Court Opinion

ID: 4566309
Source: CourtListenerOpinion
Date Created: 2020-09-17 12:05:01.320071+00
Date Added: 2024-06-11T12:49:20.463612
License: Public Domain

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19-P-1057                                           Appeals Court

            LISA A. MACKEY   vs.   SANTANDER BANK, N.A.

                          No. 19-P-1057.

       Middlesex.      June 9, 2020. - September 16, 2020.

            Present:   Sullivan, Blake, & Ditkoff, JJ.

Trust, Revocable trust, Trustee's authority. Uniform Trust
     Code. Estoppel. Mortgage, Real estate, Validity. Real
     Property, Mortgage. Uniform Trust Code.

     Civil action commenced in the Superior Court Department on
January 9, 2015.

     The case was heard by Kathe M. Tuttman, J., on motions for
summary judgment.

    Michael C. Najjar for the plaintiff.
    Matthew A. Kane for the defendant.

    SULLIVAN, J.    The plaintiff, Lisa A. Mackey, appeals from a

judgment entered in Superior Court following cross motions for

summary judgment.   A judge of the Superior Court declared that a

mortgage granted to the defendant, Santander Bank, N.A.
                                                                     2

(Santander),1 on the marital home of Lisa and her now ex-husband,

James F. Mackey, Jr., was valid by virtue of the doctrine of

estoppel by deed.2    We conclude that the doctrine is unavailable

in this case because James was not a trustee of the trust

holding title to the real estate at the time the mortgage was

granted or any time thereafter.    Because there was not a

sufficient basis in the summary judgment record for us to affirm

on the alternative theory that, under G. L. c. 184, § 34, the

mortgage was valid when given, we vacate the judgment and remand

for further proceedings.

     Background.     This case was decided on cross motions for

summary judgment.    Accordingly, we summarize the facts in the

light most favorable to the party against whom summary judgment

was entered, here, Lisa.    See DiLiddo v. Oxford St. Realty,

Inc., 450 Mass. 66, 70 (2007); Khalsa v. Sovereign Bank, N.A.,

88 Mass. App. Ct. 824, 830 (2016).

     On October 26, 1998, while James and Lisa were still

married, James established the JLJM Realty Trust (trust),

designated himself as trustee, and had the marital home

     1 The mortgage was granted to Santander's predecessor,
Sovereign Bank. Hereinafter, we refer to the lender as
Santander.

     2 Because Lisa Mackey and James Mackey share a last name, we
refer to them by their first names to avoid confusion.
                                                                    3

transferred to the trust from his construction company.3    Lisa

and James were beneficiaries of the trust.   On October 9, 2000,

without Lisa's knowledge, James signed a document stating that

he was resigning as trustee.   The terms of the trust, set out in

the margin, did not require notice of resignation to Lisa, the

cobeneficiary.4   James and his sister then signed documents

purporting to appoint James's sister as successor trustee.      Both

Lisa and Santander agree that the appointment of the sister was

contrary to the terms of the trust.   All of these documents were

recorded at the registry of deeds two months later, on December

11, 2000.

     On April 12, 2008, more than seven years after James

resigned as trustee, he executed a mortgage on the marital home

"as trustee" to secure a $400,000 line of credit.5   Lisa was

unaware of the line of credit and the mortgage at that time.

Subsequently, on December 14, 2011, James's sister resigned as

     3 Neither party has asserted that the trust was a nominee
trust, nor do we address the question.

     4 Article 13 of the trust provided, "A Trustee may resign by
written instrument, signed and acknowledged by the Trustee, and
recorded in the appropriate Registry of Deeds."

     5 James also signed a trustee's certificate, which
represented to Santander that he was the trustee. In addition,
Santander had Fiserv Lending Solutions conduct a title search of
the marital home, and Fiserv Lending Solutions advised Santander
that James was the trustee.
                                                                      4

trustee; she and James signed documents purporting to reappoint

James as trustee.

     In 2012, James filed a complaint for divorce against Lisa.

He also went into default on the $400,000 line of credit.

During the divorce proceedings, Lisa became aware of the line of

credit and the mortgage, as well as the effort to change the

trusteeship.   On September 30, 2014, a judgment of divorce nisi

entered that required Lisa and James to sell the marital home

and share equally in the proceeds.     By that time, foreclosure of

the marital home was imminent.

     Lisa then brought this action against Santander seeking a

declaration that the mortgage was invalid.6    Santander

counterclaimed for unjust enrichment on the basis that Lisa

benefited from at least some portion of the $400,000 line of

credit.7   On the parties' cross motions for summary judgment, the

motion judge declared that the mortgage was valid by reason of

estoppel by deed, and dismissed Santander's counterclaim for

unjust enrichment as moot.

