Court: Massachusetts Appeals Court; May 3, 1974; Massachusetts; State Appellate Court
The plaintiff seeks declaratory relief to subordinate three first mortgages held by the defendant, Stoneham Co-operative Bank, to the plaintiff's junior mortgages on three parcels of land. The case references Strong v. Stoneham Co-op. Bank, 357 Mass. 662 (1970), where the plaintiff's father was involved but not a party. The plaintiff appeals a decree stating that the bank's title, obtained through foreclosure sales initiated before this suit, is not subject to the plaintiff's rights.
1. The plaintiff argues that the bank forfeited its priority by not accepting partial payments on arrears. This claim is based on a misinterpretation of G. L. c. 170. 24, cl. 10, which allows for loan repayment but does not require acceptance of payments in arrears. The provision instead refers to anticipatory payments. This interpretation undermines the bank's right to foreclose due to arrears, as established in Wilshire Enterprises, Inc. v. Taunton Pearl Work, Inc., 356 Mass. 675, 678 (1970).
2. The agreements to increase interest rates on two of the three notes, made prior to foreclosure proceedings, do not alter the priorities of the mortgages. These agreements are binding under G. L. c. 170. 24, cl. 8. The court does not need to determine their validity against non-consenting junior encumbrancers as there was no evidence that the bank had actual or constructive notice of those encumbrancers. Although the junior mortgages were recorded before the agreements, such recording did not constitute constructive notice to the mortgagee of the first mortgages, as established in previous cases (George v. Wood, 9 Allen 80; Dixon v. Smith, 181 Mass. 218; Clarke v. Cowan, 206 Mass. 252; Hardy v. Beverly Sav. Bank, 175 Mass. 112).
The final decree is affirmed, and costs of appeal are awarded to the defendant.
