Daudelin v. Lee

Carroll, J. In this suit in equity the plaintiff complained that he gave a note to the defendant, secured by a mortgage on real estate, in the sum of $40,000 to become due in four years from April 22, 1924; that by mutual mistake, or fraud of the defendant, said note and mortgage contained terms different from those agreed on; that the mortgage contained the agreement “that the whole of said mortgage may become due on demand,” contrary to the understanding of the plaintiff and defendant; and that the defendant has started foreclosure proceedings. The plaintiff prayed that an injunction issue, restraining the foreclosure, and that the note and mortgage be reformed. The master found that the parties agreed that the note secured by the mortgage was payable in four years from its date in instalments of $1,000 every three months, with interest at seven per cent per annum, payable with the instalments; that by mutual mistake the note and mortgage securing it were made payable on demand; that at the time the foreclosure proceedings were instituted there was no breach of the conditions of the mortgage “as understood and agreed by the plaintiff and defendant, except the nonpayment of taxes”; and that since August 1, 1925, and up to the time of the hearing before the master, in December, 1925, no payment of principal or interest has been made. In the Superior Court a decree was entered directing that the mortgage be reformed by substituting the words “in four years, with quarterly instalments of one thousand dollars each” for the words, “on demand”; that the note be reformed so as to be payable in instalments of $1,000 every three months until April 22, 1928, “at which time the balance shall be paid.” The decree ordered the plaintiff to pay the principal and interest due to July 22, 1926, within ten days. The restraining order “heretofore made and in force shall be dissolved unless the said payments, together with taxes” in arrears, “be paid within the said ten days.” The plaintiff appealed from this decree. His contention is that he should have been awarded costs; that there was error in dissolving the temporary injunction, and that the [9] decree did not “go far enough in reforming the mortgage note and mortgage.” There was no error in failing to award costs to the plaintiff: they were in the discretion of the court. The decree was not open to objection because it ordered that if the plaintiff did not pay the taxes and instalments already due, within ten days, the temporary injunction should be dissolved. The plaintiff was already in default; and he cannot complain because the injunction was to be dissolved unless he complied with the terms of the mortgage and note as reformed by the court. The plaintiff also contends that as the note was a negotiable promissory note, the defendant might indorse it to a holder in good faith. The plaintiff’s rights were sufficiently protected by the decree. The note as written was payable on demand; it was dated April 22, 1924. The decree was entered in September, 1926. The indorsee therefore would not be a holder in due course even if the note were not reformed. American Bank v. Jenness, 2 Met. 288. G. L. c. 107, §76. Decree affirmed.