Murphy v. Wachovia Bank of Delaware, N.A. | Appeals Court of Mass. - foreclosure (the second lienholder foreclosed) the proceeds must go to the owner – not the 1st mortgagor

Appeals Court HAROLD B. MURPHY, trustee,1 vs. WACHOVIA BANK OF DELAWARE, N.A., & another.2 No. 13-P-1943. Middlesex. November 12, 2014. - August 13, 2015. Present: Kafker, Cohen, & Milkey, JJ. COHEN, J. This case concerns the proper distribution of surplus funds after a foreclosure sale initiated and conducted by the holder of a second mortgage. After a jury-waived trial, a judge of the Superior Court ruled that defendant Wachovia Bank of Delaware, N.A. (Wachovia), erroneously distributed surplus funds to the holder of the first mortgage, Wells Fargo Bank, N.A. (Wells Fargo), instead of to the mortgagor, Nigel Thorpe. The judge therefore ordered Wachovia to pay $178,626.61, plus interest and costs, to the plaintiff, Harold B. Murphy, as trustee of the bankruptcy estate of Thorpe (trustee). On appeal, Wachovia argues that it was entitled to disburse the funds to Wells Fargo, but even if it was not, it had valid equitable defenses to the trustee's claims.3 For the reasons that follow, we affirm.