Findlay v. Darnall

Boyd, C. J., delivered the opinion of the Court. A per curiam was filed in this case, in whieh it Was shown that the decree was reversed and a sale reported set aside because a majority of the judges were of the opinion that .there was no such default as authorized a sale to be made under the power in the mortgage ait the time it Was made. The case was submitted by both sides, and by reason of the differences óf opinions between the judges, .a number of consultations were held by those present (two being prevented by illness from being present for some weeks), and the- writer of this opinion, to whom the case was not originally assigned, will confine the discussion of it to the one point stated in the per curiam. The mortgage is dated June 6, 1921, is for twenty thousand dollars, payable three years after date, with interest payable semi-annually, as evidenced by two notes, one of $15,000, playable to three of the mortgagees, and the other for five thous- and dollars, payable to another mortgagee.

There is the usual condition making the mortgage void on the payment of principal and interest, when and as the same may be due and payable, and the performance of all covenants, and there is a covenant to pay all ground rent, taxes, assessments, etc., “when legally demandable.” ²⁹³ There is a provision that in ease of default being made in the payment of the money or the interest thereon, or in any agreement, covenant or condition of the mortgage, the entire mortgage debt shall be deemed due and demandable, and that in ease of default the mortgagees or R. Bennett Dam-all, their attorney or agent, can at any time after such default sell the property mortgaged or so much thereof as may be necessary. In ease of sale it is provided that there shall be twenty days’ notice of the time, place, manner 'and terms -of sale in a, newspaper published in Howard Oounty, and such other notice as by the said mortgagees, their heirs or assigns may he deemed expedient. It then provides for the distribution of the proceeds of sale: “First to the payment of all expenses incident to such sale, including a fee of five hundred dollars and a commission to the party making sale of said property equal to the commission allowed trustees for making sale of property by virtue of a decree of a court having equity jurisdiction in the State of Maryland,” etc. The only default in the covenants of the mortgage by the mortgagors alleged to exist was the non-payment of the taxes levied in 1922. The ease is one of importance, as a similar covenant as to taxes, etc., is generally to be found in mortgages in the counties in this State, and the time when a default exists in such mortgages for non-payment of taxes should not be left in doubt.

The case of Condon v. Maynard, 71 Md. 601 , much relied on by the appellees, differs in some important respects from this. The covenant to pay the taxes was the same in that ease as in this, “when legally demandable,” but the taxes for the two years involved in .that ease (1887 and 1888) were unquestionably due and in arrear, and had been in the one ease since January 1, 1888, and in the other since January 1, 1889. The property was not advertised for sale until February 8, 1889. The appellant in that case contended that, inasmuch as the local law required the ²⁹⁴ collector to give notice after January 1st that unless taxes in arrear were paid in thirty days he would proceed to sell, and no such notice had been given, they were not legally demandable, and there was no default in that particular.

That contention Was held to be not well founded, as it was not necessary for the mortgagee to wait until the tax collector had given the notice required by the local law before be could proceed to sell in enforcing the payment of taxes, if there was default in the covenant of the mortgage. The correctness of that conclusion may readily be conceded, but there is much more involved in this case. There 'axe some expressions in that opinion which, When considered by themselves, may support the appellee’s contention in this ease, but other parts of the opinion explain what was meant, and very clearly show all that was decided in that case. For example, Judge; Mc'S'I-iebby, in considering the local law relied on in that case, in connection with the enforcement of the payment of taxes by the collector, said: “The collection of these taxes could not have been enforced ‘according to law,’ that is, by legal process, unless the notice had first been given; but the taxes; were none the less due and in arrear, and, therefore, legally demandable when Maynard instituted these proceedings.

The sections of the local code relied on relate exclusively to the mode of enforcing the payment of overdue taxes. The taxes must necessarily be due before payment can be enforced, and when due they are legally demandable, though summary proceedings to compel payment be not at once resorted to.” But he did not mean, and could not have meant, that because they were “due” in the sense that they could be then paid, they were legally demandable. On the contrary, he had previously said“Taxes may be paid immediately 'after they have been levied, and from that time the statute of limitations begins to run. 'Code, Art. 81, 'Sect. 83. They do not, however*, become due and in arrear until the first day of January next after the date of the levy.