     Discussion.    1.   Validity of mortgage -- estoppel by deed.

"Estoppel by deed occurs when . . . a grantor conveys property

     6 Sale of the marital home was stayed pending the outcome of
this case.

     7 Lisa and Santander also brought claims against James.
Those claims were resolved by rulings on motions to dismiss and
for summary judgment, and are not at issue in this appeal.
                                                                     5

by deed which, unknown to the grantee, the grantor does not own

at the time of the conveyance, but which the grantor later

acquires.   In such a case, the grantor (and anyone claiming

under him) is estopped from asserting against the grantee a

claim of title to the property conveyed" (citation omitted).8

Dalessio v. Baggia, 57 Mass. App. Ct. 468, 469-470 (2003).     The

motion judge concluded that James was entitled to reappoint

himself as trustee under the terms of the trust, and that

Santander was therefore entitled to rely on the doctrine of

estoppel by deed to establish the validity of the mortgage.

     The applicability of estoppel by deed turns on whether

James became the trustee again after executing the mortgage "as

trustee."   Both parties agree that the purported appointment of

James's sister as successor trustee did not comply with the

terms of the trust, but they disagree as to who instead became

the successor trustee.   According to Lisa, she became the

successor trustee upon James's resignation.   According to

Santander, the trusteeship was vacant after James's resignation,

     8 Lisa does not dispute that these principles extend beyond
the conveyance by deed context to the mortgage context presented
here. Nor does she dispute that estoppel by deed applies in the
context of a trust, where someone who is not a trustee executes
a document "as trustee" and later becomes a trustee.
Accordingly, we deem both issues as uncontested for purposes of
this litigation, and do not address them. See Mass. R. A. P. 16
(a) (9) (A), as appearing in 481 Mass. 1628 (2019).
                                                                    6

and he was free to resume that position at any time under the

terms of the trust, as he did in 2011.

     We first address what happened immediately after James's

resignation.    General Laws c. 203E, the Massachusetts Uniform

Trust Code (MUTC),9 provides that a vacancy in a trusteeship

shall occur if, among other reasons, a trustee resigns.    G. L.

c. 203E, § 704 (a) (3).10    When such a vacancy occurs, the MUTC

provides that it shall be filled in the following order of

     9 We note that the MUTC, G. L. c. 203E, was not effective
until July 8, 2012, after the trust was established and James
both resigned and was purportedly reappointed as trustee.
Nonetheless, the MUTC, with limited exceptions, applies to "all
trusts created before, on or after the effective date" and "to
all judicial proceedings concerning trusts commenced on or after
the effective date." However, the MUTC does not affect "an
action taken before the effective date." St. 2012, c. 140, § 66
(a).

     10   General Laws c. 203E, § 704 (a), provides in full:

     "A vacancy in a trusteeship shall occur if:

     "(1) a person designated as trustee rejects the
     trusteeship;

     "(2) a person designated as trustee cannot be identified or
     does not exist;

     "(3) a trustee resigns;

     "(4) a trustee is disqualified or removed;

     "(5) a trustee dies; or

     "(6) a guardian or conservator is appointed for an
     individual serving as trustee."
                                                                    7

priority:   "(1) by a person designated by the terms of the trust

to act as successor trustee; (2) by a person appointed by

unanimous agreement of the qualified beneficiaries; or (3) by a

person appointed by the court."    G. L. c. 203E, § 704 (c).   As

to subdivision (1) of § 704 (c), compare Ferri v. Powell-Ferri,

476 Mass. 651, 654 (2017) ("[W]here the language of a trust is

clear, we look only to that plain language").

     Thus, under either the MUTC or the common law, we first

look to the relevant language of the trust.     Article 9 of the

trust designated James as trustee and Lisa as successor trustee:

     "JAMES P. MACKEY JR. shall serve as Trustee during the
     entire duration of this trust or so long as he shall be
     able to discharge the duties thereof, and so long as said
     JAMES P. MACKEY JR. shall serve as Trustee, he shall act
     solely in all matters pertaining to the Trust. If JAMES P.
     MACKEY JR. shall be unable or unwilling to serve as
     Trustee, then LISA A. MACKEY shall serve as Successor
     Trustee hereunder."

