Renotas v. Storm

²⁸ Eewee, J"., delivered the opinion of the Court. The owners of certain real estate in Frederick leased a storeroom on the property to the appellants for a term of three years from November 1st, 1931, with the privilege of renewal for two additional years provided the property had not been sold. Shortly after the execution of the lease a pre-existing mortgage on the land and building was foreclosed. The lessees excepted to the ratification of the foreclosure sale on the ground of an alleged fraudulent conspiracy between the ■mortgagee and the mortgagors to deprive the exceptants of the benefit of their lease.

The appeal is from an order overruling the exceptions and ratifying the sale. When the lease was executed, the mortgage had been long overdue. It was dated August 20th, 1929, and secured a promissory note of the mortgagors for $21,780.56, payable six months after date, with interest at six per cent. The mortgagee was a national bank.

Prior to its action for the foreclosure of the mortgage, it had requested the mortgagors to reduce the amount of the indebtedness, and the bank examiner had criticized the continuance of the loan without curtailment. After the execution of the lease to the appellants, and while they were preparing to take possession of the storeroom for use as a restaurant, the proprietor of a similar business, conducted in an adjacent building, offered the mortgagors $28,000 for their property. This was considered a highly advantageous offer. • But the mortgagors were not in a position to accept it and convey the title with right of immediate possession, since the lease to the appellants was then in force. Efforts by the mortgagors to make a settlement with the appellants were not successful.

While the bank knew of the $28,000 offer when the foreclosure proceeding under the