Robertson v. American Homestead Ass'n

Bartol, J., delivered the opinion of this court. ’ It has been decided by this court, that from a decree passed under the act of 1833, ch. 181, and its supplements, an appeal lies. Williams vs. Williams, 7 Gill, 302. Hays vs. Dorsey, 5 Md. Rep., 99. On such appeal, this court will review the proceedings as presented by the record, examine the terms and conditions of the mortgage, and determine whether the decree is in conformity therewith. In a proceeding under that act the court has no power to pass any decree, which is not in conformity with the conditions of the mortgage, and embraced in the terms of assent to the decree, contained in the mortgage itself. In this case the decree ascertains the sum of §336.09 to be due from the appellant to the appellee, and directs, “that unless' the mortgagor shall, on or before the 27th day of August 1855, pay to the mortgagee, or bring into court to .be paid to. him, the sum of §366.09, together with the costs of this proceeding,” that the mortgaged property be sold. That sum is the amount stated to be due in “the statement of claim” filed by the appellee under the 3rd section of the act of 1833. But., upon looking at the mortgage, it is obvious that no such sum could be due at the time of the decree. The mortgage contains no covenant or engagement for the payment of any such sum. It provides for the payment of:— 1st. “Interest monthly on §460.00.” 2nd. “One dollar weekly, payable every Friday.” 3rd. “All ground-rent, taxes and public dues, for which the mortgaged property may be liable.” 4th. “All fines imposed by the articles of association of the — 407 — said body corporate, for neglect to make the said payments, or any of them.” 5th. “To keep the mortgaged property fully insured from loss by fire, for the benefit of the mortgagee, during the continuance of the mortgage.” It is also stipulated, that these obligations are to continue “until the time arrives, when each unredeemed share of the said body corporate’s stock shall be worth in cash, above all losses and liabilities, the sum of $200, and the said body corporate shall have sufficient funds on hand, to pay to the holders of every unredeemed share of its stock the said sum of $200, clear of all losses and liabilities.” There is no provision in the mortgage for the payment of the sum of $460, named therein as the consideration for which it was executed, nor any part of it as a mortgage debt. The petition of the appellee alleges a default, by the mortgagor for more than three months, “in not paying the weekly instalments and the interest secured by the mortgage.” Upon the face of the mortgage therefore, and on the allegations in the appellee’s petition, the circuit court had no power to decree the sum of $366.09 to be due; and in so far as the decree directs the mortgagor to pay that sum to the mortgagee, or to bring it into court to be paid to him, it is erroneous. The 2nd section of the act of 1833 simply empowers the court “to decree, that the mortgaged premises be sold, at any one of the periods limited for the default of the mortgagor.” The proceedings contemplated by the act are exparte, and the court is not authorised, by its decree, to determine judicially the amount due upon the mortgage. Before a sale can be made under the decree, the mortgagee is required to file a statement of his mortgage claim, verified by oath. That may be done either before or after the decree. See Hays vs. Dorsey, 5 Md. Rep., 101. But such statement is not conclusive, and the amount actually due is open to examination on proof, either before the sale or after the order of ratification nisi. For the reasons above stated, we must reverse the decree of the circuit court. But considering that the appellee is entitled to a decree of sale, under his petition and the mortgage exhib — 408 — ited, our duty, under the act of 1832, ch. 302, sec. 6, is to remand the cause to the circuit court, in order that the decree may be corrected, and such further proceedings may be had as are contemplated by the act of 1833, and as may be necessary for “determining the cause upon its merits.” ’ The act of 1832 imposes on this court the further duty of “determining and declaring the opinion of this court on all points which may have been made before it, or which may be presented by the record.” And in conformity with its requirements, we proceed to the consideration of the several questions presented. It has been objected that this mortgage is inoperative, for want of compliance with the provisions of the act of 1825, ch. 50, in not specifying on its face the principal sum it is intended to secure, or the length of time during which the several sums thereby secured are required to be paid. A conclusive answer to this objection is to be found in the provisions of the act of 1852, ch. 148, which, in express terms, authorises such mortgages as this, and makes them valid. This mortgage is not within the provisions of the act of 1825, or, if it be, that act is repealed pro tanto by the act of 1852, ch. 148, whereby building associations, incorporated under its provisions, are empowered to take such mortgages as the one before us, the very terms of the mortgage being prescribed by the 7th section of that act. The same act of 1852, by fair implication, brings such a mortgage as the present within the provisions of the act of 1833, ch. 181, and its supplements. In the 9th section it is provided, “that the oath of the treasurer or other financial officer of any such corporation, whose duty it may be to keep the books of accounts of any such corporation, shall be so taken and deemed to be, a full compliance with the provisions of the act of Assembly of 1833, ch. 181, and its supplements.” The objection that the several sums secured to be paid, are each too small, to be within the jurisdiction of the Chancery Court, can not apply to this case; because it appears by the petition filed, that there was due at the time of the decree, an amount sufficient to bring the case within the jurisdiction of the court. — 409 — In the further progress of the case, the duty will devolve on the circuit court, to ascertain the amount which the appellee is entitled