author: Callahan, J.

text:
    Joseph G. Voll et al. v. Lafayette Bank and Trust Company, Trustee
    (14346)
    Peters, C. J., Callahan, Glass, Covello and Borden, Js.

      Argued June 3
    decision released August 11, 1992

      Matthew B. Woods, for the appellant-appellee (defendant-third party plaintiff).

      Michael A. D’Amico, for the appellees-appellants (plaintiffs).
   Callahan, J.

The issues in this appeal and cross appeal arise out of a promissory note and mortgage deed executed by the plaintiffs, Joseph and Antoinette Voll, in favor of the defendant-third party plaintiff, Lafayette Bank and Trust Company (bank), acting as trustee of the retirement account of the third party defendant, Alex Klein. The plaintiffs brought this action, seeking the discharge of the mortgage they had executed in favor of the bank. See General Statutes §§ 49-8 and 49-13. The bank subsequently impleaded Klein as a third party defendant, seeking indemnification for any damages recoverable by the plaintiffs in the principal action and for other damages, costs and attorneys’ fees. Thereafter, the bank filed an answer, three special defenses and a counterclaim, which sought the reformation of the note and the recovery of attorneys’ fees from the plaintiffs. After a trial to the court, at which a jury assisted the court in making certain findings of fact, the court rendered judgment in favor of the bank on both the complaint and the counterclaim, except that the court did not hold the plaintiffs liable for the bank’s attorneys’ fees, and in favor of the bank on the third party complaint, ordering Klein to reimburse the bank for the legal expenses it had incurred.

The bank appealed from that judgment, claiming that the trial court improperly concluded that the plaintiffs were not liable for the bank’s attorneys’ fees. The plaintiffs cross appealed, arguing that a new trial should be ordered because the trial court improperly: (1) failed to instruct the jury on the issue of whether Klein or the bank had been negligent in the loan transaction; (2) instructed the jury on the question of whether Antoinette Voll had ratified the conduct of her husband; and (3) gave the jury a “Secondino charge” with respect to the plaintiffs’ failure to call Antoinette Voll to testify at the trial. We affirm the judgment.

The trial court could reasonably have found the following facts. On October 10, 1984, the plaintiffs executed a promissory note for $82,000 in favor of the bank as trustee for Klein’s retirement account. On the same day, the plaintiffs executed a mortgage deed in favor of the bank, as Klein’s trustee, securing the debt with certain property owned by the plaintiffs. Joseph Voll, Antoinette Voll, Klein and a representative from the bank were present during the transaction, which occurred on the bank’s premises.

Before the plaintiffs executed the documents, Klein began to read the mortgage deed and noticed a prepayment provision in the first paragraph. He objected to the provision on the basis of his understanding that the parties had agreed that the loan could not be prepaid before it was due in October, 1991, and insisted that the document be redrafted. Because of certain time constraints, Joseph Voll suggested that they simply delete the prepayment term and initial the change. Klein agreed. The provision was then deleted from the mortgage deed and the deletion initialed by Joseph Voll and Klein. Joseph Voll assured Klein that he did not have to take the time to read the remainder of the mortgage deed since it contained standard language. Relying on Voll’s assurance, Klein then turned to the promissory note, where he noticed a similar prepayment provision in the first paragraph. Joseph Voll and Klein crossed out that provision and initialed the change. After initialing the deletion in the first paragraph of the note, Klein indicated that the documents were acceptable to him because he assumed, without reading the remainder of the note, that, like the mortgage deed, the remaining paragraphs contained standard provisions.

The plaintiffs then executed the documents, and Klein authorized the bank’s representative to disburse a check for $82,000 from his retirement account. Although Antoinette Voll was present while her husband and Klein discussed striking out the two prepayment clauses, she did not participate in the discussion or initial either change. She did, however, sign both documents without objection.

Unbeknownst to Klein, the third paragraph of the note contained another provision allowing for prepayment of the loan, which had not been deleted. Relying on that provision, the plaintiffs sent a check to the bank in an attempt to prepay the loan approximately six years before the 1991 due date. When the bank contacted Klein to obtain his authorization to accept the prepayment and to discharge the mortgage, Klein responded by letter, directing the bank to refuse the prepayment and agreeing to indemnify the bank for “any costs or liability you incur in connection with this matter.” When the bank, in accordance with Klein’s direction, refused to accept the prepayment and to discharge the mortgage, the plaintiffs instituted this action against the bank. The bank in turn impleaded Klein as a third party defendant.

At trial, the plaintiffs presented evidence to support their claim that the parties had agreed that prepayment of the debt would be allowed in accordance with the remaining prepayment provision in the note, despite the deletion of other prepayment language from the note and the mortgage deed. The bank presented contrary evidence to support its counterclaim that the promissory note, as executed, was the result of the unilateral mistake of Klein coupled with fraudulent or inequitable conduct on the part of the plaintiffs. It sought to have the note reformed to delete the prepayment language because, it claimed, the note did not reflect the parties’ agreement that prepayment would not be permitted. On the third party complaint, the bank introduced Klein’s letter into evidence to support its claim that Klein was liable for any damages that might be recovered by the plaintiffs and for any litigation costs incurred by the bank in connection with the suit. Klein interposed a defense that he wrote the letter while under the duress of a bank employee.

After all the evidence had been presented, the trial court instructed the jury and submitted six interrogatories to it. The trial court adopted the findings of the jury as expressed by the answers to the interrogatories, rendering judgment for the bank on the complaint, the counterclaim and the third party complaint against Klein. The court did not, however, order the plaintiffs to pay the bank’s attorneys’ fees.

I

The sole issue in the bank’s appeal is whether the trial court properly concluded that the plaintiffs were not required to pay the bank’s attorneys’ fees. The bank bases its claim for attorneys’ fees on paragraph 7 of the mortgage deed, which provides in relevant part: “Protection of Lender’s Rights in the Property; Mortgage Insurance. If Borrower fails to perform the covenants and agreements contained in this Security Instrument, or there is a legal proceeding that may significantly affect Lender’s rights in the Property (such as a proceeding in bankruptcy, probate, for condemnation or to enforce laws or regulations), then Lender may do and pay for whatever is necessary to protect the value of the Property and Lender’s rights in the Property. Lender’s actions may include paying any sums secured by a lien which has priority over this Security Instrument, appearing in court, paying reasonable attorneys’ fees and entering on the Property to make repairs. . . . Any amounts disbursed by Lender under this paragraph 7 shall become additional debt of Borrower secured by this Security Instrument. . . .” The bank claims that the attorneys’ fees it expended in connection with the plaintiffs’ action for discharge of the mortgage and its counterclaim for reformation of the promissory note are recoverable under the provisions of paragraph 7 as amounts disbursed to protect the bank’s rights in the mortgaged property. The plaintiffs maintain that the reimbursement provision of paragraph 7 does not apply to the attorneys’ fees expended by the bank in this case because the issue in this case was whether the plaintiffs could prepay the debt, and resolution of that issue could not in any way affect the property that was the subject of the mortgage securing the debt. We agree with the plaintiffs that the plain language of paragraph 7 does not contemplate the plaintiffs’ payment of attorneys’ fees under these circumstances.

“A contract is to be construed according to what may be assumed to have been the understanding and intention of the parties.” Ginsberg v. Mascia, 149 Conn. 502, 505-506, 182 A.2d 4 (1962). The intention of the parties is a question of fact to be determined “from the language of the contract, the circumstances attending its negotiation, and the conduct of the parties in relation thereto.” Kakalik v. Bernardo, 184 Conn. 386, 393, 439 A.2d 1016 (1981). The trial court’s finding of fact with respect to intent is reversible on appeal only if the court’s finding was clearly erroneous. A. Dubreuil & Sons, Inc. v. Lisbon, 215 Conn. 604, 609-10, 577 A.2d 709 (1990); Kakalik v. Bernardo, supra.

It is reasonable to read paragraph 7, which is entitled “Protection of Lender's Rights in the Property; Mortgage Insurance," as intended to ensure that the property serving as collateral for the debt will be properly maintained by giving the mortgagee the right to take steps to protect its security interest in that property. Indeed, the bank conceded at oral argument that, unlike a more general provision allowing for reimbursement of all litigation costs in connection with a loan, a provision of this sort is generally employed to entitle a mortgagee to recoup moneys expended for taxes, insurance or other carrying costs on the property or for litigation affecting the title to or value of the property.

