Montgomery Tire Service, Inc. v. Towsner

McWilliams, J., delivered the opinion of the Court. High Performance Tires, Inc. (HP), was launched in the fall of 1967. It foundered in the spring of 1968. In midcourse it cajoled the appellant (Montgomery) into parting with about $25,000 worth of tires.

Montgomery’s attempt to salvage something out of the wreckage, unsuccessful below, provides the basis for this appeal. The narrow question presented arises out of the dismissal of its petition to enjoin both temporarily and permanently the foreclosure of a deed of trust on realty. How success in this regard might benefit Montgomery will be disclosed in our recital of the relevant facts. While the record provides no specific information about HP, it seems reasonable to assume that it was formed at the behest of the appellee Edward R. Beisler, Jr. (Junior), in 1967 and that he was its principal if not its only stockholder.

To assist Junior’s venture into the tire business his father (Beisler), on 3 October 1967, handed him $10,-000 in cash, which appears to have found its way into the coffers of HP. On 29 February 1968 HP bought a quantity of tires from Montgomery. A part, perhaps all, ¹⁹⁴ of the consideration therefor was evidenced by a confessed judgment note of HP for $24,751.01, co-signed by Junior and his wife Marilyn. On 5 April 1968 Junior and his wife conveyed their Prince George’s County home to the appellees Towsner and Rabenovets, in trust, to secure the payment of a $10,000 note to Beisler and his wife Hilda.

The interest was payable semi-annually; principal payments were to commence ten years later. The principal was the same $10,000 that had been transferred to Junior in October 1967. The note and the deed of trust were dated 2 April 1968; both were executed on 5 April; the deed of trust was recorded on 8 April. On 28 May 1968 Montgomery obtained a judgment by confession against HP, Junior and Marilyn in the amount of $14,021.57.

In October 1968, having ordered the issuance of a writ of fieri facias, Montgomery instructed the sheriff to seize certain tires it had sold to HP but, says Montgomery, the sheriff was unable to make the levy because the tires had been hidden. In April 1969 the writ was reissued and the sheriff was directed to levy upon Junior’s furniture and his equity (there was a first mortgage of $15,753.86) in the realty. Admission to the residence was refused but the levy upon the realty was made. On 10 December the sheriff, as directed, advertised his intention to sell the property at public sale on 14 January 1970.

Towsner and Rabenovets, the trustees, published an advertisement on 25 December 1969 announcing their intention to foreclose the deed of trust and sell the property on 13 January 1970, the day before the sheriff’s sale. On 9 January Montgomery filed a “petition for ex parte relief and [an] injunction to stay [the] foreclosure pursuant to [Maryland] Rule W76.” It prayed also a permanent injunction on the ground that the deed of trust was “null and void.” It was null and void, said Montgomery, because Rabenovets, “a grantee and trustee * * * and a person beneficially interested in the grant,” also a notary public, had attested the signatures of Junior and Marilyn, and had taken their acknowledgment. Moreover, it pointed out, he had taken the affidavit of Beisler and ¹⁹⁵ Hilda in which they swore that they were “the parties secured” and that the consideration recited was “true and bona fide as therein set forth.” The trial judge, at the conclusion of a brief hearing held 12 January, found the $10,000 October transaction to have been a loan rather than a gift and, for aught disclosed by the evidence, free of any “indication * * * of * * * fraud.” He rejected the argument that Rabenovets' acting both as trustee and notary nullified the deed of trust. Accordingly he dismissed Montgomery’s petition.

On the day following the trustees sold the property, subject to the first mortgage, to Beisler and Hilda for $6,-600, “they being at that price the highest bidders” therefor. Montgomery’s sheriff’s sale was called off. We were told at argument that since the sale there has been no further activity in the foreclosure case. Whether Montgomery’s petition “pursuant to Rule W76” was a proper invocation of that rule seems not to be before us.

The question was not raised in this Court nor in the court below. Neither was it mentioned by the trial judge. Nevertheless, we think it appropriate, in the circumstances, to assume, without deciding, that Montgomery had sufficient standing to intervene. Montgomery leans heavily on United States Fidelity and Guaranty Co. v. Shoul, 161 Md. 425 (1931), where one of the questions presented was whether a notary was “authorized to take the acknowledgment to the deed * * * in which she was named as the grantee.” There a husband had conveyed to the notary who in turn conveyed to the wife.

Both deeds were executed simultaneously; both were recorded on the day following. Judge Pattison, for the Court, said: “Mr. Tiffany, in his work on Real Property, says in volume 2 (2d Ed.), p. 1729: ‘It is generally agreed that an officer who is beneficially