Herman v. Mondawmin Building & Loan Co.

⁴⁸² Urner, J., delivered the opinion of the Court. In pursuance of a decree by consent under the provisions of a mortgage, certain real estate in the City 'of Baltimore was sold at public auction. The question on this appeal is whether exceptions to the ratification of the sale were properly overruled. The property sold under the decree is situated at the southeast comer of York Road and Radnor Avenue.

It consists of two adjacent lots of ground, one of which is vacant and the other improved with an apartment house. The trustee who made the sale, and who had been substituted for a trustee originally appointed by the decree, reported that, having received no bid for the improved lot when offered separately, lie sold the property as a whole to the highest bidder for the svim of $19,000. The decree for the sale was entered under a first mortgage, for $14,000, from the'appellants, Jonas Herman and wife, to the Mondawmin Building Association, which subsequently assigned it to John F. Steinmetz. A second mortgage, for $8,000, was given by Herman and wife to the appellants, George Sehissler and wife, from whom Herman had purchased the property.

Sehissler and his wife assigned the second mortgage to Benjamin Brown and indorsed the promissory note which it secured. Brown became the purchaser of the property at the sale under the decree. The exceptions to the sale were filed by Herman and wife as mortgagors, and by Sehissler and wife on account of their interest as indorsers of the second mortgage note. The exceptions assert that: (1) The first mortgage was ■ ■not in default.

(2) The property was sold for a grossly inadequate price. (3) One of the persons attending the sale, and who would have paid a higher price, was persuaded by the purchaser to refrain from bidding. (4) The substituted trastee, in making the sale, did not comply with the terms of the order by which he was appointed. (5) The statement of the mortgage claim filed in the proceeding was not properly verified. ⁴⁸³ As to the first ground of exception it is sufficient to say that the mortgage appears from the record to have been in default even if a charge which is alleged to be usurious is rejected.

Hpon the question as to the adequacy'of the price reported, it was testified by Herman that he bought the property from Schissler in the summer of 1922 for $27,000, and that he converted the building, then standing on one of the lots, into a five apartment house at a cost of approximately $8,-000. In his opinion the property should have been sold for $30,000, including the unimproved lot. William R. Patterson, the real estate broker who had negotiated Schissler’s sale of the property to Herman, stated that in his judgment It was worth from $28,000 to $30,000. According to Schissler's testimony he would have bid as much as $25,000 at the sale, if he had not been dissuaded under the circumstances to be presently mentioned.

But since tbe sale he has not been willing to make such an offer. His daughter, who said she had dealt in real estate, and had valuable interests of her own, testified that she thought the property could be sold for $24,000 and that she would buy it herself for $20,000 if given time to finance the transaction. David Kennedy, Esquire, testified that, acting as attorney for Schissler, he made an offer of $22,000 for the property to Brown, the purchaser, that sum being sufficient to pay the amounts due on both mortgages. This offer, he said, was refused by Brown, who stated, however, his willingness to sell for $25,000.

Mr. Steinmetz, the assignee of the first mortgage, estimated flie property at “$15,000 as a speculative value and $20,000 as an investment value.” Allen L. Jamison, a real estate broker, who was present at the sale, and who was called as a witness by the purchaser, valued the property at $20,000: It was testified by Brown, the purchaser, that prior to the sale he told Schissler the property would have to bo sold for $22,000, in order to' protect the latter from liability for the payment of the second mortgage, and in the same interview said he thought the property was worth that amount. ⁴⁸⁴ All of the witnesses estimated the real value of the mortgaged property be in excess of the price at which it was sold by the trustee. The valuation placed upon it by the purchaser’s own witnesses was $20,000, while the purchaser himself advised the assignor of the second mortgage, before the sale, that it was worth $22,000, and declined after the sale to sell it for that price. The sale appears, therefore, to have been made for a price which was inadequate. But the deficiency is not proved, by the weight of the evidence, to be so great as to require the rejection of- the sale on that ground alone, if it was duly and fairly made under proper conditions.

