38 Mass. App. Ct. 136 | Mass. App. Ct. | 1995
After the First Colonial Bank for Savings had foreclosed its first mortgage on property belonging to the de
The principal thrust of the Bergerons’ appeal rests on their filing for and being discharged from bankruptcy prior to the foreclosure sale. As a result, they claim that under Federal bankruptcy law the security interest in the real estate granted to Ford prior to their filing of their petition does not carry over to the surplus funds received after the filing of the petition. They rely upon the provisions of 11 U.S.C. § 552(a) (1988), which provides “[ejxcept as provided in subsection (b) of this section, property acquired by the estate or by the debtor after the commencement of the case is not subject to any lien resulting from any security agreement entered into by the debtor before the commencement of the case.” The Bergerons’ reliance upon this provision is misplaced because in the circumstances of this case they never acquired a property interest in the surplus proceeds, which were less than the liens on the property.
Under Federal law, a lien on real estate survives the bankruptcy unaffected by the debtor’s discharge in bankruptcy. Johnson v. Home State Bank, 501 U.S. 78, 83 (1991). Dewsnup v. Timm, 502 U.S. 410, 417 (1992). The existence and nature of the lien that survives is determined by State law. Nobelman v. American Sav. Bank, 508 U.S. 324, 329 (1993). Under Massachusetts law, the surplus proceeds of a
The Bergerons’ other contentions are equally unavailing. They claim that once the first mortgagee foreclosed, Ford’s lien was terminated under the statutory power of sale contained in G. L. c. 183, § 21, which provides that a foreclosure sale “shall forever bar the mortgagor and all persons claiming under him from all right and interest in the mortgaged premises, whether at law or in equity.” Their reliance on this statute ignores the well established case law that recognizes an equitable lien in the surplus proceeds of a foreclosure sale in junior mortgagees. Dennett v. Perkins, 214 Mass. at 451. Pilok v. Bednarski, 230 Mass. at 58. Similarly unpersuasive is their argument that the express omission of junior lienors from the provisions of G. L. c. 183, § 27, negates Ford’s right to the surplus. Section 27 requires a foreclosing mortgagee to pay any surplus proceeds to “the mortgagor, or his heirs, successors or assigns.” The junior mortgagee, of course, is considered to be a successor or assignee of the mortgagor, and therefore is entitled to surplus proceeds under the statute. See Krikorian v. Grafton Co-op. Bank, 312 Mass. 272, 274-275 (1942).
Finally, there is no merit to the argument of the Bergerons that summary judgment was improper because Ford was substituted for Ford Motor Credit Company as a party defendant and the judge decided the motion without the benefit of an affidavit from Ford. The Bergerons failed to object to the substitution in the trial court and cannot complain at this
Judgment affirmed.