McCartney v. Frost

Powers, J., delivered the opinion of the Court. In law libraries in Maryland little can be found concerning a sale of real estate by a sheriff after levy of a writ of fieri facias on a judgment. ⁴⁹⁶ The case before us involves such a sale. The appellate decisions are few, and the only relevant statutory law is found in Code, Courts Art., §§ 11-501, 11-502, and 11-509, which read: § 11-501 “A sheriff to whom any writ of execution is directed may seize and sell the legal or equitable interest of the defendant named in the writ in real or personal property.” § 11-502 (in part) “(a) A sheriff shall give notice of the time, place, and term of the sale of any property under execution before the property can be sold. “(b) In the case of a sale of an interest in property, the notice shall be posted on the courthouse door and printed in a newspaper, published in the county where the property is located at least: “(2) 20 days before the sale of real property.” § 11-509 “If a sheriff sells any interest of the defendant in any property, he shall convey it to the purchaser upon payment of the purchase price.” We have been directed to no Maryland Rule relating to a sheriffs sale of real estate, and we find none. The BR Rules relate only to a judicial sale, which, being defined as a sale of property which is subject to ratification by a court, excludes a sheriffs sale, which is not subject to ratification.

The W Rules apply only to foreclosure of mortgages and other security devices. This appeal by Irene J. McCartney, an owner in common of an undivided one half interest in a row house in Dundalk, is from an order of the Circuit Court for Baltimore County ⁴⁹⁷ denying her motion to set aside the levy and sale under a writ of fieri facias. No question was raised in the motion 1 concerning the original judgment, the issuance, or the levy of the writ of fi. fa. The attack was upon what the sheriff did, or failed to do, after he was instructed by the judgment creditor, John A. Greene, to proceed to sell the property.

The writ of fi. fa. was issued on 18 December 1975, showing a principal indebtedness of $3,429.00, attorney’s fee of $342.90, and costs of $38.00. The writ was served and the levy made, according to the record, on 28 December 1975. Counsel for the judgment creditor gave instructions to the sheriff on 8 March 1976 to proceed with advertisement and sale. An advertisement of the sale, to be held on the premises at 11:00 A.M. on 20 April 1976, was published in The Jeffersonian, a weekly newspaper published in Towson, Baltimore County, on 25 March and on 1, 8, and 15 April 1976.

What was advertised and sold was “all the right, title, claim and demand at law and in equity of the said Harley J. McCartney and Irene J. McCartney in and to” the described property. At the sale the first bid was $1,500.00. The second bid, in the amount of $2,000.00, was made by Rex A. Frost, appellee. There were no other bids.

The sheriff (through the auctioneer employed by him) declared the property sold to Dr. Frost for $2,000.00. The purchase price was paid, and on the same day the sheriff executed and delivered a deed conveying the property to Rex A. Frost. Appellant’s motion to set aside the sale, filed 20 days after the sale, alleged that the selling price was grossly inadequate and unconscionable, and that the sheriff “failed to do those things necessary to attract the bidders and ⁴⁹⁸ promote the bidding, and otherwise failed to act in good faith to procure the highest possible bid, as required to law”. The appellee was permitted, upon petition, to intervene.

A hearing on the motion was held before Judge John N. Maguire on 11 June 1976. Testimony was heard from eight witnesses, and 15 exhibits were received in evidence. The judge directed counsel to file written memoranda. They did.

On 21 October 1976 Judge Maguire filed a Memorandum and Opinion, which concluded with an order denying the motion to set aside the sale. Appellant filed a motion for reconsideration of the court’s memorandum and opinion. A further hearing was held, and testimony taken, on 6 December 1976. At its conclusion Judge Maguire said, “the Motion for Reconsideration of my Opinion is overruled, and the Motion [to Set Aside the] Writ of Fieri Facias is denied.” Within 30 days thereafter the appellant filed an order for appeal from the judgment on the motion to set aside and on the motion for reconsideration. 2 Appellant’s arguments here are that the sale should have been set aside because: 1.