Hilton Park Co. v. Gary, 133 Md. 509 ; Evans Marble Co. v. Abrams, 131 Md. 204 ; Boyd v. Smith, 127 Md. 359 ; Hunter v. Highland Land Co., 123 Md. 644 ; Edgecombe Park Co. v. Finney, 121 Md. 320 ; Vollum v. Beall, 117 Md. 617 ; Robertson Co. v. Chambers, 113 Md. 232 ; McCarty v. Hamburger, 112 Md. 40 . It is contended that the other grounds of exception, considered in connection with the inadequacy of the price, would justify a decision that the sale should be vacated. The next inquiry to be made, therefore, is whether the testimony supports the charge that the purchaser induced another bidder to abandon his purpose and effort to buy the property. If a wrongful interference with the freedom and fairness of the sale occurred, with resulting prejudice to the exceptants’ interests, they have a legitimate ground upon which to ask that the sale be abrogated.

McLane v. McLane, ante p. 186; Chew v. Baker, 133 Md. 637 ; Loeber v. Ecker, 55 Md. 1 . The issue of fact which we have now to determine is whether Schissler, who made one bid at the sale, was influenced by Brown, the purchaser, to withdraw from the competition. It is proved beyond doubt that Schissler attended the sale with a view to the protection of himself and his wife against their liability as indorsers of the note secured by the second mortgage which they had assigned to Brown. It was necessary that the property should be sold for not less than $22,000, in order that both the first and second mortgages ⁴⁸⁵ might be fully paid out of the proceeds.

In describing the occurrences at the sale Schissler testified: “When I got down there Benjamin Brown, the one that bought the second mortgage from me, comes over on the side there and asked me whether I was going to buy the property, and I said, I am. Do you think it is going to bring $25,000 ? I says, Sure. I won’t let it go for that.

So then, when the sale started and I goes over to listen at the auctioneer Benjamin Brown turns around and says, Don’t bid agin me, I will bid it in between us two. It kind of struck me, I didn’t know what to say, and he goes to work and offers $19,000 and the auctioneer knocked it down to him.” The next day he received a letter, which he offered in evidence, demanding payment of the second mortgage debt and interest. Further testifying, Schissler said: “I thought, of course, having the second mortgage he woidd bid it in to protect me too. He bids $19,000 and the auctioneer knocked it down to him, and the next morning I get this mail.” When asked on cross-examination how much he would then be willing to pay for the property, he said: “That is another question.

At the sale I would not let it go at $25,000 but now it is all mixed up. I was there to buy it in, and if it had not been for Benj amin Brown I would have it, too.” Q. You made an arrangement with Ben Brown by which he was to bid and you were to bid it between you, is that right? A. How is that? Q. You were to buy it between you, it was to be your property as well as his, and he bid it in ?

A. That is what he told me. Whether it was or not I couldn’t say. I was studying and while I was studying he offered $19,000 and he got it. Q. How much was it started at ?

A. I think $16,000 the first hid. Q. $15,000 ? A. That is right, and I bid sixteen. Q. You bid sixteen ?

A. Yes, sir. Q. In violation of that contract? A. Oh, no; before that. When I bid sixteen he turned around and says, Don’t bid agin me, I will bid it in between ns two.

Q. You agreed to that? A. I didn’t agree. I didn’t know what to say, and while I was studying around he offered $19,000 and it was knocked down to him. Q. ⁴⁸⁶ Your understanding was that he was buying it in for you ?

A. I supposed so. I didn’t know how he meant it, but the property should never have gone for $19,000, because I would have given’ as high as $25,000. Being asked again whether he would then give $25,000 for the property, he said: “No, not after they go to work and leave me out that way.” Miss Lillie Schissler, daughter of the preceding witness, testified as to a telephone interview with Brown, just before the sale, which she narrated in part as follows: “He says, is your father going to be there ?' I said, Yes, sure, he is gping to be there to protect his mortgage. He says, you tell your father I would like to see him before the sale to have a talk with him.

T said, where do you want to see him? I can get in touch with him now. LTe says, No, it will be all right. Let him get