Case Title: NE Educ. Training Serv. v. Silver St. Partner

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 1990-05-01T00:00:00Z

Document:
NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40
as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 88-513


New England Educational Training             Supreme Court
Service, Inc. and John S. Burgess
                                             On Appeal from
     v.                                      Bennington Superior Court

Silver Street Partnership and                May Term, 1990
The National Mortgage Company


Arthur J. O'Dea, J.

Thomas F. Heilmann of Thomas F. Heilmann & Associates, Burlington, for
  plaintiffs-appellants

Peter W. Hall of Abell, Kenlan, Schwiebert & Hall, Rutland, for defendant-
  appellee


PRESENT:  Allen, C.J., Peck, Dooley and Morse, JJ., and Martin, Super. J.,
          Specially Assigned


     DOOLEY, J.   Plaintiffs New England Educational Training Service
Corporation (NEETS) and John Burgess appeal from the trial court's
dismissal of their mortgage foreclosure action.  We affirm.
     Although the facts behind this dispute are somewhat complicated, we can
reduce them to their essentials as follows.  The property involved in the
foreclosure is located on Silver Street in Bennington ("the Silver Street
property") and is apparently owned by defendant Silver Street Partnership,
pursuant to a quitclaim deed from defendant Snowfall, Inc.  How these
parties acquired the property is irrelevant.  It is only relevant that the
property was once owned by James Donahue (Donahue) and that he gave a
mortgage deed on the property to plaintiffs.
     The center of the dispute is a different piece of property, the former
facilities of Mark Hopkins College ("the college property").  The college
property was the subject of a foreclosure action by Vermont National Bank.
Through a complex series of transactions connected with the failure of this
college, title to this property came into the hands of John S. Burgess, a
trustee, treasurer, and attorney for the college.  NEETS, a creditor of the
college, also had an interest in the property.  They attempted to sell the
property to Donahue, apparently with the understanding that he would take
over the operation of the college and put it back on its feet.  Donahue
proved to be a reluctant purchaser.  Although he would sign purchase and
sales agreements, he would not go through with them.  It is Donahue's
failure to go through with the purchase of the college property that gives
rise to this action.
     The initial purchase agreement was dated December 31, 1976.  Donahue
agreed to buy the property from plaintiff NEETS and pay $4,000 for a down
payment, $50,000 in escrow, and $110,000 on closing.  The agreement
provided for a March 3, 1977 closing, and was contingent upon NEETS
acquiring title to the premises through the then-pending foreclosure
proceedings.   Section C(4) of the agreement contained the following
language:  "[i]n the event BUYER shall fail to pay the balance of the
purchase price or complete said purchase as herein provided, all amounts
paid hereinunder shall, at the option of NEETS, be retained as liquidated
damages."  Donahue failed to complete the purchase.  On March 19, 1977, the
agreement was extended for thirty days, but Donahue again failed to complete
the purchase.
     On July 5, 1977, with both NEETS and Burgess involved, the agreement
to purchase was extended by another thirty days.  The extension agreement
provided that the terms of the December 31 contract would remain in force.
Donahue concurrently executed a mortgage deed covering the Silver Street
property to NEETS and Burgess.  The mortgage deed stated that Donahue had
received $160,000 from NEETS and Burgess as consideration for the conveyance
and that the property was conveyed free of encumbrances except for a first
mortgage to a prior owner.  According to its terms, the deed secured a
promissory note for $160,000 to plaintiffs.  Donahue executed such a
promissory note, payable thirty days later.  Neither the mortgage deed nor
note indicated that these instruments were intended to secure Donahue's
performance on the purchase and sale agreement for the college property.  It
is undisputed, however, that Donahue never received $160,000 from
plaintiffs.
     The mortgage was recorded on July 6, 1977, in the Town of Bennington
land records.  Donahue again failed to purchase the college property and,
hence, never made payments on the mortgage note.  Burgess eventually sold
the property to another party for $220,000.
     On September 6, 1984, plaintiffs brought this action to foreclose their
mortgage on the Silver Street property.  On September 18, 1984, defendants
brought suit against their predecessor in title, Donald and Gloria
Humphreys, for breach of warranty of title, and against plaintiffs for their
failure to discharge the mortgage.  The Humphreys cross-claimed against
plaintiffs for failure to discharge the mortgage and mortgage note,
alleging that plaintiffs had received full payment for the indebtedness that
the mortgage purportedly secured. (FN1) These actions were consolidated on March
29, 1985.
     Following an appeal and remand on issues unrelated to the present
appeal, New England Educ. Training Serv., Inc. v. Silver Street
Partnership, 148 Vt. 99,