The bank argues, nevertheless, that this action affected its rights in the property because it threatened to extinguish those rights completely if the plaintiffs had been allowed to prepay the loan. In other words, the bank contends that its interest in the property was threatened because it might have had to accept prepayment in satisfaction of the debt and, as a result, to discharge the mortgage once the debt no longer existed. Adopting this interpretation of paragraph 7 would convert the provision, which was obviously designed to allow the bank to take reasonable measures to protect its security interest in the mortgaged property, into a much broader provision allowing for the recovery of attorneys’ fees in any dispute, whether it directly pertained to the mortgaged property or simply involved the underlying debt and thus only tangentially affected the bank’s interest in the property. The trial court’s rejection of this interpretation was not clearly erroneous. Accordingly, we hold that the plaintiffs were not liable to the bank for its attorneys’ fees because this litigation involved only the underlying debt and did not affect the bank’s security interest in the mortgaged property except insofar as it determined whether the debt still existed.

II

The first issue raised by the plaintiffs in their cross appeal is whether the trial court improperly refused to charge the jury that it could not find unilateral mistake on the part of the bank, as Klein’s trustee, coupled with fraudulent or inequitable conduct by the plaintiffs, if it found that Klein had acted negligently in the loan transaction by failing to read the entire promissory note and mortgage deed at the time of their execution. This claim was adequately preserved for appeal since the plaintiffs submitted a proper request to charge on the issue and duly excepted to the trial court’s failure to give the requested instruction. We conclude that the trial court was correct in refusing to give the instruction.

In Essex v. Day, 52 Conn. 483, 1 A. 620 (1885), this court held that the unquestionable negligence of certain town officials in not reading the text of bonds before they were issued did not operate to bar the town from obtaining a reformation of those bonds in order to correct an error therein, where the defendant bondholder had received one of the bonds knowing of the mistake and had then sought to use the error to his advantage. Of the town officials’ failure to read the text of the bonds and its impact on the equitable claim for reformation of the bonds, Justice Loomis wrote: “There is here unquestionably a reprehensible carelessness; a lack of intelligent attention to the matter that must be regarded as not only unreasonable but culpable. We have no disposition to defend, or even to excuse, such conduct. . . . This negligence is not of that extremist kind which the courts sometimes characterize as the equivalent of fraud. It was not recklessness; it was mere want of care. . . . It is to be classed only with those incautious and unbusiness-like acts which are constantly presenting themselves and would not have been noticed but for some mischief that they have wrought. Thus a man carelessly signs a note for a thousand dollars which he supposed to be for a hundred dollars. Through a mistake of the scrivener it is thus written, when he had directed that it be written a hundred, and he signs it without reading it. This is certainly gross carelessness; but should it debar him from all remedy against a party who receives the note knowing of the mistake? Would not a court of equity enjoin the holder who took it with full knowledge against its collection? Would it be good in his hands, in any court admitting of equitable defences, for more than a hundred dollars? We think therefore that the negligence of the plaintiffs in the execution and issuing of the bonds, was not of such a character as to preclude all equitable relief against the present defendant.” Id., 492-93.

Because the reasoning of Essex v. Day applies equally to the circumstances of this case, the trial court properly refused to charge the jury that a finding of negligence on the part of Klein could defeat the bank’s claim for reformation of the note based on its unilateral mistake coupled with fraud or inequitable conduct by the plaintiffs. See also Cherkoss v. Gasser, 123 Conn. 368, 195 A. 737 (1937) (negligence of one party did not bar reformation of a deed where there was mutual mistake as to terms of the deed and other party was not prejudiced thereby); Geremia v. Boyarsky, 107 Conn. 387, 140 A. 749 (1928) (contractor’s negligent mathematical error did not preclude rescission of the contract because homeowner knew of the mistake and was not prejudiced thereby). Adopting the plaintiffs’ view would reward fraudulent conduct at the expense of one whose mere carelessness had caused him unwittingly to agree to terms not contemplated by the parties. Equity should not sanction such an unconscionable result. Consequently, we reject the plaintiffs’ claim that the trial court should have instructed the jury on Klein’s negligence because a finding of such negligence by the jury would not have vitiated the bank’s equitable claim for reformation of the promissory note.

III

The next claim raised by the plaintiffs in their cross appeal challenges the propriety of the trial court’s instruction to the jury that, in assessing the bank’s counterclaim that the note should be reformed because of Klein’s unilateral mistake coupled with fraud or inequitable conduct on the part of the plaintiffs, the jury should consider the circumstances surrounding the loan transaction to determine whether Antoinette Voll ratified the conduct of her husband in that transaction. We are not persuaded that the instruction on ratification was improper.

Some background information is in order. The bank’s original counterclaim alleged, inter alia, that the plaintiffs had engaged in fraud or inequitable conduct in their dealings with Klein in the loan transaction. The counterclaim did not specifically allege, however, that Antoinette Voll had engaged in such conduct by ratifying her husband’s behavior rather than by any act of her own that defrauded Klein.

Although Antoinette Voll did not testify at trial, evidence was admitted, without objection, that her husband handled the deal with Klein, that she was present when her husband and Klein discussed and then deleted and initialed two of the prepayment provisions in the note and mortgage deed, that she voiced no opposition to anything agreed to by her husband, that she signed the note and mortgage deed as modified and that she received and endorsed the $82,000 check after the modifications had taken place. After the plaintiffs had rested their case, the bank filed a supplemental request to charge on the issue of Antoinette Voll’s ratification of her husband’s fraudulent or inequitable conduct. The court gave the requested instruction over the plaintiffs’ objection that ratification had not been specifically alleged in the bank’s counterclaim. The plaintiffs did not, however, move the court for permission to proffer additional evidence to rebut the claim of ratification. When the jurors had completed their deliberations, the trial court accepted their answers to the six interrogatories, including an affirmative response to the interrogatory regarding whether Antoinette Voll had ratified her husband’s conduct, and excused them from further service.

Before the court issued its memorandum of decision in the case, the bank successfully moved for permission to amend its counterclaim “to conform the pleadings to the proof on the issue of ratification.” Thereafter, the plaintiffs filed a motion for a new trial or, in the alternative, for permission to introduce additional evidence on the issue of Antoinette Voll’s ratification of her husband’s conduct. The trial court denied the plaintiffs’ motion.

The plaintiffs maintain that the charge on ratification was improper because the bank had not specifically alleged in its original counterclaim that Antoinette Voll had ratified the fraud or inequitable conduct of her husband. They further contend that the court abused its discretion in allowing the bank to amend its counterclaim after trial to add this essential allegation. Even if we assume, without deciding, that it was necessary for the bank to allege affirmatively that Antoinette Voll had ratified her husband’s conduct, we nonetheless conclude that the instruction was proper because the trial court did not abuse its discretion in allowing the bank’s posttrial amendment to the counterclaim.

“[A] trial court may allow, in its discretion, an amendment to pleadings before, during, or as here, after trial to conform to the proof. Wright v. Coe & Anderson, Inc., 156 Conn. 145, 155, 239 A.2d 493 (1968); Thibault v. Frechette, 135 Conn. 170, 173, 62 A.2d 863 (1948); cf. Winsor v. Hawkins, 130 Conn. 669, 670, 37 A.2d 222 (1944); General Statutes § 52-130 . . . .” Saphir v. Neustadt, 177 Conn. 191, 206, 413 A.2d 843 (1979). “Whether to allow an amendment is a matter left to the sound discretion of the trial court. This court will not disturb a trial court’s ruling on a proposed amendment unless there has been a clear abuse of that discretion.” Falby v. Zarembski, 221 Conn. 14, 24, 602 A.2d 1 (1992). “[W]here, as here, there is a variance between allegations in the [counterclaim] and the proof at trial, which is corrected by amendment to the [counterclaim], a judgment based on the amended [counterclaim] will not be set aside unless the variance misled or prejudiced the defendants on the merits of the case.” Saphir v. Neustadt, supra, 208.

