Lowe v. Lowe

Henry, Jr., J., by special assignment, delivered the opinion of the Court. The appellant, Eugene E. Lowe, as mortgagor of certain chattels, filed exceptions in the Circuit Court for Montgomery County to the report of foreclosure sale submitted by the assignee under the mortgage. The grounds of the exceptions were that the property sold had been wrongfully seized and kept by the mortgagee pending the sale inasmuch as no default had occurred under the mortgage, that notice of the sale was defective, that the mortgagee-purchaser had failed to comply with the advertised terms of the sale, and that the mortgage would not have been in default had the mortgagee first applied certain other security to payment of the underlying debt as he allegedly should have. After taking testimony the Chancellor concluded that no sufficient grounds were shown on which to set aside the sale.

Accordingly, an order was entered dismissing the exceptions and ratifying the sale. From that order the appeal has been taken. The parties to the mortgage under consideration are brothers, and in 1955 they were operating a general excavating business as partners. In the latter part of that year the partnership purchased certain machinery consisting of a dump truck, tilt-top trailer and caterpillar front-end loader at a cost of approximately $26,655.

On May 10, 1956, the brothers borrowed $25,000 from the Farmers Banking and Trust Company of Montgomery County (hereinafter referred to as the Bank) to help pay for this equipment and on the same date gave their joint demand promissory note for the amount of the loan, said note having been co-signed by their father, Arthur L. Lowe, Sr. The father died on September 12, ³⁶⁷ 1956, leaving a Last Will and Testament which included a legacy of $10,000 to be paid to the appellant one year after the death of the testator and which devised the remainder of his estate to the appellee, who was named Executor under the Will. On December 1, 1956, the parties entered into a written agreement by the terms of which the appellee sold his entire interest in the business to the appellant in consideration of the latter agreeing, among other things, to pay the $22,000 then due to the Bank on the above mentioned demand promissory note in monthly instalments of $500.00 plus interest. As security for the payment of the balance due on the note the appellant assigned to the appellee his legacy of $10,000 under his father’s will to hold “until said note is paid in full”, and in addition agreed to execute a chattel mortgage in his favor in the sum of $22,000 upon the equipment which the parties had purchased with the loan from the Bank. The mortgage, which was executed and recorded shortly thereafter in accordance with the terms of the agreement, included a recital of consideration consisting of a then existing debt of $22,000 owed by the mortgagor to the mortgagee, which the former agreed to pay, together with annual interest of 5%, on demand after date.

In the agreement which had given rise to the mortgage, however, the parties had provided that it was to become due and payable if the note to the Bank “was not paid when due.” The testimony below discloses that the appellant made only-two $500 payments against the principal sum of the note from December, 1956, up to the date in August, 1957, when the appellee took possession of the mortgaged chattels. On December 3, 1957, the assignee instituted foreclosure proceedings under the mortgage, and on January 3, 1958, he sold the property therein described at public auction. The appellee, with the high bid of $13,000, purchased the chattels. The appellant contends that despite his failure to make the agreed upon monthly payments to the Bank, the appellee had no right