Safe Deposit & Trust Co. v. Strauff

Johnson, J., delivered the opinion of the Court. Appellant, Safe Deposit & Trust Company of Baltimore, a body corporate, trustee under a deed from Mary B. Torrington, filed two suits in the Baltimore City Court, one against Loretta P. Strauff, executrix of the last will and testament of Edward A. Strauff, deceased, and the other against Loretta P. Strauff individually. Each suit was brought to recover the sum of $3,439.38, being the amount of deficiency as shown by the auditor’s account in a proceeding instituted in the Circuit Court for Baltimore City by appellant for foreclosure of a $10,000 mortgage from Douglas W. Chatterley and wife to it, dated October 7th, 1925, which was a first lien upon certain premises known as 614 West Fortieth Street, of Baltimore City. The cases came on for trial before the court, sitting as a jury, after issue was joined on the general issue pleas filed by each defendant, and on a special plea filed by Loretta P. Strauff individually, alleging she had never signed the extension agreements mentioned in the declaration; and both were heard together.

At the conclusion of the testimony, the court ³⁰⁸ granted in each case a prayer instructing itself, sitting as a jury, that no evidence had been offered legally sufficient to entitle the plaintiff to recover, and its verdict must be in favor of the defendant. Judgment absolute on the verdicts and in favor of each defendant was subsequently entered, and from these judgments the plaintiff below has appealed. The sole exception in each appeal is taken to the action of the trial court in granting the prayers above referred to, and, since the questions presented by each appeal are practically identical, both appeals will be considered together. The suits are an outgrowth of the decision of this ■ court in Chatterley v. Safe Deposit & Trust Co., 168 Md. 656, 657 , 178 A. 854 , in which we reviewed the action of the Circuit Court of Baltimore City in entering a deficiency decree against Chatterley and wife in favor of the'present appellant.

That case was decided upon certain testimony and an agreed statement of facts, which we held sufficient to show that appellants therein, Chatterley and wife, had been released by virtue of a novation that arose by reason of the dealings between the trust company, Chatterley and wife, and Edward P. Strauff and wife, whereby the latter had agreed to pay the mortgage indebtedness, and had been accepted by the trust company as its debtors, .and upon that theory the present suits were instituted. However, Strauff and wife were not parties to that proceeding, had no opportunity to be heard therein, and are not bound thereby. The granted prayers make no reference to the pleadings, but relate solely to the insufficiency of the evidence in support of the plaintiff’s right to recover under the declaration, wTiich sufficiently alleges liability against each defendant upon the ground of novation, as well as upon the theory that they become liable for the mortgage deficiency because of having assumed the payment of the $10,000 mortgage, and, since on appeal the sole question argued relates to the court’s action in granting these demurrer prayers to the evidence, our consideration of the case will be limited to that issue, and because the ³⁰⁹ evidence in the case, especially as to Loretta P. Strauff, differs materially from that upon which the decision was based in Chatterley v. Safe Deposit & Trust Company, supra, it becomes necessary to review it, and for convenience the same will be stated in narrative form. On October 7th, 1925, Douglas W, Chatterley and wife executed unto appellant as trustee a $10,000 mortgage payable three years from date, bearing interest at five and one-half per cent, per annum upon the property previously mentioned.

The mortgage was in the form customarily used in Baltimore City, contained no restriction as to alienation by the mortgagors, but did contain a covenant whereby, until default was made in its conditions, the mortgagors, their heirs or assigns, should have possession of the property upon paying all taxes, assessments, public dues, and charges assessed on the property, and “on the mortgage debt and interest, which mortgage debt and interest, taxes * * * and charges, the said mortgagors covenanted to pay when legally due. * * * ” On March 17th, 1926, Chatterley was visited by a representative of Albert P. Strobel, Jr. & Co., real estate brokers, in regard to selling the property to Strauff, and, after some preliminary negotiations, he and his wife entered into a contract with Strauff for the sale of the property at $19,250, $500 of which was paid in cash, the remainder payable on or before May 1st, 1926. On the day following its execution, Chatterley, at the request of Strauff, interviewed the real estate officer of the trust company and informed him thereof, and asked if Strauff would be acceptable to the company, as Strauff desired the mortgage to remain upon the property to avoid refinancing. The real estate officer assured Chatterley that he would give him an answer after he “looked up Strauff,” and, not receiving an answer, he returned to the same office a few days later, and was assured that Strauff would be perfectly satisfactory to the trust company. Strauff, receiving this information, was entirely satisfied, and he and his wife moved into the property on April 17th, 1926, remaining there for ³¹⁰ several years.