Applying these principles to the case before us, we conclude that the trial court properly exercised its discretion in permitting the posttrial amendment and in denying the plaintiffs’ subsequent request to proffer further evidence. Once the bank filed its supplemental request to charge on ratification and the court indicated its intent to give the ratification instruction, the plaintiffs were on notice that the jury and the court would consider this issue in deciding the merits of the bank’s counterclaim. They made no attempt to present additional evidence to rebut the claim of ratification at that time, but, instead, waited until after the court had accepted the jury’s answers to the interrogatories, which were favorable to their opponent, and after it had excused the jurors from further service on the case. Such behavior suggests that, although the plaintiffs knew the issue of ratification would be submitted to the jury, rather than immediately seeking permission to introduce evidence on that issue, they chose to hedge their bets in the hope that the jury would find in their favor. Given these circumstances, it was well within the trial court’s discretion to deny the plaintiffs’ post hoc request to present additional evidence on ratification. When pleadings are amended after trial merely to conform to the proof, the opposing party does not necessarily have the right to present further evidence unless the amendment injects a new, material issue into the case. Azzolina v. Sons of Italy, 119 Conn. 681, 688-89, 179 A. 201 (1935); Mazulis v. Zeldner, 116 Conn. 314, 317, 164 A. 713 (1933). Because the bank clearly raised the ratification issue at trial in its supplemental request to charge, the trial court instructed on that issue, and the court submitted an interrogatory to the jury on that issue, we conclude that the plaintiffs were not misled or prejudiced by the subsequent amendment to the bank’s counterclaim after trial. Accordingly, we reject the claim that the trial court acted improperly in charging the jury on ratification, in granting the bank’s motion for amendment with respect to ratification, or in denying the plaintiffs’ motion to present evidence to rebut ratification.

IV

The plaintiffs claim, finally, that they are entitled to a new trial because, upon Klein’s request, the trial court improperly gave the jury a “Secondino charge,” permitting the jury to draw an adverse inference from the plaintiffs’ failure to call Antoinette Voll as a witness. See Secondino v. New Haven Gas Co., 147 Conn. 672, 165 A.2d 598 (1960). They premise their argument on an off-the-record agreement allegedly reached among the parties that, in the interest of saving time, no one would call Antoinette Voll to the witness stand. They claim that this agreement carried with it the implicit assurance that no missing witness instruction would be sought. The bank vigorously disputes the existence of any such agreement. It claims that, when the plaintiffs’ counsel asked whether either Klein or the bank intended to call Antoinette Voll, they both simply responded that they did not. According to the bank, there was no agreement, implicit or otherwise, that a Secondino charge would not be sought if the plaintiffs failed to call her. Because the parties disagree about whether such an agreement was in fact reached, and nothing before us indicates the existence of such an agreement, we reject the plaintiffs’ claim in this regard as wholly unsubstantiated by the record.

The judgment is affirmed.

In this opinion the other justices concurred.

       See General Statutes §§ 52-218 and 52-219; Practice Book §§ 308 and 309.

       The bank appealed to the Appellate Court, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c).

       The plaintiffs’ attorney prepared both the promissory note and the mortgage deed.

       Referring to the underlying debt, the provision stated “if not paid earlier.”

         Referring to the debt, the provision stated “if not sooner paid.”

       The provision stated: “Borrower may prepay the principal amount in whole or in part, and the Note holder shall impose no penalty for such prepayment.”

       The relevant text of the letter states:
      “I hereby direct you, as Trustee of my Keogh Plan, to refuse any payment of principal made by Joseph G. Voll and Antoinette P. Voll which is in excess of the payment currently due on the promissory note of Joseph G. Voll and Antoinette P. Voll, in the original principal amount of $82,000 and dated October 10, 1984.
      I agree to hold you harmless and to indemnify you for any costs or liability you incur in connection with this matter.
      Very truly yours,
      [signature]
      Alex Klein”

       The bank also asserted in its counterclaim that the prepayment provision in the note was the result of the mutual mistake of the parties. The jury rejected this theory; see footnote 9, infra; and the trial court rendered judgment in accordance with the jury’s finding in this regard.

       The six interrogatories and the jury’s responses to them follow:
      “1. DID THE VOLLS PROVE BY THE FAIR PREPONDERANCE OF THE EVIDENCE THAT THEY TENDERED FULL PAYMENT AND THAT THE BANK REFUSED THE PAYMENT?
      YES JL NO_
      2. DID THE BANK PROVE BY CLEAR, CONVINCING, AND UNEQUIVOCAL EVIDENCE THAT THE PARAGRAPH WHICH PERMITS PREPAYMENT IS IN THE NOTE BY REASON OF MUTUAL MISTAKE MADE BY MR. KLEIN AND MR. & MRS. VOLL?
      YES_ NO _X_
      IF YOU ANSWER QUESTION NUMBER TWO YES, GO DIRECTLY TO QUESTIONS FIVE AND SIX AND OMIT THREE AND FOUR.
      3. DID THE BANK PROVE BY CLEAR, CONVINCING, AND UNEQUIVOCAL EVIDENCE THAT THE PARAGRAPH WHICH PERMITS PREPAYMENT IS IN THE NOTE BY REASON OF MISTAKE COUPLED WITH FRAUD OR INEQUITABLE CONDUCT BY MR. VOLL?
      YES _X_ NO __
      ONLY ANSWER QUESTION 4 IF ANSWER TO QUESTION 3 IS YES.
      4. DID MRS. VOLL RATIFY MR. VOLL’S CONDUCT?
      YES _X_ NO_
      5. DID MR. KLEIN AGREE TO REIMBURSE THE BANK FOR LEGAL FEES INCURRED IN DEFENDING MR. & MRS. VOLL’S CLAIM?
      YES JL_ NO_
      6. DID MR. KLEIN SIGN THE INDEMNITY LETTER WHILE UNDER DURESS CAUSED BY A BANK EMPLOYEE?
      YES_ NO X ”

       The plaintiffs do not argue that the bank has already recovered its attorneys’ fees from Klein by executing on its judgment against him. Indeed, at oral argument, the bank’s attorney represented to the court that he had not yet attempted to collect the attorneys’ fees from Klein. We therefore do not address the issue of double recovery in deciding whether the bank was entitled to recover its attorneys’ fees from the plaintiffs.

       The trial court instructed the jury as follows: “Fraud, for the purposes of this rule, includes concealment or nondisclosure by a party, who knows that the other party is acting under a mistake as to material facts. Both Mr. and Mrs. Voll signed the note. With respect to Mrs. Voll, I should discuss the Doctrine of Ratification.
      “ ‘Ratification is the affirmance, approval by a prior act, which did not bind her, but which was done on her account. Ratification requires the acceptance of the result of the act, with full knowledge of all the material facts.’ You should examine all the circumstances surrounding Mrs. Voll’s participation in the closing transaction. Did she knowingly accept the results of any wrongful conduct on the part of her husband, with full knowledge of all the material facts? I do not mean to imply that there was, in fact, wrongful conduct. That is a decision, which you, alone, can make. The question you must answer on the alternative defense—actually there are two questions—are as follows: did the bank prove, by clear, convincing and unequivocal evidence, that the paragraph, which permits prepayment, is in the note by reason of mistake coupled with fraud or inequitable conduct by Mr. Voll? If the answer to that question is yes, then you should answer the following question: did Mrs. Voll ratify Mr. Voll’s conduct? Your answers to the above questions will determine the validity of the Volls’ claim.”

       The counterclaim alleged in relevant part: “The Note failed to state the agreement of the parties due to: (a) The mutual mistake of the parties; or (b) The mistake of Klein coupled with fraud, actual or constructive, of the Plaintiffs, in that they knew Klein believed the loan could not be prepaid, represented to him through the transaction that the loan could not be prepaid, agreed to delete the language authorizing prepayment from the mortgage, failed to call Klein’s attention to the prepayment paragraph in the Note after agreeing to delete other language in the Note authorizing prepayment, and assured Klein that the Note and Mortgage, after the two deletions in question, conformed to the parties’ agreement that the loan could not be prepaid, (c) The mistake of Klein coupled with inequitable conduct on the part of the Plaintiffs, in that they knew Klein believed the loan could not be prepaid, represented to him through the transaction that the loan would not be prepaid, agreed to delete language authorizing prepayment from the mortgage, failed to call Klein’s attention to the prepayment paragraph in the Note authorizing prepayment, and assured Klein that the Note and Mortgage, after the two deletions in question, conformed to the parties’ agreement that the loan could not be prepaid.”

