Holton Park Co. v. Gary

Thomas, J., delivered the opinion of the Court. This appeal is from an order of the Circuit Court for Baltimore County overruling exceptions to and finally ratifying a sale made under' the power contained in a mortgage and by the attorney therein named. In March, 1895, the Circuit Court for’ Baltimore County assumed jurisdiction of the trust estate created by a deed, dated September 29th, 1886, from Pameiia A. Holton, and appointed Judge Henry Stockbridge trustee in the place ⁵¹¹ of his father, then deceased. In, April, 1901, Judge Stockbbidge was on his petition relieved and discharged from, the further execution of the trust and James!

A. Gary, of Baltimore County, was appointed trustee in his place. In October, 1908, Mr. Gary, trustee, under the authority of the Court, sold and conveyed to the Enterprise Realty Company of Baltimore City for $60,000.00 the farm in Baltimore County, on the Dogwood Road and Franklin Turnpike, known as “The Meadows,” containing three hundred and twenty-seven and a half acres of land, and took from said company a mortgage of said land to secure the payment of the purchase money to the amount of $45,000.00, payable five years after date, with interest at five per cent., payable semi-annually. The mortgage contained the following provisions : “And it is agreed that the said Enterprise Realty Company of Baltimore City, its successors or assigns, shall have the right to anticipate the payment of said mortgage indebtedness upon the following terms: “First—The lot of ground beginning at the intersection of the Dogwood Road with a line binding on the east side of the road leading to the Mansion House on said property, and running thence along the east side of said road, and continuing the same course until it intersects another line drawn at right angles from the west outline'of the whole tract of property and so as to include the barn situated thereon, thence reversing said line and bounding thereon to the west outline of said property; thence along the west outline of said property to the Dogwood Road, and thence along the Dogwood Road to the place of beginning, shall bo released from the operation hereof upon payment of the sum of twenty thousand dollars ($20,000.00). “Second—All the balance of said property shall be released from the operation hereof, upon payment of two hundred dollars ($200.00) per acre, in tracts of not less than five (5) acres, until mortgage is paid off.” ⁵¹² The mortgage contained a covenant on the part of the mortgagor to pay the mortgage debt and interest and taxes, etc., and provided that in case of default tbe entire mortgage debt should become due and tbe said trastee, *‘his bears and assigns or successors in said trust, or Francis E. Pegram, their attorney or agent,” were authorized at any time after such default to sell the property, “upon giving twenty days’ notice a.t the time, place, manner and terms of sale, in some newspaper printed in Baltimore County, and such other notice as by the said mortgagee, etc. * * * may he deemed expedient.” The property was purchased, by tbe Enterprise Realty Company with the view of developing and selling the same as suburban property, and to tbat end tbe company caused a survey and plat of tbe property to be made dividing it into building lots. Nothing appears to have been accomplished by the Enterprise Realty Company and not a. single lot was sold by it, and in May, 1913, tbe appellant, the Holton P'ark Company, was incorporated and tbe entire property covered by tbe mortgage was conveyed to it by tbe Enterprise Realty Company.

