## Facts

- The defendants executed a \$45,000 promissory note secured by a mortgage on real property and defaulted in May 1962.
- After giving notice of intent to foreclose, the plaintiff mortgagee took possession on October 23, 1962.
- Nineteen days before the foreclosure sale, the plaintiff signed a purchase-and-sale agreement with a third party (Barber) for \$45,000, conditioned on the plaintiff acquiring title at foreclosure; Barber paid a \$2,000 deposit and the deal contemplated a \$35,000, ten-year mortgage back to the plaintiff.
- The plaintiff regarded \$45,000 as a fair price at the time of the pre-sale agreement and discussed the agreement with one mortgagor but did not disclose the \$45,000 price.
- Before the foreclosure sale, the plaintiff allowed Barber to occupy the premises and bring trucks onto the property.
- At the foreclosure auction on November 14, 1962, seven or eight people attended; the auctioneer solicited bids; the plaintiff was the only bidder and bought the property for \$40,000.
- The plaintiff later sold the property to Barber for \$45,000.
- In the ensuing deficiency action, a jury found a deficiency of \$5,488.67 against the defendants.
- At trial, the judge excluded a cross-examination question asking whether the plaintiff expected to “keep the \$45,000” upon closing with Barber without disclosing it to the mortgagors.

## Issues

1. Whether the mortgagee’s pre-sale resale agreement, non-disclosure of the resale price, permitting the prospective buyer’s pre-sale occupancy, and bidding below the resale price constituted bad faith or “chilling” of bids that should bar or reduce a deficiency as a matter of law.
2. Whether the trial judge erred by refusing requested instructions that would treat the mortgagee’s conduct as bad faith or bid chilling as a matter of law rather than a factual question for the jury.
3. Whether excluding the defendants’ cross-examination question about the mortgagee’s expectation to “keep the \$45,000” was reversible evidentiary error.

## Decision

- The court overruled the defendants’ exceptions and left the deficiency judgment undisturbed.
- The court held that, on these facts, the mortgagee’s good faith and the fairness of the foreclosure sale were properly submitted to the jury as questions of fact.
- The court held that refusing the defendants’ requested instructions was not error because the requested charges would have removed the factual issue of good faith from the jury.
- The court held that excluding the challenged cross-examination question was not reversible error given the evidence otherwise admitted about the resale agreement, prices, and non-disclosure.

## Legal Principles

- A mortgagee exercising a power of sale must act in good faith and with reasonable diligence to protect the mortgagor’s interests.
- Whether particular foreclosure-related conduct amounts to bad faith or improper bid chilling generally presents a question of fact for the jury, evaluated under all the circumstances.
- A higher post-foreclosure resale price or the existence of a pre-foreclosure resale agreement does not, by itself, establish bad faith or automatically preclude a deficiency.
- Exclusion of an argumentative or cumulative cross-examination question is not reversible error where the opposing party otherwise had a fair opportunity to present the substance of the point to the jury.

## Conclusion

The court sustained a deficiency verdict where the mortgagors argued that a pre-foreclosure resale arrangement and related conduct showed bad faith and chilled bidding, holding those contentions were for the jury and that the challenged evidentiary ruling and refusal of requested instructions did not warrant reversal.


Manoog v. Miele, 350 Mass. 204, 213 N.E.2d 917 (Mass. 1966)