Hurlock Food Processors Investment Associates v. Mercantile-Safe Deposit and Trust Co.

MOTZ, Judge. These companion cases are appeals from the order of the Circuit Court for Dorchester County overruling exceptions to two related mortgage foreclosures and ratifying the foreclosure sales. (i) In September, 1988, appellee, Mercantile Safe Deposit & Trust Co. (Mercantile or the bank), loaned a total of $8,525,000 to appellant, The Hurlock Food Processors, Inc. (HFP), for the operation of a vegetable cannery. The loans were governed by a loan and security agreement, in which HFP granted the bank a security interest in all of HFP’s personal property and permitted the bank, upon HFP’s default, to “sell at public or private sale ... any part of all ... personal property” and to “purchase the whole or any part” of that property, “free from any right of redemption.” HFP also granted Mercantile a first lien on all HFP real property, i.e. on the plant, the 11 acre site on which it was located, and an additional 27 acres owned by HFP.

This lien was evidenced by a deed of trust, recorded in the county land records, that permitted the bank, on default, to “bid for and acquire” the ³¹⁹ property “and in lieu of paying cash” credit HFP with “the net sales price.” On the very same day, Mercantile loaned $240,-000 to appellant, Hurlock Food Processors Investment Associates (HFPIA), for the purchase of a farm located near, but not contiguous to, the HFP plant. The farm was to be, and, in fact, was used for disposal of waste water generated in the canning process. The HFPIA loan was also secured by a deed of trust, recorded among the county land records, that contained identical language consenting to a buy-in by the bank on default of the loan. Appellant, John J. Neubauer, Jr., owns 70% of HFP’s stock; the remaining 30% is owned in equal 6% portions by Wilmer Smith, Jay Williamson, Donald Bartlett, George Dongaira, and Miles Walk.

The HFPIA Partnership is owned by the same individuals in approximately the same proportion of ownership. All individuals are guarantors of the HFP and HFPIA loans. In February, 1990, HFP and HFPIA defaulted on their loans. Mr. Neubauer, the principal owner of both entities, requested that the bank delay foreclosure actions to give him time to negotiate sales of the plant and the farm to a third-party as a going concern.

The bank agreed to this, and, over the next several months, Mr. Neubauer negotiated with several potential third-party purchasers. While these negotiations were ongoing, Mercantile agreed to continue financing the plant so the tomato crop could be canned. When the third party negotiations collapsed and the tomato crop had been canned, the bank began preparing for foreclosure proceedings. On November 8, 1990, pursuant to Md.Code (1974, 1988 RepLVol.) § 7-105 of the Real Property Article and Md.Rules W71 and W72, Mercantile filed petitions in the circuit court for foreclosure sales against HFP and HFPIA, seeking to sell the HFP real estate, equipment, and inventory and the HFPIA farm.

The court entered orders granting both petitions and directing that all property be sold; appointing Donald J. Trufant and Brendon F. Shea, both Mercantile officers who were named trustees in the deeds of trust, as trustees to make the sales; and setting forth certain terms and conditions of the sale. ³²⁰ The trustees engaged Michael Fox Auctioneers, Inc. (Fox) to hold public sales on December 3, 1990. Fox is a national firm based in Baltimore that specializes in auction sales of real estate, industrial equipment, and machinery, and that has extensive experience in the auctioning of food processing equipment. Fox had previously auctioned equipment for Campbell Soup, Sara Lee, and Quaker Oats and had conducted between twenty and thirty other food processing equipment sales in the previous ten years, including at least two others on the Eastern Shore. Prior to the sales, Fox marketed the properties by placing advertisements in national, regional, and local publications, mailing 20,000 copies of a color brochure that contained 12 photographs, and embarking on a telemarketing campaign.

Legal ads for the HFP and HFPIA property ran, side by side, in a local newspaper, the Cambridge Daily Banner, for three successive weeks prior to the sales. All property — realty, inventory and equipment — was available for inspection prior to the sales, and the plant manager testified that he showed the property to prospective purchasers prior to the sales. Both sales were held at the HFP plant. The sale of the plant was advertised to begin at 10:00 a.m., and the sale of the farm at 10:30 a.m.

