Kirsner v. Sun Mortrage Co.

Digges, J., delivered the opinion of the Court. The appeal in this case is. from a, decree by the Circuit Court Ho. 2 of Baltimore City in favor of the Sun Mortgage Company, appellee, against Dave B. Kirsner, appellant, for the sum of $1,986.62, with interest from date, and $3.80 costs: the said sum being the deficiency found by the auditor to be due from Dave B. Kirsner, Ellis Praeger and Harry ⁶⁸⁴ Saxon, under the terms of a mortgage dated the 17th day of' June, 1924. The facts giving rise to' this decree may he summarized from the recoird as follows: Immediately prior to June llth, 1924, Kirsner was the owner of three leasehold lots or parcels of ground in Baltimore City, which on or about that date he sold to Praeger and Saxon, and agreed with them to assist in'financing their purchase. In accordance with that understanding they .applied for and received a loan of $6,000 from the appellee, being recited in the mortgage as a part of the purchase price of the property.

In order to secure the loan a mortgage was given by Praeger, Saxon, and Kirsner on the property. On the same day, by an agreement of that date, Kirsner deposited, as additional security for the repayment of the $6,000, the sum of $600 with the State Building & Loan Association. The portions of the mortgage necessary to be specially considered are: “This mortgage, made this seventeenth day of June in. the year one thousand nine hundred and twenty-four by and between Ellis Praeger, Harry Saxon and Dave B. Kirsner of the City of Baltimore, in the State of Maryland of the first part (mortgagors), and the Sun Mortgage Company, a corporation, of the second part (mortgagee). Whereas, the parties of the first part (mortgagors), are justly indebted unto the party of the second part (mortgagee), in the sum of six thousand dollars ($6,000), for money this day loaned and advanced (being part of the purchase price of the hereinafter described property), for the repayment of which principal sum, together with interest to accrue thereon at the rate of six per centum per annum, payable semi-annually, the mortgagors have made and passed their promissory note of even date herewith, drawn payable to the order of the mortgagee, for the said principal sum of six thousand dollars, and payable one year after date; said principal note bearing interest at the rate of six per centum per annum, payable semi-annually.

To better secure the repayment of this mortgage and mortgage indebtedness, and any renewals or extensions thereof (and the ⁶⁸⁵ holder of this mortgage may renew or extend payment of this mortgage and unpaid mortgage indebtedness upon the request of any one or all of the mortgagors or upon the request of any party interested in the title or ownership in or to any of the premises herein described), these presents are executed. Row this mortgage witnesseth, that in consideration of the premises and of the sum of one dollar, the said Ellis Praeger, Harry Saxon and Dave B. Kirsner do grant, assign and convey unto the Sun Mortgage Company, its successors and assigns, all those three lots or parcels of ground situate and lying in Baltmore City at present known as No. and described as follows.” Then follows the description: “Being the same three lots of ground and premises as those described in an assignment, hearing even date herewith, from Dave B. Kirsner to Ellis Praeger and Harry Saxon, and intended to be recorded among the Land Records of Baltimore City immediately prior hereto. The said Dave B. Kirsner joins in this mortgage for the purpose of becoming 'bound on the personal covenants contained herein, and for the repayment of the indebtedness secured by this mortgage, hut has no interest in the property herein described.” The mortgage contains an assent to the passing of a decree by the Circuit Court of Baltimore City or the Circuit Court No. 2 of Baltimore City for a sale of the property mortgaged, in accordance with sections 720 to 732, inclusive, chapter 123 of the Acts of 1898, or any supplements or additions thereto; and then provides: “And it is agreed, that, until default be made in the premises (hut not thereafter) the said parties of the first part, their successors, executors, administrators or assigns, shall possess the aforesaid property upon paying in the meantime, the ground rent aforesaid, and all taxes, assessments, public dues and charges levied or assessed, or to be levied or assessed, on said ⁶⁸⁶ hereby mortgaged property, and on the mortgage debt and interest hereby secured; which taxes, ground rent, mortgage debt and interest, public dues, charges and assessments, the said parties of the first part covenant to pay when legally payable.” Finally the mortgage is thus executed: “Witness the hands and seals of the said mortgagors: Ellis Praeger (Seal), Harry Saxon (Seal), Dave B. Eirsner (Seal). “State of Maryland, City of Baltimore, ss: I hereby certify that on this seventeenth day of June, in the year one thousand nine hundred and twenty-four; before me, the subscriber, a notary public of the State of Maryland, in and for the city or county aforesaid,' personally appeared Ellis Praeger, Harry Saxon and Dave B. Eirsner, the mortgagors named in the foregoing mortgage and they acknowledged the foregoing mortgage to be their act. At the same time also appeared Edward J. Lee, the vice-president of the Sun Mortgage Company, the mortgagee herein named, and made oath in due form of law, that the consideration set forth in said mortgage is true and bona fide as therein set forth; and also made oath that he.is the agent of the mortgagee, with authority to make'this affidavit.