       The bank had already filed several other requests to charge a few days before this supplemental request was filed.

       The amended counterclaim alleged Joseph Voll’s fraudulent or inequitable conduct “as ratified by the Plaintiff, Antoinette P. Voll, in that she accepted the results of said conduct with an intent to ratify the same and with full knowledge of all the material circumstances.”

       The plaintiffs also argue that the trial court should not have entertained the request to charge on ratification because it was filed five days after a deadline imposed by the court in chambers for the filing of requests to charge. Practice Book § 317 provides that “[wjritten requests to charge the jury must be filed . . . before the beginning of the arguments or at such earlier time during the trial as the court directs . . . .” In this case, the bank filed its request to charge before closing arguments had begun, but after an earlier deadline set by the court. Section 317, which expressly empowers a trial court to establish an earlier deadline for the submission of requests to charge, impliedly empowers the court to modify its prior scheduling order. Indeed, this court has held that a trial court has discretion to consider a request to charge filed even after arguments have begun. Zupanick v. Fielding, 114 Conn. 345, 348-49, 158 A. 881 (1932); Farrington v. Cheponis, 84 Conn. 1, 9, 78 A. 652 (1911).

       The plaintiffs do not claim that there was insufficient evidence of Antoinette Voll’s ratification of her husband’s conduct.

       One interrogatory queried the jurors about whether Antoinette Voll had ratified her husband’s conduct. See footnote 9, supra.

       The court instructed: “If a party fails to call to the stand a witness, who was within his power to produce and who would naturally have been produced by him, you are entitled to infer the witness’ testimony would have been unfavorable to the party failing to call the witness. And you may consider that fact in arriving at your decision. During the arguments, the lawyers referred to the fact that Mrs. Voll was not called as a witness. There are two requirements for the operation of this rule. First, the witness must be available. Second, the witness must be a witness whom the party would naturally produce. A witness, who would naturally be produced by a party, is one who is known to that party and who, by reason of his or her relationship to that party, or to the issues, or both, could reasonably be expected to have peculiar or superior information, which would be material to the case and which, if favorable to the party, the party would have produced.”

       Although the plaintiffs also seem to argue on appeal that the Secondino instruction should not have been given because Antoinette Voll was not a witness that the plaintiffs would naturally have produced, they did not advance this argument in the trial court. Consequently, we decline to consider it on appeal. See Practice Book § 4185.


source: Caselaw Access Project

author: Borden, J.

license: Public Domain

text:
    Virginia Corporation v. C. Chandra Galanis et al.
    (14474)
    Peters, C. J., Callahan, Glass, Borden and Berdon, Js.

      Argued April 29
    decision released August 11, 1992

      Edwin L. Doernberger, with whom was M. Mitchell Morse, for the appellants (plaintiff and defendant Consolidated Capital Corporation).

      William A. Phillips, for the appellee (defendant Armstrong Capital, S.A.).
   Borden, J.

The dispositive issues in this appeal are: (1) whether three judgment liens of the defendant Armstrong Capital, S.A. (Armstrong), on a particular piece of property are entitled to priority, in a foreclosure action, over the mortgages of the plaintiff, Virginia Corporation, and one of the defendants, Consolidated Capital Corporation (Consolidated Capital), on that property; and (2) whether moneys expended to maintain property during a mortgage foreclosure proceeding, authorized by the court, are to be given priority over the encumbrances on that property. The plaintiff brought this action to foreclose its mortgage, and appeals jointly with Consolidated Capital from the judgment of the trial court, Karazin, J., affirming the report of an attorney state trial referee that established the priorities of the encumbrances on the property.

The plaintiff and Consolidated Capital claim that the trial referee improperly concluded that: (1) they had notice of a fraudulent conveyance of the property due to a notice filed on the land records by an interim trustee in bankruptcy; (2) the conveyances of the mortgages to them were fraudulent conveyances in which they had participated; (3) Armstrong’s claims were not barred by the statute of limitations within which to bring an action to set aside a fraudulent conveyance; and (4) the moneys they had expended, pursuant to court authorization, in order to maintain the property during this foreclosure proceeding were not entitled to priority over the recorded encumbrances on the property. We affirm in part and reverse in part.

The relevant facts are as follows. On January 13, 1977, John Galanis purchased property known as 766 Lake Avenue in Greenwich (the property) in the name of Paisley Farms, Inc. (Paisley Farms). Galanis, who controlled Paisley Farms as its president, had Paisley Farms hold record title to the property in order to shield the property from his creditors. In November, 1978, Paisley Farms, at John Galanis’ direction, conveyed the property to his attorney, Dennis Joy, as trustee. In June, 1979, Armstrong registered in Connecticut three judgments that it had obtained against John Galanis for fraud.

In January, 1980, at Galanis’ direction, Dennis Joy, as trustee, conveyed the property to Galanis’ wife, C. Chandra Galanis (Chandra Galanis). Simultaneously, Chandra Galanis, at John Galanis’ direction, conveyed the property to JPJ Investments, Inc. (JPJ Investments). These conveyances were recorded on April 25, 1980, and were all executed in order to shield the property from creditors of John Galanis. Five days later, on May 1, 1980, Chase Manhattan Bank instituted an involuntary bankruptcy proceeding against John Galanis. On April 13, 1981, the interim trustee in the bankruptcy proceeding recorded a notice in the Greenwich land records claiming an interest in the property on behalf of John Galanis’ creditors. In June, 1982, JPJ Investments, at the direction of John Galanis, conveyed the property to Chandra Galanis. John Galanis directed this conveyance in order to use the property as security for loans he planned to obtain.

On March 10, 1983, Chandra Galanis, Thomas Williams and Andover Financial Corporation procured from the plaintiff a loan in the amount of $1,000,000 and executed a promissory note in that amount to the plaintiff. To secure the note, Chandra Galanis conveyed to the plaintiff a mortgage on the property that was recorded on the same day. On July 30, 1984, Chandra Galanis and Consolidated Mortgage procured from Consolidated Capital a loan in the amount of $1,500,000 and executed a promissory note in that amount to Consolidated Capital. To secure the note, Chandra Galanis conveyed to Consolidated Capital a mortgage on the property that was recorded on August 9, 1984. The property was valued at approximately $3,000,000 when the trial began. It is these mortgages of the plaintiff and Consolidated Capital that the trial court subordinated to the subsequently recorded judgment liens of Armstrong.

After the recordation of the mortgages, Armstrong filed a suit against John and Chandra Galanis seeking collection of its three registered judgments. On March 12, 1986, Armstrong obtained a prejudgment remedy of attachment against John and Chandra Galanis in the total amount of $2,213,000 and recorded the attachment against the property. Armstrong thereafter recorded judgment lien certificates for its three judgments against the property on September 9, 1987. It is these judgment liens, rather than the attachments, to which the trial court gave priority over the mortgages of the plaintiff and Consolidated Capital.

On September 26, 1986, the plaintiff filed the present action to foreclose its mortgage on the property. On July 6, 1987, Armstrong filed its answer and special defenses to the foreclosure action, along with a counterclaim against the plaintiff and a cross complaint against Consolidated Capital. In its special defenses, Armstrong claimed that the plaintiff and Consolidated Capital “knew or should have known that the defendant Chandra Galanis was holding title to the premises as nominee of John Galanis,” that they knew John Galanis was involved in fraudulent activity and that they had “conspired with him to disguise his interest in the premises . . . .” Armstrong sought to have the mortgages declared null and void.

On September 21, 1990, after a trial to an attorney state trial referee, W. James Cousins, the referee issued a report concluding that Armstrong had proven, by clear and convincing evidence, that the conveyances of the property, directed by John Galanis, were fraudulent conveyances made with the intent to defraud John Galanis’ creditors. The referee then noted that “Armstrong, having proven that John Galanis fraudulently conveyed his property to avoid creditors, established its right to enforce its judgments against the property. That right is subject only to the intervening rights of someone who innocently buys or encumbers the property without notice of Armstrong’s claim. Trumbull v. Hewitt, 65 Conn. 60, 31 A. 492 (1894), 37 Am. Jur. 2d, Fraudulent Conveyances § 153. The rights of the buyer or encumbrancer are inferior to those of a creditor, if the buyer or encumbrancer ‘knew or ought to have known of the fraudulent transfer, having been informed of facts which suggested an investigation of title . . . .’ 37 Am. Jur. 2d, [supra, p. 824].” The referee found that the plaintiff and Consolidated Capital had actual knowledge of the fraudulent transfers through “the extensive and close relationship these lenders had with the fraudulent transferor, John Galanis.”

