Hannan v. Lyddane

Adkins, L., delivered the opinion of the Court. The sole question on these appeals is: Did the appellant have an interest in the property sold within the meaning of section 9 of article 66 of the Code, which provides that “the court shall have full power to hear and determine any objections which may be filed against such sale by any person interested in the property.” Patrick F. Hannan is the appellant in both cases.- In No. 10 the appellees are assignees of a chattel mortgage dated March 28th, 1931, given by William A. Hill Company, a •corporation, to Grace T. Pyles as collateral security for an alleged indebtedness of $227,500; and in No. 11 the appellees are trustees in a deed of trust dated March 30th, Í931, in the nature of a mortgage between the same parties to secure the same indebtedness. Both of these papers were duly recorded. The question for determination is the same in both cases.

The appellant was the holder of promissory notes in excess of $4,500 from the William A. Hill Company, which he had indorsed and discounted with the Federal American National Bank & Trust Company at the time the said chattel ³⁵⁹ mortgage and deed of trust were executed. Grace T. Pyles was a stenographer in the office of the William A. Hill Company, and immediately indorsed the notes described in said mortgage and deed of trust to the Federal American National Bank & Trust Company, which now holds them. The real estate described in the deed of trust was, on May 10th, 1932, sold by the trustees under power of sale in the deed, and the chattels in the chattel mortgage were sold by the assignee thereof on May llth, 1932, both of which sales were duly reported to the Circuit Court for Montgomery County. Exceptions to the ratification of sales were filed by appellant in both cases on identical grounds.

In substance the complaint is that the chattel mortgage and deed of trust were procured by the said bank and trust company from the William A. Hill Company, practically all the stock of which was owned by William A. Hill, at a time when he was physically and mentally ill, and not in a condition to comprehend the full import of the transaction; that the property conveyed was practically all the assets of the mortgagor company; that the purpose of the conveyances was to prefer certain creditors mentioned in an agreement of March 31st, 1931, to the exclusion of all other creditors; that, after the said bank and trust company got possession of said assets, it made partial payments on the indebtedness of the William A. Hill Company to the exceptant and to others, and thereby lulled the exceptant into a sense of security, although he had no actual knowledge of said conveyances until within a month of the filing of his exceptions; that in executing said conveyances as president of the company the said Hill was acting under the advice and counsel of the trustees named in said deed of trust, one of whom was acting as his counsel and as counsel for some of the other creditors who were to be protected ; that at the time of these conveyances and the execution of said agreement the said bank and trust company held the notes of the William A. Hill Company indorsed by the ex-ceptant; that on or about May 23rd, 1932, the exceptant for the first time was informed of the terms of said agreement, and immediately notified the said bank and trust company ³⁶⁰ that he considered that he had been released by said agreement from his indorsement on said notes; that it refused to strike off his indorsement; that, if it were not the intention of said bank and trust company to protect the notes held by it, indorsed by exceptant, then said agreement is void as to