Opinion
April 5, 1989.
Present: McGuane, Dohoney Lenhoff, JJ.
Contract, For sale of real estate; Failure to pay Farmer's Home Administration mortgage debt. Damages, Attorneys' and paralegal fees.
Report of court's modification of judgment for plaintiffs by striking award for attorneys' and paralegal fees. Action heard in the Milford Division by Larkin, J.
Richard A. Villani for the plaintiffs.
Henry J. Lane for the defendants.
These proceedings involve the sellers of realty (Plaintiffs) seeking damages from the buyers (Defendants) for the failure of the Defendants to pay an F.H.A. (Farmer's Home Administration) mortgage debt. Said action arises from the Defendants' acceptance of a deed from the Plaintiffs wherein the premises were conveyed subject to the F.H.A. mortgage in question, and the Defendants did "agree to assume the same and to hold the Seller harmless with respect thereto."
The answer of the Defendants sets forth that said mortgage was discharged but that they neither actually or impliedly promised to pay the underlying debt then due that was secured by said F.H.A. mortgage.
Both parties filed motions for summary judgment; and, after hearing, the Trial Court found for the Plaintiffs, assessing damages in the sum of $43,934.99, attorneys' and paralegal fees in the sum of $3,241.25 and costs in the sum of $156.50.
The Defendants, claiming to be aggrieved by the judgment thus rendered, took appropriate steps to have this Appellate Division determine the matter reported.
The trial Court, after hearing the parties, reviewing the pleadings, considering the motions for summary judgment with their supporting affidavits; and, taking cognizance of the cases of Locke v. Homer, 131 Mass. 93, 109 (1881), Flynn v. Kinrick, 285 Mass. 446, 448-449 (1934), Consumers Savings Bank v. Cohen, 8 Mass. App. Ct. 594 (1979), Papamichail v. Holyoke Mutual Insurance Co., 8 Mass. App. Ct. 849 (1979), and Nutter v. Mroczka, 303 Mass. 343, 345-346 (1939), concluded that there was no issue of material fact to be resolved. See Dist./Mun. Cts. R. Civ. P., Rule 56 (c) and Attorney General v. Baily, 386 Mass. 367, 370-371 (1982). Accordingly, the Trial Court caused judgment to be entered for the Plaintiffs.
The affidavit of the Defendant, Brian P. Peterson, had attached to same, a copy of the discharge of the F.H.A. assumed mortgage, which discharge stated therein that the lien of the described property in the mortgage is released but that it did not release the underlying note listed in the mortgage.
This tribunal holds that the entry of judgment by the Trial Court for the Plaintiffs was correct.
Notwithstanding the foregoing, we direct special attention to the Defendants' contention that the Trial Court erred in its assessment of attorneys' and paralegal fees by reason of the Plaintiffs' prosecution of the instant action. Said Defendants cite the case of Fuss v. Fuss, 372 Mass. 64, 70 (1977) wherein it is indicated that the general rule in this Commonwealth is that a litigant must bear his own expense for attorneys' fees with same recoverable only in a restricted class of cases. Further, we note the following language appearing in Leventhal v. Krinsky, 325 Mass. 336, 341 (1950): —
Reasonable attorneys' fees are recoverable when parties contract for their payment, as in mortgage foreclosure cases or in agreements for indemnity or contracts to advance money.
In the case of Nutter v. Mroczka, 303 Mass. 343, 346 (1939), we find language which clarifies the issue now being considered. In the case at bar, unlike the facts in Nutter v. Mroczka, supra, the deed provides that the grantees "assume" the F.H.A. mortgage plus the grantors are to be held harmless. As stated in Nutter v. Mroczka, supra, at page 346, where a deed employs verbiage that both "assumes" payment, and also provides for indemnification, the Plaintiffs have the option to either institute suit upon the implied contract to pay the mortgage, or, to proceed on an implied contract of indemnity. Since an implied contract of indemnity is not breached until the grantors sustain a loss, no cause of action founded upon such contract would accrue . . . . until the loss was sustained by the grantors.