Thus, barring disqualification, according to the unambiguous

trust language, Lisa was to serve as the successor trustee upon

James's resignation.11

     11Article 13 of the   trust set forth the manner in which a
trustee could resign and   the procedure for the appointment of a
new trustee in the event   of the death, resignation, or
incapacity of both James   and Lisa:

     "A Trustee may resign by written instrument, signed and
     acknowledged by the Trustee, and recorded in the
     appropriate Registry of Deeds. Should any vacancy occur by
     reason of the death, resignation or incapacity of the
     original and succeeding Trustee named herein, a new Trustee
     may be appointed by an instrument or instruments signed and
                                                                      8

     Our inquiry does not end there, however, because Santander

contends that the mere naming of a person as trustee does not

make it so; the person must accept the trusteeship.      See

Loughery v. Bright, 267 Mass. 584, 588 (1929), and cases cited.

This rule, which has since been codified at G. L. c. 203E, § 701

(b),12 is based in sound public policy.   Trustees must fulfill

certain duties and are liable for their failure to do so.      See,

e.g., O'Connor v. Redstone, 452 Mass. 537, 552-553 (2008)

(successor trustees are liable for their failure to review

records of predecessor trustees).   However, in this case, Lisa,

while the designated successor trustee, was not informed of the

vacancy, and was deprived of the opportunity to accept the

trusteeship.13   We need not decide, however, what the

     acknowledged by all of the beneficiaries, provided in each
     case that such instrument or instruments shall be recorded
     in the appropriate Registry or Registries of Deeds along
     with a certificate of acceptance signed by the succeeding
     Trustee."

This provision is inapplicable, however, because Lisa did not
die, resign, or become incapacitated.

     12General Laws c. 203E, § 701 (b), provides, in pertinent
part, that "[a] designated trustee who does not accept the
trusteeship within a reasonable time after knowing of the
designation shall be deemed to have rejected the trusteeship."

     13Although the MUTC's notice provisions have no effect on
James's resignation, an action which occurred prior to the
effective date of the MUTC, see note 9, supra, we note that
§ 705 (a) of the MUTC now imposes limited notice requirements on
a trustee who resigns. The notice required varies with the type
of trust. Section 705 provides in full:
                                                                    9

ramifications of James's failure to notify Lisa of the vacancy

would be with respect to Santander's rights under the mortgage,

because we conclude that James lacked the authority to reappoint

himself as trustee.

    Answering the question of James's authority to reappoint

himself as trustee requires us to interpret the language of the

trust, looking to the plain language of the trust.     See Ferri,
476 Mass. at 654.     Furthermore, "we do not read words in

isolation and out of context.    Rather we strive to discern the

settlor's intent from the trust instrument as a whole and from

the circumstances known to the settlor at the time the

    "(a) A trustee may resign:
         "(1) upon at least 30 days' notice to: (i) the
         settlor and all co-trustees of the trust, in the case
         of a revocable trust, and (ii) the qualified
         beneficiaries and all co-trustees of the trust, in the
         case of any other trust; or
         "(2) with the approval of the court.
    "(b) In approving a resignation, the court may issue orders
    and impose conditions reasonably necessary for the
    protection of the trust property.
    "(c) Any liability of a resigning trustee or of any
    sureties on the trustee's bond for acts or omissions of the
    trustee shall not be discharged or affected by the
    trustee's resignation."
We note further that, even if § 705 (a) did apply, the notice
would not need to be provided to Lisa in her capacity as a
beneficiary, as this was a revocable trust. See § 705 (a) (1),
supra.
                                                                     10

instrument was executed."   Hillman v. Hillman, 433 Mass. 590,

593 (2001).

    Santander relies on Article 9 of the trust, which provided

that "[James] shall serve as Trustee during the entire duration

of this trust or so long as he shall be able to discharge the

duties thereof" to argue that the language stating that James

"shall serve" allowed him to resign and reappoint himself as

trustee whenever he so desired.

    Santander's argument founders because its interpretation of

the trust takes this language out of context.   The trust

provided a mechanism whereby James was permitted to resign if he

was no longer willing or able to serve as trustee, as well as

instructions for appointment of a successor trustee.      There is

no dispute that James resigned.    The trust then clearly provided

that Lisa was to become the successor trustee or, in the event

of Lisa's death, resignation, or incapacity (none of which

occurred here), that the trust beneficiaries were to appoint a

new trustee.   The trust did not include an option allowing James

to reappoint himself as trustee.   The language of the trust is

plain and unequivocal in this respect and does not "support a

reasonable difference of opinion as to the meaning of the words

employed" (citation omitted).   Ferri, 476 Mass at 654.

