Union Trust Co. v. Harrisons' Nurseries, Inc.

Collins, J., delivered the opinion of the Court. This is an appeal from a decree of the Circuit Court for Worcester County in equity, and it is the second time this case has been before this court. On December 2, 1929, Harrisons’ Nurseries, Inc., appellee here, executed a deed of trust to the Union Trust Company of Maryland, a corporation, trustee, appellant here, to. secure an issue of not over $200,000 of 6 per cent, first mortgage honds. At the time the deed of trust was executed, the appellee was indebted to the Union Trust Company of Maryland, as a banking institution, in the amount of approximately $85,900 and to other creditors in the amount of $56,000, making a total indebtedness of $82,900.

Bonds in the amount of $36,000 were deposited with the said Union Trust Company of Maryland, as a banking institution, by the trustee as collateral security for its ninety-day note of $35,900. Bonds were issued to other creditors for their indebtedness in the amount of $56,000, and bonds were sold in the amount of $27,000, making the total bonds issued and outstanding $119,000 shortly after the execution of the mortgage. Subsequently thereto, the Union Trust Company of Maryland, as a banking institution, without any author ²⁹³ ization from the mortgagor, but advising it of the action taken, appropriated the $81,000 of additional bonds in its hands as trustee as additional collateral security and in 1931, held $117,000 of the bonds as collateral security for a note of $35,900. From that time on the appellee borrowed from the Union Trust Company various sums of money, executing new notes therefore.

On September 27, 1941, the Union Trust Company, trustee, filed a petition for the foreclosure of the deed of trust and alleged in its petition that the entire indebtedness of the $200,000 was in default. The Exchange and Savings Bank of Berlin, Maryland, being a party in interest, obtained permission to intervene and filed an answer in which it alleged that the total mortgage indebtedness was not $200,000, but $119,000. The chancellor in that case held that the amount of bonds issued and outstanding was $119,000. On appeal, being the case of Union Trust Co. of Maryland v. Harrisons’ Nurseries, Inc., 180 Md. 651 , 26 A. 2d 812, 814 , this court held that “the decree appealed from should be so amended as to declare that the amount of bonds issued and outstanding is not $119,000, but that amount plus such additional bonds as represent the amount of moneys as was loaned or advanced by the trust company after the loan of December 2, 1929.” The case was remanded for further proceedings and the chancellor below, after taking testimony, was of the opinion that, as the only unpaid loan made since the loan of December 2, 1929, was that of $10,000, which had been reduced to $4,608.72, plus accrued interest thereon, the equivalent of that loan in bonds is $10,000 and thereupon decreed that the amount of bonds issued and outstanding was the $119,000 plus the $10,000, making a total of $129,000.

An appeal is taken to this court in this case from that part of his decree. The main question for our decision in the case now