Carozza v. Peacock Land Corp.

Prescott, J., delivered the opinion of the Court. High bidders of $275,700 at a mortgage foreclosure sale, conducted by a trustee appointed by a decree of court, who had their exceptions to the ratification of said sale overruled, appealed from the decree finally ratifying and confirming the sale. The appellants raise several questions, but in the view we take of the case, it will only be necessary to answer one of them, namely, was the advertisement of sale so deceptive and misleading as to render the sale voidable at the option of the purchasers ? The property is located at the southeast corner of the intersection of York and Timonium Roads, and, for several years had been operated as a drive-in restaurant with parking facilities.

We shall not set forth the advertisement in full. In the main, it is in the customary form. The following are the portions that the appellants claim render it fatally defective: “2. [The property to be sold] being known and designated as Lots Nos. 1, 2, 3, 4, 5, 6 and 7 in Section C, as shown on the plat of Yorkshire, which Plat is recorded among the Land Records of Baltimore County in Plat Book W.P.C. No. 7 folio 21. “Improved by a large modern drive-in restaurant, the main area of which is approximately 76 feet by 62 feet, with canopy-covered concrete service islands situate on fully-paved lot fronting approximately 330 feet on York Road [italics ours], with substantial frontage on Timonium Road.” The description of the property in the advertisement, omitting the decription of the improvements, is in substantial accord with the description thereof in the mortgage foreclosed. Unfortunately, however, the owners had deeded to Baltimore County .083 of an acre thereof for road improvement purposes ¹¹⁶ before the mortgage was recorded.

This out-conveyance was not reflected in the description in the mortgage or the advertisement of sale. Appellants promptly ordered the title examined, and the title report revealed that, prior to the execution of the mortgage, the owner had conveyed a three-sided segment of the property at the intersection of York and Timonium Roads. This segment was bounded by a straight line some 104 feet on York Road, a straight line about 155 feet on Timonium Road, and the third line a curve connecting the point 104 feet south on York Road and the point 155 feet east on Timonium Road. This parcel included all of Lot No. 1 and portions of Lots Nos. 2, 3 and 4, in Block C, and it partially eliminated access to the retained property across the frontages on York and Timonium Roads mentioned above.

We will mention later the effect that the above conveyance had upon the retained property due to building setback regulations. After receiving the title report, the appellants filed their exceptions, which were dismissed by the chancellor, and the sale was finally ratified and confirmed. This appeal followed. The appellees raise several questions which we shall determine first.

They contend that the sale involved was “a sale in gross,” hence the purchasers are required to accept the property irrespective of the description in the advertisement of sale. In Kriel v. Cullison, 165 Md. 402, 408 , 169 A. 203 , this Court stated that “a sale in gross, sometimes called a ‘contract of hazard/ is where specific designated parcels of land are sold as a whole and there is no warranty, express or implied, as to quantity.” The Court continued at page 409: “If the representation of the quantity be mere matter of description, and not of the essence of the contract, as where there are qualifying words, as ‘more or less/ or ‘by estimation/ the vendee must be understood as assuming upon himself the risk of the quantity.” From the above definition, it is apparent that whether a sale is “in gross” depends upon the facts and circumstances of each particular case. ¹¹⁷ Decisions in this Court that deal with “sales in gross” will be found in Slowthower v. Gordon, 23 Md. 1; Tyson v. Hardesty, 29 Md. 305; and Jenkins v. Bolgiano, 53 Md. 407 , all cited by appellees. The first two cases dealt with sales of acreage. In Slowthower , the property was described as “that valuable cotton factory known as the Phoenix Factory, with 187 acres of land, more or less, attached thereto.” In Tyson , the agreement was “to sell the Wilna Farm * * * for the sum of eleven thousand dollars, 171 acres more or less.” The Court stated that the principle deduced from the cases preceding Tyson was that when, by the contract of sale, the qualifying words “more or less,” or equivalent expressions (such as “by estimation”), have been used, they import that quantity did not enter into the essence of the contract, and, in the absence of fraud, neither party can claim relief either for a deficiency or a surplus. 1 In the Jenkins case, a lot in Baltimore City was conveyed by a metes and bounds description, calling for 94 feet on Lanvale Street and 216 feet on Lovegrove Alley, but the owner did not have the full quantity of land contained in ■ the description.