By 10:00 a.m., the parking lots were full, and over 200 people from at least 12 states had assembled. As one attendee testified, “it was a large auction and there were people from everywhere, it was well advertised.” A list of 98 1 persons, who registered at the sale, was attached to the Report of Sale; the former plant manager testified “approximately 15” representatives from different canneries attended. First, the plant realty and equipment was offered as an “entirety.” The auctioneer testified that “[t]he high bid was at $900,000, and that was from the bank.” This bid was held in reserve and the plant was next offered without equipment; no bids were received. The equipment was then offered as an ³²¹ entirety without the plant realty; a bid of $400,000 from a third-party was received and reserved.

The plant entirety was then again offered for sale and, again, no bids were received. The bank’s earlier reserved bid of $900,000 on the plant entirety (realty and equipment) was then rejected. The plant realty, without equipment, was offered again, and again no bids were received. The farm was then offered.

When no bids were received from any third-party on the farm, it was sold to the bank for $175,000. After the farm was sold, the inventory was offered for sale. The inventory was first offered as an entirety. Bids from third parties reached $5.85 per case; this bid was reserved.

After a brief recess, the auctioneer reopened bidding on the entirety. He placed the bank’s bids of $5.90 and $5.95 per case, and when no bid from a third party over $5.85 per case was received, the auctioneer reserved the bank’s bid of $5.95. The inventory was then offered line-by-line, ie., a fixed number of cases of a certain product and certain can size, until the auctioneer concluded that sales in that manner would not reach $5.85 per case. He then discontinued the line-by-line sale, and declared the sale confirmed to the Bank for $5.95 per case.

The plant’s equipment was then sold on an item-by-item basis to third-party buyers for a total of $720,435.00 ($13,-141.82 was paid to two prior secured creditors of specific trucks and forklifts). At the end of the equipment sale, the plant (without equipment) was again offered for sale. Again, no bids were received from third parties. The plant realty, including improvements, the 11 acre plant site, and the nearby 27 acre parcel, were then sold to the bank for $250,000.

The auction realized the following amounts: HFP Plant HFPIA Farm Plant realty $ 250,000.00 $175,000.00 Equipment 720,435.00 Inventory 753,888.80 Total realized at auction from HFP Property $1,724,323.80 After the auction, the bank resold the inventory, which it had purchased for $5.95 a case, to a third party for $6.50 a case. ³²² The yield from this resale was credited to HFP. In addition, the Bank sold to that third party a small quantity of additional inventory that had been withheld from sale; that amount was also credited to HFP. The total of these two inventory sales yielded $864,000 or an additional $110,111.20 over the $753,-888.80 realized at auction. After the foreclosure sales, the bank received an offer to purchase the HFPIA farm for $225,000 and an offer to purchase the HFPIA farm and 27 acre plot owned by HFP for $260,000.

No resales of these properties have been made pending ratification of the foreclosure sales. Mercantile, however, has stated its intent to credit any gain on resales of the farm or the plant realty to the borrowers. The trustees filed timely reports of sale on January 2, 1991 with all required supporting material. HFP and HFPIA filed numerous exceptions, discovery was taken, and a hearing on the exceptions was set for June 27, 1991.

Shortly before the scheduled hearing, Mr. Neubauer, the majority stockholder of HFP and partner in HFPIA and one of the guarantors of Mercantile’s loans, moved to intervene, personally, as an additional exceptor, adopting the exceptions already filed by HFP and HFPIA. 2 This motion was granted and no argument is made in this Court that this intervention was improper. Over a ten month period, the circuit court heard five days of testimony on the exceptions. Seventeen witnesses testified and numerous exhibits were admitted. On the valuation issues, the exceptors’ principal real property expert was H. Ray Stevens, a local realtor and past president of the Dorchester County Board of Realtors.

