Rayner v. Bryson

Miller, J., delivered the opinion of the court. Upon the former appeal in this case, the Court of Appeals decided that the relation previously existing between the parties, as to the ten shares of stock, was not destroyed by their sale at the Stock Board, the pledgee himself having been the purchaser at that sale, and still continuing to hold them. The main question upon the present appeal relates to the correctness of the account ratified by the court, in respect to the charge of interest on the dividends received by the appellant — 478 — after payment of the loan for which the stock was pledged as collateral security. In sustaining the jurisdiction in equity, this court, on the former appeal, held that though the transaction was not technically a mortgage, yet the stock being pledged as security for a debt, it partook of the nature of a mortgage, was subject to redemption, and the pledgor being entitled to a return *of the identical property pledged, a bill to redeem could be maintained. The appellant’s liability for interest must, therefore; be measured by that of a mortgage in possession and holding on under circumstances such as are disclosed'in this record,, áfter the mortgage debt has been paid. In many of its features the case is strikingly like that of Quarrell v. Beckford, 1 Madd. Ch. 151, where the rule as to interest was first established. The mortgagee there claimed to hold under a decree of foreclosure. Proper parties were made to'the original bill to foreclose, but the suit having abated by the death of the complainant before decree, it was revived against the same defendants, the parties to whom the equity of redemption had, in the meantime, been assigned by the mortgagor not being made p'arties to the bill of revivor. When the bill to redeem was subsequently filed by these assignees, the mortgagee relied upon the decree of foreclosure as protecting his possession and exempting him from all liability to account. The defect as to parties was fatal to this defense, and an accounting was ordered. The Master’s report showed the mortgage debt was paid off by the receipts of rents and profits, and a considerable balance was in the hands of the mortgagee for some time prior to the filing of the bill, and large sums were subsequently received during the litigation, which was protracted for many years, by reason of difficulty in obtaining proof on which to state the account. At the hearing, upon the Master’s report, the principal question was the liability of the mortgagee for interest, and it was held that whilst the mistake as to the effect of the decree of foreclosure exonerated him from any imputation of fraud or intentional misconduct in holding on after his debt had been paid, it did not exempt him from payment of interest on the surplus so received by him. The point was then presented, from what period was the interest to be chai-ged, and with respect to that the Vice Chancellor, Sir Thomas Plumer, — 480 — said: “ I am of opinion it should be from the Ming of the hill, for at that period the demand was made and ought to have *been complied with according to the justice of the case.” In the present case the sale at the Stock Board was made in November, 1861, after previous notice of the intention to sell had been given to the appellee. There is no pretense of fraud in the sale; on the contrary, every effort was made to sell to third parties, and after being offered at the board the stock was bought in by the appellant at $80 per share, a price higher than could then have been obtained for it in the market. The appellee was promptly informed, and presented with an account of the sale, but made no offer to redeem, and no demand until the filing of this bill on the 24th of December, 1863. There is no ground for imputing bad faith or intentional misconduct to the appellant in the transaction, and, whilst he is liable for interest, he is hound to pay it only from the time the bill was filed. The account shows that the loan, principal and interest was paid on the 20th of December, 1862, by dividends then received, leaving a small balance of $21.08 then due the appellee. From that date dividends were received, from time to time, up to the period of filing the bill, and on each of such dividends the appellant is charged with interest from the date of its receipt. This we have shown is error. He should be charged with interest on the aggregate amount of dividends received, when the bill was filed, from that date to the time of stating the account, and on each dividend subsequently received from the date of its receipt. It has been argued that the question of interest is res adjudicata, and the expression in the opinion of this court, on the former appeal, that as to these shares “ the complainant is entitled to the relief he asks,” is relied on to sustain this position. If we should assume this to be true as to the appellant’s liability for interest, still it does not determine from what period the charge is to be made, for if we look to the prayer for relief in the bill, we find that though interest is there claimed on the surplus, if any, in the appellant’s hands, yet nothing is said as to the time from which it is to be computed. *It has been further argued for the appellee that the account should have been stated with annual rests, and, as the case must go back for a re-stating of the account, it is proper — 481 — that this question should be decided. It is not insisted these rests should be made for the purpose of a more speedy liquidation of the principal of the debt, for in this particular the account accords with the settled practice in this State. Scott v. Chapline, 4 H. & McH. 91. The object is, by means of these rests, to charge the appellant with compound interest on the balances in his hands after payment of the loan. We find no facts or circumstances in this case to warrant such a charge. Compound interest was not even claimed by the complainants’ counsel in Quarrell v. Beckford, supra, and is never allowed except where there has been intentional misconduct or gross negligence on the part of the party withholding the money. In Wilson v. Metcalfe, 1 Russell, 530, where the debt was paid before bill filed, annual rests