Opinion
No. 559931
September 22, 2003
MEMORANDUM OF DECISION
The plaintiff Key Bank USA, NA. (Key Bank), brings this foreclosure action against the defendants, Sheila A. May, Eric May and Associates Home Equity Services, Inc. (Associates). The defendants, May, claim as a special defense a violation of the Home Solicitation Sales Act, C.G.S. § 42-136. Defendant, Associate's, defense is that the plaintiff's interest is subordinate to their's under the doctrine of equitable subrogation. Defendants, May and Associates, filed briefs dated August 7, 2003. The plaintiff, Key Bank, by letter from its counsel dated September 10, 2003, has advised the court that it has waived its rights to brief the issues presented and has requested the court to decide the case without briefs on behalf of the plaintiff. The court shall, therefore, do so.
Facts
In its amended complaint dated May 27, 2003, Key Bank assigned its interest in the May property to Mortgage Electronic Registration System, Inc. To avoid confusion, the court will continue to refer to the plaintiff as Key Bank. The plaintiff claims the note is in default and has elected to accelerate the balance due on the note and to declare it to be due in full and to foreclose the mortgage securing the note. The plaintiff also asserts in its complaint that the defendant, Associates, may claim an interest in the property, but that interest is subsequent in right and subordinate to the interest of the plaintiff.
The Mays claim by special defense that Sheila May was coerced into signing the note by a Joseph Grub who persuaded her to purchase siding for her house and finance the work through plaintiff's predecessor, Family Financial Services, Inc. The court heard detailed evidence from Mr. Grille and Ms. May as to how the loan was arranged. From the evidence, it is clear to the court that the transaction was subject to C.G.S. §§ 42-134 (a) and 42-136. Compliance with the statutes is a condition precedent to any right of action by the plaintiff on the note CT Page 10879-dh or mortgage and must be pleaded and proven.
Discussion
The applicable statutes, C.G.S. §§ 20-429 (e); 42-134a and 42-136 provide as follows.
I. THIS TRANSACTION WAS SUBJECT TO THE HOME SOLICITATION SALES ACT AND THE HOME IMPROVEMENT ACT
a. Home Improvement Act
The Home Improvement Act provides, at § 20-429 (e), that each transaction subject to the Home Improvement Act is as also subject to the provisions of the Home Solicitations Sales Act (HSSA). Thus, even if this transaction were not otherwise subject to HSSA, it would be covered by virtue of § 20-429 (e).
b. Home Solicitations Sales Act
The term "Home Solicitation Sale" is a sale of consumer goods or services in which the seller personally solicits the sale and the buyer's agreement or offer to purchase is made at a place other than the place of business of the seller. See, C.G.S. § 42-134a.
II. THE HOME SOLICITATION ACT IMPOSES REQUIREMENTS ON ENTITIES FINANCING HOME IMPROVEMENTS
C.G.S. § 42-136 provides:
(a) Any note or other evidence of indebtedness given by a buyer in respect of a home solicitation sale shall be dated not earlier than the date of the agreement or offer to purchase.
Any transfer of a note or other evidence of indebtedness bearing the statement required by subsection (b) of this section shall be deemed an assignment only and any right, title or interest which the transferee may acquire thereby shall be subject to all claims and defenses of the buyer against the seller arising under the provisions of this chapter.
(b) Each note or other evidence of indebtedness given by a buyer in respect of a home solicitation sale shall bear on its face a conspicuous statement as follows: THIS INSTRUMENT IS BASED UPON A HOME SOLICITATION SALE, WHICH SALE IS SUBJECT TO THE PROVISIONS OF THE HOME SOLICITATION SALES ACT. THIS INSTRUMENT IS NOT NEGOTIABLE. CT Page 10879-di
(c) Compliance with the requirements of this section shall be a condition precedent to any right of action by the seller or any transferee of an instrument bearing the statement required under subsection (b) of this section against the buyer upon such institute action or suit against a buyer in respect thereof (d) A promissory note payable to order or bearer and otherwise negotiable in form issued in violation of this section may be enforced as a negotiable instrument by a holder in due course according to its terms.
The note and mortgage in this case are both "evidences of indebtedness." See., e.g., Enterprises, Inc. v. Becker, 416 A.2d 183, 36 Conn. Sup. 213 (1980). (A note or other evidence of indebtedness is a contractual obligation to pay in the future for consideration presently received.) The note is clearly subject to the statute. The mortgage recites the terms of the note with specificity, and that it is given "in consideration of the indebtedness herein recited," and is clearly an "evidence of indebtedness." Neither the note or mortgage, Exhibit A and B, respectively contains the language required by § 42-136 (b). Section 42-136 (c) requires proof of such compliance in order to prevail in this action.
III. ALL HSSA AGREEMENTS THAT DO NOT COMPLY WITH STATUTORY REQUIREMENTS ARE VOID
The first paragraph of C.G.S. § 42-135a provides:
No agreement of the buyer in a home solicitation sale shall be effective if it is not signed and dated by the buyer or if the seller shall . . . Failure to furnish the buyer with a fully completed receipt . . . which shall show the date . . . and the name and address of the seller . . . The buyer may cancel this transaction anytime prior to the third business day after the date of the transaction . . .
The evidence clearly establishes that several of the requirements of the statutes were not complied with; notably, May was not orally informed of her right to cancel the agreement; she did not receive any written contract regarding the vinyl siding and the arrangements all took place in May's home; all in violation of the statutes. In Associated Credit Company v. Nogis, 6 Conn. Cir. 746 (1974, Burns, J.), the court ruled that failure to comply with § 42-136 renders an agreement not merely voidable, but void.
Accordingly, the mortgage in this case was never valid because it did not comply with the various requirements of the Home Solicitation Sales CT Page 10879-dj Act as mentioned above.
Conclusion
The court, therefore, find that the mortgage held by the plaintiff is void for failure to conform with the home solicitation sales act. Therefore, judgment must enter in favor of the defendants, May. Judgment also enters in favor of the defendant, Associates, since the plaintiff has no valid mortgage on the property.
D. Michael Hurley, JTR CT Page 10879-dk