Hughes v. Federal Land Bank

Urner, J., delivered the opinion of the Court. Among the provisions of section 152 of article 16 of the Code, relating to partition or sale of lands in equity, is the following: “And wherever any bill or petition is filed under the provisions of this section for the sale of lands, persons holding mortgages and other incumbrances on the said lands or an undivided interest therein may be made parties to said bill, and the said lands or interests therein shall be sold free and clear of such mortgages or other incumbrance, and the rights of the lienors shall be protected in the distribution of the proceeds of the sale of such lands.” The question here presented is whether that provision entitles cotenant mortgagors to maintain a suit for the sale of the mortgaged land in derogation of the mortgagee’s right to continue a proceeding, Which had been previously instituted, for the exercise of a power of sale in the mortgage because of default in its payment. In this instance the suit by the cotenants for a sale of the property was, brought after the mortgage and an approved bond had been filed in a case duly docketed, and a sale advertised, by the assignee to whom the mortgage had been transferred for the purpose of foreclosure. The ³⁰⁶ sale was advertised for October 22nd, 1935, but did not occur because one of the mortgagors, on October 17th, 1935, filed a petition in the District Court of the United States for the District of Maryland to secure a composition and extension of his debts under the Federal Bankruptcy Law (11 U. S. Code Ann., sec. 1 et seq.).

That petition was dismissed on June 26th, 1936, and on the same day some of the mortgagor tenants in common instituted the pending partition suit, in which the Federal Land Bank as mortgagee, and Thomas M. Harrington, as its assignee, were joined with other lienors and with certain cotenants of the mortgaged property as defendants. By its answer the mortgagee bank proposed that the suit be dismissed as against it because of the prior pendency of the foreclosure proceeding. The jurisdictional question thus raised by the answer was determined in favor of the mortgagee, and from the court’s decree dismissing the suit as ix> that defendant, the cotenants who filed the> bill of complaint have appealed. The contention of the appellants is that when their suit for a sale of the mortgaged property was brought, the Circuit Court’s jurisdiction had not attached to the proceeding for the enforcement of the mortgage, because no sale under its provisions had then been reported to the court.

Reference is made to the statement in several of this court’s opinions to the effect that the court’s jurisdiction in such a proceeding becomes complete upon the filing of the report of sale. Warehime v. Carroll County Bldg. Assn., 44 Md. 512, 517 ; Beetem v. Garrison, 129 Md. 664, 672 , 99 A. 897 ; Hebb v. Mason, 143 Md. 345, 355 , 122 A. 318 ; Union Trust Co. v. Biggs, 153 Md. 50, 55 , 137 A. 509 . But those cases involved no such question as the one now to be decided.

In Warfield v. Dorsey, 39 Md. 299, 307 ,) it was said in the opinion: “In sales to be made under authority given by a mortgage provided for by the 64th (now 66th) article of the Code, when they are brought within the control of the Court of Chancery, the same rules must be applied as to chancery sales generally. These provisions of the Code confer no special power upon ³⁰⁷ the court, and give to it no new or extraordinary jurisdiction, but prescribe another source for the exercise of its ordinary authority. Foreclosure of mortgages is one of the usual attributes of a Court of Chancery, and the statute provides for their summary employment by substituting the power contained in the mortgage for a decree of sale. Cockey v. Cole, 28 Md. 276 .

The 4th sec. [now 7th] of the Article provides that before a sale shall be made by any person so authorized, bond shall be given by him, to be approved by the judge or clerk of the court, to abide by any order or decree that shall be made by the Court in relation to the sale of the mortgaged property. When this has been done the proceedings are brought under the cognizance and guidance of the court,