White v. Malcolm

Eccleston, J., delivered the opinion of this court. These three appeals are all taken from an order of the Circuit court for Baltimore county, setting aside certain sales of real estate, situate in that county, which had been mortgaged by Robert Howard to 'White & Elder. The sales were made and reported by T. Parkin Scott, Esq., as “Attorney, agent or trustee,” for the mortgagees, under the Act of 1826, ch. 192. Before the sales, the Great Falls Iron Company received a deed from Robert Howard, which it is alleged, by the appellants, combed all liis equity of redemption, in all the mortgaged premises then held by or remaining in him. After the sales, under the mortgage, James Malcolm and William II. Brown, were appointed trustees on the application of the said Howard for the benefit of the insolvent laws. The mortgage to White & Elder, from Howard and his wife, is dated the 6th of October 1857. The conveyance from Howard and wife to the Great Falls Iron Company bears date the 25lb of January 1858. On the 17th of June 1858, White & Elder executed the power of attorney or authority to Thos. Parkin Scott, authorizing him to sell the mortgaged premises, “according to the provisions of the Act of Assembly, in such case made and provided.” And on the 22nd day of the same month, the said T. P. Scott gave bond to the State, with security, which was duly filed and approved, conditioned to “abide by and fulfil any order or decree which should be made by the Circuit court of Baltimore county, in relation to the sale of the mortgaged premises, or the proceeds thereof.” The said power of attorney, mortgage and bond, were filed in the said Circuit court, on the day last mentioned. Mr. Scott, as trustee and attorney, made sundry sales of — 538 — the mortgaged premises, on the 29th of November 1858, and on (he 3rd of December following, reported the same to the said court. It is admitted that Robert Howard applied for the benefit of the insolvent laws, on the 21st of December 1858, when •James Malcolm and William H. Brown were appointed his trustees, and bonded as such. On the 23rd of the same month these trustees filed two exceptions to the sales, and on the 19th of February 1859, they filed twelve additional exceptions. The first two are: 1. That said Robert Howard applied for the benefit of the insolvent laws upon the 21st of December 1858, and your petitioners were duly appointed his trustees, and have duly bonded as such, and therefore the sale reported in this case ■ought not to be ratified. 2. They also allege that said mortgage was given upon a usurious consideration of ten thousand dollars, and ought not therefore to be ratified; and for other reasons that will be urged upon the hearing of these objections to said sale. The additional exceptions referred to are the following: 3. That the said White and Elder have not filed their . bond of indemnity, as required by the section 2, of the Act of 1826, ch. 192. 4. That the sales reported were made in the city of Baltimore, beyond and without the limits of Baltimore county. 5. That the said trustee and attorney did not give twenty days notice of the time, place, manner and terms of sale in two daily newspapers, printed in the city of Baltimore. 6. That the said trustee and attorney did not give twenty days notice of the time, place, manner and terms- of sale in two daily newspapers, printed in Baltimore county. 7. That the said attorney and trustee did not in any notice of sale, given by him, sufficiently describe the premises proposed to be sold. 8. That the sales were made on terms not authorized by -law. 9. That the sale of lot No. 1, as described in the report of — 539 — the said trustee and attorney, is not warranted by any notice of sale given by said trustee and attorney, and that the said description is vague, indefinite and uncertain. 10. That the sale of lot No. 2, as described in said report, is not warranted by any notice of sale given by said trustee and attorney, and that the said description is vague, indefinite and uncertain. 11, 12, 13. These three exceptions are similar to the 10th, and relate to the sales of lots Nos. 3, 4 and 5. 14. That the said trustee and attorney hath not made a report of the terms on which said sales were made, nor of the compliance by the purchasers, or any of them, with said terms of sale, in whole or in part. On the 21st of May 1859, exceptions to the ratification of the sales were filed by the Great Palls Iron Company, “for the reasons assigned” in the former exceptions. Mr. Scott, as solicitor for "White & Elder, objected t.o these exceptions: 1st. Because they were not filed in time. 2nd. Because they were not filed until the day for hearing the exceptions of the trustees in insolvency. 3rd. "Because the testimony taken on the part of the said trustees was not admissible in evidence, on these exceptions. And therefore the court was asked to direct the clerk to take said exceptions from the file, and that the court would disregard them, because not taken in conformity with the provisions of the Acts of 1826, ch. 192, and 1845, ch. 352. On the 26th of May 1859, the judge below passed the following order: “The exceptions against the sales made and reported by T. P. Scott, trustee and attorney for the mortgagees, filed by James Malcolm and William H. Brown, trustees for the creditors of Robert Howard, and those filed by the Great Falls Iron Company, and the motion filed by the said White & Elder to take the aforesaid exceptions of the Great Falls Iron Company from the files of the court, standing ready for hearing and being argued by counsel for the parties and submitted, and the proceedings being considered by the