On the basis of these findings, the trial referee assigned Armstrong’s three judgment liens a priority-position over the mortgages of the plaintiff and Consolidated Capital. On July 2, 1991, the trial court, Karazin, J., rendered judgment in accordance with the trial referee’s report and recommendations. The plaintiff and Consolidated Capital appealed to the Appellate Court from that judgment, and we transferred the appeal to this court pursuant to Practice Book § 4023 and General Statutes § 51-199 (c).

I

The plaintiff’s and Consolidated Capital’s first claim is that the trial referee improperly found that they had participated with Chandra Galanis in John Galanis’ scheme to defraud his creditors when they received their mortgages on the property. They argue that in order to set aside their mortgages, Armstrong was required to prove, by clear and convincing evidence, that the mortgage conveyances had been made with fraudulent intent in which they had participated. They stress that “[i]t must be emphasized that the [clear and convincing evidence] standard of proof must be applied to the conveyances from Chandra Galanis to [the plaintiff] and Consolidated Capital.”

Armstrong claims, on the contrary, that since the plaintiff and Consolidated Capital had actual knowledge of the fraudulent conveyance directed by John Galanis to Chandra Galanis, the record owner of the property at the time of the mortgage conveyances, the plaintiff and Consolidated Capital were not bona fide encumbrancers and, therefore, their mortgage encumbrances on the property were subordinate to the claims of Galanis’ defrauded creditors. In other words, Armstrong argues that irrespective of the trial referee’s finding that the plaintiff and Consolidated Capital participated in John Galanis’ fraudulent scheme, the fact that they had actual knowledge of the fraudulent conveyance to Chandra Galanis that was directed by John Galanis “destroys [their] pretended bona-fides.” We agree with Armstrong.

The plaintiff and Consolidated Capital initially claim that Armstrong is barred by the three year statute of limitations within which to bring an action to set aside a fraudulent conveyance. See Travelers Indemnity Co. v. Rubin, 209 Conn. 437, 441, 551 A.2d 1220 (1988) (three year tort statute of limitations of General Statutes § 52-577 applies to common law fraudulent conveyance action). The trial referee held that any statute of limitations was tolled due to John Galanis’ fraudulent concealment of the various fraudulent conveyances and by the automatic stay during the bankruptcy proceeding. We note, contrary to the assertions of the plaintiff and Consolidated Capital, that the present case is not an action brought by Armstrong to set aside the mortgage conveyances from Chandra Galanis to the plaintiff and Consolidated Capital. This is also not an action brought by Armstrong to set aside the fraudulent conveyance to Chandra Galanis that was directed by John Galanis. The present case arises from a foreclosure action brought by the plaintiff in which Armstrong is asserting, as an equitable defense in order to obtain a priority position as an encumbrancer on the property, the fact that the plaintiff and Consolidated Capital are not bona fide encumbrancers. Since the present case does not involve an action to set aside a fraudulent conveyance, but rather an equitable defense asserted by Armstrong as a defendant in a foreclosure action, we conclude that § 52-577 is inapplicable.

The general rule is that a bona fide purchaser or encumbrancer from a fraudulent grantee acquires good title and takes the property discharged of the fraud so that he has priority over the fraudulent grantor’s creditors. See Walp v. Mooar, 76 Conn. 515, 57 A. 277 (1904); Williamson v. Russell, 39 Conn. 406 (1872); United States v. Fidelity & Deposit Co., 214 F.2d 565 (5th Cir. 1954); First State Bank of Scottsbluff v. Bear, 172 Neb. 504, 110 N.W.2d 83 (1961); 37 Am. Jur. 2d 824, Fraudulent Conveyances § 152. “The rights of a purchaser [or encumbrancer] from a fraudulent transferee are superior to those of the [fraudulent] transferor’s creditors only if such purchaser [or encumbrancer] is an innocent purchaser [or encumbrancer] for value. Where it appears that he had knowledge or notice of the fraudulent transfer, he will be held to have acquired the title subject to the rights of the [fraudulent] transferor’s creditors. His right is inferior to that of the creditors where it appears that he knew ... of the fraudulent transfer . . . .”37 Am. Jur. 2d 824, supra, § 153; see also Walp v. Mooar, supra; Kantola v. Hendrickson, 52 Idaho 217, 12 P.2d 866 (1932).

In the present case, the trial referee first found, and the plaintiff and Consolidated Capital do not dispute, that John Galanis fraudulently conveyed the property to Chandra Galanis in order to shield the property from his creditors, one of which was Armstrong. In making this finding, he concluded, as was necessary; see footnote 9, supra; that Chandra Galanis had participated in the fraud and was, therefore, a fraudulent transferee. Since Chandra Galanis was a fraudulent transferee, the mortgages on the property, as encumbrances acquired from a fraudulent transferee, are superior to the encumbrances of John Galanis’ creditors only if the plaintiff and Consolidated Capital did not have notice of the fraudulent transfer.

The trial referee found that “Armstrong proved that [the plaintiff] and Consolidated Capital knew ... of the fraudulent [transfer] . . . through the extensive and close relationship these lenders had with the fraudulent transferor, John Galanis.” This finding will be set aside only if it was clearly erroneous. The finding, however, is not clearly erroneous because there is ample evidence in the record to support it.

The referee found that the plaintiff corporation was owned by Jerome Morris, who operated it as a sole proprietorship. Consolidated Capital was also owned by Morris along with his close friend, Jay Botchman. Botchman was a friend and close confederate of John Galanis. When John Galanis asked Botchman to find him a lender who would take the property as security, Botchman introduced Galanis to Morris. Prior to the mortgage loans, Morris met with Galanis and Thomas Williams, Galanis’ brother-in-law, in Greenwich to discuss the bankruptcy and whether the property was in the estate of John Galanis. The referee also found that, subsequently, the two mortgage loans at issue were granted to Galanis in order to “buy up claims of the bankruptcy creditors. Botchman assisted Galanis in buying up the creditors’ claims.” At the time of the mortgage loans, record title to the property was in the name of Chandra Galanis. On the basis of these facts, we conclude that the trial referee’s finding that the plaintiff and Consolidated Capital had actual knowledge of the fraudulent conveyance was amply supported by the record. Therefore, the trial referee properly assigned Armstrong’s three judgment liens on the property priority over the plaintiff’s and Consolidated Capital’s mortgages.

II

The plaintiff next claims that the trial referee improperly refused to allow the plaintiff to recover, with priority over the recorded encumbrances on the property, moneys it had expended to maintain the property during the foreclosure proceeding. We agree.

The following facts are relevant to this issue. On June 8, 1987, after the foreclosure action had been begun, the plaintiff filed a motion for immediate access to the property. In its motion, the plaintiff stated that the property “may be vacant, damaged and uninsured, which situation seriously jeopardizes the security of the plaintiff in the property.” The plaintiff requested that it have access to the property in order to maintain the property so as to preserve the security and to obtain insurance on the property. The trial court, Lewis, J., granted the plaintiffs motion.

In his report, the trial referee found that the plaintiff had expended $85,250.91 “for the maintenance and protection of the mortgaged premises . . . .” After the referee filed his report, the plaintiff filed a motion to correct the report to include thirty-nine factual assertions. The third factual assertion provided: “Monies expended by [the plaintiff] for the maintenance and protection of [the property] . . . are prior in right to all other encumbrances except real estate taxes. Reason: These items were necessary for the protection, care and maintenance of the property which, in turn, protected the equity available for encumbrancers. Further, by order of [the] Court, [the plaintiff] expended money for these items.”

