Asbell v. Marshall Building & Loan Ass'n

¹⁰⁷ Pattison, J., delivered the opinion of the Court. The appellants, Philip Asbell and Sarah Asbell, his wife, on the 27th day of September, 1923, executed a mortgage unto the appellee, the Marshall Building and Loan Association, upon sixteen houses in the City of Baltimore, to secure a loan of $19,200, made to them by said association. The appellants, in the mortgage executed by them, covenanted with the appellee, the building and loan association, to pay to it so much each week upon the mortgage debt, and so much each week as interest and premium, and also covenanted to pay, when due and demandable, the ground rent, water rent and taxes, and all other public dues, charges, rents and assessments for which the mortgaged property or debt was liable. The mortgage also contained a provision that the entire mortgage debt was to' mature in four years from the date of the mortgage, and whatever balance remained owing on said mortgage debt at that time became due and payable on demand.

Among the covenants found in the mortgage, is the following : “It is also covenanted and agreed by the said mortgagors that in the event of a sale or transfer of title of the said mortgaged premises, voluntary or involuntary, then, and in that event, the entire mortgage debt becomes due and payable.” At the time of the execution of the mortgage, the appellants paid to the association an entrance fee of $960, and at such time it was agreed between the parties that $4,800 of the loan should remain with the association as a deposit to the credit of the appellants, as evidenced by a pass book issued to them. The mortgage also contained the consent of tin; mortgagors that a decree should be passed for the sale of the mortgaged property if default occurred in any of the covenants or conditions of the mortgage. On the tenth day of October, 1923, the appellants conveyed the mortgaged premises to Lerner Brothers, who, in the deed to them, assumed the payment of the mortgage debt. Thereafter the association received, and credited on the ap ¹⁰⁸ pellant’s account, checks of Lerner Brothers, “representing payments on account of dues, interest and expenses under the mortgage.” On May 15th, 1924, the mortgaged property was sold at public auction by Lerner Brothers to one Zetzer, and on the 18th day of August, 1924, the property so sold was, by deed of that date, conveyed by Lerner Brothers to Zetzer, subject to the mortgage resting thereon, and in that deed, which was placed on record February 13th, 1925, Zetzer assumed the payment of the mortgage debt, and thereafter made weekly payments to the association on account of said indebtedness.

After the sale of the property to Zetzer, the appellant, Philip Asbell, made demand upon the association for the payment to him of the $4,800 left with it as a deposit. The association refused to pay it and, on August 20th, 1925, the appellants brought suit in the Baltimore City Court against the association to recover the $4,800 so left with it. At or about the time of the institution of the suit in tire Baltimore City Court, the appellants brought suit against the association in the Superior Court of Baltimore City to recover the $960 paid by them as an entrance fee. The $4,800 was thereafter paid to Asbell upon a resolution passed by the directors of the association, at a meeting on November 26th, 1925, at which Asbell was present.

The resolution was that “Mr. Asbell be paid the sum of $4,800 hypothecated by him as security for his loan on the property on Cleveland Street (the property here referred to) mortgaged by him, with the understanding, however, that the association does not waive any right against Mr. Asbell.” And the suit, instituted to recover the same, was on November 27th, 1925, marked “Settled”; and on December 1st of the same year, the entry of “Agreed and settled, upon payment of the costs by the defendant” was made in the suit instituted in the Superior Court. After the passage of the decree and the appointment of the trustee on the day mentioned, and while the proceedings were still pending, but before any sale was made of the mortgaged property, Zetzer and wife, with Benjamin L. ¹⁰⁹ Ereeny as surety, on the 16th day of November, 1925, executed and delivered to_ the association the following bond: “Whereas by mortgage dated Sept. 26th, 1923, and recorded among the Land Records of Baltimore City in Liber S. O. L. No. 4081, folio 21, etc., one Philip Asbell and wife executed a mortgage to the Marshall Building and Loan Association on sixteen certain houses on Cleveland Street, in Baltimore City, to secure a loan of nineteen thousand two hundred ($19,200.00) dollars, advanced to them by said association, and “Whereas said mortgage contains a clause constituting the same in default upon any change in ownership, unless consented to in writing by said mortgagee, notwithstanding which, one Jacob Zetzer has, since the execution of said mortgage, assumed title to said property subject to said mortgage, and that the said mortgagee has not consented to said change in ownership, but has begun proceedings to sell the said properties under said mortgage, and has served notice on the said Zetzer that unless the mortgage indebtedness is at once liquidated, the sale would proceed, and “Whereas the undersigned have agreed with the said association to guarantee the payment of part of said mortgage indebtedness, to wit: three thousand ($3,-000.00) dollars, upon the condition that the association waive its right to foreclose said mortgage on account of default referred to. “Now, Therefore, the condition of this obligation is such that if the amount due the association with interest is paid to them, this obligation shall bo null and void, but in the event the said association shall sustain any loss if said properties are sold for an amount insufficient to liquidate the indebtedness, after deduction of proper costs and expenses, the undersigned covenants and agrees to indemnify them against any loss to the extent of three thousand ($3,000,00) dollars.” After the execution of the aforegoing bond, and after the institution of the foreclosure proceedings, Zetzer, on the 18tli ¹¹⁰ day of January, 1926, before the sale was made by the trustee, sold and conveyed the mortgaged premises to one Herman Canter. In the deed to him, however, Canter did not-assume the payment of the mortgage debt. In the agreed statement- of facts, found in the record, it is shown that to June 26th, 1924, the payments were made on account of the mortgage in accordance with its terms.

Thereafter the payments were made with less regularity, and on the 13th day of February, 1925, the day upon which the deed from Lerner Brothers to Zetzer was recorded, there was owing upon the principal the sum of $165.16, but nothing on the interest. The delinquencies in making the payments thereafter increased, and on October 29th, 1925, less than one month before the above mentioned bond was executed, there was due and owing upon the principal $192.60, though at the time of the sale there was due and owing upon the principal more than $4,000 and interest from August 4th, 1927. The sale made by the trustee on the 29th day of September, 1927, was finally ratified and confirmed on the following 7th day of November, and the audit thereafter stated was finally ratified and confirmed. It was showm by the audit that, after applying the proceeds of the sale to the payment of the mortgage debt and interest and the cost and expenses of the sale, there still remained due and owing to the association on the mortgage debt the sum of $9,048.35.

Thereafter, upon the petition of the association, a decree in personam in favor of it against the appellants for the said sum of $9,048.35 was passed by the court, on November 28th, 1927. It is from that decree of the court that this appeal is taken. It is conceded by the appellants that the effect of the sale and conveyance of the mortgaged property to Zetzer, subject to the mortgage indebtedness, which he assumed to pay, was to make him the principal debtor and the appellants sureties for the payment of such debt, but they contend that while this is true, they are released and discharged from all liability as sureties, because of the execution and acceptance, without their consent, of the aforegoing bond, executed on ¹¹¹ the 16th day of November, 1925, which had the effect, as claimed by them, of extending the time of payment, or, if it did not have that effect, it amounted to a material change in the contract between the parties, prejudicial to the appellants. It is the settled rule of law of this state, as contended by the appellants, that