Berean Bible Chapel, Inc. v. Ponzillo

Gilbert, J., delivered the opinion of the Court. This appeal calls upon us to construe Real Property Article § 4-109, the prior conveyance curative provisions of the article, with respect to its effect on subsequent creditors without notice. The factual happenings out of which this appeal arose are uncomplicated. On May 22, 1972 Rita Helen Comi executed a mortgage in favor of Imogene Ponzillo.

The mortgage was a lien upon property known as 2026, 2028 and 2030 Orleans Street in Baltimore City. A default occurred on the mortgage and a foreclosure sale resulted. Berean Bible Chapel, Inc., a Maryland religious corporation, was the successful bidder at the sale, they having bid $14,000.00. After the sale was reported by the trustee to the Circuit Court of Baltimore City and within the time allowed by that court’s order nisi, the purchaser excepted to ratification of the sale.

The purchaser pointed out that the mortgage from Comi to Ponzillo “. . . was not acknowledged or was improperly acknowledged and . . . there was also a lack of acknowledgment or affidavit of consideration. . . .” Consequently, the purchaser charged that the trustee could not “give a good and marketable title to the purchase*- ” The matter was referred to the Master in Chancery, Harry M. Sachs, Jr. Mr. Sachs submitted a “Report and Recommendation” to the Chancellor in which Sachs concluded that, “. . . the purchaser takes good title from the trustee and that the equitable lien which is in the process of being enforced by virtue of these proceedings takes a priority over the other lien creditors if there be any.” The purchaser noted exceptions to the Master’s report and recommendation. Judge Joseoh C. Howard, after a hearing ⁵⁹⁸ on the exceptions to the Master’s report, issued an order dated February 20, 1975 in which he overruled the purchaser’s exceptions and affirmed the report of the Master. In the same order Judge Howard “ratified and confirmed” the sale by the trustee to Berean Bible Chapel, Inc., and Berean entered an appeal to this Court. We shall affirm Judge Howard’s order for the reasons hereinafter stated.

The acknowledgment portion of the form mortgage executed by Comi in favor of Ponzillo reads: “On this 22nd day of May, 1972, before me, a Notary Public of said State, personally appeared _ known to me, or satisfactorily proven to be the person whose name is subscribed to the within Mortgage, and who acknowledged that she executed the same for the purposes therein contained. At the same time also appeared--agent of the within named corporation, Mortgagee, and made oath in due form of law that the consideration set forth in said mortgage is true and bona fide as therein set forth, and also made oath that he is the agent of the Mortgagee and duly authorized to make this affidavit. As Witness my hand and Notarial Seal.” Thereafter the notary subscribed her name and affixed her official seal. The Court of Appeals in Pagenhardt v. Walsh, 250 Md. 333, 335 , 243 A. 2d 494, 496 (1968) quoted H. Ginsberg and I. Ginsberg, Mortgages and Other Liens in Maryland 56 (1936), wherein the authors state: “If the affidavit [of consideration] is lacking or if the affidavit is bad, the mortgage will, as a general rule, have no effect except as between the parties.

The mortgage is not absolutely void, but will have the effect of an equitable mortgage. As such mortgage, it will yield to the specific lien created by an attachment, even though such attachment is ⁵⁹⁹ based on a prior existing debt. But it will be good against a judgment creditor who acquires such judgment subsequent to the mortgage but on a prior debt.” Judge Singley, writing for the Court in Pagenhardt , after noting the history of the Court’s treatment of the various cases that it had considered with respect to a lack of or defective affidavit of consideration or acknowledgment (at 336-338), went on to say: “. . . [S]trict and literal standards are to be applied to the form of the affidavit. Dyson v. Simmons, [ 48 Md. 207 (1878)] . . .; Reiff v. Eshleman, [ 52 Md. 582, 588 (1879)] . . ., which holds that the making of the oath cannot be the subject of parol proof; Jackson v. County Trust Co., [ 176 Md. 505 , 6 A. 2d 380 (1939)].. . .

An affidavit deficient in form . . . like a defective mortgage, except as between the parties, or as to those having actual notice, is regarded by the Maryland cases as a nullity, since it creates no valid lien and cannot be regarded as having put subsequent creditors on constructive notice.” 250 Md. at 338 . See also Dryfoos v. Hostetter, 268 Md. 396, 403 , 302 A. 2d 28 (1973). Under the Pagentiardt and Dryfoos holdings the mortgage in the instant case, except as between the parties, would be a nullity with respect to subsequent creditors without actual knowledge, were it not for the curative provisions of Real Property Art. § 4-109. 1 That section provides, in pertinent part: “(a) Defective grants recorded before January 1, 1973. — If an instrument was recorded before January 1, ⁶⁰⁰ 1973, any failure of the instrument to comply with the formal requisites listed in this section