Harvey v. Provident Savings Bank

Sloan, J., delivered the opinion of the Court. This appeal is from an order dismissing exceptions to a mortgagee’s sale. By mortgage dated May 24th, 1913, Joshua G. Harvey, Jr., exceptant and appellant, conveyed and assigned the unexpired portion of a lease in a lot of ground fronting 23 feet 2 inches on the west side of Hanover Street and 65 feet on the north side of Pratt Street in Baltimore to the Provident Savings' Bank, to secure the payment of $10,000, payable in three years -with interest at 51/2 per cent. The west half of the lot was 33 feet 2 inches in width.

On June 30th, 1935, the balance due on the mortgage was $9,386.19; interest, $647.64; total, $10,033.83. When the sale was made, the taxes- for four years were unpaid. The mortgage having been long in default, the mortgagee decided to foreclose, and accordingly, on August 12th, 1935, through Jesse N. Bowen, trustee, appointed by decree of the Circuit Court No. 2 of Baltimore City, after the usual notice by advertisement, the property was sold to the Crown Realty Corporation, ²⁹⁷ for which Henry Weinberg, and Jeannette his wife, were later substituted as purchasers, for the sum of $2,380. The sale was reported to the court and exceptions filed to its ratification by the mortgagor, the reasons assigned being: (1) inadequacy of price; (2) faulty advertisement; (3 and 4) the failure to emphasize and explain the small ground rent of six shillings and one-half of a penny.

The test of the validity of a judicial sale is whether the final bid is at the best price obtainable at the time, the property sufficiently advertised, the sale fairly made and properly conducted. Mere inadequacy of price will not be sufficient to invalidate a sale unless so grossly inadequate as to suggest fraud or unfairness. Busey v. Perkins, 168 Md. 453 , 178 A. 254 ; Waters v. Prettyman, 165 Md. 70, 74 , 166 A. 431 , and cases there cited. It must be conceded that there is a vast difference in this case between the amount of the mortgage and the sale price.

For twenty-one years the exceptant had paid the interest on a $10,000 mortgage, and then, a year after he ceases to pay, he sees the collateral sold for a fourth of the loan. If the lender, mortgagee, had bought in the security itself, it might be required to explain the reason for its original opinion of value, as evidenced by the amount of the loan, and the sale price to itself. Busey v. Perkins, 168 Md. 453, 456 , 178 A. 254 . In this instance, however, the mortgagee did not bid on the property, but did the only thing it could do under the terms of the mortgage—advertised it for sale in accordance with the terms of the mortgage and sold to the highest bidder.

Unless the mortgagor has other means, the one hurt in this transaction is the mortgagee, and it is not complaining. The exceptant produced two witnesses, real estate brokers, one of whom testified that the property was worth $9,000. He valued the land at $6,500. He based his “opinion on that as potential site for a gasoline filling station.” Another real estate broker gave his opinion of value ²⁹⁸ as $8,500; of which he estimated the land to be worth $6,000.

The auctioneer testified that there were twenty-five or thirty