Owens v. Graetzel

D’igges, J., delivered the opinion of the Court. This is an appeal from a decree of Circuit Court No. 2 of Baltimore City overruling exceptions to the ratification of ³⁶³ a mortgage sale and finally ratifying tbe same'. Tbe facts as disclosed by tbe record are substantially as follows: On tbe first day of August, 1923, tbe appellant, Effa A. Owens, borrowed tbe sum of $3,200 from tbe appellee, and to secure tbe payment thereof executed a mortgage on certain leasehold property located in Baltimore City, particularly described in said mortgage as lying on tbe north side of Brighton Street,' which property belonged to the appellant. The portions of said mortgage necessary to be considered for tbe proper1 determination of the case are as follows: “This mortgage, made this 1st day of August, in tbe year one thousand nine hundred and twenty-three, by and between Effa A. Owens, formerly Effa A. Patterson and Harry ILazlip, mortgagors, of the City of Baltimore, in the State of Maryland, of the first part, and G. Clem Graetzel, mortgagee, of the second part. “Whereas, the said mortgagee hath this day lent unto the mortgagors the sum of thirty-two hundred ($3,200.00) dollars, to be repaid two years after date, with interest at six per cent., payable quarterly on the first days of August, November, February, May, and for which principal sum of thirty-two hundred ($3,200.00) dollars, the said mortgagors have passed unto the mortgagee their negotiable promissory note of even date herewith, payable two years after date, with interest aforesaid. * * * “Provided, that if the said mortgagors, their executors, administrators, shall well and truly pay or cause to be paid the aforesaid principal sum of thirty-two hundred ($3,200.00) dollars and all the installments of interest thereon when and as each of them shall respectively be due and payable as aforesaid and shall perform each and all of the covenants herein on their part to be performed, then this mortgage shall be void. “And the said mortgagors do hereby declare and 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 hereby mortgaged, in accordance with chapter 123, sections 720 to 732, inclusive, of the Laws of Maryland, passed at the Janu ³⁶⁴ ary session in the year 1898, or any supplements or additions thereto.

And in case of any default being made in the payment of the aforesaid mortgage debt, principal or interest, in whole or in part at the time or times limited and mentioned for the payment of the sum as aforesaid, or in case any default being made in any covenant or conditions of this mortgage, then the whole mortgage debt hereby intended to be secured shall be deemed due and payable, and sale of said mortgaged property may be made by the trustee or trustees named in such decree as may be passed, as aforesaid, for the sale of said property; or upon any such default, as aforesaid, a sale may be made by the said party of the second part, his executors, administrators or assigns, or by George H. Leimkuhler, their duly constituted attorney or agent, under Article LXVI, sections 6 to 10, inclusive, of the Maryland Code (1904), Public General Laws, or under any other general or local laws of the State of Maryland relating to mortgages. And upon any sale of said property, under the powers hereby granted, the proceeds shall be applied as follows, to wit: First, to the payment of all expenses incident to said sale, including a commission to the party making sale of said property equal to the commission usually allowed trustees for making sale of similar property by virtue of a decree of a court having equity jurisdiction in the State of Maryland, and a reasonable attorney’s fee to the attorney instituting or conducting the foreclosure proceedings; second, to the extinguishment of all claims of the party of the second part, his executors, administrators or assigns hereunder, whether the same shall have then matured or not; and third, the balance, if any, to the said parties of the first part, their executors, administrators or assigns.” This mortgage was duly recorded. At the time of the execution of the mortgage, the mortgage settlement was made in the office of the appellee, who is an attorney, and after deducting the amounts shown on the settlement sheet, the appellee gave to the appellant his check payable to Effa A. ³⁶⁵ Owens and Harry Hazlip for $1,207.27. These deductions included amounts for the settlement of mortgages that were then upon the property, and also an item of $320 paid to A. R. Whiting as a, fee for the loan then being made, and also an item of $48 for three months interest in advance.

