Powell v. Hopkins

Bowie, J., delivered the opinion of the Court. An injunction having been granted on a bill filed by the appellants, against the appellees, in the Circuit Court for Talbot County, in Equity ; at a hearing, upon motion to dissolve, after answer filed, upon bill, answer and depositions taken under a commission, the injunction was dissolved ; from which decree this appeal is taken. The appellants, claiming as trustees, charge that being authorized and appointed under a deed, from Gfustavus A. Skinner and wife, dated the 22nd of January, 1872, convoying all Skinner’s estate, real and personal to the grantees, in trust to sell the same, at public or private sale, upon such terms and notice as to them should seem, best, and apply the proceeds after payment of costs, charges, commissions and expenses, in payment of the several creditors of said Skinner, according to their preferences and priorities, &c., after accepting the trust, and giving bond as required by law, they proceeded to advertise the property conveyed to them, in execution of their trust, for sale on the 12th of March, 1872. That some of the creditors of Gfustavus A. Skinner, claim under mortgages executed by him on portions of the realty, and others under judgments, rendered at different times, and they apprehend contests may arise as to their several priorities, which can only be properly adjusted in the Circuit Court. ' — 8 — That one of said,creditors, the appellee Hopkins, claiming under a mortgage from said Skinner for the sum of $5,000, bearing date the 7th of November, 1866, upon a part of said realty called “Asbury,” containing 317 acres, with a view of preventing the appellants from performing their trust, and embarrassing them in the execution of their duty, or with the design of procuring the sale of said land upon terms, that will produce an inadequate price, and that he may buy the same at less than its value, has advertised the said land for sale, for cash, under an alleged power contained in his mortgage, and insists he will sell the same, on the 12th of March, 1872, the day fixed by the appellants for their sale — that they verily believe that the said land, which is the most valuable part of the estate, will he sacrificed, because of the doubt thrown upon the title by the conflicting advertisements, and unreasonableness of the terms requiring cash for so large an amount, and the creditors of the said Skinner, will be defrauded of the chances of payment of their claims. They charge that Hopkins, has no right to sell under his mortgage, since the conveyance in trust to the appellants for the benefit of all his creditors, and the Court will not allow any one of several creditors, to carve and cut the estate to their own exclusive advantage, and the injury of the creditors generally. The appellants further charge, that a sufficient amount may he realized from the sales to be made by them, to discharge the claim of the appellee Hopkins ; that he' has no right to prescribe cash as the terms of sale under his mortgage, as it is not so expressed therein, and he had not given due notice, etc., and that all the interest due him had been paid and part of the principal, which he has applied toward the discharge of bonus and interest on said mortgage, higher than the rate allowed by law, etc. — 9 — The answer of Hopkins admits the execution of the deed of trust to the appellants, hut denies that it conveys to them all the property and estate and effects of said Skinner, at the time of his insolvency, and insists the same is void. He admits that some of the creditors of Skinner claim under mortgages, hut denies that any of the judgment creditors are prior to the mortgage to himself, or to the deed of trust to the appellants, and avers that there are but three mortgage creditors, to wit: Margaret A. Arringdale, Joseph H. Harrison, and the respondent, between whom no contests, or difficulties are likely, or can possibly arise requiring the intervention of the Court for their adjustment. He denies all design or purpose to defeat or embarrass the appellants in the execution of their trust, or to sacrifice the property, but avers he offered to make arrangements with responsible persons to effect a sale upon most advantageous terms, and the property would have been sold for its full value, and a larger price than it is likely to command. He insists his right to sell, is not affected by the deed of trust, but that he has the superior and prior right to sell. He denies that all the legal interest has been paid ; or that any part of the payment of the principal, has been appropriated to other purposes. It appears from this partial abstract of the bill and answer, that although one of the grounds relied on by the bill, was the cloud likely to be thrown upon the title of part of the property conveyed to the appellants, by the proposed sale of the appellee Hopkins, the main reasons for their prayer for the injunction, are the absence of any express power in the terms of sale, given by the mortgage to sell for cash, and the allegation that such terms were unreasonable, and inequitable, and to the prejudice of — 10 — other creditors, and want of due notice of sale as required by the mortgage. The learned Judge who granted the injunction, relied mainly on the hard and inequitable terms of sale prescribed by the mortgagee, there being no power conferred in express terms to sell the whole mortgage premises for cash, and the averment of want of notice, whilst the Court who dissolved it, held that where no terms of sale are expressed, the mortgagee may under the power, proceed to sell upon reasonable terms, and should he impose terms, that were inequitable and unreasonable, the mortgagee, had ample remedy by making objections to the ratification of the sale, and refer to Gayle vs. Fattle, 14 Md., 69; White & Elder vs. Malcolm, 15 Md., 529; Berry vs. Skinner, 30 Md., 512. The appellants in their argument in this Court, insist their right to an injunction is established by the case of Tuck vs. Calvert, 33 Md., 219. The subject of controversy in that case, was the right of certain claimants to the proceeds of land sold by trustees, arising under exceptions to the auditor’s report. The right to the injunction issued in the original proceedings in the Circuit Court of Prince George’s County was not involved. An injunction had been obtained on bill filed by junior judgment creditors against the sheriff, who was proceeding under executions issued by senior judgment creditors. The defendants answered the hill, and assented to a sale by trustee. This Court in that case passed no opinion on the question now raised. In the case of Gayle vs. Fattle, the complainant expressly charged, that the execution of the power of sale, pending the suit of one claiming by paramount title, was calculated to cloud the title. This Court, disposed of the