    We have determined that, under the plain terms of the

trust, James was not permitted to reappoint himself.      We make
                                                                    11

this determination as a matter of the common law of trusts, see

Ferri, 476 Mass at 654; Hillman, 433 Mass. at 593, applicable to

actions which preceded the effective date of the MUTC.     See note

9, supra.

    For purposes of clarity on remand, we next turn to the

applicability of G. L. c. 203E, § 704 (c), with respect to any

future appointment of a trustee.    While the MUTC is inapplicable

to acts taken before its effective date, it remains applicable

to trusts created before or after its effective date and to "all

judicial proceedings concerning trusts commenced on or after the

effective date."    St. 2012, c. 140, § 66 (a).14   See note 9,

supra.   We therefore address the MUTC's command to appoint a

successor trustee "designated by the terms of the trust," G. L.

    14   The full text of St. 2012, c. 140, § 66, provides:
    "(a) Except as otherwise provided in this act:
            "(1) this act shall apply to all trusts created
            before, on or after the effective date of this act;

            "(2) this act shall apply to all judicial proceedings
            concerning trusts commenced on or after the effective
            date;

            "(3) an action taken before the effective date of this
            act shall not be affected by this act.

    "(b) If a right is acquired, extinguished or barred upon
    the expiration of a prescribed period that has commenced to
    run under any other statute before the effective date of
    this act, that statute shall continue to apply to the right
    even if it has been superseded."
                                                                       12

c. 203E, § 704 (c) (1), in light of the trust language, which

remained unchanged both before and after the effective date of

the MUTC.

    Section 704 (c) (1) of the MUTC states that a vacancy first

"shall" be filled "by a person designated by the terms of the

trust to act as successor trustee."     James was the original

trustee, not a successor trustee.     Indeed, Santander's argument

relies on the fundamental assumption that James "resumed" his

trusteeship.    Like the trust, the statute makes no room for

resumption of the trusteeship after resignation; rather, the

statute enforces the terms of the trust.       Therefore, under both

the trust and the statute, James has no present or future right

to reappointment under § 704 (c) (1).     We express no opinion as

to the appointment of a successor trustee or other fiduciary

pursuant to the trust and the MUTC.     See G. L. c. 203E,

§ 704 (c) (2), (3); G. L. c. 203E, § 704 (d).

    2.      Validity of mortgage when given.   For the first time on

appeal Santander maintains that the mortgage is nonetheless

binding on the trust because James's resignation was noted only

on a separately recorded document.    Santander relies on G. L.

c. 184, § 34, which includes the following provision:

    "Any recordable instrument purporting to affect an interest
    in real estate executed by any person or persons who, in
    the records of the registry of deeds for the county or
    district in which the real estate lies, are or appear to be
    the trustees of a trust shall be binding on the trust in
                                                                    13

    favor of a purchaser or other person relying in good faith
    on such instrument, notwithstanding . . . (b) any
    amendment, revocation, removal or resignation of trustee,
    appointment of additional trustee, or other matter
    affecting the trust, unless the same is recorded in said
    registry of deeds and noted on the margin of said trust in
    said registry."

Santander contends that, according to the plain language of

§ 34, the mortgage is binding on the trust because James's

resignation was not noted on the margin of the trust in the

registry of deeds.    Lisa, however, asserts that "handwritten

references in the margins of trust or other documents have been

abandoned" due to technological advances, and she urges a more

flexible interpretation of the statute that comports with the

goal of notice.

    While we may affirm on any ground supported by the summary

judgment record, see Brangan v. Commonwealth, 477 Mass. 691, 697

n.12 (2017), there is an insufficient basis to affirm on this

alternative theory.    Dueling briefs paint divergent pictures of

how such a notation could or could not be made.    Briefs are not

a substitute for facts, however.    Santander has not addressed,

and there are no facts in the summary judgment record regarding,

good title practice, how notations were made on recorded

documents, or the title search results that would have appeared

in 2008 when James executed the mortgage "as trustee."     See,

e.g., Dalessio, 57 Mass. App. Ct. at 472-474.     As a result,

Santander has not met its burden on summary judgment because the
                                                                 14

record does not include admissible evidence regarding whether

the practice of making margin notes on recorded documents had

been followed or abandoned by 2008, or whether it was possible

to make margin notes in 2008.   See generally Khalsa, 88 Mass.

App. Ct. at 828-829.   In the absence of a factual record

properly presented to the motion judge, we decline to address

this issue, raised for the first time on appeal.

    Conclusion.   We vacate so much of the judgment as declared

that the mortgage was valid on the basis of estoppel by deed and

that dismissed Santander's counterclaim for unjust enrichment as

moot, and we remand for further proceedings consistent with this

opinion.

                                   So ordered.