Mr. Stevens testified that, using “market analysis,” the fair market value of the HFPIA farm was $1,800 to $2,000 per acre, or $290,000 for the 145 acres, not counting the value of the waste water system; taking into account the existence and value of the system, he valued the farm at $462,500. The latter valuation was buttressed by the facts that (1) within the ³²³ preceding year, Mr. Stevens had sold two farms to the Town of Hurlock for spray irrigation disposal of waste water at a price of $3,190 per acre; (2) Mr. Neubauer’s testimony that the cost to HFPIA to install the spray irrigation system had been approximately $100,000; and (3) Fox, in a pre-sale market analysis, had predicted that the farm would easily bring at least $375,000 at auction even if sold as bare farmland. Mr. Stevens testified that, in his opinion, the fair market value of the HFP plant real estate, ie., the 11-acre site with the 135,000 square-foot building, empty of equipment and not as an operating facility, was $165,000 for the land, and $1,350,000 for the “building ... assuming it was operable [as] a warehouse facility” and that the fair market value of HFP’s 27-acre parcel was $270,000. Thus, Mr. Stevens’ total valuation for the HFP realty was $1,785,000.

On cross-examination, however, Mr. Stevens admitted that he was not an appraiser and had not done an appraisal, but had visited the plant, empty of all equipment, after the actual sale. Mr. Stevens conceded that the lack of bids at the auction indicated a lack of market interest. He also conceded that although he would be able to advise a client to pay his valuations for the farm and 27 acre parcel, “the plant site [was] more difficult.” Mr. Stevens also admitted that he had valued the plant as a warehouse, that some fairly extensive remodeling would be necessary to convert it to warehouse use, and that he did not know the cost of this remodeling. He agreed that his actual valuation of the plant building was $5 to $10 a square foot and if the $5 rather than $10 a square foot valuation was used, his valuation was $650,000, rather than the previously stated $1,350,000.

Mr. Stevens also agreed that other canneries were available for sale on the Eastern Shore, and admitted that he had not sold any in Dorchester County in the “last year or two.” Ronald Reinwald, an expert appraiser of food plant equipment, who had appraised the equipment in 1987 and 1989, determined that the fair market value of the equipment on his list at the time of the sale, eighteen months following his most recent appraisal, was not less than $1.5 million. He noted ³²⁴ several instances in which there was a great scarcity of and market demand for certain pieces of the equipment. Mr. Reinwald, however, had not attended the auction, and could not match up his list of equipment with the auction equipment list. Wilmer Smith, HFP’s former plant manager and a minority shareholder, who was, at the time of trial, employed part-time by the bank to maintain the plant, but who was called as a witness by the exceptors, testified in great detail' about the condition and desirability of the equipment.

He stated that some of the equipment was “obsolete” or in “poor” condition, and that many items were in “fair” condition, meaning a mechanic had to be available to perform repairs. His estimates of value were not very different from the prices obtained at the foreclosure sale; he testified that several items were sold at auction for more than his view of their fair market value, and some were sold for more than their purchase price. No appraisal was offered by the exceptors with respect to the inventory. Mr. Neubauer, however, testified that it had a fair market value of more than $1,625,000; inventory sheets introduced into evidence established that this represented the wholesale prices of this inventory at the approximate time of the sale when such products were offered for sale in the normal course of business.

John Speake, who was called as a witness by the exceptors, testified that he had negotiated with Mr. Neubauer to purchase the plant, farm, equipment and inventory, for between $1.3 and $1.4 million, in the summer and fall preceding the December sale. In response to a question from the circuit court, Mr. Speake stated that “several times” he thought the parties were “close” to a sale but negotiations broke down because Mr. Neubauer kept changing the terms and the price, and every change required additional efforts on Mr. Speake’s part to determine if he would be able to get financing. (At 2:25 in the afternoon of the foreclosure sale, Mr. Speake also faxed an offer, contingent on obtaining financing, to purchase the farm, plant realty, and equipment for $1.2 million and the inventory for $6.50 a case; no party asserts before us that this bid should have been accepted.) For its valuation evidence, ³²⁵ Mercantile relied on Mr. Speake’s testimony, the absence of bids on the farm and plant, and the lack of bids higher than the bank bid on the inventory, to show that its bids were “not shockingly low.” Mr. Trufant testified that his bids were set according to a formula furnished to him by his counsel, under which he was to bid 70% of the amounts owed to the bank on the loans. The exceptors contended below and before us that Mercantile committed a fatal “irregularity” by not advertising an “informal easement” that benefitted the farm property and the plant property by permitting plant waste water to be sprayed on farm land.