allegation very summarily, declaring it insufficient to arrest the power of sale given — 11 — the vendor, by the vendee, in a mortgage to secure the purchase money; and referring to the other grounds, that the proceedings of the mortgagee, were not in conformity with the Act of 1826, ch. 192, (an Act relating to mortgages in the City and County of Baltimore,) they said: “if the sale be made without a compliance with the requisitions of the Act of 1826, ch. 192, when it shall have been reported, the appellee will then have an opportunity to point out the departure, and to claim whatever advantage it will give him,” the injunction was accordingly dissolved. If the claim by title paramount, would not justify the intervention of a Court of Equity, by injunction, because of the liability to collusion between the mortgagor and claimant; the claim of trustees, by deed subsequent to the mortgage, would justly be subject to the same objection, since nothing is easier or more tempting to an embarrassed debtor than the execution of a deed of trust, for the benefit of creditors generally, with discretionary powers in the trustees, which may be postponed indefinitely. The policy of the law is to prevent all unusual delay, in the execution of the powers expressed or implied in the mortgage, for which reason, Courts of Equity are prohibited from interfering by injunction, except in particular cases. Art. 64, Code of Pub. Gen. L., sec. 15, The terms of a deed are generally construed most favorably for the grantee, and most strongly against the grantor. The mortgage to Hopkins empowers him, in case of any default, to sell all the property thereby mortgaged, or so much as may be necessary, and to grant and convey the same to the purchaser or purchasers, his, her or their heirs, or assigns, “which sale shall be made in the following manner:” The mode of sale is prescribed, but the terms are omitted ; it would be a violent presump — 12 — tion, that such a power was nugatory, because, “cash” or “credit,” were not prescribed, “omne majus continet in se minus;” if the omission does not leave the power of the mortgagee unlimited in that respect, it certainly invests him with power to sell on reasonable terms, which may be cash or credit, according to the circumstances, and according to the case before cited, be subject to the action of the Court, on the question of ratifying the sale. . The language of the mortgage, giving the power of sale in the present case, is nearly the same as that used in the case of Berry vs. Skinner, 30 Md., 572. No question was raised in that case, as to the authority to sell for cash, but this Court, recognizing the power “as appendant, or annexed to the estate, coupled with an interest and irrevocable, a part of the mortgage security, vested in the mortgagee, or any person, who by assignment or otherwise, becomes entitled to the money to be secured, decided it could not be affected by the mortgagor subsequently becoming non compos, and the institution of proceedings in lunacy, and the application of the committee for an order to sell the mortgaged premises for the benefit of creditors generally, so as to suspend the execution of the power by the mortgagee.” The language of the Court is, “ he, the mortgagee, was constituted a trustee by the mortgage itself, to sell the mortgaged property, on default of payment, and the Court has no power to deprive him of the summary means of realizing his debt, that formed a part of the security, upon which he advanced his money.” Ibid. 574. An irrevocable power, cannot be annulled by a subsequent conventional trust, created by the mortgagor, without the privity or consent of the prior mortgagee. In the words of this Court, in the case last cited, “ In the absence of irregularity, fraud, or unfairness in executing the power, the Court has no alternative, however — 13 — harsh and severe the proceeding may appear to be, but to ratify the sale.” The allegation in the bill, of want of notice to the mortgagor, was abandoned by the appellants’ counsel in argument before this Court, and is negatived by the answer and evidence. The other points relied on by the appellants in support of the injunction are, the payment of usurious interest, and the application of part of the money paid by the mortgagor, which should have been applied to the extinguishment of the principal, “pro lanío,” to the payment of taxes and bonus. The exaction of usurious, or illegal interest, (if proved by the evidence,) does not invalidate the mortgage, or affect the power to sell. The Complainant must pay, or bring into Court to be paid, the principal and legal interest, before he can claim the intervention of a Court of Equity, by injunction. Gwynn vs. Lee, 9 Gill, 137; Baugher vs. Nelson, 9 Gill, 299. The Court of Equity, in which the sale is to be ratified, and the proceeds .distributed, has full authority and jurisdiction to adjust the question of interest between the parties — so with regard to the other credits claimed; if admitted, or satisfactorily proved, they would not entitle the appellants to an injunction to stay the sale entirely, but only “pro tanto.” The mortgagor however, testifies, that he overpaid him (the mortgagee,) one year, one hundred dollars, “which he returned.” L, A. Skinner, the son of the mortgagor, says: “I carried a sum of money to him, (the mortgagee,) but do not recollect how much it was. Mr. Hopkins, told me there was one hundred dollars too much, and he wanted me to take it back to my father.” “I told him I knew nothing about it, * * * * he had better keep it, and give it back to my father himself.” The mortgagee both in his answer and evidence taken under the commission, denies that all the interest, or any — 14 — part; of the principal has been paid; or that any demand has been made upon him by the mortgagor, or the appellants, to allow credits, which he has refused to allow. (Decided 14th March, 1873.) The 15th section of the 64th Article, Code of Public General Laws, declares, £‘ no injunction shall be granted to stay any sale, or any proceedings after any sale, of mortgaged premises under this Article,” . * * * “ unless such party shall on oath allege, that the mortgage debt and all interest due thereon, has been fully paid, or that some part of such debt or interest,, the amount of which he shall state, has been paid, and that the mortgagee, or person acting under him, refuses to give credit for such amount,” etc. This provision of the Code, is only declaratory of a general principle of Equity, and without inquiring or deciding how far it is competent for the Legislature, to limit the power of Courts of Equity, in the exercise of their jurisdiction, it is sufficient to say, the allegations • of the bill in this respect, are not sustained. Finding no error in the order appealed from, dissolving the injunction, the same will be affirmed. Order affirmed.