In this matter, the Plaintiffs have not paid the F.H.A. underlying debt due that the Defendants had assumed. Hence, these proceedings are not based or founded on an implied contract of indemnity, but are grounded upon the breach of contract to pay said debt due for which the mortgage was given as security. Consequently, the law relative to counsel fees falls within the ambit of Fuss v. Fuss, supra; not within Leventhal v. Krinsky, supra. Therefore, attorneys' and paralegal fees are not to be recovered, and the Trial Court has erred in this respect.
Concluding, the Appellate Division, finding no error in the entered judgment for the Plaintiffs thereby upholds same. However, as there is error found relating to the assessment of attorneys' and paralegal fees, the Trial Court's entered judgment on August 24, 1988 is modified by striking therefrom the following: — "Attorneys' and paralegal fees $3,241.25." In all other particulars, said judgment be and is hereby affirmed.
term of one year, at a monthly rental of $550.00. The lease contained an express provision limiting occupancy to the named lessees. After the initial term of the lease, it was renewed for an additional year at an increased monthly rental of $575.00, and the lease was further amended to name Michelle Miller as the sole tenant. She initialed the lease, indicating her agreement to each of the amendments. In October of 1986, she telephoned the plaintiff and stated that she was vacating the apartment and giving it back to him. She later gave written notice of the termination and furnished her forwarding address. At the end of November, she left the keys to the apartment in the plaintiff's mail box.
Ellen Waxman, at some point, had moved into the apartment with Michelle Miller, without the written consent of the plaintiff. After the departure of Michelle Miller, she called the plaintiff and told him that she did not want to move. The plaintiff told her that she would not be permitted to remain on the premises, that she had never been accepted as a tenant, inasmuch as he had never accepted rent from her, and that he would not create a new tenancy with her. Ellen Waxman, thereafter tendered the monthly rent, but he refused to accept her tender of rent monies. In conclusion, the plaintiff stated that he had not, and would not accept Ellen Waxman as a tenant, and that he wanted her out "immediately, if not sooner." On cross examination, the plaintiff acknowledged that he was aware that Michelle Miller had someone living with her and that he really did not care since he dealt exclusively with Michelle Miller, and when she left, anyone living with her had to go also.
Michelle Miller testified that Ellen Waxman had moved in during July of 1986, and that she would not have executed the lease renewal in August of 1986, if she thought that the plaintiff would not accept Ellen Waxman as a tenant. She acknowledged, however, that the plaintiff "never gave written permission approving a subtenant."
Ellen Waxman testified that she had, in fact, moved into the apartment in July of 1986. She also stated that she had gone to the plaintiff's office in August of 1986, and filled out an application. No interview was set up and when the lease renewal was executed the plaintiff had declined to include her name on the lease, for reasons not entirely clear. She stated that she paid half of the monthly rent to Michelle Miller, had her name on the mail box and requested that repairs be made to the apartment.
At the conclusion of the hearing, the Board thereafter made the following findings of fact:
1. Shlomo Pinkas is the trustee of S S Realty, which owns 14 Foster Street.
2. Michelle Miller and Bambi Roth signed a standard form apartment lease August 2, 1985, wherein Michelle Miller and Bambi Roth agreed to rent from S S Realty, 14 Foster Street, apartment #1 from September 1, 1985 to August 31, 1986.
3. The lease referred to in finding of fact #2 was subsequently amended to delete Bambi Roth's name, and was renewed by changing the rental period to September 1, 1986 to August 31, 1987.
4. In May, 1986, Bambi Roth moved out of 14 Foster Street, apartment #1 and in July, 1986, Ellen Waxman moved into 14 Foster Street, apartment #1.