The “easement” issue arose because the plant property and the HFPIA farm were not contiguous. Consequently, waste water from the plant had to be transported via pipeline across land owned by two intervening landowners, the Town of Hurlock and the Peninsula Land Company. Several witnesses testified as to the “easement.” Mr. Neubauer initially stated that there was a written “lease” between the plant and farm. He later admitted, however, that he had no writing documenting this lease or easement and had found no easement recorded in the land records.

Instead, he relied on (1) a recorded plat that mentions a “right-of-way” and (2) an unsigned, undated agreement. The attorney, who represented the bank at the September, 1988, closing of the HFP and HFPIA loans, testified that, although a “proposed easement” was mentioned in his files, there was no copy of an easement agreement in his files or the closing binders, that he had not seen such an agreement and that, at closing, the existence of or documentation of an easement was not discussed. Town officials testified that an easement agreement had been proposed but that such an agreement had never been submitted to the town for its approval, and that they had never seen any easement agreement between HFP and any other party. With regard to the exceptors’ argument that the plant and farm should have been sold together as one offering, four witnesses testified.

Jay Williamson and Wilmer Smith, two of the minority stockholders and minority partners, stated that they and the other minority owners wanted to sell the parcels ³²⁶ together and had proposed this to Mr. Neubauer. Mr. Neubauer refused “want[ing] to keep them separate.” Mr. Trufant, of Mercantile, testified that he had asked Smith to make an inquiry of Mr. Neubauer concerning selling the parcels together, and that Mr. Smith had reported back that Mr. Neubauer refused. Mr. Neubauer, however, testified that his “refusal” applied only to a formal merger of the two entities. It was undisputed that the HFPIA farm and HFP plant properties were separately owned by different entities and secured different, independent loans that were not crosscollateralized.

After five days of hearings on the exceptions, over a period of ten months, the parties filed lengthy post-trial memoranda. On November 30, 1992, the circuit court issued a comprehensive 26-page Opinion and Order overruling all exceptions and ratifying the sales. In it, the judge made numerous findings of fact, which will be discussed within. The circuit court concluded that the exceptors “failed to meet their burden of proving partiality, unfairness, or a lack of good faith on the part of Mercantile or Mr. Trufant” and that “the prices generated at the foreclosure sale were not so inadequate as to shock the conscience of the court.” The exceptors appeal, asserting that the circuit court erred in ratifying the foreclosure sale.

In support of that claim they raise the following questions, which we have shortened for clarity: 1. Did the circuit court fail to follow the requirements of Southern Maryland Oil, Inc. v. Kaminetz, 260 Md. 443 [ 272 A.2d 641 ] (1971), which sets out the method to be used in considering the ratification of a foreclosure sale where the secured party is the purchaser? 2. Did the circuit court err in its determination that the sale prices were adequate? 3. Did the circuit court err in its findings that the conduct of the sale was not tainted by irregularity? 4.

Did the court place the burden of proof on the wrong party? ³²⁷ 5. Did the circuit court err in denying all relief on the ground that there was no reasonable probability of a resale? We discuss within all issues raised by the exceptors, although not precisely in the order raised by them. (ii) The exceptors’ first argument is that the trial court failed to follow the requirements of Southern Maryland Oil, Inc. v. Kaminetz, 260 Md. 443 , 272 A.2d 641 (1971).

Specifically, the exceptors apparently regard the following language in Kaminetz as critical to the outcome of these cases: When the purchaser at the foreclosure sale is the mortgagee or his assignee, the Courts will examine the sale closely to determine whether or not it was bona fide and proper. The Courts will set aside such a sale upon “slight evidence of partiality, unfairness or a want of the strictest good faith.” Id. at 450 , 272 A.2d 641 (quoting Heighe v. Evans, 164 Md. 259, 270 , 164 A. 671 (1933)). Latching upon this language, the exceptors assert that they “provided much more than the ‘slight evidence’ of the irregularity which is required for relief from a sale under Kaminetz ” but were denied all relief “merely because” the circuit court was not persuaded that “the irregularities complained of had actually had an adverse impact on the sale.” The critical difficulty with this argument is that it ignores both the way in which the above quoted Kaminetz principle has actually been applied in Maryland and another, equally well established principle of Maryland foreclosure law. In Kaminetz , the exceptor alleged fraud, conspiracy, and other improper motives when the mortgagee’s assignee purchased the property; the circuit court ratified the sale without a trial.

