Contract, Construction, Validity, For sale of real estate. Equity Jurisdiction, Specific performance. Equity Pleading and Practice, Findings by trial judge. Fraud. Cooperative Bank. Words, "Bank."
A contract in writing for the sale of two parcels of real estate at the price of $30,000 provided that the purchaser should be allowed "to place a new first mortgage on each estate, with any bank, for the highest amount possible," and, out of the proceeds, to pay the seller $14,900 in cash "in addition to the deposit" of $100 already made, and that the balance of the purchase price was to be paid in the form of two notes of $7,500 each, "signed by the buyer or any person, or persons whom he may designate," and secured by second mortgages on the property. The purchaser arranged with a cooperative bank for a loan of $16,000, to be secured by a first mortgage for $8,000 on each parcel, the mortgagor in one to be himself and in the other his son, and was prepared to pay the seller from the amount thus obtained $14,900 in cash, and also was ready to give him notes for the amounts stated in the agreement, one executed by himself and one by his son and each secured by a second mortgage. The seller refused to accept such tender of performance and the purchaser sought to enforce specific performance by a suit in equity. At the hearing the evidence was reported. The judge found that the sum which the bank agreed to lend was not an unreasonable amount and that the use of the shares did not enable the plaintiff to take any advantage of the situation or to raise an amount on a first mortgage which was excessive. From a decree for the plaintiff, the defendant appealed. Held, that (1) The parties must be held to have included a cooperative bank in the words "any bank"; (2) A finding by the judge, that the contract was not procured through fraud or mistake, was warranted; (3) The contract could not be construed as limiting the total amount of mortgage encumbrance to be placed on the property to a sum not in excess of the purchase price; (4) Since the agreement contemplated that the two notes to be secured by the second mortgages might be signed by the buyer or by any other person, it could not be said that the plaintiff did not perform the contract in substantial compliance with its terms because of the fact that his son was to execute the mortgages on one of the estates, even if it be true that the cooperative bank could not have loaned to one person the amount secured by both first mortgages; (5) It could not be said that the judge failed to exercise a sound discretion in causing the entry of a decree for specific performance.
SANDERSON, J.
This is a bill for specific performance of an agreement to convey two parcels of real estate. The purchase price was $30,000, and the agreement contained a clause to the effect that the plaintiff, who was the vendee, should be allowed "to place a new first mortgage on each estate, with any bank, for the highest amount possible," and, out of the proceeds, to pay the defendants $14,900 in cash "in addition to the deposit" of $100 already made. The balance was to be paid in the form of two notes of $7,500 each, "signed by the buyer, or any person, or persons whom he may designate" and secured by second mortgages on the property. The plaintiff arranged with a cooperative bank for a loan of $16,000, to be secured by a first mortgage for $8,000 on each parcel, and was prepared to pay the defendants, from the amount thus obtained, $14,900 in cash and also was ready to give them notes secured by second mortgages for the amounts stated in the agreement. The defendants contend that the plaintiff has not complied with the terms of the agreement, because the loan was to be made by a cooperative bank, which requires the mortgagor to subscribe for and pledge to the bank a certain number of shares of its own issue as collateral security for the performance of the condition of the note and mortgage, G.L.c. 170, §§ 22, 23; and that the agreement did not contemplate a loan from a bank which receives as security such a pledge of shares in addition to the mortgage.
A cooperative bank is included in the term "bank" when that word is used in the chapter of General Laws on banking, unless the context otherwise requires. G.L.c. 167, § 1. Borrowing from cooperative banks and securing the loan by mortgage on real estate is a matter of such frequent occurrence that the contracting parties would be presumed to have knowledge of it, and it must be held that, when making the agreement to place mortgages on real estate with "any bank," they intended to include cooperative banks, which by statute are expressly authorized to make loans so secured, and that they understood that, if loans were so obtained, the statutory requirements of subscribing for and pledging shares would be incidents of the transaction. G.L.c. 170, §§ 23, 26. The shares issued by such banks are to be paid for in the form of monthly dues. G.L.c. 170, § 13. The judge found that the sum which the bank agreed to lend was not an unreasonable amount and that the use of the shares did not enable the plaintiff to take any advantage of the situation or to raise an amount on a first mortgage which was excessive. If the parties had intended to restrict the plaintiff to savings banks in placing the loans, they naturally would have so stated. The fact, that the methods by which a cooperative bank transacts business are in many important features different from those adopted generally by other banking institutions, does not require us to reach the conclusion that it is not a bank within the meaning of the contract under consideration.
The findings by the judge that the evidence did not satisfy him that there was any mistake in omitting to state in the agreement that the first mortgages should not be in excess of $15,000 and that the evidence did not satisfy him that the plaintiff committed any fraud upon the defendants, we cannot say were wrong as matter of law either upon the admitted facts or upon the whole evidence. These findings are conclusive against the contentions of the defendants as to fraud. The judge found that Louis V. Sissenwine read the agreement and that there was nothing in the evidence to show that he did not fully understand what he was doing when he executed it.
The agreement contemplated that both first and second mortgages should be placed on each of the two estates sold, and specifically provided that the two notes to be secured by the second mortgages might be signed by the buyer or by any other person. The agreement cannot be construed as limiting the total amount of these encumbrances to a sum not in excess of the purchase price, nor can it be said that the plaintiff did not perform the contract in substantial compliance with its terms because of the fact that his son was to execute the first mortgage on one of the estates, even if it be true that the cooperative bank could not have loaned to one person the amount secured by both first mortgages. G.L.c. 170, §§ 12, 26.
It could make no difference to the defendants under the agreement which they made whether the amount loaned on first mortgages is thus obtained from one cooperative bank or whether the plaintiff should accomplish the same result by borrowing from two.
No question such as was raised in Comparone v. Mixon, 258 Mass. 537, is here presented.
After considering all of the contentions of the defendants, we cannot say that upon the facts found the court failed to exercise a sound discretion in entering the decree for specific performance.
Decree affirmed.