John Hancock Mutual Life Insurance v. Lester

234 Mass. 559 | Mass. | 1920

Jennet, J.

It is well settled that during the time the “soldiers’ and sailors’ civil relief act” is in force a mortgagee forecloses under a power of sale contained in a mortgage at his own peril “unless upon an order of sale previously granted by the court and a return thereto made and approved” by it; and that while a sale is not necessarily bad, it is of no validity if made during the “military service” of an owner of the land, or within three months thereafter, if consummated without such order and return. U. S. St. 1918, c. 20, § 302 (40 U. S. Sts. at Large, 444). Hoffman v. Charlestown Five Cents Savings Bank, 231 Mass. 324. Morse v. Stober, 233 Mass. 223.

It is equally clear that if there is no jurisdiction to make such order as this statute contemplates, mortgagees are deprived of the benefit of this provision, are left without an adequate remedy under , powers of sale contained in their mortgages, and must either postpone foreclosures until the act ceases to apply or proceed by entry under R. L. c. 187, § 1, or by action at law under other sections of that chapter. It is urged that no order authorizing foreclosure by sale can be entered unless some owner of the property is in the military service, thus leaving mortgagees without the protection of an order under the act in cases where they either are unable to establish the existence of owners in the service, or where they do satisfy the court that no owners are therein. Hallowell v. Ames, 165 Mass. 123, recognized that the existence of special facts requiring equitable relief may be a sufficient basis for jurisdiction in equity in the foreclosure of mortgages, and Old Colony Trust Co. v. Great White Spirit Co. 178 Mass. 92, with an abundant citation of authorities declared the same rule. The statute under consideration expressly provides for orders of foreclosure, and in the Hoffman case, at page 329, it is said that “the existence of the soldiers’ and sailors’ civil relief act is a special circumstance which is sufficient to give the equity courts of the Commonwealth jurisdiction to foreclose . . . Q)ower of sale] mortgages within the time specified in the act.” The Morse case in effect approves this statement. What was said as to this question in the Hoffman case is now decided.

The mortgages in question are upon valuable property in the business centre of Boston, and were given to secure the payment of $3,500,000. No interest has been paid since that which became due on October 1, 1917, and taxes and betterment assessments to the amount of many thousands of dollars have not been paid. The mortgagors were the trustees under an “agreement and declaration of trust,” and the defendants are their successors in trust. While it is conceded that they hold the legal title to the premises, there are outstanding equitable interests evidenced by certificates for thirty thousand shares of the face value of $3,000,-000. The shareholders are numerous and some of them are in military service within the act.

The trustees claim that the shareholders are owners under the act. Whether their interests are legal or equitable this contention is assumed to be correct under the decision in the Hoffman case. The trustees further contend that no order authorizing foreclosure should be entered because the shareholders “are not parties, and no inquiry has been made as to their plight, and some of them have entered the military service, and their rights would be cut off by foreclosure.”

The failure to join the shareholders as parties does not prevent the entry of an order of sale. Their interests are fairly and sufficiently represented by the trustees whose duty it is to act in their interest. There is no adversary relation or action between them and the trustees. Stevenson v. Austin, 3 Met. 474. Shaw v. Norfolk County Railroad, 5 Gray, 162, 171. Ashton v. Atlantic Bank, 3 Allen, 217, 219. Jewett v. Tucker, 139 Mass. 566, 577. Kerrison v. Stewart, 93 U. S. 155, 160. Manson v. Duncanson, 166 U. S. 533, 543. Colorado & Southern Railway v. Blair, 214 N. Y. 497, 513. See Equity Rule 24. The act does not provide that no order of foreclosure shall be made where owners are in the military service.

The bill in equity in this case was filed July 16, 1919. In addition to service on the trustees, a general order of notice has been published. The trustees only have appeared. Under the trust instrument, the trustees who “take charge of and manage the property ... as they . . . deem for the best interests of the shareholders,” do not present to the court any reason why the mortgages should not be foreclosed, apart from the fact that persons who are “owners” under the statute are in military service. It is not urged that the mortgagee’s interests do not require a foreclosure, or that a foreclosure would inequitably affect the interests of those in military, service. Interest and taxes form a rapidly increasing burden on the property. The trustees do not claim that foreclosure is unwarranted because of impaired ability of certificate holders to comply with their obligations because of military service, and no such representation has been made by any person in their behalf. It is nearly fourteen months since the signing of the armistice. Free course of mails between this country and Europe has existed for many months. Here the activities and sacrifices of war no longer engage the minds of men or forbid attention to business. It is clear that the ability of shareholders to comply with the terms of the mortgages is not now materially affected by reason of such service.

The plaintiffs are entitled to a decree authorizing the foreclosures in accordance with cl. 3 of § 302 of the act. The form of the decree is to be settled by a single justice, but it is to provide for a sale or sales, without the intervention of a commissioner or special master, substantially in accordance with the powers of sale contained in the mortgages, and without further notice than that required by said powers, unless in the discretion of the single justice it is deemed necessary or advisable to provide for additional notice or for an extension of the time required for notice of sale under the powers or required by R. L. c. 187, § 14, as amended by St. 1906, c. 219. See St. 1918, c. 257, § 439, as amended by St. 1919, c. 5.

So ordered.