2005-441, PREMIER CAPITAL, LLC v. NICKOLAS SKALTSIS & a.

The defendants, Nickolas and Lorraine Skaltsis,

and orally), for the defendants. Law Office of James H. Schulte, of Dover (James H. Schulte on the brief

brief and orally), for the plaintiff. to press. Errors may be reported by E-mail at the following address: Law Offices of Randall L. Pratt, of Portsmouth (Randall L. Pratt on the

editorial errors in order that corrections may be made before the opinion goes No. 2005-441 Hampshire, One Charles Doe Drive, Concord, New Hampshire 03301, of any Strafford Readers are requested to notify the Reporter, Supreme Court of New ___________________________

THE SUPREME COURT OF NEW HAMPSHIRE

page is: http://www.courts.state.nh.us/supreme. a.m. on the morning of their release. The direct address of the court's home reporter@courts.state.nh.us. Opinions are available on the Internet by 9:00

well as formal revision before publication in the New Hampshire Reports. NOTICE: This opinion is subject to motions for rehearing under Rule 22 as followed. p. 2 entered judgment for the plaintiff in the amount of $703,504.99. This appeal

Exeter Banking Company in March 1990. Following a bench trial, the court

it had been assigned the promissory note originally given by the defendants to Inc. On September 10, 2003, the plaintiff commenced this action, alleging that 1997, AMRESCO New Hampshire, L.P. assigned the note to Premier Capital, original promissory note to AMRESCO New Hampshire, L.P. On September 23,

1791, “notes secured by mortgages were completely exempt from the statute.” When New Hampshire’s general statute of limitations was first enacted in

decision was stating new law.” our decision in three-year statute of limitations under RSA 508:4, I (1997). They contend that overruled Cross “without actually citing [it] and without stating why the Cadle whether the defendants are correct that our decision in Cadle effectively properties. In March 1996 AMRESCO New Hampshire, Inc. assigned the decisions interpreting that statutory provision is necessary to determine A brief review of the legislative history of RSA 508:6 and our early

should be overruled. in Cadle Co. v. Dejadon, 153 N.H. 376 (2006), is in conflict with Cross and the meaning of the statute.” The defendants also argue that our recent holding mortgage is no longer enforceable and no action may be brought on it within the mortgage has been foreclosed, even if no discharge is recorded, the

Cross v. Gannett, 39 N.H. 140 (1859), “squarely holds that once

twenty-year statute of limitations under RSA 508:6 (1997) rather than the The defendants first argue that the trial court erred in applying the advertised and conducted a mortgage foreclosure sale in June 1994 on both which was $659,632.79. Subsequently, AMRESCO New Hampshire, Inc. II made a demand upon the defendants for the balance then due on the note,

Hampshire, Inc. Realty Corp., and in 1993 they were further assigned to AMRESCO New

for bankruptcy protection. In December 1993, AMRESCO New Hampshire, Inc. The defendants defaulted on the note in 1992 and filed unsuccessfully

properties. In 1992, the promissory note and mortgages were assigned to Hilco Broadway in Dover, together with an assignment of leases and rents on those years. The note was secured by first mortgages on 3A Rose Street and 124 rate plus 1.50% adjusted daily, and provided for amortization over twenty-five The note provided for a variable interest rate equal to the Bank of Boston base amount of $565,000 in favor of First NH Banks, Exeter Banking Company. On March 12, 1990, the defendants executed a promissory note in the

twenty-year statute of limitations for a promissory note signed by seven N.H. 459, 471 (1860). In Savings Bank, the plaintiff claimed the benefit of the themselves, give security for their obligations. See Savings Bank v. Ladd, 40 twenty-year statute of limitations did not apply to parties who did not, One year later, we cited Cross as support for the conclusion that the

given to secure.” Id. at 142. as extended by [RS 181:6], must not be the same as that which the mortgage is liability, on account of which the right of action on the note is to be considered unanswered by the Cross decision, therefore, was “whether the specific security for the same liability due on the notes..” Id. at 142-4 p. 3 3 (emphasis added). Left long as the plaintiff is entitled to maintain an action upon the mortgage, as action may be brought, on account of any specific liability, upon the note, so “whether the statute can be construed to mean any thing more than that an statute of limitations. We noted that the decision left open the question to secure his liability, his obligations were not subject to the twenty-year endorser.” Id. at 142. Because the endorser, Gannett, did not give a mortgage the mortgage securing it.” the maker [obligor] [and that Cross’ action was] brought on the liability of the based upon the fact that “[t]he mortgage . . . was given to secure the liability of on real property.” commencement of the suit. “establishes a twenty-year statute of limitations for notes secured by mortgages Id. at 141. We held that the action was barred on the notes, which had become due more than ten years before 20 years from the time the right to recover first accrued,” RSA 508:6