Thereupon Mr. Tanekum Silberman wrote Mr. Cary the following letter applying for an extension of the mortgage: “Baltimore, May 27, 1913. “James A. Gary, Esq., “722 Equitable Building. “Dear Sir: “In October, 1908, the Enterprise Realty Company purchased from you, as trustee, the Holton Earm, called ‘The Meadows,’ situated on the Franklin Turnpike and Dogwood Roads, for the sum of $60,000.00, paying yon $15,000.00 cash, and giving yon a mortgage for the balance of purchase money, viz, $45,-000.00, to run for five years. “A new company, called tbe Holton Park Company, has recently been incorporated with a capital of $10,-000.00, >and duly organized, which has purchased from ⁵¹³ the Enterprise Realty Company the Holton farm called ‘The Meadows/ subject to the legal operation and effect of your mortgage. In this new company (the Holton Park Company) I personally own 75 per cent, of the stock, and expect to control the remaining 25 per cent, of the stock, while none of the other stockholders of the Enterprise Realty Company has any interest in the Holton Park Company. “The five years for which the mortgage for $45,-000.00 was given you, as trustee, being about to expire, I ask that the mortgage be extended for another period of live years under the same terms, in order to give the new company an opportunity to develop the property, the time being not yet ripe to sell the whole or any part of the same in building lots. Your trust estate can not in any way be hurt by an extension of the mortgage, as the land will undoubtedly increase in value as the city grows towards it, and it will receive the interest on the investment, as heretofore, promptly. “In the meantime, I intend to occupy, with my family, the mansion on the property, and overlook the farmer who will work the place, with the endeavor and hope that the same may be made to carry itself. The farmer now tells me that within the next year or so the farm will be a paying proposition, in which event, after paying the carrying carges of interest, taxes, insurance, etc., the Holton Park Company will, I am sure, be glad to turn over to you a portion of the excess in reduction of the mortgage. “While I cannot bind the Holton Park Company, I will use my best endeavors to have that portion.of the property adjoining the Colonial Estates developed first and in any development to do as little injury to the balance of the property as a farm as possible. “Hoping you may see your way clear to extend the mortgage, I remain, “Very truly yours, “Tanchum Silberman.” ⁵¹⁴ The application of Mr. Silberman, the president of the Holton Park Company, was submitted to the Court under whose jurisdiction the trust was being administered and in pursuance of an order of the Court Mr. Gary, the trustee, entered into an agreement extending the mortgage for another period of five years, beginning’ on the 16th day of October, 1913.

In April, 1916, the president of the Holton Park Company applied to Mr. Gary to release a certain lot or parcel of the land covered by the mortgage, containing five acres;, and offered to pay therefor one thousand dollars. The matter was; submitted to the Court (Judge Dtotcae) having jurisdiction of the administration of the trust, and that Court passed an order refusing to allow the trustee to execute the release on the ground that the five acres were on the front of the property, on the Franklin Turnpike and Dogwood Road and the release thereof would materially injure the “security” afforded by the mortgage. In May, 1916, the Holton Park Company filed a petition in the case in which .the trust was being administered praying the Court to rescind its previous order directing the trustee not to execute the release and to pass an order requiring him to do so. Hpon this petition the Court passed an-order granting the relief prayed, “unless cause to the contrary be shown” on or before the 29th of May, 1916.

This petition was promptly answered by the trustee, and in his answer the trustee alleged that the release demanded by the Holton Company was not sought in furtherance of a bona, fide sale of the lot, or in accordance with the agreement of the company not to so dispose of the property as to impair the security of the mortgage, but that the purpose of the company wasi to obtain an unfair advantage of the mortgagee. In September, 1911, the company requested the release of another lot containing about ten acres of land, and in October following applied for the release of two other lots, - one containing ten acres and the other about nine acres of land. In the petitions of the trustee reporting these applications to the Court the lots ⁵¹⁵ are described as fronting on the Dogwood Road or on the Franklin Turnpike, and on each of the petitions the Court passed au order directing the trustee not to execute the releases unless cause to the contrary he shown on or before a day therein named. In October, 1917, the company, through its attorney, tendered the mortgagee, or his attorney, the amount of interest on the mortgage about to become due and the amount of taxes on the property overdue and unpaid on condition that the mortgagee would execute the releases' applied for.

The trustee^ or his attorney, refused to receive-the money on the conditions named, and on the 22nd of October the trustee filed a petition in the case in which the trust estate was being administered setting out the default under the mortgage and praying for an order authorizing him to foreclose the mortgage. The Court passed an order accordingly, and on the same day a suit was docketed and foreclosure proceedings were instituted, but the property was not advertised for sale until February, 1918, because of the efforts, in the meantime, of counsel for' the company and mortgagee to reach an agreement by which, parts of the property could be sold and released from the lien of the mortgage in such manner as not to impair the security of the mortgage. The efforts of counsel having failed, the property was advertised in, February and was sold at public sale by the attorney named in the mortgage at the Court House door in Baltimore County on March 18th, 1918, to Charles H. Anderson for the sum of $42,500.00. The sale was reported' to the Court and on the 13th, of April the Holton Park Company filed exceptions to the sale on the grounds: First, because the property was insufficiently advertised.

Second, because the