The price was grossly inadequate. 2. The purchaser did not comply with the advertised terms of sale, that the property would be sold “for cash”. 3. There were irregularities in the procedure of the sale, which must be considered with the grossly inadequate price. Inadequacy of Price Appellant presented evidence, not controverted, that the appraised value of the property, assuming clear title, was ⁴⁹⁹ $24,000.00, and that there was an encumbrance of $6,000.00 against it.

This evidence indicates that for a price of $2,000.00 and a debt of $6,000.00, or a total of $8,000.00, the purchaser received a value of $24,000.00, three times the price. Appellant presents it as an equity value of $18,000.00 for a price of $2,000.00. However put, the price certainly appears to be inadequate, perhaps grossly so. But there are other factors.

A sheriff in effect sells a quitclaim interest. 3 He gives no assurance of good title. As the auctioneer put it in his testimony, at a sheriffs sale he is selling “a pig in a bag”. Another factor wTas present here. Mrs. McCartney, apparently because of advice given to her by a lawyer she consulted, declined to permit inspection of the inside of the house.

Inadequacy of price, coupled with irregularities and improprieties in the sale, caused the Court of Appeals in Nesbitt v. Dallam, 7 Gill & Johnson 494 (1836) to set aside a sheriffs sale of real estate. The statute then in effect required that the advertisement of sale be set up at the courthouse door of the county, and other public places in the county, where such sale may be made. The property levied upon was three separate lots in the town of Port Deposit. The advertisement was set up at no public places in the county, except the courthouse, post office, and two taverns in Elkton, 18 miles from Port Deposit.

The sale was held at Elkton. Regarding the advertisement in that case the Court of Appeals said that it was a circumstance that would have great weight in inclining the court to set aside a sale, where the property had been sold greatly below its value. The Court said, at 511: “It is the duty of the sheriff in making a judicial sale, to endeavour to obtain the best price in his power for the property to be sold; and in the exercise of a sound judgment and discretion upon the subject, he should cause advertisements to be set up at such public places ⁵⁰⁰ in the county, as he may reasonably believe would be conducive to that end; amongst which, in the present case, in the absence of all proof to the contrary, would be public places in the town of Port Deposit, and its vicinity.” The three lots were sold in mass, on the execution of a judgment of $150.00 which had first priority, but was followed by a mortgage and other judgment liens amounting to between $4,000.00 and $5,000.00. The property was proved to have been worth $5,800.00.

It was sold for $1,100.00. The Court said, at 512: “Such a disparity between the price and value of the property sold, furnishes intrinsic evidence of the irregularity, impropriety, or unfairness of the sale; and connected with any of the several omissions of duty, or indiscretions of the sheriff before referred to, leaves not to the court a shadow of discretion as to vacating this sale.” The Court then discussed what it called the “gross misconduct of the sheriff” in selling the entire property in mass, which it said was “manifestly a fraud on the rights of the mortgagee”. The present statute requiring the sheriff to give notice of the sale calls for no exercise of sound judgment and discretion. Both the minimum and the maximum are that the notice be posted at the courthouse door, and printed in a newspaper published in the county.

Anything less is fatal to the sale; anything more is surplusage. An allegation that a sheriffs sale brought a grossly inadequate price was considered by the Court of Appeals in Preissman v. Crockett, 194 Md. 51 , 69 A. 2d 797 (1949). The Court disposed of issues concerning the levy, and the sheriffs return, neither of which is involved here, and of the contention of the judgment debtors that they had a right to select the paper in which the advertisement of sale was published. The property in that case was sold by the sheriff for $1,050.00, subject to a lien of $664.37, which would total ⁵⁰¹ $1,714.37.

There was inconclusive evidence which indicated a value of about $4,000.00. The Court noted prior holdings “that mere inadequacy of price standing alone was insufficient to set aside a judicial sale”,.and stated, at 60: “We do not think that the price which the property in question brought at the sale was grossly inadequate; and the conduct of the sale by the sheriff cannot be questioned for want of fairness, good faith, and the exercise of reasonable discretion.” Clearly it is the law that if the