The Court of Appeals did not find the “slight evidence” standard mandated reversal, but rather affirmed, specifically stating, “the mere fact” that the mortgagee’s assignee purchased the property “would not invalidate the sale.” Kaminetz, 260 Md. at 453 , 272 A.2d 641 . In order to escape a ³²⁸ demurrer, even in the situation in which the secured party-purchased the property, the exceptor had to allege “some impropriety in the conduct of the foreclosure sale or fraud by the mortgagor known to the purchaser which would render the sale invalid____” Id. (emphasis added). In the case that was the original source of the “slight evidence” language, Heighe v. Evans, 164 Md. 259, 270 , 164 A. 671 (1933), the Court of Appeals went even further.

The exceptor alleged fraud, conspiracy, and other improper motives, as well as inadequate price when a mortgagee purchased the property; the circuit court, after a hearing at which evidence as to these allegations was offered, sustained the exceptions, and ordered a resale. Id. at 261 , 164 A. 671 . The Court of Appeals reversed, explaining that, although a sale to a secured party will be closely scrutinized, there is no • reason why [a secured party] should not be permitted to bid as freely and as fully as any other person desiring to purchase the property---- Id. at 270 , 164 A. 671 . There are numerous other cases in which exceptors’ challenges to foreclosure sale purchases by the secured party have similarly been rejected, even though the exceptors presented some evidence, as they did here, that an inadequate price was realized or the sale was not advertised properly, etc. See, e.g., Garland v. Hill, 277 Md. 710 , 357 A.2d 374 (1976); Smith v. Digges, 261 Md. 130, 136 , 274 A.2d 92 (1971); Habib v. Mitchell, 257 Md. 29, 35 , 261 A.2d 744 (1970); Ed Jacobsen Jr., Inc. v. Chapline, 253 Md. 70, 73-74 , 251 A.2d 604 (1969); Bachrach v. Washington United Cooperative, 181 Md. 315, 321-22 , 29 A.2d 822 (1943); Walton v. Washington County Hosp.

Ass’n, 178 Md. 446, 451 , 13 A.2d 627 (1940); PAS Realty, Inc. v. Rayne, 46 Md.App. 445, 451 , 418 A.2d 1222 , cert. denied, 289 Md. 739 (1980). One of these cases, Bachrach v. Washington United Cooperative supra, 181 Md. 315 , 29 A.2d 822 , was heavily relied on by the Kaminetz court. For example, Kaminetz quoted Bachrach for the proposition that a State statute “expressly provided ... that no title derived through the foreclosure of ³²⁹ mortgaged property shall be impeached, either at law or in equity, on the ground that the property was bought in by the mortgagee or his assignee.... If the acts of the mortgagee and the assignee were lawful, their confederation does not make their acts unlawful.” Kaminetz, 260 Md. at 455 , 272 A.2d 641 (quoting Bachrach, 181 Md. at 325 , 29 A.2d 822 ).

Similar statutory provisions are, of course, presently a part of Maryland law. See Md.Code (1974,1988 Repl.Vol.) § 7-105(e) of the Real Property Article and Md.Code (1975, 1992 Repl. Vol.) § 9-507 of the Commercial Law Article. In Bachrach , the Court of Appeals also noted: It is essential to the prompt administration of justice that the rule be inviolably observed that no court shall set aside a foreclosure sale merely because of harmless errors or irregularities committed in connection with the exercise of the power of sale, or for any slight or frivolous reasons not affecting the substantial rights of the parties.

