Stickney v. Mohler, Graff & Co.

Gqldsboroitgh, J., delivered the opinion of this Court: Henry D. Lawrence, of the city of Baltimore, being desirous of obtaining certain loans from the Chesapeake' Bank, the bank agreed to loan him the sum of fifteen thousand dollars, by discounting for him, from time tn time, promissory notes or bills of exchange drawn by himself, or by others and endorsed by him, to an amount not exceeding at any one time the amount aforesaid. Such: ⁵⁰⁴ discounts to bo granted at any and all times within two years from the date of the agreement. To secure the payment of these loans, Lawrence, on the 13th day of May 1855, executed to the bank a mortgage, conveying all the property mentioned therein. The mortgage contains the assent of Lawrence to the passing of a decree by the Superior Court of Baltimore city, or the Circuit Court for Baltimore city, for the sale of the mortgaged property at any time after default shall have been made in payment of the debt secured by the mortgage, or any part thereof, in accordance with the provisions of the Act of 1833, ch. 181.

The bank filed its petition in the Circuit Court, on the 21st day of January 1856, alleging -the facts heretofore stated, and which are set out in the mortgage. That in pursuance of the terms of the mortgage, and upon the faith of the security thereof, the bank discounted, for the use and accommodation of Lawrence, a promissory note made by Moliler, Graff & Co., for 01,560.15, drawn to the order of Lawrence, and endorsed by him, and gave him the net proceeds thereof. That this note, when it matured, was not paid by the makers; that it was regularly protested, and that Lawrence also failed to pay it. Thereafter, the bank filed a supplemental petition, in which it is stated that Mohlcr, Graff & Co. had paid the note re-referred to in the original petition, and b}r an order of Court they had leave to withdraw the note.

The bank thereupon filed with their petition three several notes of Lawrence’s, due and owing, amounting to the sum of •08,500, with an affidavit that no part thereof had been paid.' Upon the original and supplemental petitions of the bank, the Circuit Court passed a decree for the sale of the mortgaged premises, and appointed George H. Williams ⁵⁰⁵ trustee to soil the property, who sold the same for the amount specified in his report. The trustee’s report was finally ratified and confirmed, and the cause referred to the auditor to state an account. The auditor, after deducting the expenses of suit and trustee’s commissions, appropriated the fund to the payment of the three notes filed by the bank, and the interest thereon, principal and interest amounting to $8,536.66, which left a balance of $3,513.42 subject to the further order of the Court. This last named sum is claimed on the one hand by the appellants, Stickney & Co., as second mortgagees, under a mortgage from Lawrence, and on the other hand by Mohler, Graff & Co., as alleged sureties of Lawrence, claiming by subrogation under the mortgage of Lawrence to the Chesapeake Bank, At the final hearing, the Circuit Court allowed to Mohler, Graff &■ Co. the amount of the note for $1,560.75, and also that for $1,000.75.

From this part of the decree the appellants appealed. The Court disallowed the claim of Mohler, Graff & Co. for the note of $825, and from this part of the decree they appealed. In reviewing the action of the Circuit Court upon these conflicting claims, we deem it proper to examine and decide upon the relation which existed between Henry D. Lawrence and Mohler, Graff & Co., at the time when the last named parties gave to Lawrence their several promissory notes, and which, being endorsed by him, he had discounted in the Chesapeake Bank, and obtained the proceeds thereof. The proposition insisted On by the appellees, that these were accommodation notes, would meet the approbation of this Court if they were shown to have been executed without equivalent or consideration ; for, in that case, the rela ⁵⁰⁶ tion of principal and surety would arise, and