Hardy v. Smith

Grason, J., delivered the opinion of the Court. It appears from the record in this case that there were three mortgages on certain leasehold property in Baltimore, the first in point of time held by John Small, Jr., the second by William P. Smith, and the third by the appellant. Smith obtained a decree under the 182nd and subsequent sections of the 4th Article of the Code of Public Local Laws, for a sale of the mortgaged premises, John Small, Jr., being appointed trustee to make the sale. At the time of the sale, Small, the trustee, announced that the property would be sold clear of incumbrances; the sale took place, was reported and finally ratified by the Court. The auditor stated an .account applying, the proceeds of sale to the payment of Small’s mortgage, and the balance to Smith’s, leaving a balance still due the latter. The appellant filed exceptions to the ratification of the account, claiming that the proceeds of sale ought to be applied to Smith’s mortgage and the balance to his own, and denying Small’s right to participate in the fund. The account was however ratified and this appeal was taken, and the only question raised is, whether any part of the proceeds of sale can rightfully be applied to the payment of Small’s mortgage. We think this question is settled by the cases of Tome vs. Merchants and Mechanics’ Building and Loan Co., of Baltimore City, 34 Md., 14, and Appold vs. Prospect Building Association, 37 Md., 457. In the former case Tome, who was first mortgagee, filed his bill for an injunction to restrain the Building and Loan Company, from proceeding under section 182 of the Code [3] of Public Local Laws to foreclose its mortgage. His bill was dismissed, and upon appeal tlie decree dismissing his bill was affirmed by this Court. The decision rested upon the ground that Tome had no right to interfere with the decree or the sale of the mortgaged premises by the Building and Loan Company, and that the sale would be subject to Tome’s rights under his prior mortgage. It does not appear that Small had obtained any decree upon, or had any authority to sell under, his mortgage at the time the sale took place, or that he had advertised to sell clear of incumbrances. He, as mortgagee, was no party to the proceedings. As trustee he had no authority to sell except under the decree in Smith’s case, and could only sell subject to his own prior mortgage. He had therefore no right to participate in the distribution of the proceeds of sale. They ought to have been applied to the payment of Smith’s mortgage, and the balance to the payment of the mortgage held by the appellant. (Decided 25th June, 1874.) The order appealed from will be reversed and the cause remanded for further proceedings, in accordance with the views expressed in this opinion. Order reversed, and, cause remanded.