Rhoderick v. Roy Hansen Mortgage Co.

McWilliams, J., delivered the opinion of the Court. In September 1968 the appellant (Rhoderick), a Frederick County builder, went to see the appellee (Hansen), 1 an Arlington (Va.) mortgage broker. He told Hansen he needed some money and that he had “about $85,000 worth of deferred purchase notes, some first [mortgages] and some second mortgages.” Hansen said Rhoderick “took * * * [Hansen’s] forms with him and put down in complete detail exactly what * * * [Hansen] needed to know in order to evaluate how much he could borrow against them.” Hansen submitted Rhoderick’s application to Thomas Offutt, a fellow citizen with money to lend. Offutt expressed interest.

Hansen then telephoned Rhoderick and told him Offutt might loan “50 or 60% of the face ¹³¹ value of the notes” to Leisure Village, Inc., a corporation owned by Rhoderick. He also told him the interest rate would be 16 % and approximately what the other expenses would be. Rhoderick said he was “interested.” Subsequently Hansen and Offutt met Rhoderick in Frederick. After he showed them the mortgaged properties Hansen said he would advise him as soon as possible of Offutt’s final decision.

On 5 November 1968 Hansen sent Rhoderick the following letter: “I am pleased to advise you that your recent application for a loan has been approved on the following terms and conditions: Leisure Village, Inc. will execute a promissory note in the face amount of $41,000, bearing 16% interest, payable in full on or before two years from inception. Leisure Village will also assign all right, title and interest in a package of 18 deferred purchase notes, having an unpaid balance as of October 25 of approximately $82,424 with a monthly cash flow of approximately $748.00. The terms of the contract to repurchase the notes will allow for any additional payments to be made to the $41,000 debt in addition to the payments received from the notes on an amortizing basis. Settlement will be held at the office of Mr. W. J. Offutt in Frederick.

From the $41,000 you will pay a loan fee to this office of $2050.00 and all legal expenses attendant in the transaction. [Emphasis added.] Kindly return your approval of this matter to me. /s/ Roy O. Hansen “Seen and approved Harry Rhoderick” Rhoderick signed the letter above his typewritten name and returned it to Hansen. According to Hansen, Rhoderick telephoned him shortly thereafter and said, “Let’s get on with this and get it settled.” Hansen testified he ¹³² explained to Rhoderick and to Mr. Leckemby, Rhoderick’s attorney, that “proper endorsements” of the notes and a rundown of the titles to the mortgages would be required and that Offutt was willing to accept Leckemby’s certificate that everything was in order. As indicated in the letter of 5 November, Offutt had arranged for W. J. Offutt, Esq. (no relation), a Frederick attorney, to represent him in the transaction.

On 13 December Hansen sent the following letter to Rhoderick: “Mr. W. Jerome Offutt tells me today that he has been advised by your attorney, William Leckemby, that you intend to break your contract with me for a loan recently applied for and approved. In my last conversation with you on December 5, you told me you had all intentions of proceeding with the loan, but that the imposition of having a complete title search on each note had slowed down the transaction. You further implied that your attorney was going to try to ‘work something out’ with Mr. Offutt and that you would get in touch with me. At this point your statement does not agree with the facts.

Mr. Offutt denies that he ever instructed Mr. Leckemby to make a complete title search on each note, furthermore neither I nor my lender ever imposed such a requirement on Mr. Offutt [Rhoderick]. It is common practice in loans of this type to have a simple run down of the title on each note and a certificate issued by a competent attorney indicating that the note or notes is a valid 1st or 2nd trust as the case may be. Assuming that a complete title search on each note had been required in no way abrogates the contractual agreement that you agreed to. The essence of our contract was that you would put up certain collateral, properly qualified as to validity and receive a loan for same on terms and conditions agreed to by you. ¹³³ “At this point Mr. Rhoderick I am convinced that you have used my commitment to shop this loan elsewhere to a better advantage to yourself and that you are trying to use the excuse that the complete title search was the deterring factor in bringing this transaction to fruition.

If I am wrong in this presumption, then I will expect you to live up to our contract and close this matter immediately. Otherwise be on notice I will expect from you my earned commission of $2050 plus interest to my lender on the $41,000 he has set aside for your use since November 5, plus a reasonable fee to Mr. W. J. Offutt for his services. “If I do not hear from you within 5 days of this date, I will put this matter in the hands of Mr. [W. Jerome] Offutt to take legal action against [you]. Sincerely yours, /s/ Roy O. Hansen CC: W. J. Offutt Wm. Leckemby” Hansen filed a suit against Rhoderick and Leisure Village, Inc., in the Circuit Court for Frederick County in January 1969.

The case came on for trial before Barrick, J., without a jury, on 3 April 1970. On 23 April 1970 Judge Barrick entered a judgment for $2,050 in favor of Hansen and against Rhoderick. At the same