Hart v. Home Owners' Loan Corp.

Offutt, J., delivered the opinion of the Court. Mildred W. Hart, the appellant in this case, by a deed of that date, on October 19th, 1926, acquired the reversion in and to a lot of ground and the improvements thereon, located in Baltimore City, and especially the right to receive an annual rent of $90 issuing out of said lot. The rent was created by a lease from H. Webster Cole to George A. Finch and Margaret B. Finch, his wife, dated February 29th, 1916. On June 2nd, 1926, Finch and his wife mortgaged their leasehold estate in the property to the Park Mortgage & Ground Rent Company, and by various mesne assignments all the right, title, and interest in and to that mortgage became vested in the Sun Mortgage Company, which on January 16th, 1934, assigned it to the Home Owners’ Loan Corporation, the appellee.

So that when this suit was docketed, Mildred W. Hart, the appellant, owned the reversion, Finch and his wife owned the leasehold, and the Home Owners’ Loan Corporation owned the mortgage. On November 29th, 1927, the mortgage being then in default, foreclosure proceedings were filed in the Circuit Court of Baltimore City, in which on the same day a decree was entered, and on January 17th, 1934, that decree was entered to the use of the appellee. After it acquired the mortgage, but before this suit, two installments of rent became due, and remain unpaid, although demand was made upon the appellee for the payment thereof. Thereupon the appellant filed in Circuit Court No. 2 of Baltimore City her bill of complaint ⁴⁴⁹ against the appellee, in which she prayed (1) that it be required to pay to her a sum of money equal to the installments of rent then due on the property and any taxes or public charges then due, and (2) that it be required to pay to her, her heirs or assigns, a sum of money equal to the installments of rent and any taxes or other public charges assessed against the property, when and as the same became due in the future.

The appellee demurred to the bill for a want of equity, the court sustained the demurrer without leave to amend, and this appeal is from that order. The only question which the appeal presents is whether the appellant’s claim may be enforced in a court of equity. In addition to the facts stated above, the appellant alleged in her bill that numerous judgments have been recovered against Finch, that the leasehold is subject to two mortgages junior to that held by the appellee, that Margaret Finch is entirely dependent upon her husband for support, and that he is financially irresponsible. It has long been the settled law of this state that the holder of a mortgage on leasehold property is, where the mortgage contains no provision for a redemise, and, from the date of any default by the mortgagor in the covenants of the mortgage where it does contain such a provision, bound by all the covenants in the lease which run with the land, including covenants to pay rent and taxes.

Williams v. Safe Deposit & Trust Co., 167 Md. 499 , 175 A. 331 , and cases cited therein. The lessor may bring an action at law, against the person in whom title to the mortgage is vested, for any rent which may have become due and payable under the lease during the period in which the title was so vested in him, to recover such unpaid rent, if during that period the mortgage was in default (Williams v. Safe Deposit & Trust Co., supra), but he cannot bring such an action against a former holder of the mortgage, for rent so accruing while he owned the mortgage, after the holder has parted with his title to it, but, in such a case, he must sue in equity. Wil ⁴⁵⁰ liams v. Safe Deposit & Trust Co., supra. These principles are so firmly established, and so clearly stated in the case last cited, that no further citation of authority is required to support them.

The mortgage in this case does contain a provision that until default the mortgagors shall have possession of the property, and the appellant in her 'bill alleges that the mortgage was in default on November 29th, 1927, that it was in default while held by the appellee, that a decree for the sale of the mortgaged property was entered on November 29th, 1927, and from those allegations it may be presumed that it was in default when the bill of complaint in this case was filed. The appellee owned the mortgage when the two installments of rent became due and it owned it at the time this suit was instituted. It is conceded that it had not prior to that time assigned the mortgage or transferred its title to it to any other person, so that, unless the decree in the mortgage foreclosure proceeding had the effect of divesting the title of the mortgagee or its assignees, the legal title thereto was in the appellee. There is nothing in the record to suggest that the decree had any such effect, and if it be inferred that the