The papers involved in the transaction contained no warranty, express or implied, as to the quantity of land sold. The Court held that quantity did not enter into the essence of the contract; hence the purchaser assumed the risk as to quantity. In the instant case, we have a markedly different situation from any of the above cases, cited by the appellees. The words “more or less” or “by estimation,” or their equivalent, are not used in the advertisement.

We are dealing with highly valuable ¹¹⁸ business property. The advertisement stated that the trustee was offering for sale “Lots 1, 2, 3, 4 [etc.] in Block C,” and the offering fronted “approximately 330 feet on York Road, with substantial frontage on Timonium Road.” This, we think, was a definite representation and warranty as to the quantity ■of land to be sold, the quantity being that called for in the advertisement, and its “approximate” frontage on York Road, 2 which removed the subject sale from the definition of “a sale in gross.” Kriel v. Cullison, supra. More will be said later concerning the materiality of the representation, or misrepresentation, and the trustee’s inability to convey the property as advertised. The appellees also argue that the doctrine of caveat emptor was applicable to the sale; consequently the purchasers assumed the risk of the quantity of land to be conveyed and its frontages on York and Timonium Roads.

The appellants having filed their exceptions prior to the sale’s ratification, this question would seem to be answered by the flat statement of this Court in Byrd v. Day, 138 Md. 442, 445 , as follows: “It is also claimed on behalf of the appellant that the rule of caveat emptor applies to the present case [one of a mortgage foreclosure], but it has been repeatedly held both in this State and elsewhere that the rule of caveat emptor has no application where a judicial sale is involved until after the sale has been finally ratified.” However, the appellees urge the somewhat unusual claim that the above statement means that prior to the ratification of ¹¹⁹ a sale, the doctrine of caveat emptor does not apply to such “matters concerning the legal status of title determinable only by reference to the land records,” but it necessarily and logically applies “to matters concerning the physical characteristics, quantity, etc., of the land.” No citation of authority, local or otherwise, is made to support the proposition, and to uphold it would proceed in the teeth of our own decisions and the authorities elsewhere. As early as the case of Tomlinson v. McKaig, 5 Gill 256, 276 , this Court said: “Before the ratification * * * all objections to a sale are open for consideration, and the sale will be set aside upon the proof of error, mistake, misunderstanding or misrepresentation as to the terms or manner of the sale. Before ratification, the sale must appear to be in all respects fair and proper, or it cannot receive the sanction of the court.” And in Hunting v. Walter, 33 Md. 60, 62 , the opinion stated: “It would be a great wrong to hold a purchaser, who became such through a mistake * * * to a strict compliance, unless some rule of law required it.” See also Kauffman v. Walker, 9 Md. 229, 240; Stewart v. Devries, 81 Md. 525 , 32 A. 285 ; 30A Am. Jur., Judicial Sales, § 58; Freeman, Void Judicial Sales (4th Ed.), p. 163; Hammond v. Cailleaud, 43 P. 607 (Cal.).

We hold that the doctrine of caveat emptor did not apply to the subject sale. But if we accept for a moment, .arguendo, appellees’ above notion, it is difficult to conceive a more vital thrust at a matter “concerning the legal status of title determinable only by reference to the land records” than the fact that a part of the land advertised to be sold had already been conveyed away. This brings us to the heart of the case. At the outset, it must be noted that this is not a case where either the owner or the purchaser is claiming that the trustee failed, properly, to describe in his advertisement the location of the premises.

Here, the purchasers claim there were material misrepresentations in the advertisement of sale as to the quantity, nature and characteristics of the property to be sold, upon which they had a ¹²⁰ right to rely, and did rely to their prejudice, and such misrepresentations and their reliance thereon entitle them to be released from the obligation to purchase the subject property. Here, the authorities cited will be quite similar to those mentioned when we dealt with the question of caveat emptor. It is well established that if the question be raised in time, the court will see that no undue advantage is taken of a purchaser at a judicial sale, and he will not be compelled to consummate the sale if it would be inequitable to require him to do so, especially where there has been misrepresentation, intentional or otherwise, on the part of the trustee. 3 Stewart v. Devries, supra. The Court stated that this rule was necessary for the purposes of justice, as well as to encourage bidding at judicial sales.

See also Paper Bag Co. v. Carr, 116 Md. 541 , 82 A. 442 ; Ivrey v. Karr, 182 Md. 463 , 34 A. 2d 847 ; Talbert v. Seek, supra; Miller, Equity Procedure, § 499; 30A Am. Jur., Judicial Sales,