were allowed against the mortgagee in possession, but in that case the answer, not only denied that any part of the debt had been paid by receipts of rents and profits, but it was argued, (and such appears to have been the case,) that the mortgagee and her representatives had, by every artifice of litigation, prolonged the controversy for nearly twenty-dye years, and thereby continued in possession and enjoyment of the estate. In Montgomery v. Calland, 14 Simons, 78, the debt had not been paid when the bill was filed, but was paid at the time the defendant put in his answer which denied this fact, and set up a claim (on what ground does not appear) to the equity of redemption. The decree directed the Master to state the account with annual rests, but at the hearing upon further directions, the Vice Chancellor said: “ With respect to the balances, it seems to me that as there has been improper conduct on the part of Calland, (for he has been receiving what was in fact the plaintiff’s money and on a falsi suggestion,) the right thing to do is to refer it back to the Master to compute interest at four per cent, upon the balances in his hands since the *mortgage was paid off.” We do not understand from this that the claim for compound interest was sustained, but rather the contrary, and that the case merely decides that where the debt was paid off after bill filed, interest on the balances should be charged from that time. Such appears to be the view taken of this case in Fisher on the Law of Mortgages (91 Law Lib.) 511; and in Coote on Mortgages, (70 Law Lib.) 532. The general rule is stated by the latter — 482 — author , 70 Law Lib. 531, thus : “ I f the mortgagee was already-paid in full at the time of filing the bill, or on earlier demand made by the mortgagor or by some other incumbrancer, he will be charged with interest on the balance then in his hands, and on all subsequent annual balances due from him, not, in general, compound interest, but simple interest from the end of each year, as the rents were received.” In Archdeacon v. Bowes, 13 Price, 353, a mortgagee in possession under a covenant that he should receive the rents and profits until his debt was paid, received more than his debt, and retained the surplus for a considerable time after receiving notice, from a subsequent incumbrancer, that he would be held liable for interest, unless the money was paid over in aid of other incumbrancers, and it was held, upon the authority of Quarrell v. Beckford, supra, that he should pay interest, but not compound interest, on the amount and on the annual balances in his hands from the time of receiving such notice. It is impossible to liken the present case in its circumstances to that of Wilson v. Metcalfe, supra, or to that of Diffenderffer v. Winder, 3 G. & J. 311, where compound interest was allowed. The appellant answered with sufficient promptness, making a full disclosure of the sale of the stock, and relied upon that as a bar to any account of further dividends; and there has been no unnecessary delay in the litigation. He had the right to set up this defense, and though it turned out by the decision of this court to be unavailing, his conduct therein, as already stated, is free from any imputation of fraud or bad faith. We are clearly of opinion the claim for compound interest should *not be sustained. Hanson v. Worthington, 12 Md. 418; Dennis v. Dennis, 15 Md. 73. There is no error in charging the appellant with the costs in this court of the former appeal, because such was the effect of the decree of reversal with costs. In reference to the costs in the Superior Court, we are of opinion they also should be paid by the appellant. The general rule in England, upon a bill to redeem, is that where the debt is not paid at the time of filing the bill to allow the mortgagee his costs, but where the mortgage debt was paid at the time of bill filed or on previous demand, and the mortgagee has retained balances, the costs will be charged to him. Coote on Mortgages, 531; Archdeacon v. Bowes, 13 Price, 353. — 483 — Nor is there any error in that part of the court’s order which directs the money to be paid to the complainant for the use of the parties to whom the same is entered, in disregard of the claim of Mrs. McKim, an attaching creditor. It appears an attachment on a judgment, in favor of Mrs. McKim against the appellee, was laid in the hands of the appellant on the 15th of September, 1866. We are, however, satisfied from the evidence in the record, that the whole claim1 against the appellant involved in the present case had been bona fide assigned, one-third to Mr. Williams and two-thirds to Mr. Stevenson, and the cause entered for their use prior to the laying of the attachment in the appellant’s hands. The exceptions of the attaching creditor were overruled, apparently on this ground, and she has acquiesced in this decision, not having taken any appeal. Under such circumstances the appellant will be protected in paying according to the court’s order against any claim on account of this attachment. . The order is, however, erroneous in directing interest to be .paid on the aggregate amount of principal and interest found due by the account, until paid. It is true that in judgments at law the interest on the debt may be calculated down to the date of the judgment, and the whole will then bear interest from that date, but this is the effect of an express statutory *provision, (Code, Art. 27, sec. 15,) which hás never been extended to decrees in equity on bills to account, where the account embraces charges of interest. The rule in Maryland, in such cases, is correctly stated by Chancellor Bland, in Winder v. Diffenderffer, 2 Bland, 204: On a bill for an account for the recovery of a legacy or the like, where interest is allowed, it is computed by the auditor from the time the money became due, up to the time of stating the account, with interest on the principal sum only, from that time until paid.” The order appealed from will be reversed and the cause remanded, in order that the account may be re-stated in accordance with the views expressed in this opinion. The appellant is entitled to the costs of this appeal. Order reversed and cause remanded.