tú claim under the mortgage; It is obvious that the sum actually due, according to the covenants in the mortgage, cannot be ascertained by estimating the sum of $460, named in the mortgage, as if it were a debt secured, or money to be repaid, there being no covenant in the mortgage, or any obligation on the mortgagor, requiring him to repay that sum, or any part of it, as such. The mortgage debt can cohsist Only of the several items above enumerated, that is to say, for money due to the corporation on account of the monthly interest, the weekly instalments for fines ithposed by the articles of the association, if any, and for ground rcht, taxes and costs of insurance, if any have been paid by the corporation, which may be in arrear, after allowing to the appellant, the credits to which he may be entitled for payments made by him; and the balance due on said seVefal items, constitutes the whole mortgage debt in presentí, and if the samé be paid, a sale of the property will be prevented, and the decree will stand as a security for future instalments and liabilities. In case of a sale of the mortgage property in entirety, it will be the duty of the circuit court to ascertain by proof the amount of the present value, in gross, of the sums secured by the mortgage, payable in future; To prescribe a precise rule for such ascertainment is not free from difficulty; because the period of time, during which they are to be paid, is not specified in the mortgage. In ascertaining that sum, the court cannot look beyond the mortgage itself; there is no such reference made in the mortgage to the “rules and articles” of the association as to make them part of the mortgage, or to authorise the court to consider them, in construing the mortgage, or ascertaining the amount which the mortgagee is entitled to receive in presentí out of the proceeds of sale. It has been determined, that under a mortgage similar to the one under consideration, the mortgagor is not entitled to redeem, on payment of the money advanced to him by the society, with interest. Seagrave vs. Pope, 15 Eng. Law. & Eq. Rep., 477. Rut although the time during which the payments are. — 410 — to be made, is not specified, there is a contingency stated in the mortgage, on the happening of whieh the payments are to cease; and its duration may be ascertained by proof, or approximated with as much certainty and exactness, as the duration of a mortgage securing an annuity for the life of a person. It is true that there are no tables or precedents for such ascertainment as is required in the present ease, because such mortgages are of comparatively recent origin, and we are without judicial decisions fixing the rule of ascertainment. We are of opinion, however, that the true rule is to ascertain by proof the probable duration of the society, then to estimate the aggregate amount of the weekly and monthly instalments payable during that time, from that sum rebate a just amount for interest, and add thereto the arrearages due, after allowing for payments made to the society, and the sum thus ascertained is the amount which the mortgagee is entitled to receive in presentí in satisfaction of the mortgage. To illustrate the view of the court, let it be supposed that on proof taken in the cause, it should be determined, that the association will continue for four years longer; then the ascertainment would be as follows: Weekly dues for 4 years (208 weeks) a $1, - $208.00 Interest on $460,4 years, ... 110.40 $318.40 From this rebate interest thereon for J the time, (2 years,) - - - 38.20 $280.20 To this add arrearages due after allowing payments - made, ------ The sum in the case supposed would be the amount, which the mortgagee is entitled to be paid out of the proceeds of sale. The only remaining question to be considered, is the objection to the decree urged by the appellant, on the ground that the mortgage is usurious in its terms. To this it is sufficient to say, that the contract, so far as it is disclosed upon the record, contains no proof or element of usury. The only proof of the contract is to be found in the mortgage, which — 411 — appears to be In al! respects such an instrument as is contemplated by the act of 1852, the consideration for which, was not a loan of money to be repaid, but the sum of $460, paid to the mortgagor by the society, as the ascertained value in advance of his shares of stock in the corporation. And although, in the preliminary part of the mortgage, it is recited to be “a condition precedent to the money below being loaned to him that these presents should be executed,” yet the consideration is stated to be $460, “in hand paid by the corporation to the mortgagor,” while the mortgage contains no covenant or obligation whatever for the repayment of said sum or any part of it. This court cannot regard the principal sum named in the mortgage as in any sense a loan, nor the contract, as it appears in the record, usurious. We have carefully considered the question of the legal operation and effect of mortgages to “building associations,” such as are contemplated and provided for by the act of 1852, and have no hesitation in pronouncing them, if executed in conformity with the provisions of that act, free from all objection on the ground of usury. We adopt the views expressed by the court of Queens Bench in Silver vs. Barnes, 6 Bing, N. C., 180, and by the courts of chancery in England, in Burbidge vs. Cotton, 8 Eng. Law. & Eq. Rep., 57, and Seagrave vs. Pope, 15 Ibid., 477. This last case involved the construction of a mortgage, executed in conformity with the Statute of 6 & 7 Will. IV., ch. 32, almost identical in its terms with the mortgage before us. In construing this contract, this court, confines itself entirely to the terms of the mortgage — there being no other proof in the cause, and considering that there is no evidence of usury to be found in the record, we are not called upon to express any opinion as to the effect of usury in a contract, under our constitution and laws. For the reasons above stated, the decree below will be reversed with costs in this court to the appellant, and the cause remanded for further proceedings. Decree reversed and cause remanded.