5. Ellen Waxman's name was put on the mailbox when she moved into 14 Foster Street, apartment #1, in July 1986.
6. Before Ellen Waxman filled out the application to have her name added to the lease, Shlomo Pinkas, knew that someone was living at 14 Foster Street, apartment #1, other than Michelle Miller, but he did not know who.
7. In August 1986, Shlomo Pinkas met with Ellen Waxman, allowed her to fill out an application to have her name added to the lease, and subsequently interviewed her.
8. Shlomo Pinkas told Ellen Waxman and Michelle Miller that putting Ellen Waxman's name on the lease would be too much paper work.
9. Ellen Waxman paid to Michelle Miller the equivalent of one month's rent, which represented half of the first month's rent and half of the last month's rent.
10. In addition to the money she paid to Michelle Miller referred to in finding of fact #9, Ellen Waxman also paid to Michelle Miller half of the rent each month from July through November.
11. Michelle Miller cashed Ellen Waxman's checks and then paid to Shlomo Pinkas the entire monthly rent.
12. Shlomo Pinkas gave Michelle Miller permission to sublet to whomever she wanted for as long as she wanted and for as long as it was convenient to her.
13. Ellen Waxman telephoned the management office once to request some lighting repairs and spoke to Shlomo Pinkas and he performed the repairs she requested.
14. Ellen Waxman is a subtenant who has been approved by the landlord.
15. Shlomo Pinkas gave Michelle Miller permission to terminate the lease as of November 30, 1986.
16. Michelle Miller vacated 14 Foster Street, apartment #1 and returned her set of keys to Shlomo Pinkas on November 30, 1986.
17. Michelle Miller and Shlomo Pinkas agreed that Shlomo Pinkas would apply the last month's rent, which he had been holding, to the month of November, 1986.
18. Ellen Waxman is a subtenant holding at the end of a lease term but who has been approved by the landlord.
19. On December 11, 1986, Shlomo Pinkas received by certified mail a check for one month's rent from Ellen Waxman, which Shlomo Pinkas did not cash and which he returned to Ellen Waxman.
20. Ellen Waxman did not fail to pay the rent for 14 Foster Street, apartment #1; rather, Shlomo Pinkas refused to accept her payment.
It is uncontroverted that paragraph 2 of the lease agreement between the plaintiff and Michelle Miller expressly provided that "[O]ccupancy is limited to the above-named Lessees". Paragraph twenty-eight thereof further provided that "[T]he Lessees shall not assign or underlet any part of or the whole of the leased premises . . . without first obtaining . . . the assent in writing of the lessor". In this connection, the evidence showed, and the Board found, that the plaintiff had declined to add Ellen Waxman's name to the lease in August of 1986. At no time did he subsequently give his written assent to her becoming a tenant or accept rent monies from her. Therefore, no tenancy was ever created between the plaintiff and Ellen Waxman. This case would appear to be controlled, in large part, by Health Co., Inc. v. E S Health Associates, 400 Mass. 700, at 703, wherein the Supreme Judicial Court sustained the validity of a similar lease provision, noting that "[W]e must respect the integrity of contracts into which parties voluntarily and knowingly enter." (See also Post v. Brookline Rent Control Board, 1984 Mass. App. Div. 250.) Michelle Miller and the plaintiff agreed to terminate the lease prior to its term, pursuant to which agreement she surrendered the keys to the premises and the plaintiff applied the last month's rent to the rent then due for November, thereby terminating the lease agreement. Accordingly, any rights that Ellen Waxman had also terminated, in the absence of written permission from the plaintiff for her to remain on the premises or acceptance by him of the appropriate rent. Parenthetically, it should be noted that we are unaware of any Massachusetts case law that holds such an express lease provision to have been waived in the absence of the landlord having accepted rent money.
Consequently, we conclude that the Board's findings relative to Ellen Waxman being an approved subtenant are not supported by substantial evidence. Hence, its decision must be vacated and annulled. It is, therefore, ordered that the Board forthwith issue the Certificate of Eviction, as applied for, subject, of course, to any further appellate review.