bearer or to order at the time it is issued or first comes into possession of a holder;

(2) is payable on demand or at a definite time; and

(3) does not state any other undertaking or instruction by the person promising or ordering payment to do any act in addition to the payment of money, but the promise or order may contain (i) an undertaking or power to give, maintain, or protect collateral to secure payment, (ii) an authorization or power to the holder to confess judgment or realize or dispose of collateral, or (iii) a waiver of the benefit of any law intended for the advantage or protection of an obligor."

The Note is payable to "Gordon F. Thornton of North Reading, MA, or order," is "due and payable on October 1, 1997," and does not state any other undertaking or instruction not permitted under G. L. c. 106, § 3-104(a)(3). If the Note is a negotiable instrument, then the applicable statute of limitations is that found at G. L. c. 106, § 3-118(a) ("an action to enforce the obligation of a party to pay a note payable at a definite time must be commenced within six years after the due date or dates stated in the note or, if a due date is accelerated, within six years after the accelerated due date."), not G. L. c. 260, § 1, the twenty-year statute of limitations on which June relies.

Whether the statute of limitations is six years or twenty years, and assuming for present purposes that Paul could not unilaterally modify the Note to extend its term, [Note 5] June's contention that the Mortgage is invalid because the Note is unenforceable is not in accord with Massachusetts law. That law was recently described in In Re Fortin, 598 B.R. at 691-692 (footnote omitted):

"The SJC has repeatedly held over the last 180 years that, at both law and equity, the inability to recover directly on a note due to the expiration of a statute of limitations is no bar to recovery under a mortgage, so long as the underlying debt remains unpaid. See Pearson v. Mulloney, 289 Mass. 508 , 515, 194 N.E. 458 (1935) ('A valid mortgage may exist although personal liability on the mortgage note never attached, or has been barred by bankruptcy or the statute of limitations.') (citations omitted); Jeffrey v. Rosenfeld, 179 Mass. 506 , 509, 61 N.E. 49 (1901) ('At law and in equity the holder can enforce his remedy upon the mortgage independently of or concurrently with that on the note, and in some cases, at least, where he has lost his remedy upon the note.'); Thayer v. Mann, 36 Mass. 535 , 538, 19 Pick. 535 (1837) ('The creditor has a double remedy, one upon his deed, to recover the land, another upon the note, to recover a judgment and execution for the debt, and it does not follow that he cannot recover on one, although there may be some technical objection or difficulty to his recovery upon the other.'). These pronouncements from the SJC are unambiguous—the mere inability to collect on a note due to the expiration of a statute of limitations does not affect the enforceability of the mortgage so long as the debt remains unpaid. The Court cannot discern (nor has Debtor cited) any subsequent ruling from the SJC indicating an abandonment of this straightforward principle."

Accordingly, June's argument to the contrary—that the Mortgage is unenforceable because the statute of limitations renders the Note unenforceable—fails. [Note 6]

In her supplemental memorandum, June now also argues that the Mortgage is governed by G. L. c. 260, § 33, which provides in pertinent part:

"A power of sale in any mortgage of real estate shall not be exercised and an entry shall not be made nor possession taken nor proceeding begun for foreclosure of any such mortgage after the expiration of, in the case of a mortgage in which no term of the mortgage is stated, 35 years from the recording of the mortgage or, in the case of a mortgage in which the term or maturity date of the mortgage is stated, 5 years from the expiration of the term or from the maturity date … ."

As June acknowledges, the Mortgage does not have a stated term, but instead is "on demand." June contends that the Mortgage became due by its own terms on February 19, 2003, which is the date on which it was recorded at the Registry.

In Deutsche Bank National Trust Company v. Fitchburg Capital, LLC, 471 Mass. 248 , 249 (2015), the Supreme Judicial Court was tasked with determining whether a mortgage stating only the term or maturity date of the underlying debt was a "mortgage in which the term or maturity date of the mortgage is stated" under the statute. In its analysis, the court outlined the "well-settled rules of statutory construction" that it would apply:

"When the meaning of a statute is at issue, '[w]e being with the canon of statutory construction that the primary source of insight into the intent of the Legislature is the language of the statute.' The language is interpreted in accordance with its plain meaning, and if the language is clear and unambiguous, it is conclusive as to the intent of the Legislature.

When interpreting the phrase, 'mortgage in which the term or maturity date is stated,' that triggers the five-year statute of limitations, '[w]ords and phrases shall be construed according to the common and approved usage of the language.' According to Black's Law Dictionary, 'maturity date' means '[t]he date when a debt falls due, such as a debt on a promissory note or bond,' and 'mortgage' means '[a] conveyance of title to property that is given as security for the payment of a debt or performance of a duty and that will become void upon payment or performance according to the stipulated terms.'"

(Citations omitted.) Id. at 253-254. In the case before it, the court determined that the term or maturity date of an underlying obligation, when expressly stated on the face of the mortgage, can become the term or maturity date of the mortgage. Id. at 257.

In this case, the Mortgage does not incorporate the maturity date contained in the Note – October 1, 1997 – so the holding in Fitchburg Capital, LLC is not applicable. See id. Instead, the Mortgage states that it is "on demand." There is no express term or maturity date within the meaning of § 33, as a result of which the Mortgage is not "a mortgage in which the term or maturity date of the mortgage is stated." G. L. c. 260, § 33. That alone should end the inquiry.

With reference, again, to the Uniform Commercial Code, an instrument with a particular maturity date is treated as "payable at a definite time;" in contrast, instruments become "payable on demand" when they have no maturity date at all. G. L. c. 106, § 3-108(a) ("A promise or order is 'payable on demand' if it (i) states that it is payable on demand or at sight, or otherwise indicates that it is payable at the will or the holder, or (ii) does not state any time of payment."). This suggests that an instrument payable on demand has no maturity date and thus is not "a mortgage in which the term or maturity date of the mortgage is stated."

Finally, June provides no support for the proposition that the date of recording the Mortgage somehow becomes the term or maturity date stated in the Mortgage, nor has this court found any such support. Instead, under the statute, the date of recording starts the clock running on the thirty-five-year limitation. See Fitchburg Capital, LLC, 471 Mass. at 248 ("a mortgage in which the term or maturity date is not stated becomes unenforceable thirty-five years after recording."). Accordingly, the Mortgage is governed by the thirty-five-year statute of limitations set forth in § 33 and is not yet unenforceable under that statute.

CONCLUSION

Based on the undisputed facts and for the foregoing reasons, the Plaintiff's Motion for Summary Judgment is DENIED. Pursuant to Mass. R. Civ. P., 56(c), judgment shall enter on the sole count of the complaint declaring that the Mortgage is not unenforceable, either by reason of the alleged unenforceability of the Note or the provisions of G. L. c. 260, § 33. As discussed at the hearing on this matter on May 31, 2019, defendant's counterclaim for unjust enrichment is DISMISSED AS MOOT and his counterclaim for "bad faith" is DISMISSED pursuant to Rule 12(b)(6), Mass. R. Civ. P., although defendant may (but is not encouraged) to file a motion pursuant to G. L. c. 231, § 6F.

SO ORDERED