As witness my hand and notarial seal. Mary M. Ehudin, Hotary Public.” On June 15th, 1925, two days prior to the mortgage becoming due, it was extended for one year, upon application of Ellis Praeger, one of the mortgagors, which application for, extension had the names of Harry Saxon and Dave B. Hirsner signed thereto-, “per E. Pagt.” On July 17th, 19-26, one month after the expiration of the extension, the mortgage not having been paid, a decree was passed by the Circuit Court No. 2 of Baltimore City for the sale of the property, in accordance with the consent to- such decree contained in the mortgage. Under the power contained in this decree the property was -sold, the report of sale finally ratified b^ the ⁶⁸⁷ court, and. the case submitted to the auditor. On January 5th, 1927, the auditor filed his account showing, after allowing for the costs and expenses of the sale, a balance of $1,-896.59 due the mortgagee'.

On the same day an order nisi was passed, warning that the report and account of the auditor would he ratified aud confirmed as stated by the auditor, unless cause to the contrary be shown within ten days from that date. There being no exceptions filed within the time prescribed, the audit was finally ratified and confirmed on January 17th, 1927. On the last mentioned date the mortgagee filed its motion praying that a decree in personam for the deficiency might he entered by the court against the mortgagors, Praeger, Saxon, and Kirsner, upon due notice being given, by summons or otherwise, as the court might direct. The chancellor ordered that a subpoena issue directed to Praeger, Saxon, and Kirsner, commanding them to appear on the second Monday in February, 1927, to answer the motion and show cause, if any they had, within fifteen days from the return of the writ, why a decree should not be entered as prayed.

Praeger and Saxon failing to answer, a decree was entered against them on May 28th, 1927. Kirsner answered the motion for the deficiency decree, setting up reasons why the decree should not he entered against him. Subsequently the court took testimony on the motion and answer thereto) and, after argument, passed the decree from which, as stated, this appeal was taken. The questions to he decided on the appeal are: (1) Whether or not a claim for alleged usury iu the making of at mortgage can he raised after the final ratification of the auditor’s account; (2) whether the extension of the maturity of a mortgage without notice to one of the makers, releases that maker from liability, when the mortgage which he has signed contains such a clause for renewal as is in this mortgage; and (3) whether or not a person who signs a mortgage as one of the mortgagors, and who signs the mortgage note as a maker, is such a person as described in section 731A of the Baltimore City Code (chapter 327 of the Acts of 1898), against whom a deficiency decree may be entered ? ⁶⁸⁸ This court has held that the usurious character of a mortgage is no ground for setting aside a mortgage foreclosure sale, and stated that the question of usury should he determined at thq time of the audit. “The question as to usury in the mortgage can only arise upon the statement of the final account of the auditor. 'It cannot be urged as an objection to the ratification of the sale.” Miller’s Equity Proc., p. 563.

The above statement of the author is supported by the decisions of this court. Md. Perm,. Land & Bldg. Soc. v. Smith, 41 Md. 516 ; Smith v. Myers, 41 Md. 425 ; Equitable Mutual Land Imp.

Assn. v. Becker, 45 Md. 632 ; Buckner v. Cronhardt, 132 Md. 612 ; Boynton v. Remson, 133 Md. 101 ; Owens v. Graetzel, 146 Md. 361 . In the case first above mentioned the court, in dealing with objections to the ratification of sale of mortgaged property, said: “The same may be said of the objection that the terms- of the mortgage are usurious. That question can only arise- upon the statement of the final account by the auditor and cannot be urged as an objection to the sale.” The same or similar language has been used in the other cases above cited, the court saying in Owens v. Graetzel, supra, “Under the decisions of this court, usury cannot be urged as an objection to the ratification of a sale, and can only arise upon the statement of a final account by the auditor. Smith v. Myers, 41 Md. 425 .” It is true that in those