These deductions further included various, items incident to releasing the former mortgage, title fee, conveyancing, stamps or note', taxes, insurance, water rent, etc. On November 8th, 1923, the appellant through his attor ney, George H. Leimkuhler, filed a petition in Circuit Court No. 2 of Baltimore City praying that a decree might be passed for the sale of said property in accordance with the terms of said mortgage, at the same time filing the mortgage as an exhibit. On the same day the judge then sitting in said court passed the following decree: “The petition and exhibit in the above cause having been submitted, the proceedings therein were by the court read and considered. “It is thereupon this 8th day of November, in the year nineteen hundred and twenty-three, by the Circuit Court No. 2 of Baltimore City, adjudged, ordered and decreed, that the mortgaged property in the proceedings mentioned to be sold, at or after any one of the periods limited in the mortgage filed for the forfeiture of said mortgage; that Geot'ge H. Leimkuhler be and he is hereby appointed trustee to make said sale, and that the course and manner of his proceedings shall be as follows: lie shall first file with the clerk of this court a bond to the State of Maryland, executed by himself, and a corporate surety or sureties to be approved by this court, or by the clerk thereof, in the penalty of sixty-four hundred ($6,400.00) dollars, conditioned for the faithful performance of the trust reposed in him by this decree, or to be reposed in him by any future decree or order in the premises; he shall then proceed to make the said sale, having given at least three weeks’ notice by advertisement, inserted in such daily newspaper or newspapers published in the City of Baltimore, as he shall think proper, of the ³⁶⁶ time, place^ manner and terms of sale, which shall be one-third cash, the balance in six and twelve months, or all cash, as the purchaser may elect, the credit payment to bear interest from the day of sale, and to be secured by tbe’note or notes of the purchaser or purchasers, endorsed to the satisfaction of the said trustee; and as soon as may be convenient after any such sale or sales, the said trustee shall return to this court a full and particular account of his proceedings relative to such sale, with an affidavit annexed of the truth thereof and of the fairness of said sale; and on obtaining the court’s ratification of the sale, and on the payment of the whole purchase money (and not before) the said trustee shall by a good and sufficient deed to be executed, acknowledged and recorded, according to law, convey to the purchaser or purchasers, his, her or their assigns the property and estate to him, her or them, sold, free, clear and discharged from all claims of the parties hereto, petitioner and mortgagors, and those claiming by, from or under them, or either of them. And the said trustee shall bring into this court the money arising from said sale, to be distributed under the direction of this court, after deducting the costs of this suit, and such commissions to the said trustee as this Court shall think proper to allow in consideration of the skill, attention and fidelity wherewith he shall appear to have discharged his trust; provided, that before the sale hereinbefore decreed shall be made, a statement of the mortgage claim, duly verified by affidavit, as required by law, be filed in said cause.” In pursuance of said decree the said attorney, George H. Leimkuhler, appointed trustee therein, advertised the property for sale by insertion of the .advertisement in the Daily Record, a daily paper printed and published in Baltimore City, the first insertion being on November 12th, 1923, and the sale was advertised in the same manner on the following subsequent dates: November 16th, November 19-th, November 23rd, November 26th, November 30th, December 1st and ³⁶⁷ December 3rd, 1923. The sale took place as advertised, oar December 3rd, 1923, at four o’clock P. M. on the premises, and the property was purchased by Mildred B. Whiting at and for the sum of $4,050.

The trustee filed a report of the sale on December 6th, 1923, and on December 11th, 1923, the appellant filed exceptions to the ratification of the said sale, and for grounds of her exceptions assigned the following reasons: 1. Because there has been no default in the mortgage herein proceeded on. 2. Because there was no demand or notice of default by the mortgagee or assignee. 3. Because bond of the trustee herein is defective and was not filed in due time. 4.

Because no sufficient notice of sale was given. 5. Because at the time of the first advertisement of sale, no sufficient bond had been filed by the trustee. 6. Because of fatal defects: appearing upon the face of the proceedings herein. 7. Because of inadequacy of price for which the property referred to in these proceedings was reported to have been sold. 8.

And for other reasons to be shown at the hearing of these exceptions. These exceptions "were heard on testimony produced by the respective parties in open court, and on February 11th, 1924, the court passed an order overruling the exceptions and finally ratifying and confirming the sale. It is from this final order that the appeal in this ease is taken. There are numerous reasons assigned in the exceptions to the ratification of the sale, but the only two of importance are: “1.

Because there has been no default in the mortgage herein proceeded on. * * * 4. Because no sufficient notice of sale was given.” The contention of the appellee is that, according to the terms of the mortgage, the interest was payable quarterly in advance; that the first quarterly interest was deducted at the time of the execution of the mortgage, and that the next date upon which interest was legally due and demandable was three months from August 1st, or November 1st, 1923. On the other hand, the contention of the appellant isi that the mortgage did not provide or require that interest should be paid in advance, and that after the payment of the first ³⁶⁸ quarterly interest at the time of the execution of the mortgage there was no further interest due or demandable until February 1st, 1924, thereby giving the appellant six months during which to collect rente from said property and be in a position to pay the interest when next due. The rule is that interest accumulates from day to day but is not payable until the date upon which the principal becomes due and payable, unless there is a different contract between the parties as to the payment of interest.

The loan in this case, which was secured by the mortgage, was to be repaid at the expiration of two years from August 1, 1923, .and with no stipulation as to the time of payment of interest, the interest on the whole amount would have been payable at the time the principal of the loan was payable. The stipulation in the mortgage, however, in respect to interest is as follows: . “Whereas, the said mortgagee hath this day lent unto the mortgagors the sum of thirty-two hundred ($3-,200.00) dollars, to be repaid two years after date, with interest at six per cent., payable quarterly on the first days of August, November, February, May, and for which principal sum of thirty-two hundred ($3,200.00) dollars; the said mortgagors have passed unto the mortgagee their negotiable promissory note of even date herewith payable two years after date, with interest aforesaid.” This clause o-f the mortgage clearly expresses' an agreement between the parties that interest on the loan secured by the mortgage was to be paid quarterly on the first days of August, November, February and May, and it is contended that a proper construction of this