Baker v. Hill

Page, J., delivered the opinion of the Court. This is an appeal from an order of the lower Court, sustaining exceptions to an account of the auditor, distributing the estate of the Washington and Baltimore Building and Loan Association, and disallowing the claim of the appellant. The facts are undisputed. In 1897 the Rapid Transit Con ¹³⁷ struction Company of Baltimore City borrowed from the appellant the sum of eleven thousand dollars, and secured the same by a mortgage upon certain real estate.

The mortgage does not appear in the record, but it is conceded that it contains the usual covenants, among them that until default the mortgagor should remain in possession of the mortgaged premises. On the 9th of December, 1897, the Rapid Transit Company conveyed the said real estate, subject to the mortgage, to the Washington and Baltimore Loan Company. The taxes for the year 1901 being due and unpaid, the Tax Collector of Baltimore County sold five acres of the tract to John H. Stirn, who was the tenant, for the sum of $290.50. On the 13th day of October, 1902, the last-mentioned corporation was by an order of the Court placed in the hands of the appellees, as receivers, with power to take possession of its property, &c., until the further order of the Court.

On the fifth day of December, 1902, the appellant filed her petition, and the Court ordered that she have leave to pursue and exercise all of the rights and remedies in her vested by the terms and provisions of the mortgage; whereupon she proceeded to foreclose, and on the fifteenth day of January, 1903, became the purchaser of the mortgaged premises for the sum of $10,200, an amount not sufficient to discharge the mortgage debt. Subsequently the appellant redeemed the land that had been sold for the taxes of 1901 by the payment to Stirn of the sum of $290. 50, with interest thereon at the rate of ten per cent and the costs. On the 12th December, 1902, the receivers collected from the tenant the sum of $300 on account of rent for the year 1902; and on the 22nd December, the balance of the said annual rent, the further sum of $200, amounting in all to the sum of $507. 22. The appellant prayed the Court to pay to her out of this sum the sum of $301.26 paid by her in the redemption of the property, as stated, and also the residue of the rent collected on account of the taxes for the year 1902.

The Court in sustaining the exceptions to the auditor’s report, overruled and disallowed her claim, and from its order she has appealed. ¹³⁸ From this statement of the facts of the case it is clear that the right of the mortgagor to collect the rents (those then accrued or thereafter to accrue, as-,long as the receivership, continued), ceased on the appointment of the receivers; and by virtue of the authority and direction of the Court passed to them. But the latter did not by their appointment become the assignees of the property. They were only entrusted with the care of it; and it was then in custodia legis “to await the ultimate disposal thereof by the Court, according to the rights and priorities of the parties concerned.” Gaither v. Stockbridge, 67 Md. 225 . Notice to the tenant, therefore, not to pay the rent to the mortgagor but only to the mortgagee would have been wholly unavailing by reason of the fact that the rents and profits, being within the order of Court, could only have been paid to the receivers.

Such notice, therefore, under the circumstances could only be effectual as being one of those “slight acts” referred to in Barron v. Whiteside, 89 Md. 463 , sufficient for the mortgagee to manifest his intention or his purpose to collect the rents himself. But that was not the only means by which that intention could be manifested; for that purpose only “slight acts” are necessary. The payment of the rent on the 5th and 22nd December to the receivers might therefore exonerate the tenant from further liability, but cannot be regarded as the equivalent to payment of the mortgagor. The receivers having no estate in the property cannot in any sense be regarded as standing in the place of the mortgagor.

The mortgagee also was restricted by the appointment of the receivers. The rents and profits, being in the custody of the Court, she could not exercise any