38 Conn. Sup. 564 (1982) | Cited 0 times | Connecticut Appellate Court | October 1, 1982

The issue raised on appeal is whetherthe defendant mortgagee is equitably estopped fromdistributing unadvanced construction mortgageproceeds to its subsidiary as against theredeeming plaintiff mortgagee. The relevant factsnecessary to understand this dispute are asfollows: On November 19, 1976, the defendant,Danbury Savings and Loan Association, Inc., loanedthe principal sum of $55,000 to John Pasqua, Jr.,a builder in Woodbury. To secure this loan, Pasquaconveyed to the defendant a mortgage securingfuture advances on lot No. 15, Flanders West,Woodbury. On June 23, 1977, D. S. & L.Corporation, a wholly owned subsidiary of thedefendant (hereinafter subsidiary), loaned toPasqua $7000 payable on demand with interest.

As a condition of the $7000 loan, Pasqua assignedto the subsidiary a claim on the future proceedsof the $55,000 construction mortgage. In effect,the defendant collateralized an otherwise unsecurednote for its subsidiary. The assignment was attachedto and became a part of the defendant's records towhich the defendant would refer when making advancesor when determining payoff figures.

On May 2, 1977, the plaintiff, Raymond's BuildingSupply, Inc., was owed $15,000 by Pasqua formaterials purchased and used in the constructionof a dwelling on lot No. 15. To satisfy thisobligation, Pasqua executed a note and mortgage onlot No. 15. The plaintiff's mortgage wassubsequent to the mortgage held by the defendantand to another held by Demetrius Enterprises,Inc., the foreclosing security creditor.

By September 1, 1977, with building activity at astandstill, the defendant had advanced to Pasqua$38,324.89 of the mortgage proceeds. The sum advanced

[38 Conn. Sup. 566]

     matched proportionately the level ofconstruction work completed. Sometime duringSeptember, 1977, the plaintiff's president,Raymond Rinaldi, telephoned and conferred withPeter Filous, a vice president of both thedefendant and the subsidiary, concerning theunpaid balance owed by Pasqua on the constructionmortgage debt. Filous represented that Pasqua owedthe defendant between $38,000 and $39,000 on themortgage and that no further monies were going tobe advanced to him.

On November 23, 1977, Demetrius Enterprises, Inc.,commenced an action to foreclose its mortgage. Thedefendant was not named a party to the foreclosureproceedings. On October 27, 1977, the defendant,through its assistant vice president, Paul Westbrook,advised Stephen Hilcoff, counsel for DemetriusEnterprises, Inc., that the mortgage balance was$38,324.89 plus accrued interest. The defendant wasaware at all pertinent times that a foreclosureproceeding on lot No. 15 was being processed.

A judgment of foreclosure was entered on February17, 1978; the plaintiff redeemed on April 3, 1978.On April 6, 1978, Westbrook advised Rinaldi thatthe balance due on the construction loan was$48,158.07. This sum included the constructionadvances plus $7763.91, representing payment ofthe June, 1977, note from Pasqua to thesubsidiary. Subsequent to redemption, theplaintiff completed the dwelling at a cost of$124,000 including the sum of $48,158.07 paid tothe defendant for release of the Pasqua mortgage.The dwelling was eventually sold for $110,000,netting the plaintiff a loss of $14,000. Theplaintiff brought this action to recover $7763.91,which it paid under protest to the defendant.The trial court held that the defendant wasequitably estopped from retaining the disputedproceeds that it received from the plaintiff torelease the subject mortgage.

[38 Conn. Sup. 567]


The defendant's first assignment of error is thatthe trial court erred in admitting Hilcoff'stestimony concerning the defendant's employees'representations as to the mortgage balance due.The defendant claims that the testimony wasimmaterial and irrelevant. Westbrook and Filous,both vice presidents of the defendant, testifiedthat they had no knowledge of the Demetriusforeclosure until April, 1978, and that theyadvised inquiring parties that the mortgagebalance was money advanced plus $7000 due on theassigned note. The defendant contends that Hilcoff'stestimony exceeded the scope of the pleadings.

Although we acknowledge that "[i]t is imperativethat the court and opposing counsel be able torely on the statement of issues as set forth inthe pleadings"; Lesser v. Altnacraig ConvalescentHome, Inc., 144 Conn. 488, 491-92, 133 A.2d 908(1957); the disputed testimony is not outside thescope of the issues raised by the pleadings. Thecomplaint alleges that the plaintiff redeemed theproperty based on the defendant's representationthat the mortgage balance was $38,324.89, when,in fact, the balance claimed and paid was $48,776.82.The defendant's denial of this allegation clearlymade Hilcoff's testimony both material and relevant.

