Friedman v. McLane

Grason, J. delivered the opinion of the Court. William A. Harting filed a bill of complaint in the Circuit Court No. 2 of Baltimore City against Francis ⁵⁶⁸ J. McLane, trading as The Walnut Grove, in which he prayed that receivers be appointed to take charge of all the property of McLane. The court, on May 19, 1947, appointed Messrs. Webster C. Tall and James K. Cullen, Receivers.

Harting was a judgment creditor. McLane was heavily indebted. He owned property situate in Brooklyn and its environs, subject to three mortgages; the first mortgage, given to secure the sum of $90,000, was held by the Annapolis Banking and Trust Company. In addition to these mortgage debts, he had a number of judgment and lien creditors, as well as general creditors.

Mr. Nathan Patz was counsel for the receivers. In the situation the counsel for the mortgagees and judgment creditors held frequent meetings and conferences with the receivers and their counsel and conferred with the court as to the best thing to be done for the benefit of the creditors. It was decided that a part of the mortgaged premises referred to be sold under the power contained in the mortgage held by the Annapolis Banking and Trust Company. The other mortgagees and judgment creditors waived their liens on the property to be sold under the first mortgage so that the purchaser at the sale could get a clear and unencumbered title.

As a result of these conferences of the creditors and lien-holders with the receivers, their counsel and the court, the receivers, on the 21st day of April, 1948, filed a petition in which, among other things, they averred: “That your petitioners therefore have authorized, subject to the formal approval thereof by this Court, the foreclosure of the first mortgages upon such real estate, so that the proceeds resulting in such foreclosure cases will be, after payment of the expenses therein and the satisfaction of the respective mortgage claims thereout, and after payment of the necessary judgment claims entitled to priorities, delivered to your Receivers for distribution in this proceeding subject to the further order of the Court herein.” The first mortgagee filed a written consent “to the terms of the aforegoing petition in respect of such autho ⁵⁶⁹ rized foreclosure of such mortgages”. Upon this petition and consent the court passed the following order: “Upon the aforegoing petition and concurrence it is this 21st day of April, 1948, ordered, by the Circuit Court No. 2 of Baltimore City that in accordance with the aforegoing petition the holder of the first mortgages upon the real estate belonging to this receivership, The Annapolis Banking and Trust Company, a banking corporation, be and it is hereby formally authorized and empowered to proceed to a sale in foreclosure proceedings based upon its aforementioned first mortgages of the real property described in such mortgages, upon the understanding and arrangement set forth in the aforegoing petition, as a result of which the Trustees in such foreclosure case or cases will, after payment of the expenses in such case or cases and after satisfaction of the first mortgage claims and such other liens as are entitled to priority therein be paid over and deliver to the Receivers herein to be held by them subject to the further order of this Court in this case for distribution in such manner as may hereinafter be authorized and directed.” Following this order a proceeding was instituted in the Circuit Court No. 2 of Baltimore City to foreclose the first mortgage on property owned by McLane. James K. Cullen and Nathan Patz were appointed trustees by the court to sell the mortgaged property. It was advertised by a plat which showed the property here concerned as lot “A”.

The buildings on this lot comprised its entire area. They delineated the lot. Running from the south-westernmost end of the building to Potee Street, in a westerly direction, is a right of way fifteen feet wide. By the advertisement the purchaser will have the use of this right of way in common.

There is a small piece of land to the east of and immediately adjoining this right of way, which was used as an addition thereto but is not embraced in the area of lot “A”. There is also a small strip of land running along the south side of the property sold to a small passageway in the rear of the stores fronting on Hanover Street, which was ⁵⁷⁰ not included in lot “A” or the mortgage. These stores were included in lot “A” and embraced in the description in the mortgage. There was a piece of land a little over twenty-six feet long and five and a half feet wide to the southwest end of the property sold, but was not covered by the advertisement or the mortgage.

An examination of the title by the Maryland Title Guarantee Company disclosed that the mortgage from McLane to the Annapolis Banking and Trust Company did not include a room eighty-seven feet seven and one-quarter inches long and eleven feet eight inches wide, which was added to the real wall of the building by McLane after the execution of the mortgage. Opening from the rear wall of this addition are two doors, and there is a fire escape from the top thereof, which projects about five feet to the rear. This additional room, not covered by the mortgage, was included in the plat as part of the property to be sold under the mortgage foreclosure proceeding. The purchaser at the sale (and the substituted purchasers) claims a five foot strip of land in fee simple running from the northernmost end of the additional room to the fifteen foot right of way which runs to Potee Street.

