Goldenberg v. Title Guarantee Co.

Henderson, J., delivered the opinion of the Court. This appeal is from a decree of the Circuit Court No. 2 of Baltimore City, overruling exceptions to an auditor’s report in a mortgage foreclosure case, and directing the clerk of court to pay over to the appellee a balance of $1,138.69 remaining after the satisfaction of the mortgage debt and costs. The facts are undisputed. The Aurora Federal Savings and Loan Association, to secure a loan of $9,000.00 to Sarah Glass Schaffer and husband, on April 16, 1952, took a mortgage on her leasehold property 3712 Eldorado Avenue, which was duly recorded.

The appellee furnished a judgment search and reported no judgments of record against the Schaffers. There was a default in the mortgage payments, and Aurora obtained a decree on January 21, 1956, appointing William F. Podlich trustee to sell "the mortgaged premises and convey the property to the purchasers or assigns “free, clear and discharged from all claims of the parties hereto, * * * and those claiming by, from or under them, or either of them.”" Pursuant to the decree, the trustee sold the premises at public auction to Eli Simpson and wife for $9,365.00, creating-a surplus in excess of the mortgage debt of $7,234.64. Before final ratification of the sale Albert Rose and wife were substituted as purchasers. Saul Goldenberg, the appellant, on August 20, 1950, had obtained a judgment of $2,648.99, with interest, costs and attorney’s fee, against Sarah Glass Schaffer.

The Title-Guarantee Company failed to report this judgment, and its-existence was unknown to Aurora, the trustee or the purchasers until after the sale was reported on February 23, 1956. Goldenberg, who had advanced money to Mrs. Schafferafter the mortgage was recorded, had obtained a second judgment against 'Mr. and Mrs. Schaffer on April 29, 1955, on which there was a balance due of $3,775.16 as of August 8,. 1955. ⁴⁵¹ When Aurora learned of the prior judgment, it called upon the Title Company to save it harmless, which the Title Company agreed to do. On February 26, 1956, the substituted purchasers filed a petition reciting the discovery of the prior judgment, and stating that although they were desirous of purchasing and taking title to the property, they were advised that until the judgment was satisfied the property could be sold on execution at any time to satisfy it. Accordingly, they prayed that the trustee be directed to pay the judgment in priority to the mortgage claim and ratify the sale on this condition.

Aurora consented to the passage of the order as prayed, relying upon the Title Company to save it harmless. An order was signed as prayed, but rescinded on the same day, when Goldenberg filed a petition praying payment of his second judgment out of the balance remaining after satisfaction of the mortgage claim. The Chancellor signed an order directing that the second judgment be “allowed in its proper priority to be paid out of proceeds of the sale * * * after the payment of the mortgage debt, costs and expenses * * On April 18, 1956, the Title Company filed a petition reciting that it was the assignee from Goldenberg of the first judgment of August 24, 1950, which it had acquired on April 6, 1956; that it had waived the priority of this judgment lien in favor of the mortgage lien, reserving all other rights and equities, and that it had entered the waiver of record. It claimed the surplus after satisfaction of the mortgage claim, as assignee of the first judgment and in priority to the second judgment still held by Goldenberg.

The Chancellor signed an order directing payment of the assigned judgment claim “in its proper priority”. At the same time the Chancellor signed an order ratifying the sale and directing that “the claims of those persons holding judgments against the said Sarah Glass Schaffer, * * * filed, or to be filed in this proceeding, be allowed by the Auditor in accordance with their proper priorities.” On May 9, 1956, the auditor found and reported that the first judgment was entitled to the balance in priority to the second judgment. Exceptions to ⁴⁵² this report and account were subsequently overruled, after hearing. The appellant argues that a sale under a mortgage foreclosure decree passes only the title of the