Cross later foreclosed upon the mortgage but was unable to satisfy the balance later, Bell sold and delivered the notes and mortgage to the plaintiff, Cross. Id. notes and transferred them and the mortgage to Joseph Bell. Id. Some years mortgage. Cross, p. 3 39 N.H. at 140. Shortly thereafter, Gannett endorsed the maker-obligor gave defendant Gannett promissory notes secured by a In Cross, we considered the application of RS 181:6. In that case, the

mortgage note would thereafter only be exempt for the same amount of time as Del Norte, 142 N.H. at 5 p. 3 37.

provides that “[n]o action for the recovery of real estate shall be brought after action upon the mortgage.” Read in conjunction with RSA 508:2 (1997), which of real estate may be brought so long as the plaintiff is entitled to bring an as RSA 508:6, currently provides: “Actions upon notes secured by a mortgage secured by mortgages of real estate.” Id. at 5 p. 3 38-39. The statute, now codified change is that since 1878, application of the statute has been limited to notes “has been reenacted a number of times since 1842 . . . [t]he only material

was that, rather than being completely exempt from the statute of limitations, a mortgage.” RS 181:6 (1842). “[T]he only change intended by the 1842 revision be brought so long as the plaintiff is entitled to commence any action upon the was amended to provide that “[a]ctions upon notes secured by mortgage, may Del Norte, Inc. v. Provencher, 142 N.H. 5 p. 3 35, 538 (1997). In 1842, the statute and the mortgage shall be barred in six years. p. 4 no longer available, that the right of action both upon the note property is destroyed and the security by way of the mortgage is property thus pledged to secure the note; and when such

maintained on either. But if the note remains unpaid by foreclosed and the note thereby paid, no action could be limitations would run against the note. If the mortgage had been may have any available remedy under his mortgage upon the maintained on it, then, by the terms of the act, the statute of If the mortgage were discharged so that no action could be

as a bar to any action upon the mortgage given to secure it.” Id. at 504. Thus: action upon the note until the statute of limitations might be properly pleaded Id. Rather, we held that the statute meant that it “shall not be a bar to any

an action may be maintained upon the note so long as the payee

it.” Id. at 503. We rejected the suggestion that under the decision in Cross, to such persons as should sign both the note and the mortgage given to secure upon and extended the holding in the legislature we have before seen to be impossible. Savings Bank that the statute applies “only Four years later, in the statute bar; and that such could have been the intention of Alexander v. Whipple, 45 N.H. 502 (1864), we relied defendant cannot be held liable, if he chooses to avail himself of debt secured by it.’” Id. at 471 (quoting Cross, 39 N.H. at 141). purpose of making application of the land pro tanto, for the payment of the coextensive with that which he has by action upon the mortgage, for the manifestly to make the remedy of the holder of the note, by suit upon it, quoting with approval the statement in Cross that “‘the object of [RS 181:6] is think, favor the construction of the statute which we have given it,” id. at 471, Id. We found “some views in the opinion in Cross v. Gannett. . . which, we

knowledge of the existence of the mortgage.

of the signer of the note, or without either of them, this after; and whether given by the consent and with the knowledge stranger; whether given at the date of the note or at any time given him to secure it, whether given by a party to the note or a creditor may bring an action upon any mortgage which has been make all persons who sign a note liable upon it so long as the [U]nless it was the design and intention of the legislature to

twenty-year statute of limitations did not apply to individuals who had no mortgage of his homestead to the plaintiffs to secure it. Id. We held that the the note was signed, Cheney’s father, who had not signed the note, executed a individuals, including J.T. Cheney and Jesse Ladd. Id. at 460. Six days after testified that the defendants’ file was given to him by an authorized

p. 5 evidence. “No particular phraseology is required to effect an assignment.”

material.”

and the assignee to receive present ownership of the claim.”

