Allied Mortgage Companies v. Kolker

Sloan, J., delivered the opinion of the Court. November 3, 1925, the Mortgage Realty Company gave a mortgage to the Sun Mortgage Company, for $8,000 ¹²⁸ payable two years after date. One, Israel Silberstein, 'joined in the mortgage “to become bound on the personal covenants and indebtedness, but has no interest in the property.” On the same day, November 3, 1925, Silberstein entered into an agreement with the Sun Mortgage Company and with the State Büilding and Loan Association whereby Silberstein agreed to and did deposit with the State Association the sum of 82,000 “to assure the repayment of the loan of Eight Thousand Dollars and accrued interest thereon.” December 19, 1925, the Mortgage Realty Company, with the consent -of the Sun Mortgage Company, sold and assigned the mortgaged property, which was a leasehold, No. 538 North Arlington Avenue, Baltimore City, to one, Walter K. Bachrach. Bachrach, by an agreement dated December 17, 1925, not under seal, agreed with the Sun Mortgage Company “to become liable with the mortgagors or any other parties already liable to the party of the second part (Sun) for the repayment of the unpaid principal of the loan, interest and expenses, due and payable under the provisions of the aforesaid mortgage,” and agreed to any renewals or extensions of payment on the request of any one interested in the mortgage or property.

July 9, 1926, the Sun Mortgage Company assigned the mortgage to the Union Trust Company, Trustee, which held it until October 28, 1935, when it assigned it to the Allied Mortgage Companies, Inc. August 16, 1927, Silberstein assigned the hypothecated sum of 82,000 to Abraham Alter and Benjamin Kolker, partners trading as Maryland Lumber Company, of which Kolker is now sole owner, to whom the dividends of six per cent per annum on the hypothecated sum were paid to February 13, 1935. On August 26, 1937, foreclosure proceedings were instituted by the Allied Companies, Inc., and the property sold. According to the auditor’s report, ratified December 6, 1937, there was a deficit on the mortgage of 84,346.23. On December 11, 1937, as charged by the appellee, without notice to or consent by him, the State Building and ¹²⁹ Loan Association paid out of the hypothecated funds the sum of $2,247.20.

On April 25, 1940, Allied Companies, Inc., executed a release to Bachrach of all its claims against him on account of the mortgage, and entered the foreclosure proceedings to his use. The bill of complaint prayed: (a) That the assignment to the use of Bachrach in the foreclosure proceedings be stricken out; (b) that a money judgment in favor of the plaintiff for $4,346.23 be decreed against Walter K. Bachrach; and (c) that a money judgment for $2,382.02 be decreed against the Allied Mortgage Companies, Inc., and the State Building and Loan Association. On the same day the mortgage for 88,000 was executed, November 3, 1925, the Mortgage Realty Company and Israel Silberstein gave a second Mortgage to the State Building and Loan Association for $4,030. At the same time Silberstein entered into an agreement with the State Association whereby he deposited with it as collateral security for the second mortgage the sum of $1,500.

August 16, 1927, Silberstein assigned the second mortgage collateral so deposited to the Maryland Lumber Company to which the State has since paid six per cent dividends and $841.92, leaving a balance of $658.08, out of which $501.40 was applied to the second mortgage, and the balance, 8158.68, paid to the Maryland Lumber Company, December 15, 1937, and the second mortgage released April 25, 1940. With the consent of the court, the plaintiff filed a “supplementary bill of complaint,” praying that the release of the second mortgage be stricken out, and the State Building and Loan Association directed to execute an assignment of the mortgage to the plaintiff. The decree appealed from directed the Allied Mortgage Companies, Inc., and Walter J. Bachrach to pay to Benjamin Kolker the sum of $2,247.20 with interest from the date of the decree, dismissed the supplementary bill of complaint, and dismissed the entire proceedings as to the State Building and Loan Association. ¹³⁰ The plaintiff’s first contention is that when the Allied Companies, Inc., bought the mortgage held by the Sun Mortgage Company, it did not buy and was not entitled to the collateral deposit made by Silverstein; that the latter’s agreement and deposit was personal to him and the Sun Mortgage Company. In the first place the plaintiff' did not demand the sum deposited until he filed his bill of complaint in this case, and drew the dividends thereon, in accordance with the agreement, for twelve years.

In so doing the plaintiff recognized the right of the State Building Association to hold the deposit pend- ' ing the payment or foreclosure of the mortgage. By its terms the collateral agreement of Silberstein provided for the deposit of “Two Thousand Dollars in cash as additional security to assure the repayment of the loan of Eight Thousand Dollars and accrued interest thereon.” But aside from these considerations, the rule is that the assignment of a debt carries with it the