In his ruling on the plaintiffs motion to correct, the trial referee stated that “[the plaintiff] seeks to add to the report thirty-nine separately numbered factual assertions. . . . Numbers 1, 3, 6, 9, 10, 11, 12, 13, 14, 16, 17, 18, 19, 20, 22, 23, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37, 38 and 39 are denied because either (1) they would not change the conclusions of the Referee, (2) are not supported by the evidence or (3) raise new legal issues not set out in the pleadings or briefs. (With respect to Number 3 where the movant seeks priority for its maintenance expenses, the Referee was initially inclined to give priority to these expenses but was provided with no authority that expenses for upkeep and maintenance are entitled to a different priority than that of the underlying mortgage.)” (Emphasis added.)

“An action of foreclosure is peculiarly equitable and the court may entertain all questions which are necessary to be determined in order that complete justice may be done between the parties. Beach v. Isacs, 105 Conn. 169, 176, 134 A. 787 (1926)." Hartford Federal Savings & Loan Assn. v. Tucker, 196 Conn. 172, 175, 491 A.2d 1084, cert. denied, 474 U.S. 920, 106 S. Ct. 250, 88 L. Ed. 2d 258 (1985); see Baybank Connecticut, N.A. v. Thumlert, 222 Conn. 784, 610 A.2d 658 (1992) (mortgage foreclosure is an equitable proceeding). Basic principles of equity lead us to conclude that moneys expended to maintain and protect secured property, pursuant to the trial court’s authorization, should be given priority over the encumbrances on that property. When a court authorizes the maintenance and protection of property in foreclosure, it does so for the benefit of the encumbrancers in order to preserve their security and the equity available to the owner. Surely, if, instead of granting the plaintiff’s motion, the court had appointed a receiver to maintain the property, that receiver would have been paid his expenses before any encumbrancers were satisfied. The result should be no different simply because the court authorized the plaintiff, rather than a receiver, to preserve the property. Therefore, the plaintiff is entitled to recover, as a first priority, the expenses that the referee found to have been incurred to maintain and protect the property.

The judgment is reversed only with respect to the priority to be given to the $85,250.91 expended by the plaintiff to maintain and protect the property, and the case is remanded with direction to modify the judgment in accordance with this opinion.

In this opinion the other justices concurred.

       Other defendants in the foreclosure action were C. Chandra Galanis, Thomas J. Williams, Andover Financial Corporation, the town of Greenwich, United States Internal Revenue Service, R and R Landscaping, Inc., and the Bank of Stamford. They have not appealed from the judgment ordering the priorities in the case.

       John Galanis is currently serving a sentence in federal prison for fraud in excess of $100,000,000. He did not testify in the present case and is not a party to this litigation.

       Armstrong obtained these judgments in the United States District Court for the Southern District of New York. The first judgment was obtained in 1976 in the amount of $510,770.84. The second judgment was obtained in 1978 in the amount of $866,739. The third judgment was obtained in 1979 in the amount of $532,022.

       The notice provided: “All persons taking any interest in said property after the date of this notice shall take subject to the interests of the Interim Trustee.” The bankruptcy proceeding was ultimately dismissed on November 9, 1984.

       Thomas Williams was John Galanis’ brother-in-law, after Williams married Chandra Galanis’ sister. He was a close advisor to John Galanis. Andover Financial Corporation was a corporation controlled by John Galanis.

       Consolidated Mortgage was also a corporation controlled by John Galanis.

       On December 22, 1984, Chandra Galanis, at John Galanis’ direction, conveyed the property to Galanis Brothers Trust, naming Chandra Galanis as trustee. This conveyance was executed in order to shelter assets from John Galanis’ creditors.

       We commend the attorney state trial referee for his clear statement of a very complex factual scenario and his thorough and well reasoned analysis of the legal issues raised thereby.

       Armstrong also claims that the evidence supports the trial referee’s finding, by the clear and convincing evidence standard, that the plaintiff and Consolidated Capital participated in John Galanis’ fraudulent scheme. While the trial referee concluded that the plaintiff and Consolidated Capital participated in John Galanis’ scheme to defraud his creditors, we do not need to consider whether that conclusion was proper since the plaintiff’s and Consolidated Capital’s actual knowledge of John Galanis’ fraudulent conveyance to Chandra Galanis disposes of this case.

       While Armstrong’s special defenses sought to declare the mortgage deeds null and void, the gravamen of the special defenses was to obtain a superior lien position over the mortgages of the plaintiff and Consolidated Capital. Indeed, the trial referee, rather than declare the mortgages void, simply determined that Armstrong’s judgment liens had priority over the mortgages. Thus, we conclude that Armstrong was not seeking to set aside the mortgage conveyances as fraudulent.
      We recognize that if Armstrong were seeking to set aside the mortgage conveyances as fraudulent, Armstrong would bear “the burden of proving either: (1) that the conveyance was made without substantial consideration and rendered the transferor unable to meet his obligations; or (2) that the conveyance was made with a fraudulent intent in which the grantee participated. Bizzoco v. Chinitz, 193 Conn. 304, 312, 476 A.2d 572 (1984); Zapolsky v. Sacks, 191 Conn. 194, 200, 464 A.2d 30 (1983).” Tyers v. Coma, 214 Conn. 8, 11, 570 A.2d 186 (1990).

       Indeed, Armstrong’s March 12, 1986 action was presumably brought to set aside that conveyance, along with John Galanis’ other fraudulent conveyances.

       The trial referee noted that while John Galanis did not actually convey the property, he did direct the conveyance. See D.H.R. Construction Co. v. Donnelly, 180 Conn. 430, 429 A.2d 908 (1980) (no inherent difference between debtor conveying his property to another and that of a debtor causing the title to the property purchased to be placed in the name of another where object of transfer is to hinder, delay or defraud creditors).

       The trial referee also found that the plaintiff and Consolidated Capital had constructive notice of claims by John Galanis’ creditors on the property and, therefore, had notice of the fraudulent conveyance directed by John Galanis to Chandra Galanis at the time the mortgage loans were made. The referee’s finding was based on a notice, filed by the interim trustee in the bankruptcy proceeding, of the trustee’s claim on that property. See footnote 4, supra. The plaintiff and Consolidated Capital claim that that notice was ineffective to put them on notice of the fraudulent conveyance directed by John Galanis to Chandra Galanis. Since we conclude that the trial referee’s finding, that the plaintiff and Consolidated Capital had actual knowledge of the fraudulent conveyance, was supported by the record, we need not consider whether the bankruptcy notice provided sufficient constructive notice to the plaintiff and Consolidated Capital of the fraudulent conveyance.

       Armstrong maintains that this claim should not be reviewed because it was not pleaded, argued or presented to the trial referee. We disagree. First, it is not surprising that this claim was not pleaded in the plaintiffs foreclosure complaint since it arose, by its nature, during the foreclosure proceedings. Second, this claim was presented to the trial referee in the plaintiffs motion to correct his report. See infra.

       The trial referee found that the plaintiff’s expenses to maintain the property were as follows:
      “Insurance $57,851.78
      Ground Upkeep $14,575.00
      Security $ 6,654.25
      Travel to Connecticut $ 3,931.26
      Appraisal Fee [$1,300.00]
      Telephone $829.27
      Plumbing__$109.35”
      Total $85,250.91
      The trial referee originally had found the appraisal fee to be $1000. The referee amended this finding to $1300 when he granted part of the plaintiffs motion to correct his report.

       This situation would be analogous to a court establishing priority to a receiver winding up a corporation. See General Statutes § 33-494 which provides in part: “priority of claims in judicial winding-up. If the court has undertaken the winding up of the affairs of a corporation . . . claims against the corporation shall be paid in the following order of priority: (1) Reasonable compensation to the receiver ... for the winding up of the corporation . . . .”


author: Covello, J.

text:
    Connecticut State Medical Society et al. v. Commission on Hospitals and Health Care
    (14456)
    Callahan, Glass, Covello, Borden and Berdon, Js.
    Argued June 10
    decision released August 11, 1992

      Jeanette C. Schreiber, with whom was Merton G. Gollaher, Jr., for the appellants (plaintiff Connecticut Hospital Association, Inc., et al.).

      Thomas J. Ring, assistant attorney general, with whom, on the brief, were Richard Blumenthal, attorney general, and Richard J. Lynch and Heather J. Wilson, assistant attorneys general, for the appellee (defendant).
   Covello, J.