Code, art. 81, sec. 67; Local 'Code, ²⁹⁵ art. 7, sec. 129; Wheeler et ux. v. Addison, 54 Md. 41 . They hear interest from that date. Ordinarily a debt may be said to be legally demandable when it is due, and as the taxes for 1887 were certainly due 'and in arrear on January 1st, 1888, and as the taxes for 1888 were due and in arrear on January 1st, 1889, they were for both years due and in arrear on February 8th, 1889, and were, therefore, legally demandable long before these proceedings were inaugnrated, unless some local law of Carroll ‘County makes a different or an inconsistent provision.” He then considered that local law as stated above. It will be observed that Judge McSherry cited Wheeler v. Addison in connection with what we have quoted above.

When that case was decided, and when Condon v. Maynard was decided, sec. 63 of chap. 483 of Act of 1874 was in force and provided that, “Whenever a sale of either real or personal property shall he made by any ministerial officer under judicial process or otherwise, all sums due and in arrears for taxes from the parties whose property is (to be) sold, shall be first paid and satisfied, and the officer or person selling shall pay the same to the collector of the county or city, if any, or to the treasurer, if there be no collector.” That is codified in section 64 of article 81 in 'Code of 1888, except the words “to be” in brackets above are omitted. By see. 66 of the Act of 1874 it was provided that “Taxes shall be considered in arrear on 'the first day of January next succeeding the date of their levy, and shall bear interest from tbeir date at the rate oi six per centum per annum.” That is the same as section 67 of article 81 of Code of 1888, except by the Act of 1888, ch. 515, it was made inapplicable to 'Garrett County. In Wheeler v. Addison some real estate had been sold on the 14th of September, 1877, by a trustee under a decree in equity, and the state and county taxes for the year 1877 on said estate paid out of the proceeds of the sale were disallowed on exceptions filed because said taxes were not due and in arrear until tbe first of January, 1878. The above sec ²⁹⁶ tions of tike Code were continued in tike Annotated Code as sections 68 and 72, respectively.

There can be no doubt about the question, it seeans to us, up to 'and including the time of the 'adoption of that Code, excepting when there was some exception to the general law made by the local laws of some of the counties as to county taxes'. Unless Wheeler v. Addison and similar cases were overruled, if the law had been continued as it was in the Annotated Code, 'and there had been a sale under such a mortgage as this, the taxes could not have been distributed to, as they were not in arrear. In State v. Safe Deposit and Trust Co., 86 Md. 581 , we beld that taxes on shares of stock were, under tike law as it then existed, due and in arrear on November 1st, for tibe reason stated by Judge Briscoe, 'and, 'although the assessment was made on or before May 15 and became final on June 15, there were no taxes for that year due -and payable at the time of tibe sale (May 23rdd) properly chargeable against tike trustee, because “the statute provides only for tibe payment of such taxes as may be due and iu arrear at the time of the sale of the property.” The 'appellee contends, however, that the whole policy of the law has been changed as to Howard County by later statutes, and hence it becomes necessary to' consider them. Section 48 of article 81 of the Annotated Code provided for a discount -of state taxes as there mentioned.

Section 28 of article 81 made it the duty of tike 'County Commissioners of the several counties and the Mayor and 'City Council of BlaL timore annually, o-n or before the third Tuesday of April, to impose the state taxes prescribed by law. By chapter 630 of the Acts of 1916, section 48 was amended so as to read: “The state taxes levied in pursuance of section 28 of tikis article and all taxes dhe from incorporated institutions of this State shall be due and payable on and after the first day of July in tibe year iu wbicb they are levied (and if not paid on or before tibe first day of September in said year, shall bear interest from said date at the rate of six per centum per annum). * * * 'Said state taxes shall be iu arrear on and after ²⁹⁷ the first day of January succeeding the date of levy, and it shall be the duty of said collectors, 'treasurers and other officers who may be charged with the collection of the same, immediately thereafter to proceed to collect said taxes in arrears in accordance with the provisions of law for the collection of delinquent taxes.” By chapter 261 of the acts of 1918 the above act of 1916 was amended so as to provide, in place of what we have placed in brackets above, tha;t “on taxes which are not paid before the first day of October in said year, interest of one-half of one per cent, shall be charged if paid at any time during said month of October, and interest of one-half of one per cent, shall be charged for each additional month or fraction thereof that such taxes remain unpaid.” The other provisions quoted -above from the Act of 1916 are the same as iu the Act