Bachrach, 181 Md. at 320 , 29 A.2d 822 . That principle has been followed in numerous subsequent cases, see, e.g., Wilson v. Cory, 228 Md. 561, 565 , 180 A.2d 695 (1962) (and cases cited therein); Ten Hills Co. v. Ten Hills Corp., 176 Md. 444, 449-451 , 5 A.2d 830 (1939), including some involving foreclosure sale purchases by secured parties. See, e.g., Habib, supra, 257 Md. at 34-35 , 261 A.2d 744 ; Walker v. Williams, 218 Md. 312, 316-317 , 146 A.2d 203 (1958); PAS Realty, supra, 46 Md.App. at 451-52 , 418 A.2d 1222 . It seems to us that the lessons to be drawn from these cases are that, although a purchase by a secured party at a foreclosure sale will be closely scrutinized to ensure that the secured party has acted in good faith, such a sale is permitted and will not be overturned absent some (at least “slight”) evidence of true “partiality, unfairness, or a want of the strictest good faith.” Kaminetz, supra, 260 Md. at 450 , 272 A.2d 641 .

Moreover, a secured party is not required to act contrary to its own interest. Claims, like those advanced here, of lack of adequate price, inadequate advertising, etc. must be proved by exceptors in cases involving secured party ³³⁰ purchasers just as they must be proved in any other case. As the Court of Appeals has explained, In general a mere allegation that a purchase price is inadequate will not be enough to invalidate a foreclosure sale. However when a mortgagee purchases at such a sale the courts will pay special attention to see that he acted in good faith.

The fact that the mortgagee is watched closely does not require him to act inimically to his own interests. There is no evidence that the sale was not properly advertised or that bidding was discouraged. There is no evidence that the sale was attended by any fraud. Good faith does not require him [the secured party] to pay the higher of the two appraisals.

Habib, supra, 257 Md. at 35 , 261 A.2d 744 (emphasis added) (citations omitted). Accord, PAS Realty, 46 Md.App. at 450-51 , 418 A.2d 1222 . Thus, the circuit court did not err in failing to follow Kaminetz simply because it required the exceptors to demonstrate “the irregularities complained of had actually had an adverse impact on the sale.” (hi) Closely related to their “slight evidence” argument are the exceptors’ various arguments as to the improper conduct by Mercantile and its officer, Mr. Trufant, the trustee under the deeds of trust for the HFP and HFPIA realty. First, relying on Perry v. Virginia Mortgage & Investment Co., 412 A.2d 1194, 1197 (D.C.App.1980), the exceptors assert that the burden of proof should be placed on the trustees ' to demonstrate that they were “faithful to their trust.” The circuit court considered this argument, or one closely akin to it, 3 and refused to adopt such a rule, pointing ³³¹ out that it would be a “contradiction” to the rule “adhered to in Maryland that ‘[t]he invalidity of a mortgage sale, like other judicial sales, is not presumed, and the burden of proving the contrary is on the one attacking the sale.’ Butler v. Daum, 245 Md. 447, 453 , 226 A.2d 261, 264 (1967).” That conclusion is legally unassailable.

See, e.g., Hardy v. Gibson, 213 Md. 493, 508 , 133 A.2d 401 (1957) (“[tjhere is a presumption in favor of the validity of judicial sales and the burden of establishing the contrary is on the exceptant”); Ten Hills Co., 176 Md. at 449 , 5 A.2d 830 (“the burden was not on the trustee to show that the sale was valid, but upon the exceptant to show it was invalid”); Clemens v. Union Trust Co., 170 Md. 520, 532 , 185 A. 462 (1936) (exceptions must be supported by preponderance of evidence to set aside trustee’s report). Although the exceptors concede that Mercantile was authorized under the loan documents and by statute to “bid and acquire” the farm, plant, etc. at the foreclosure sales, they assert that Mercantile’s Vice President, Mr. Trufant, as a trustee under the loan documents, was prohibited from bidding at the sales. They rely on North Baltimore Building Assn. v. Caldwell, 25 Md. 420 (1866) and Korns v. Shaffer, 27 Md. 83 (1867). Neither case supports the exceptors’ position.