This is an administrative appeal from a declaratory ruling of the defendant, the Commission on Hospitals and Health Care (CHHC). The dispositive issue is whether § 19a-165q-2 of CHHC’s regulations required submission to CHHC of data that violated the privacy and confidentiality rights of patients as set forth in General Statutes § 52-146e, 42 U.S.C. §§ 290dd-3, 290ee-3 (1985), and 42 C.F.R. §§ 2.11, 2.53 and 2.54 (1985). We conclude that this is so with respect to one item and, therefore, reverse, in part, the judgment of the trial court that held to the contrary.

Examination of the record discloses that on April 26, 1985, CHHC adopted §§ 19a-165q-l through 19a-165q-24 of the Regulations of Connecticut State Agencies. Thereafter, on June 14, 1985, the named plaintiff and others, filed a petition for a declaratory ruling, seeking invalidation of § 19a-165q-2 of the newly adopted regulations on the ground that it required the submission of statutorily protected patient data. On September 3, 1986, after hearings, CHHC issued a declaratory ruling concluding that the regulation was valid. The plaintiffs subsequently commenced the instant administrative appeal in the Superior Court, seeking to vacate and set aside CHHC’s declaratory ruling. The trial court, having found the plaintiffs aggrieved, rendered judgment for CHHC, concluding that the specified information did not violate the statutorily protected privacy and confidentiality rights of the plaintiffs and that the contested regulation was, therefore, valid. The Connecticut Hospital Association and the four general hospitals who were parties in the action below, appealed to the Appellate Court. We thereafter transferred the matter to ourselves pursuant to Practice Book § 4023.

The history of the statutory enactments that served as the basis for the promulgation of § 19a-165q-2 is as follows. On June 5, 1984, the General Assembly passed No. 84-315 of the 1984 Public Acts, which was thereafter codified as General Statutes (Rev. to 1985) §§ 19a-165 through 19a-165q. The statutory scheme established a prospective payment system whereby general hospital rates were established in advance based upon a fixed charge per diagnosis or medical procedure. Section 19a-165a directed CHHC to “require hospitals to submit such data as it deems necessary for the development and implementation of the prospective payment system . . . .” Section 19a-165q directed CHHC to “adopt regulations, in accordance with the provisions of chapter 54 to implement, administer arid ensure compliance with the prospective payment system established under sections 19a-165 to 19a-165q, inclusive.” Thereafter, CHHC promulgated § 19a-165q-2. Section 19a-165q-2 (b) (1) required all of Connecticut’s general hospitals to file with CHHC a “hospital discharge data set for each patient discharged from the hospital after September 30,1983.” Each data set contained thirty items of information concerning a given patient.

In their application for a declaratory ruling, the plaintiffs challenged thirteen items in each data set, arguing that the information was unnecessary for purposes of the prospective payment system and, further, that disclosure of the material violated patient privacy and confidentiality rights. The challenged data included: (1) patient identification code; (2) ZIP Code; (3) ZIP Code suffix; (4) attending physician; (5) operating physician; (6) principal procedure day; (7) other procedure I day; (8) other procedure II day; (9) other procedure III day; (10) other procedure IV day; (11) admission status; (12) expected principal source of payment; and (13) race.

I

As a threshold consideration, we must address CHHC’s claim that the issues presented are moot because of the legislature’s repeal in 1989 of the statutes that authorized the prospective payment system and its enactment of a different method for determining hospital budgets. There is no dispute that CHHC, in response to the 1989 legislative changes, adopted § 19a-167g-94 of the Regulations of Connecticut State Agencies, which superseded § 19a-165q-2. Since there is no longer a requirement to submit data pursuant to § 19a-165q-2, CHHC argues that there is no longer a justiciable controversy concerning this regulation before the court. CHHC argues that “[i]t is a well-settled general rule that the existence of an actual controversy is an essential requisite to appellate jurisdiction; it is not the province of appellate courts to decide moot questions, disconnected from the granting of actual relief or from the determination of which no practical relief can follow.” Reynolds v. Vroom, 130 Conn. 512, 515, 36 A.2d 22 (1944). While we agree that this is a correct statement of the law, we conclude that it is not applicable in the present instance.

It is undisputed that CHHC continues to maintain six years of data accumulated pursuant to § 19a-165q-2 and that CHHC refuses either to return the data to the plaintiffs or to purge the data from CHHC’s computer files. The plaintiffs’ claim, meanwhile, remains the same, i.e., that CHHC cannot legally retain the data because of its confidential nature, and that it should be required to return the same or purge its computer files.

Although the repeal of an offending law or regulation or the cessation of a challenged activity can render an action to enjoin its enforcement moot; Roy v. Mulcahy, 161 Conn. 324, 328, 288 A.2d 64 (1971); the repeal will not render moot a claim for redress of an injury occurring while the enactment was in force. Hallas v. Windsor, 217 Conn. 689, 692, 587 A.2d 149 (1991); Gunther v. Dubno, 195 Conn. 284, 288, 487 A.2d 1080 (1985). The plaintiffs claim that while § 19a-165q-2e was in force, they became prospectively liable to prior patients for the release to CHHC, over a six year period, of material that the plaintiffs argue is confidential. Until the regulation is either determined to have been valid because the requested material is not confidential or the offending material is ordered excised or, in the alternative, some other basis is determined for retaining the material, we conclude that a sufficient controversy exists to survive CHHC’s claim of mootness occasioned by the legislature’s subsequent enactments.

II

The plaintiffs’ argument throughout these proceedings has been, inter alia, that the contested regulation required them to submit to CHHC data that is confidential and, therefore, exempt from disclosure by reason of both state and federal law. With respect to Connecticut statutes, the plaintiffs refer us specifically to General Statutes § 52-146e (a), which prohibits the disclosure of records “which identify a patient to any . . . governmental agency . . . .”

With respect to federal statutes, the plaintiffs rely upon 42 U.S.C. § 290dd-3 (a), which prohibits the disclosure of records concerning “any patient which are maintained in connection with the performance of any program or activity relating to alcoholism or alcohol abuse . . . .” An identical provision governing confidentiality of patients diagnosed or treated for drug abuse is found in 42 U.S.C. § 290ee-3 (a). Implementing federal regulations define “patient identifying information” to include, inter alia, “information by which the identity of a patient can be determined with reasonable accuracy and speed either directly or by reference to other publicly available information.” 42 C.F.R. § 2.11 (j) (1985).

CHHC responds to these claims of an alleged breach of patient confidentiality by pointing out that, with respect to each data set, the actual name of the patient is not disclosed, but only a patient identifying number supplied by the hospital. This number serves only to show that a particular set of data relates to one patient’s hospital stay, but does not link the data to the actual identity of the patient. CHHC argues that such a number is expressly excluded from the meaning of the term “patient identifying information” in the federal regulation, specifically, “[t]he term does not include a patient identifying number assigned by a program.” 42 C.F.R. § 2.11 (1985).

Despite their objection before CHHC and the trial court to thirteen items of information in each data set, including the patient identifying number, the linchpin of the plaintiffs’ claim to us that a breach of confidentiality has occurred, lies, not in the submission of a patient identifying number, but rather, in the requirement to supply the patient’s ZIP Code including its four digit suffix. The plaintiffs argue that the ZIP Code constitutes “other descriptive data from which a person acquainted with the patient might reasonably recognize the patient as the person referred to.” General Statutes § 52-146d (4) (A). In its declaratory ruling, CHHC specifically rejected this essentially fact driven argument. Since this determination was one of fact, we will not reverse or modify such a holding unless we determine that the decision is clearly erroneous in view of the evidence and pleadings in the whole record. Practice Book § 4061.

“ ‘A finding is “clearly erroneous” when although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.’ ” Doyle v. Kulesza, 197 Conn. 101, 105, 495 A.2d 1074 (1985), citing United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525, 92 L. Ed. 746 (1948). We conclude that CHHC’s determination with respect to the ZIP Code information, and a person’s inability to determine a specific patient’s identity from it, was clearly erroneous.

