1 Conn. App. 30 | Conn. App. Ct. | 1983
The defendants appeal from the court's determination that they are liable for attorney's fees incurred by the plaintiff in connection with a motion for deficiency judgment after foreclosure.1 They also challenge a ruling excluding certain evidence pertaining to prior encumbrances, and a finding that their attorney was acting as an escrow agent for the plaintiff. The plaintiff has cross appealed, challenging the court's ruling denying the plaintiff attorney's fees for potential legal work incurred in the collection of the deficiency judgment.
The plaintiff initiated strict foreclosure proceedings against the defendants on January 7, 1980. Subsequently, a receiver of rents was appointed by the court upon a motion by the plaintiff. On March 31, 1980, the parties entered into a stipulation for judgment reduced to writing and filed with the court. The court rendered judgment in accordance with the stipulation on May 22, 1980. The judgment provided that the receiver of rents would be terminated on March 31. The stipulated judgment provided in part: "commencing April 1, 1980, said defendants are to collect the rental income from the property . . . and the only party allowed to sign checks [from an account opened at the Connecticut National Bank where rental income was to be deposited] shall be defendant's counsel . . . who shall provide plaintiff's counsel with a monthly statement of total income and itemized expenditures."
Pursuant to the judgment, the defendants' counsel was also required to pay city taxes on the property. The judgment also contained a provision stating that "as of March 28, 1980, the sum of $244,994.62, which sum includes an attorney's fee of $5000 is due plaintiff on the debt therein mentioned." The law day, originally set for April 1, 1981, but later extended until *32 May 4, 1981, came and passed without any of the defendants exercising the power to redeem. On May 11, 1981, title to the property vested in the plaintiff.
The plaintiff thereafter filed motions for a deficiency judgment, for an accounting, for payment of funds held by the receiver and for counsel fees incurred in prosecution of the motions. At the hearing on the motions the court excluded evidence presented by the defendants that the plaintiff had received a waiver of interest on real estate taxes owed to the city of Bridgeport. The court found that the defendants' counsel was acting as an escrow agent for the plaintiff and therefore applied the $8213.04 in the account to reduce the total indebtedness owed the plaintiff. The court awarded the plaintiff counsel fees in the amount of $4291 for work on the deficiency judgment. The court denied the plaintiff recovery for anticipated attorney's fees.
The defendants claim three principal reasons of appeal: (1) that the court erred in not allowing the defendants to present evidence that taxes owed to the city on the day of the hearing on the motion for deficiency judgment were $24,060.20 less than the amount found due in the foreclosure judgment by virtue of the plaintiff's having secured, after acquiring title, a rebate of the interest due on the taxes; (2) that the court erred in finding that counsel for the defendants was acting as escrow agent for the plaintiff in collecting rents on the subject property, so that the sum of $8213.04 held by counsel should not have been paid to the plaintiff as a credit to the defendant but belongs to the defendant; and (3) that the court erred in awarding counsel fees to the plaintiff for legal services rendered in connection with the plaintiff's motion for deficiency judgment.
On its cross appeal, the plaintiff claims error in the trial court's refusal to award counsel fees for post-deficiency-judgment services not yet performed. *33
I EXCLUSION OF EVIDENCE CONCERNING THE PLAINTIFF'S OBTAINING A WAIVER OF INTEREST ON TAXES OWED TO THE CITY OF BRIDGEPORT
The defendants concede that the real estate taxes due and owing, even though not paid by the plaintiff at the time of the hearing, constituted a lien on the real estate prior to the plaintiff's mortgage and, therefore, must be deducted from the value of the realty in determining the amount of the deficiency judgment. Hartford Federal Savings Loan Assn. v. Lenczyk,
The rule of law in Connecticut since 1833, when Connecticut first enacted a deficiency judgment statute, is that the value of the property foreclosed shall be the actual value thereof as of the date when title vested in the plaintiff under the foreclosure decree.
"Prior to 1833 the foreclosure of a mortgage operated as a bar to any subsequent action on the note. . . . Chapter 18 of the Public Acts of 1833 removed this bar, and ever since then the right of a mortgagee to a deficiency judgment after strict foreclosure, has always been coupled, in this State, with some provision for fixing the actual value of the property as of the date of the foreclosure, and for making that valuation a conclusive basis for determining the existence and amount of any claimed deficiency." Staples v. Hendrick,
The court in Hartford Federal Savings Loan Assn. v. Lenczyk, supra, held that a sewer assessment, imposed after the law day for construction work commenced prior to the law day but not completed until after it, should not be deducted from the value of the property under General Statutes
The same logic applies to a reduction as to an increase in encumbrances. Were this not so, there would be no finality to the finding of value based on the day title vested in the plaintiff.2
Changes in value, changed market conditions improvements or newly discovered deficiencies in the property are only a few examples of the plethora of issues that might be raised were the rule not as it exists. Stability in such proceedings is necessary for prudent action on the part of the foreclosing party. There was therefore, no error in excluding evidence of the reduction of the tax lien. *35
II WHETHER THE TRIAL COURT ERRED IN FINDING THAT COUNSEL FOR THE DEFENDANTS WAS ACTING AS ESCROW AGENT FOR THE PLAINTIFF IN COLLECTING RENTS FROM THE SUBJECT PROPERTY
The stipulated judgment of foreclosure, rendered on April 21, 1980, and based upon the parties' stipulation of March 30, 1980, is not a model of clarity as to the status of the defendants' counsel in collecting rents on the property. From an examination of the entire record, we conclude that, when read in context, this stipulation intended that a receiver of rents be appointed, as the court concluded.
The amount held on the vesting of title, $8213.04, was applied by the court to reduce the debt. Thus, the error, if any, would be harmless.
III WHETHER THE COURT ERRED IN ORDERING ATTORNEY'S FEES TO THE PLAINTIFF FOR SERVICES RENDERED ON THE DEFICIENCY JUDGMENT MOTION
The defendants argue that each party must bear his own costs of litigation unless a statute or agreement provides otherwise. They admit that the note evidencing the indebtedness owed the plaintiff contained an agreement to pay "reasonable attorneys' fees incurred in the collection of any sum due hereunder." Nevertheless, the defendants argue, because General Statutes
The plaintiff agrees with the defendants' general proposition of law concerning attorney's fees. The plaintiff argues, however, that General Statutes
The plaintiff also argues that when enacting General Statutes
This issue is one of first impression in this state. General Statutes
The fact that General Statutes
The defendants claim that, because General Statutes
IV ON THE CROSS APPEAL, WHETHER THE COURT ERRED IN REFUSING TO AWARD POST-DEFICIENCY-JUDGMENT LEGAL FEES FOR SERVICES NOT YET PERFORMED.
At oral argument, the plaintiff did not seriously pursue this claim of error. Permitting an award of legal fees depends upon a factual finding concerning work already performed. No award for attorney's fees may be made when the evidence on which to base the award is insufficient. Appliances, Inc. v. Yost,
We have considered the other issues raised by the defendants and find them to be without merit.
There is no error.
In this opinion the other judges concurred.