court, it is thereupon adjudged and ordered — 540 — for the reasons stated in the opinion of the court, filed with this order, that the aforesaid sales, so made and reported as aforesaid, be and the same are hereby set aside and annulled.” The reason assigned in the opinion of the court for setting aside the sales, or why they should not be confirmed is: “Because the terms on which the sales were made, are not stated in the report., ’ ’ From the order setting aside the sales these appeals are taken. The appellees have contended that all said appeals should be dismissed, on the ground that the order on which they have been taken, was passed in the exercise of a specially delegated authority, and not in the progress of a cause at law or in equity, and that in such case no provision is ju&dejfor an appeal. But, in Williams vs. Williams, 7 Gill, 302, the right of appeal was sustained, in a case arising under the Act of 1833, ch. 181, in regard to a sale of mortgaged property; which Act provides a summary mode of effecting such a sale, different from the established general practice in chancery of obtaining decrees for selling property under a mortgage. And, in analogy with the principle decided in that case, a majority of the judges, sitting in the present case, are of the opinion that appeals may be taken from decrees, or decretal orders passed by the court, where sales have been made and reported, under the Act of 1826, ch. 192. The 5th section of that Act provides for a decision, by the court, in reference to reasons filed, why a sale should not be affirmed, as also in regard to claims for the proceeds of the property; and then the section declares that, “said court shall have the same power in the premises as they now have over sales made by trustees of their own creation, or in the distribution of moneys in the hands of such trustees.” The appellees have said, conceding it to be true, that parties whose .rights are affected by such an order as the one before us, may appeal, still as Mr. Scott has no interest in the controversy, save only as trustee, agent or attorney for the mortgagees, he has no right to appeal. — 541 — But such a position is at variance with what is said in Salmon, Trustee of Boon, vs. Pierson, 8 Md. Rep., 299, and in Teakle, Trustee, vs. Crosby & Bevan, 14 Md. Rep., 23 and 24. In both of which cases the principle is most distinctly announced, that where a decision is made which injuriously affects the claim of an insolvent’s trustee for commissions, he may appeal. This principle is considered properly applicable to the present case. The fourth exception is an objection to the sales, because they were made in the city of Baltimore, and not in Baltimore county. In support of this exception, the Act of 1825, ch. 203, sec. 10, has been relied upon. It provides, “That all mortgage sales, after the first day of May next, shall be made in the county where the mortgaged premises are situated; and provided that where the lands described in any mortgage, are or shall be situated in more than one county; in such case the sale thereof may be made in either of the counties within which such lands are situated.” The 3rd, 4th, 5th, 6th, 7th and 8th sections of the Act, contain provisions exclusively applicable to mortgage sales, which should be made according to the mode established by that law. And although it may be said the 10th section is. not, in express terms, restricted to mortgage sales under that Act, yet, looking to the other sections which have been mentioned, it is believed, by a majority of the court, that the 10th section should be construed as having reference to such sales only. It is, therefore, not applicable to the sales now in dispute . The 7th, 9th, 10th, 11th, 12th and 13th exceptions present objections based upon the ground that the notice or advertisement of sale given by the trustee and attorney, did not sufficiently describe the premises intended or proposed to be sold. The notice, as given, was not made part of the report of sales, but was filed, and appears in the record. Upon examination thereof, a majority of the court think there was no ground for setting aside the sales on account of the description of the property given in the notice. — 542 — The third exception assumes that the 2nd section of the Act of 182G should be construed as requiring the bond therein provided for, to have been given by the mortgagees, and that the bond of the attorney and trustee was not a compliance with the requirements of the law. In this we do not concur. The first section authorizes a mortgagee or mortgagees, or his, her or their duly authorized attorney, agent or trustee, to sell the mortgaged property, as fully and freely in every respect, as any trustee acting under a decree of any court, may do. The second section then provides, “ That before any person shall be entitled to act in virtue of the authority vested by the preceding section, he or she shall give bond,” &c. Looking to the language of the whole section, it does not seem to require more than one bond. It directs that “such bond shall be and remain as an indemnity to and for the security of all persons interested in such mortgaged property, or the proceeds thereof.” If, then, where the sale is to be made by an attorney or trustee, the law is to be understood as requiring the bond to be given by the mortgagee, and the law does not provide for one by the trustee, what security will the mortgagee have for his interest in the proceeds of the property? It can hardly be supposed the Legislature intended the attorney or trustee should be authorized to sell without a bond. The third section declares “that every person making sale of mortgaged