Pennsylvania Avenue Permanent Building & Loan Ass'n v. Dubin

Pattisoic, J., delivered the opinion of the Court. On December 7th, 1925, the Pennsylvania Avenue Permanent Building & Loan Association of Baltimore City, the appellant, loaned unto Israel Dubin, the appellee, $2,080 on sixteen shares of its stock, taking as security for the loan a mortgage upon the property 1704 West Lanvale Street, Baltimore. ⁵⁵⁶ Payments amounting to $141 were made on the mortgage by Israel Dubin from the date of the mortgage to October 16th, 1926, at which time the property was conveyed, to a certain Annie Foland. The deed, however, made no mention of the outstanding mortgage, and there was no covenant on the part of Annie Foland to- assume it. Under the terms of the mortgage, the mortgagor covenanted to pay regular weekly payments until the stock- was fully paid.

There was a provision in the mortgage that if the property was transferred the whole indebtedness was to become due and payable upon five days’ notice by the mortgagee to the mortgagor. Pursuant to the rules or by-laws of the building and loan association, Annie Foland, to whom the property had been or was to be transferred, paid to- the association a transfer fee of $19.11. After the transfer of the property, she made payments on the mortgage, but in 1932, being in defaull in the payments thereon, the property was sold under the mortgage. An auditor’s report and account were made in the foreclosure proceedings -and ratified September 14th, 1932,. which showed a balance due the mortgagee of $839.81.

Thereafter, on September 16th, 1932, the appellant moved for a decree in personam for the deficiency as shown by the auditor’s account against Israel Dubin. The appellee filed his answer thereto in which he admitted the deficiency claim,, but denied that the plaintiff was entitled to a decree in per sonaron, for the reason that a transfer fee of $19.11 was paid to the association by Annie Foland at the time the property was conveyed to her, -and that Annie Foland was accepted by the association as the mortgagor, and the defendant was. thereby released from any further liability or connection with the mortgage premises. The case was heard and evidence was taken therein, showing that the mortgage was not only in default at the time the foreclosure proceedings were had,, but likewise at the time of its transfer, and that Hr. Dubin had notice of such default prior to- the institution of the-foreclosure proceedings, and had several times suggested to-the association not to foreclose the mortgage. ⁵⁵⁷ The sole question in this case is: Did the payment- of a transfer fee of $19.11 by Annie Foland, the grantee, to the building and loan association, and its acceptance of such fee, release the mortgagor from his covenant in the mortgage to pay the mortgage debt?

The right of the mortgagee to a deficiency decree in this caso is based upon the statute (Code Pub. Loe. Laws, art. 4, sec. 731A), which provides: “If, upon a sale of the whole mortgaged property by virtue of a decree passed under an assent to thq passing of a decree contained in the mortgage under the provisions of Section 720 of this, Article, the net proceeds of sale, after the cost and