John Cummings, an account manager at plaintiff Premier Capital LLC,

F.2d 1312, 1316 (8 had standing to bring this action on the note was not supported by the Cir. 1986). th fact for the trial court.” Gold’n Plump Poultry, Inc. v. Simmons Eng. Co., 805

Id. Thus, “[w]hether or not an assignment occurred is a question of

“The important thing is the act and the evidence of intent; formalities are not Cosmopolitan Trust Co. v. Leonard Watch Co., 143 N.E. 827, 829 (Mass. 1924).

(quotation omitted). “A valid assignment may be made by any words or acts

(quotation omitted). “The ultimate test is the intention of the assignor to give re Dodge-Freedman Poultry Company, 148 F. Supp. 647, 650 (D.N.H. 1956)

The defendants next argue that the trial court’s ruling that the plaintiff

defendants’ default, and is therefore not barred by the statute of limitations.” concluded that the “action was clearly brought within 20 years of the or discharge it by operation of law.” hold that mortgage by the mortgagee, merely foreclosing upon the mortgage cannot void Cross is not in conflict with Cadle and that the trial court correctly limitations for twenty years.” Del Norte, 142 N.H. at 539-40. Accordingly, we remain undischarged, the debtor waived the right to plead the statute of mortgagor), that where the covenants of the mortgage given to secure the note foreclosure sale, he may still assert, in an action against his debtor (the has recourse to the property once it has been sold free and clear at a unwavering line of decisions from this court, “although the mortgagee no longer made the note and gave the mortgages to secure it. Thus, under an Unlike mortgage. Cross, in the case before us, as in Cadle, the defendants both limitations might be properly pleaded to any action upon the being barred by the statute, until such time as the statute of Id.

at 379. “[A]bsent full payment of a note or an express discharge of the rendered void and a discharge compelled by the mortgagee.” Cadle, 153 N.H. 508:6] to mean that only upon performance of the conditions of a mortgage is it In Cadle, we noted that we have “consistently interpreted [RSA 508:2 and

Id. at 505.

discharged, an action may be maintained upon the note without foreclosure of the mortgage or otherwise, and the mortgage is not p. 6 6

that he believed the fair value on the properties was $80,000 for Rose Street Street property and $313,200 for the Broadway property. Cummings testified debtor.” The 1994 tax assessments for the properties were $154, p. 6 600 for the Rose has standing to bring this action. be any consideration where the question arises between the assignee and the Premier Inc.’s right to enforce the note. Therefore, Premier LLC reject this argument, however, because it is not “necessary that there should faith unless the price is so low as to shock the judicial conscience.” Id. conveyed by an assignment for value for which there was no evidence. We insufficient. each case.” Id. “Inadequacy of price alone is not sufficient to demonstrate bad evidence submitted to prove the amount of the deficiency owed was reasonable efforts to assure a fair price, depends upon the circumstances of funds were generated from the foreclosure sale. They also contend that the mortgagee must establish an upset price, adjourn the sale, or make other 541 (1985) (quotation omitted). “What constitutes a fair price, or whether the the circumstances.” Murphy v. Financial Development Corp., 126 N.H. 536, “must exert every reasonable effort to obtain a fair and reasonable price under (quotation and brackets omitted). As to the foreclosure sale, a mortgagee clearly erroneous.” Touma v. St. Mary’s Bank, 142 N.H. 762, 766 (1998) prevailing party below and will overturn a damage award only if we find it to be “On review, we consider the evidence in the light most favorable to the Premier LLC was a valid transfer and vested Premier LLC with to enforce the note. As such, the transfer from Premier Inc. to because the note was not a negotiable instrument and, thus, it could only be the intent to give Cummings, as an agent of Premier LLC, the right behalf of Premier LLC. The physical transfer was conducted with was sufficient evidence of the amount due under the note and that insufficient The defendants next argue that the trial court erred by ruling that there

Cosmopolitan Trust, 143 N.E. at 829.