property under the authority of this Act, shall make a report, under oath or affirmation, of the mode of their proceeding, and of all matters done in pursuance of such authority, and of the fairness of the sale,” <fcc. It cannot well be doubted that such report is to be made by the attorney or trustee,'when the sale is made by him. If so, why may not the attorney or agent be considered as the person required to give bond, before he “ shall be entitled to act in virtue of the authority vested by the preceding section?” When he receives from the mortgagee a power to sell, he surely is a person who is to act in making the sale, and, in so doing, he is to act in virtue of the provisions of the law on the subject. — 543 — . The fifth and sixth exceptions object to the sales, because sufficient notice of the time, place, manner and terms of sale was not given. It appears the sales took place on the 29ih of November 1858. The advertisement of the intended sale, it is admitted, was inserted in two daily newspapers, printed and published in Baltimore city, on the 2nd of November 1858, and was continued in said papers twice a week from that clay until said day of sale. That it was also inserted in two weekly newspapers printed and published in Baltimore county, commencing oil the 6th of November 1858, and continued weekly until the said day of sale. The law was passed when Baltimore city was part of Baltimore comity, the title of the law being, “An Act relating to mortgages in the city and county of Baltimore.” And the first section requires at least “twenty clays notice in two or more of the daily newspapers published in said city, of the time, place, manner and terms of sale.” The appellees have contended that nothing short of twenty days daily notice, is a sufficient compliance with this provision, and, therefore, the notice admitted to have been given in this case did not gratify the requirement of the law. But this view is not consistent with the principle adopted in Johnson vs. Dorsey, 7 Gill, 286. There a sale was made under a decree requiring the trustees to give “ at least three weeks previous notice, inserted in some newspaper or papers, and such other notice as they might think proper.” It was admitted that the trustees advertised the sale once a week for three weeks, and once on the day of sale, in two of the daily newspapers in the city of Baltimore. The court held that to be a legal notice of the sale. It was before the city and county were separated, politically, under the present Constitution, and the land was situate in the county. If the notice there given was a compliance with the decree, the present should be considered sufficient under the Act of 1826. That does not require twenty days daily notice, or that the notice should be inserted twenty times in two daily papers. The Act of 1816, ch. 129, in relation to sales of negroes — 544 — and lands, under writs of fieri facias or venditioni exponas, requires notice by advertisement set up at least twenty days before the day of sale, at the court-house door of the county, and other public places, “and also published for the same period of time, previous to the day of sale, in some newspapers, provided there be any printed in the county where such sale may be made.” This certainly directs publication in the newspapers, where there are any in the county, “at least twenty days before the, day of sale,” and it is not believed that this law, of so many years standing,' has, in any portion of the State, ever been construed as requiring twenty days daily advertisements, or twenty insertions in the newspapers. Such a construction would render sales very expensive where there are daily papers; and not only expensive, but subject them to great and needless delay where weekly papers alone are published. The eighth exception raises an objection, which assumes the sales were made'on terms not authorized bylaw. In support of this exception it has been contended that the trustee and attorney had no power to sell on credit, but for cash alone. The Act of 1826 prescribes no special terms of sales. - It does not say whether they are to be for cash or on credit. The terms, according to the advertisement, were, “one-third cash, and the balance in six months and twelve months, with interest and security.” Considering these reasonable, and not prohibited by law, they present no valid objection to the sales. The fourteenth exception objects to the sales, because the trustee and attorney in reporting them, neither stated what the terms were, nor the compliance with them, by the purchasers, or any of them, either in whole or in part. The first branch of this objection is the ground on which the court below set aside the sales. Instead of such an omission being considered sufficient to require the sales to be annulled, in the absence of any proof of fraud, surprise or undue advantage, the rights of purchasers should have induced the court to have authorized, and indeed required the trustee and — 545 — attorney to amend his report, by correcting the omission) so far as the facts would warrant. We have seen already, that by the 5th section of the Act of 1826, when reasons are filed in objection to the affirmance of a sale, the court have the same power in the premises as they have ‘over sales made by trustees of their own creation. The first exception takes the ground that, on the 21st of December 1858, Robert Howard applied for the benefit of the insolvent laws, when James Malcolm and William H» Brown were appointed his trustees, and therefore these sales ought not to be ratified. By way of reply to this exception the appellants say, that by deed of the 25th of Janury 1858, before his