Chatterley received from the trust company a notice for six months’ interest which became due in October, 1926, which he took to the cashier of the trust company, with the explanation that he was no longer interested in the mortgage or in the property, and from that time received no further notice from the trust company concerning the mortgage until February 10th, 1934, after it had been filed for foreclosure. In the agreement between Chatterley and wife and Strauff the latter assumed “the present first mortgage of $10,000.00 with interest at 5%%.” However, because of some contention raised by the vendee concerning the depth of the property and a ten-foot alley which ran across it, final settlement was not made until August 1st, 1926, and, according to the memorandum by which they settled and the testimony of Chatterley, it appears that, while settlement was on the basis of $18,500, Chatterley at least in addition thereto retained the $500 initial payment. In the final settlement the $10,000 mortgage was deducted from the purchase price, as was likewise a second mortgage upon the property, broker’s commissions, and adjustments of taxes, water rents, and insurance to that date, leaving a net balance due Chatterley of $5,755.75, which was paid by Edward A. Strauff with three checks, and at the direction of Strauff the property was by deed, bearing date of July 31st, 1926, conveyed by Chatterley and wife to Frederick R. Peddieord and wife, the habendum clause of which deed contained a provision that it was subject to the legal operation and effect of the $10,000 mortgage held by the trust company. Peddieord and wife reconveyed the property to Edward A. Strauff and Loretta P. Strauff, his wife, as tenants •by the entireties, by deed dated February 4th, 1927, but no mention of the mortgage was made in that conveyance.

Moreover, the deeds last mentioned were executed simultaneously, and the Peddicords had no interest in the transaction, but acted at the request and for the accommodation of Edward A. Strauff. From the time of the execution of the contract of sale ³¹¹ in 1926, Strauff and wife owned the property until May 15th, 1933, when they conveyed it to Charles M. Perrigoy and wife, and between those dates Strauff paid ¡the interest which accrued upon the mortgage and also the taxes upon the property. The mortgage, by its terms, was due on October 7th, 1928, and about this time plaintiff and Strauff began negotiations for an extension of the time for its payment, these being consummated November 28th, 1928, reading as follows: “It is hereby understood and agreed between the undersigned that the time for the payment of the $10,000 mortgage debt of Douglas W. Chatterley and Julia B. Chatterley, his wife, secured by mortgage on 614 W. Fortieth Street, Roland Park, in fee, as set forth in said mortgage dated October 7th, 1925, and recorded among the Land Records of Baltimore City in Liber S. C. L. 4467, folio 586, is hereby extended for a period of two years from October 7th, 1928, the said sum to bear interest at the rate of 5:l/i% per annum, payable semi-annually— all the terms, covenants, conditions, rights and remedies in said mortgage contained to remain in full force and effect.” That agreement was executed on behalf of the trust company by its real estate officer and undoubtedly signed and sealed by Edward A. Strauff, and purports to have been signed and sealed by Loretta P. Strauff. At its expiration, further negotiations were entered into between Strauff and plaintiff, with the results that a further agreement was made on January 28th, 1931, by which the time for payment was extended until October 7th, 1938, and this likewise was signed and sealed by Strauff and purports to have been signed and sealed by his wife.

However, plaintiff’s dealings with Strauff in relation to the extensions were carried on by correspondence, and through this medium it received the two agreements, the execution of which is denied by Mrs. Strauff in her fourth special plea. On September 26th, 1988, the trust company addressed a letter to Strauff, advising him that the mortgage would ³¹² become due on October 7th, and on October 20th of the same year addressed a second letter to him requesting payment of the mortgage, but received no reply to either letter, he having previously departed this life, and, after learning of his demise, it wrote a third letter, on November 18th, to his executrix requesting settlement of the $10,000 mortgage, which had previously matured. It is also conceded that the claim was proved in the Orphans’ Court for Baltimore City and that liability thereon was denied 'by the executrix of Strauff prior to the institution of the suit. If believed by the jury this evidence was sufficient to support a finding for the plaintiff in the suit against Loretta P. Strauff, executrix,