On July 29, 1981, § 122.6 of the Domestic Mail Manual was revised to define and describe a national ZIP Code system that included for the first time, a nine digit ZIP Code. It provided: “The ZIP Code system is a numbered coding system which facilitates efficient processing of mail. The most complete ZIP Code is a nine-digit number divided by a hyphen between the fifth and sixth digits. The Postal Service has adopted the term ‘ZIP+4’ as its trademark for the 9-digit ZIP Code. The first three digits identify the delivery area of the section center facility (SCF) or major city post office serving the area in which the address is located. The next two digits (the fourth and fifth digits) identify the delivery area of the associate post office or branch station of the major city post office serving the address. The sixth and seventh digits (the first two digits following the hyphen) identify an area known as a sector. The eight and ninth digits identify a smaller area known as a segment. The final four digits of the ZIP+4 Code identify specific geographic units such as: a side of a street between intersections; individual buildings; a floor or group of floors in a large building; a firm within a building; a span of boxes on a rural route; or a group of post office boxes in which mail delivery will be made by a single postal employee.” See United States Postal Service, Domestic Mail Manual, § 122.612 (1992), incorporated by reference in 39 C.F.R. § 111.1, § 111.5 (c) (2) (iv) (1991).

In response to the introduction of this nine digit system, the United States Postal Service published a series of ZIP + 4 State Directories, excerpts of which were furnished to CHHC in connection with the plaintiffs’ petition for a declaratory ruling. Examination of this directory discloses that a given four digit suffix refers to a very small number of postal addresses. Indeed, in numerous instances, this suffix identifies by name just one person. Under such circumstances, we conclude that the four digit ZIP Code suffix constituted “other descriptive data from which a person acquainted with the patient might reasonably recognize the patient as the person referred to.” General Statutes § 52-146d (4) (A). That portion of the regulation requiring the submission of the ZIP Code suffix was contrary to the confidentiality mandates of existing law and was, therefore, invalid.

Once relieved, however, of their prospectively identifying four digit ZIP Code suffix, the remaining twelve items in the data set can no longer be linked to an ascertainable individual. Although the plaintiffs argued to CHHC that the remaining data constituted “information by which the identity of a patient can be determined with reasonable accuracy and speed either directly or by reference to other publicly available information”; 42 C.F.R. § 2.11 (1985); or, in the alternative, that it constituted a record “which identifies] a patient to any . . . governmental agency”; General Statutes § 52-146e (a); CHHC rejected these arguments based upon its evaluation of the evidence in the record. Unlike the claim with respect to the ZIP Code suffix, we see nothing in this record that suggests that CHHC’s rejection of these further factual claims was clearly erroneous.

The plaintiffs further argue that § 19a-165q-2 violated their patients’ constitutional rights to privacy and that the plaintiffs, as hospitals, have the right as third parties to advance the constitutional claims of their patients under the federal rule of jus tertii. The foundation of such an argument relies on the factual predicate that the hospitals had furnished CHHC confidential information pursuant to § 19a-165q-2. In view of our determination that with the excision of the four digit ZIP Code suffix, there is no reasonable likelihood of correlating a given data set with a specific patient, confidential information within any constitutional sense was not accumulated. We, therefore, decline to address this issue.

The judgment is reversed in part and the matter is remanded to the trial court with direction to render judgment ordering the excision of the ZIP Code suffix from the material accumulated by CHHC.

In this opinion the other justices concurred.

       The original petitioners were the Connecticut State Medical Society, the Connecticut Hospital Association, Inc., Joseph C. Czarsty, M.D., William A. Whalen, M.D., Joseph P. Zeppieri, M.D., the Greenwich Hospital Association, the Hospital of St. Raphael, Rockville General Hospital, Saint Vincent’s Medical Center and the Sharon Hospital. All of the petitioners, with the exception of Zeppieri, appealed from the agency’s decision to the Superior Court. The Connecticut Hospital Association, Inc., the Greenwich Hospital Association, Rockville General Hospital, St. Vincent’s Medical Center and the Sharon Hospital are the only parties to the present appeal.

       General Statutes (Rev. to 1985) § 4-176 provides: “Each agency may, in its discretion, issue declaratory rulings as to the applicability of any statutory provision or of any regulation or order of the agency, and each agency shall provide by regulation for the filing and prompt disposition of petitions seeking such rulings. If the agency issues an adverse ruling, the remedy for an aggrieved person shall be an action for declaratory judgment under section 4-175 unless the agency conducted a hearing pursuant to sections 4-177 and 4-178 for the purpose of finding facts as a basis for such ruling, in which case the remedy for an aggrieved person shall be an appeal pursuant to section 4-183. If the agency fails to exercise its discretion to issue such a ruling, such failure shall be deemed a sufficient request by the plaintiff for the purposes of section 4-175. Rulings disposing of petitions have the same status as agency decisions or orders in contested cases.”

       Section 19a-165q-2 (a) of the Regulations of Connecticut State Agencies then provided in part: “definitions. For the purpose of this section and except as otherwise noted, the following words and phrases have the following meanings:
      “(12) Procedures and days performed.
      “(A) ‘Procedure’ means a significant procedure that carries an operative or anesthetic risk, requires highly trained personnel, or requires special facilities or equipment. Procedures will be reported in ICD-9-CM coding. For each procedure, the day in the length of stay on which the procedure was performed is also to be reported.”

       Section 19a-167g-94 (g) (7) of the Regulations of Connecticut State Agencies provides in part as follows: “Data elements and suppression thresholds for nonconfidential reports.
      “(A) To create a nonconfidential report, the following data elements collected under this section will be replaced by substitute data elements which have been modified for purposes of confidentiality as follows . . .
      “(iv) Zip code will be replaced by an aggregation of zip codes composed of at least two contiguous zip codes and subject to the provisions of subsection (7) (B). . . .
      “(B) Thresholds for data suppression for nonconfidential reports. . . .
      “(iv) Any nonaggregated report which contains data elements by discharge shall not contain the data element ‘hospital code,’ and shall contain a substitute for the data element ‘zip code.’ This substitute shall be composed of an aggregation of zip codes equivalent to the health service areas created pursuant to the National Health Planning and Resources Development Act, Public Law 93-641.”

       The history of the statutory enactments that served as the basis for the promulgation of § 19a-167g-94 of the Regulations of Connecticut State Agencies is as follows. On June 30,1989, the General Assembly passed No. 89-371 of the 1989 Public Acts, which repealed, inter alia, General Statutes § 19a-165q and its attendant regulation, § 19a-165q-2 of the Regulations of Connecticut State Agencies. It was thereafter codified as General Statutes §§ 19a-167g through 19a-167k. It provided for the establishment of net and gross revenue caps for each hospital as a means of determining a hospital’s total revenues during a given fiscal year. General Statutes § 19a-167g provides that the “commission shall adopt regulations . . . to implement, administer and ensure compliance with sections 19a-167 to 19a-167f, inclusive, and section 19a-167h and to establish hospital efficiency standards to be used in the budget review process pursuant to section 19a-167c.” It was pursuant to this statute that CHHC promulgated § 19a-167g-94.

       General Statutes § 52-146e (a) provides in relevant part: “Except as provided in sections 52-146Í to 52-146i, inclusive, no person may disclose or transmit any communications and records or the substance or any part or any resume thereof which identify a patient to any person, corporation or governmental agency without the consent of the patient or his authorized representative.” (Emphasis added.)
      General Statutes § 52-146d defines material that “identifies a patient” as follows: “privileged communications between psychiatrist and PATIENT. DEFINITIONS. . . .
      “(4) ‘Identifiable’ and ‘identify a patient’ refer to communications and records which contain (A) names or other descriptive data from which a person acquainted with the patient might reasonably recognize the patient as the person referred to, or (B) codes or numbers which are in general use outside of the mental health facility which prepared the communications and records.”

       Title 42 of the United States Code, § 290dd-3 (a) provides: “Records of the identity, diagnosis, prognosis, or treatment of any patient which are maintained in connection with the performance of any program or activity relating to alcoholism or alcohol abuse education, training, treatment, rehabilitation, or research, which is conducted, regulated, or directly or indirectly assisted by any department or agency of the United States shall, except as provided in subsection (e) of this section, be confidential and be disclosed only for the purposes and under the circumstances expressly authorized under subsection (b) of this section.”

       CHHC concluded that “[t]he data which is submitted, pursuant to Connecticut Regulations § 19a-165q-2, (including the ZIP Code), does not contain descriptive data such that a person acquainted with the patient might reasonably recognize the patient as the person referred to in the data.”