Relevant evidence is evidence which has a logicaltendency to aid the trier in the determination ofan issue. Pitt v. Kent, 149 Conn. 351, 357,179 A.2d 626 (1962). The question of relevance mustdepend upon all the considerations, includingtime, the character of the evidence and all thesurrounding circumstances which, in the opinion ofthe court, appear to have a bearing upon itsworthiness to be brought into consideration anddetermination of the matter in contention. Holden& Daly, Connecticut Evidence 67(d). Moreover, theplaintiff correctly contends that Hilcoff's testimonyundermined the credibility of the defendant's

[38 Conn. Sup. 568]

     two principal witnesses, Filous and Westbrook.A witness can be impeached by proof thathe has made prior statements that areinconsistent with his in-court testimony.Schurgast v. Schumann, 156 Conn. 471, 482,242 A.2d 695 (1968). We are satisfied that thecontested testimony was relevant and properlyadmissible on several grounds.


The defendant's second assignment of error is thatthe finding of estoppel was not supported by theevidence. We do not agree.

The essential elements to an equitable estoppelare the following: "`[T]he party must do or saysomething that is intended or calculated to induceanother to believe in the existence of certain factsand to act upon that belief; and the other party,influenced thereby, must actually change his positionor do some act to his injury which he otherwisewould not have done.'" Pet Car Products, Inc. v.Barnett, 150 Conn. 42, 53-54, 184 A.2d 797 (1962).

Our examination of the record reveals sufficientfacts from which the trial court could reasonablyconclude: (1) that prior to the plaintiff'sredemption of the foreclosed premises thedefendant through its employees, Filous andWestbrook misrepresented either knowingly orrecklessly the amount due on the mortgage balance;(2) that the defendant knew the plaintiffcontemplated a risky redemption; (3) that theplaintiff's success or failure depended greatly onthe information supplied by the defendant; and (4)that the plaintiff was likely to and did rely uponthe defendant's representations to its injury.

We are not unmindful of the sharp division inthe evidence presented at trial. It is not,however, our function to attribute evidence toeither litigant. In light of the conflictingtestimony the trier of fact is privileged to adoptwhatever testimony is reasonably believes to

[38 Conn. Sup. 569]

     be credible. Klein v. Chatfield, 166 Conn. 76, 80,347 A.2d 58 (1974). "The fact-finding function isvested in the trial court with its uniqueopportunity to view the evidence presented in atotality of circumstances, i.e., including itsobservations of the demeanor and conduct of thewitnesses and parties which is not fully reflectedin the cold, printed record . . . ." Kaplan v.Kaplan, 186 Conn. 387, 391, 441 A.2d 629 (1982)."`It is for the trier to pass upon the credibilityof witnesses and the weight to be accorded theevidence. This court cannot retry the case.'Edgewood Construction Co. v. West HavenRedevelopment Agency, 170 Conn. 271, 272,365 A.2d 819 (1976)." Mabry v. Blakeslee, 38 Conn. Sup. 338,340, 446 A.2d 1089 (1982).


The defendant's third claim of error is that thetrial court's decision, which is based on thedoctrine of equitable estoppel, did not considerthe plaintiff's failure to exercise due diligenceto ascertain the amount due to the defendant. PetCar Products, Inc. v. Barnett, supra. Thedefendant's thrust is that the evidence does notsupport the trial court's conclusion that theplaintiff inquired as to the payoff figure "onnumerous occasions" prior to its redemption of theproperty. When the legal conclusions of a courtare challenged, the appellate court must determinewhether they are legally and logically correct andwhether they find support in the facts set out inthe memorandum of decision. Pandolphe's AutoParts, Inc. v. Town of Manchester, 181 Conn. 217,221-22, 435 A.2d 24 (1980).

Upon an examination of the evidence and pleadingsin the record, we cannot say that the trialcourt's conclusion of equitable estoppel isclearly erroneous. Practice Book 3060D.

It is unessential that we address the defendant'stwo remaining claims of error as neither issufficient to alter the results of this appeal.

There is no error.

In this opinion BIELUCH and COVELLO, Js., concurred.

[38 Conn. Sup. 570]

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