It was also disclosed by the title search that the ownership of about thirty feet of the fifteen foot right of way, running easterly from Potee Street, was in the Mayor and City Council of Baltimore. It further developed that McLane married subsequent to the execution of the mortgage, and his wife, Iva Mae McLane, has an inchoate right of dower in the property now held by the receivers. The sale made by the trustees was reported to the court on May 26, 1948. The exceptions to the ratification of the sale were not filed until November 12, 1948.

In the meantime there were numerous conferences between the Title Company, counsel for the exceptants, the trustees, and the receivers for the purpose of perfecting any infirmity in the title to the property. The testimony tends to show, and the court found as a fact, that it was agreed that a petition be filed in the receivership ⁵⁷¹ case authorizing the receivers to join in a deed with the trustees to the end that the purchaser at the mortgage sale would receive a good title to the property purchased by him; also that a deed be given by the Mayor and City Council, relinquishing title in the thirty foot strip of the fifteen foot right of way leading from Potee Street to the property sold. It was agreed by Mr. Jira, representing the Title Company, that Mrs. McLane’s claim for inchoate right of dower in the property held by the receivers be held for future determination by the court in the receivership proceeding, and her solicitor has stated that she is ready and willing to join in a deed relinquishing her claim to either the receivers or the purchaser at the mortgage sale. An order was passed in the receivership case on August 13, 1948, by the court authorizing the receivers to join in a deed with the trustees and to convey that portion of the property which was sold at the mortgage sale (which portion at that time was vested in the receivers) to the purchaser; together with a right of way extending from the west wall of the room which was added to the building by McLane after the mortgage was executed, running from northwest end of said wall, with a uniform width of fifteen feet, to the right of way leading to Potee Street, with the use thereof in common with the other properties abutting thereon to the west.

The receivers state that they will join in a deed to the purchaser at the mortgage sale to those small pieces of property, not covered by the mortgage or the plat by which it was sold, but which fringe the property sold. It might be noted in passing that Jacob L. Friedman, agent, the purchaser, filed a petition on September 1, 1948, asking that he, together with other persons named in the petition, be substituted as purchasers, and prayed the court by its order to confirm and ratify said sale to the persons named therein. The court passed an order on that date authorizing the substitution of the persons named therein for Friedman, agent, and authorizing the trustees “to convey said property, as reported by ⁵⁷² said Report of Sale directly to the said substituted purchasers”. It seems plain from the record that the Mayor and City Council of Baltimore City stood ready to convey its interest in the fifteen foot right of way extending from Potee Street to the property sold; and the City Council passed an ordinance directing that such a conveyance be made.

It appears that all of the objections to the title which the substituted purchasers and the Title Company raised were cured or could have been cured at any time the substituted purchasers stood ready to comply with the terms of the mortgage sale. The real bone of contention in this case is that the substituted purchasers claim a strip of land about two and one-half feet in width contiguous to and running along the north wall of the Walnut Grove building a distance of one hundred and thirty-four feet eight inches. This area was outside of the dark line which delineated the northermost line of lot “A”. No such area is shown on lot “A”.

On the day that the sale in question was made, lots shown on the plat from “D” to “L” fronting on Patapsco Street were also sold. The plat shows that lots “B” and “C” (which were not sold that day), “D”, “E” and “F” extend to the north wall of the building known as Walnut Grove Club, and to the black line delineating the northernmost line of lot “A”, which also represents the wall of the Walnut Grove building. All of the lots from “D” through to “L” have a uniform depth, as shown by the plat. Mr. Friedman attended both sales that day.

The auctioneer was asked if the depths of these lots extended to the wall, and Mr. Patz, one of the trustees, announced that they did. This testimony is contradicted but the court saw and heard the witnesses testify and found as a fact that the statement was made by Mr. Patz. So that Jacob L. Friedman, who purchased the property at this mortgage sale as agent for those who were substituted for him as purchasers, must have heard this announcement, and the evidence shows that one, if not more, of the substituted ⁵⁷³ purchasers was present at the sale. There is considerable evidence in the record regarding whether this two and one-half foot fringe along the north wall was sold as a part of lot “A”, but the court heard all of this testimony, had the opportunity, which we do not possess, of