Busey v. Perkins

Parke, J., delivered the opinion of the Court. On June 1st, 1929, two sisters, Ida Grace Parrish, widow, and Mary Laura Busey, widow, executed a mortgage deed of real and leasehold property to Clarence W. Perkins, trustee, to secure equally the payment of an aggregate sum of $87,027, for which the mortgagors were liable as the makers or indorsers of notes to divers individuals and corporations. In consideration of the execution of the mortgage deed, the mortgage creditors agreed to postpone the time of payment of the obligations secured for the period of one year accounting from June 1st, 1929, within which period the mortgagors agreed to pay the mortgage debts, with interest thereon payable semi-annually. By the terms of the mortgage, the trustee had the power to release any of the property, granted and conveyed by the mortgage deed, at any time during the existence of the mortgage lien, for the purpose of selling such property at a purchase price whose sufficiency was to be determined by the trustee.

The proceeds of any sale so made were to be applied pro rata to the payment of the mortgage debts. The mortgage stipulated that, upon the assignment, transfer, or mortgage sale of the mortgaged property, without the consent in writing of the mortgage trustee being first had, the mortgage trustee, at his option, could declare the debts due and payable, and, unless paid, could foreclose. Aside from these special provisions, the mortgage deed contained the usual provisions and covenants, including one prescribing the trustee’s commissions, in the event of sale, to be those usually allowed to trustees for making sale of property by virtue of a decree in chancery. On the day of the execution of the mortgage deed, and in pursuance of an alleged agreement of all the parties in interest, the trustee in the mortgage deed, and the ²² creditors secured by it, entered into an indenture which recited the execution of the mortgage deed of trust, its essential provisions, and the grantee’s acceptance of the trust created, and then provided that the trustee might mark, within five days and for the purpose of identification, the evidences of indebtedness held by the mortgage creditors and intended to be secured; that the trustee would make every effort, during the existence of the mortgage, to sell advantageously, at either public or private sale, sufficient of the mortgaged property to pay the mortgage indebtedness, but, upon the contingency that the mortgage claim should not be so discharged by June 1st, 1930, the trustee would then foreclose the mortgage deed; and that, if the trustee should release any of the mortgaged property, it would only be when the price paid would be fair and just, and the property remaining subject to the mortgage lien sufficient to protect the obligations due the mortgage creditors.

A third contemporaneous and complementary document was a power of sale given by the two mortgagors to their solicitor, empowering him to sell their property during the period of one year, and to be paid the usual commission for his services. The mortgage indebtedness was not paid, and on January 16th, 1934, the trustee began foreclosure proceedings in the Circuit Court of Baltimore City, where a decree of foreclosure was obtained for a sale of the mortgaged premises in that city pursuant to the statute, by reason of the assent having been declared by the mortgagors in the mortgage deed. Public Local Code (Flack) vol. 1, title Baltimore City, art. 4, secs. 720-724. On January 30th, 1934, Mary Laura Busey, one of the mortgagors, filed a petition in the foreclosure proceedings against the trustee and the other mortgagor, Ida Grace Parrish, praying that the mortgage deed of herself and her sister should be annulled on the grounds of fraud and mistake; that the trustee be restrained from foreclosing and exercising any of the powers granted; that the decree of foreclosure be rescinded; that an interlocutory injunction be granted to prevent any further pro ²³ ceedings by the trustee under the decree; and that the petitioner have other and further relief.

Ida Grace Parrish, co-mortgagor, filed an answer which admitted the allegations of the petition, and prayed that the mortgage be set aside and that she be accorded the same relief that had been asked by her co-mortgagor. The trustee filed an answer in denial of the material allegations of the petition. Five of the corporate creditors intervened and answered, and four combined demurrers with their answers. The cause then being at issue, testimony was taken before the chancellor, who, after a hearing, passed a decree dismissing the petition of Mary Laura Busey.

The appeal is from this decree. The petitioner, Mary Laura Busey, is the widow of J. Clarence Busey, who died in 1889. She is the sister of Ida Grace Parrish, whose husband, Edward M. Parrish, died on April 21st, 1929. The sisters are children of John Waters, who died in 1916, and Mary E. Waters, his wife, who died in 1917.

Their father had his residence in Baltimore County, where the two sisters lived during the lives of their parents, and have since continued to live. Upon the death of their parents, the two sisters became the owners as tenants in common of valuable real and leasehold property and of various securities. Each sister continued to hold this real and personal property in undivided one-half interests. With the exception of some furniture and her personal effects of little value, the petitioner had no other property.

Soon after the death of Edward M. Parrish, his widow requested Clarence W. Perkins, an attorney at law, to settle her husband’s estate. The attorney reported the estate to be insolvent, with an indebtedness of $129,353.-99, that was chiefly held by banks. On this indebtedness, the petitioner, who had signed for accommodation, was an indorser, or maker, in varying amounts, for the aggregate sum of $15,892; and Mrs. Parrish was similarly bound in the amount of $73,867. A number of the notes contained a power for the entry of judgment by confession, and, within one week after the death of Parrish, a ²⁴ judgment by confession had been entered against Mrs. Parrish, which was quickly followed by another.

The maturities of many of the notes were near at hand, while all would become due by the end of August, 1929. It was known that no substantial amount would be received from the greatly insolvent estate of Parrish, and that practically all of the burden of the heavy obligations for which his wife and her sister had become responsible must be speedily met. The real ¡and leasehold property of the sisters in the city was unincumbered, but the land in Baltimore County was subject to an overdue first mortgage lien of $5,000, which was held by the Savings Bank of Baltimore, and which had been on the land at the death of their father. Mrs. Busey had sufficient resources to meet her separate obligations, but her sister was unable to procure $73,867 to satisfy her creditor's.

Practically all of the assets of the sisters, except the deposits in bank, were not liquid, as these consisted of real and leasehold property, and a mortgage lien of $26,000 on land which they liad sold. The property conveyed by the mortgage deed of trust of June 1st, 1929, was appraised as of that date by real estate experts who valued the tract of 370 acres in the county at $315,350, and that in the city at $37,125. While the land in the county was valuable, it did not have a ready market and, therefore, time was required for its disposal. The financial situation, therefore, was that, while Mrs. Busey could meet her individual liabilities, Mrs. Parrish could not, apd Mrs. Busey did not have sufficient available assets to pay the obligations of both.

However, if the two sisters should give a mortgage on all the real and leasehold property which they held as tenants in common, all the creditors of each sister would be secured. This security was demanded by the creditors as the price of their forbearance to press the immediate collection of their obligations by suit, judgment, and execution. If Mrs. Busey satisfied the demands against her, and left Mrs. Parrish to meet her own very much greater debt, the creditors of the latter would have secured judgments, ²⁵ upon which writs of execution would issue against the undivided one-half interest of Mrs. Parrish in the real and personal property of which the two sisters were seised and possessed as tenants in common. The effect of such a course would have been a reduction in the sale value of the undivided moiety of property held by Mrs. Busey, and the passage of the undivided one-half interest of Mrs. Parrish to the purchasers at the execution sales, who would have then become the cotenants of Mrs. Busey.

The only methods of terminating such an objectionable status