The defendants also contend that the plaintiff does not have standing Inc. gave him the defendants’ file and told him to enforce it on A.2d 14, 20 (200 p. 6 6). before us. See In the Matter of Hampers &. Hampers, 154 N.H. ___ , ___, 911 We affirm the trial court’s factual findings as they are supported by the record

Cummings credibly testified that a representative from Premier

Premier Capital, LLC. The trial court found: representative of Premier Capital, Inc. with the intent that it be transferred to p. 7 As the court stated in its order:

actions under the note would be barred by the statute of limitations. They Boston was ultimately consumed by another bank.” all of their records relating to the note at issue based upon their belief that any time period the Bank of Boston rate was unavailable that is, when Bank of during which time they made no payments and no effort to sell the property.

the plaintiff was not guilty of laches. The defendants assert that they destroyed Federal Reserve prime rate is a reliable and accurate measure to use for the The defendants’ final argument is that the trial court erred by ruling that between the withdrawal of their bankruptcy petition and the foreclosure, Finally, the court found that the defendants had approximately one year V have been a glut in the property market at the time of the foreclosure sale.” payment history was “essentially uncontroverted by the defendants.” Furthermore, as the trial court noted, the plaintiff’s evidence of the defendants’ to compute interest based on an alternative prime rate selected by FDIC). determined by reference to the prime rate of a failed institution, it is reasonable F. Supp. 745, 747 (S.D. Miss. 1993) (where the interest rate on a note is

at times when the Bank of Boston base rate was available [and] that the “that the Federal Reserve prime rate was equal to the Bank of Boston base rate interest rate specified in the note to calculate the amount owed, he testified buyers. In addition, the court found that there was evidence that “there may trial court’s findings. Although Cummings did not use the Bank of Boston buyer were taken until after Ameresco [ As to the amount of the deficiency owed, the record likewise supports the large portion of the outstanding mortgage. No steps to find a able to secure a high enough price on the properties to satisfy a was not so low as to support a finding of bad faith. sale obtained a reasonable price under the circumstances and that the price We hold that the record supports the trial court’s finding that the foreclosure

obligations. selling price as they would need to satisfy their mortgage not sell the properties because they could not obtain as high a property. The court can reasonably infer that the defendants did

the properties, the properties carried significant tax burdens for the years the prices realized at auction were significantly below the tax assessment values of defendants surely would have sold the properties had they been Being relatively sophisticated real estate investors, the

Street and $190,000 for Broadway. The trial court found that although the and $170,000 for Broadway. The foreclosure sale brought $51,000 for Rose obligation to pay on this note. p. 8 impose the equitable doctrine of laches to discharge their note is purely the defendants’ own fault and the court will not from the defendants’ destruction of the records relating to this

responsibilities under the note. As such, any prejudice resulting hoping the foreclosure would absolve them of their properties. The defendants consciously defaulted on the note,

because they no longer wanted to maintain control of the

testified he and his wife ceased making payments on this note transferring large amounts of real estate. Additionally, Skaltsis their business running considerable lines of credit and they were savvy real estate purchasers and sellers, and operated

DALIANIS, DUGGAN, GALWAY and HICKS, JJ., concurred.

We find no error.

sufficient prejudice. The defendants are not unsophisticated, inaccurate interpretation of the law and does not amount to action was not reasonable because it was based upon an this note between the foreclosure and the commencement of this

of law, we will not overturn it,”

the resulting prejudice. the plaintiffs, the conduct of the defendants, the interests to be vindicated, and

The defendants’ destruction of their financial records relating to

The trial court stated in its ruling: involved.” some change in the conditions or relations of the property or the parties id. of the inequity of permitting the claim to be enforced – an inequity founded on trial court’s decision is unsupported by the evidence or erroneous as a matter the circumstances justify its application,” id., and “[u]nless we find that the plaintiff has slept on his rights.” (quotation omitted). “[T]he trial court has broad discretion in deciding whether

doctrine should apply to bar a suit, the court should consider the knowledge of Acceptance Corp., 124 N.H. 701, 710 (1984). “In determining whether the suit only if the delay was unreasonable and prejudicial. Jenot v. White Mt. than the applicable statute of limitation period, laches will constitute a bar to

Id. (quotation omitted). When the delay in bringing the suit is less

(1997). “Laches . . . is not a mere matter of time, but is principally a question

“Laches is an equitable doctrine that bars litigation when a potential

action and should therefore not be obligated to pay the debt. argue that they have been prejudiced by the plaintiff’s delay in bringing this