In North Baltimore the court held that a trustee only empowered “by a decree of a court ... to sell real estate” could not “bid for and purchase that property for a third person,” North Baltimore, 25 Md. at 423-24; there was no express power given by the court directing that the property could be “sold at a private sale” or to the secured party or his representative. Id. at 422 . Here, in contrast, the trustees, although authorized to act by the court, were originally empowered by the loan documents, and those documents, in turn, expressly permitted the secured party to bid and purchase at the foreclosure sales. Korns is even less helpful to the exceptors; it merely held that a secured party under a mortgage is like a trustee, and so cannot purchase at a foreclosure sale on terms different from those provided by the mortgage or by statute.

Korns, 27 Md. at 90 . As noted above, the exceptors concede ³³² that here the bids of the secured party, the bank, were authorized both by the loan documents and by statute. The only authority that we have found, or that the exceptors have cited, that does offer any support for their claim is Gordon on Maryland Foreclosures. That treatise states: It is always important that the lender or his agent or an officer of the lender be present at the sale to sustain the bidding to the predetermined upset price as the Trustee may not bid.

Alexander Gordon, Gordon on Maryland Foreclosures § 20.-08, at 359-60 (2d ed. 1985). (emphasis added). The cases cited by Gordon in support of this proposition, however, do not unequivocally hold that trustees are always barred from bidding at their sales. Rather, those cases hinge on whether there was a personal benefit to the trustee or third party from the transaction or whether there was adequate authority for the secured party’s buy-in.

See, e.g., Love v. Rogers, 118 Md. 525, 532 , 85 A. 771 (1912) (trustee may purchase trust property for own benefit if “confirmed” by interested parties, long “acquiescence,” or by failure of beneficiary to set aside transaction, quoting Hammond v. Hopkins, 143 U.S. 224, 251 , 12 S.Ct. 418, 427 , 36 L.Ed. 134 (1892)); Welbourn v. Kleinle, 92 Md. 114, 122-23 , 48 A. 81 (1900) (where agreement expressly permitted, partner may be allowed to purchase deceased partner’s interest for own account but subject to close scrutiny); North Baltimore, supra, 25 Md. at 423 (court appointed trustee not permitted to purchase at private sale, as agent for third party, when given no such power by court). There is no suggestion of any personal benefit here and there clearly was authority for the secured party to buy-in. Thus, the authority relied on by the exceptors does not support their claim that Mr. Trufant, as trustee, was prohibited from bidding and purchasing property at the sales, for his employer, the secured party. We have, however, found no Maryland case approving what the exceptors assert happened here, ie., foreclosure sale purchases for a secured party by an officer of the secured ³³³ party, who was the named trustee under loan documents, which expressly permitted the secured party, but not the individual trustee, to “bid and acquire” the property at foreclosure sale.

On one hand, such a practice may be contrary to general principles of trust law. On the other, there is absolutely no evidence that, even if improper, the asserted bidding by the trustee caused the exceptors any prejudice, and so, consistent with the “no harm, no foul” rule articulated in Bachraeh, even if improper, such bidding would seem to entitle the exceptors to no relief. We need not, indeed cannot, resolve this novel question here. This is because, although the circuit court did find that “the trustee was permitted to ‘buy in,’ ” it never found that the trustee, himself, did “buy in.” Moreover, the failure to make this finding was obviously not clearly erroneous since there was virtually no evidence supporting such a finding. 4 The exceptors next challenge Mercantile’s use of a subsidiary, Mett, Inc. Mr. Trufant testified that it was bank policy not to hold, in its corporate name, assets like those the bank purchased at the foreclosure sales.

Immediately after the sales a subsidiary, Mett, Inc., was formed, and the purchases were assigned to it. Mr. Trufant explained that Mett, Inc. was not formed or organized prior to the sale because the bank expected that the HFP and HFPIA assets would be sold to an unrelated third party. See, Walton, supra, 178 Md. at 451-52 , 13 A.2d 627 (“it frequently happens that a mortgagee reluctantly purchases mortgaged property at his own sale in ³³⁴ order to extricate himself from a situation which threatens continual loss, thereby taking the chance of holding it for an indefinite period with the possibility of sustaining a loss on resale”). Nevertheless, the exceptors maintain that because Mett, Inc. “was not a corporation on the day of the sale,” the circuit court should not have ratified a sale to it.

The exceptors do not point out any way in