application for the benefit of the insolvent laws, Robert Howard conveyed all his equity of redemption in the mortgaged premises to the Great Falls Iron Company, so that nothing passed to his trustees in insolvency, and therefore, they have no standing in court. It is undoubtedly true that if the deed from Howard to the Great Falls Iron Company did convey all his equity of redemption in the mortgaged premises, nothing in said property passed to Howard’s trustees, and they have no interest which can give them a standing in court. Higgins, et al., vs. Horwitz, 9 Gill, 345. But, under the views we have taken of this case, it is not deemed necessary to examine minutely at this time, whether the deed to the Great Falls Iron Company conveyed Howard’s equity of redemption in all the mortgaged property then held by or remaining in him. For although property not sold at the time of an insolvent’s application, will pass to the trustee, yet when a sale has been made under a mortgage or decree, before the application of an insolvent, the rights of the purchaser, thus acquired, will be respected and sustained. In support of this exception the appellees have referred to Zeigler vs. King, 9 Md. Rep., 330. There, however, the sale had not been made, but only notice given of an intended sale, before the insolvent’s application. And there has been — 546 — no case in Maryland in which it has ever been held, that a sale of mortgaged property actually made and reported, for ratification, to a court having jurisdiction over the subject, has been set aside, simply because the mortgagor, after the sale and report thereof, and before the ratification, became an insolvent petitioner, and had a trustee appointed. Nor do We think the present sales should be annulled for the reason stated in the first exception. The second exception alleges usury. It Avas not urged in the argument before us, because the counsel thought it would be more appropriately considered with reference to the application of the proceeds of sales. The appellants have contended that the court should not have considered any of the exceptions, because none of them were filed within twenty days after the sales. On that subject the 5th section of 1826 provides, that all persons interested in the mortgaged property, “may, at any time within twenty days after the sale thereof, file the reasons, if any exist, why the said sale should not be affirmed.” We do not understand this provision as intended to prevent exceptions after the expiration of the twenty days, although the sale may not have been ratified, but to prohibit the ratification for twenty days, thereby securing to persons interested that length of time to present objections against the sale. These sales could not have been ratified until the certificates of publication of the report of sales were before the court, and they were not presented until some time in May 1859, long after the expiration of twenty days after the sales. It has been insisted by the appellants’ counsel, (and we think • correctly,) that, at the hearing of this case, the court might have allorved the attorney and trustee to have amended his report. And can such be the privilege of one side, and yet the other have no right to object to the sale, as it appears by an amended report, merely because the sale has been made, more than twenty days? There is another hardship resulting from the appellants’' doctrine. By the 3rd section of the Act, the report of sale may be made at any time within fifteen days after the sale. — 547 — This is, virtually, allowing but five days for the filing of exceptions, if they are to be excluded at the end of twenty days after the sale has been made. What exceptions may be proper cannot be well ascertained, in every case, before the report is presented to the court. If it should not be filed until the fifteenth day, and before that an injured party has been required to leave home for a distant place, and should be, necessarily, absent until after the expiration of the twentieth day, the appellants’ construction of the law would exclude such a party from any relief, even although the sale may not have been ratified, and although there maybe valid objections to the ratification of the sale, known to the party. (Decided May 16th, 1860.) According to the long and well settled practice in this State, when a sale is made under a decree in chancery, an order of ratification nisi is passed and published, in which it is ordered that the sale shall be ratified, unless cause to the contrary be shown on or before a particular day therein named. If, however, after that day, but before final ratification, objections to the sale shall have been filed, they have never been considered as coming in too late to be heard. And if so, why should the 5th section of the Act in question be held to exclude all exceptions after twenty days subsequent to a sale ? We do not think any good reason has been, or can be urged, why the like construction should not be given to the Act which has been uniformly applied to the order nisi in chancery. Gn the 26th of May 1859, the court passed the order annulling the sale. On the 21st of the same month, the exceptions of the Great Falls Iron Company were filed, all others having been previously filed. From the views already expressed, it may be seen that we do not think the exceptions of the company were too late to have been considered by the court, and consequently the appellants were not entitled to have them taken from the file, or dismissed. The order appealed from will be reversed and the cause remanded for further proceedings, the appellees to pay the costs in this court. Order reversed and the cause remanded.