Kenly v. Huntingdon Building Ass'n

A mortgagee, purchaser of the mortgaged property at a second foreclosure sale, appeals in this case from an order setting the sale aside because of the unfavorable condition of the market and consequent low price at which the sale was made. The court, after having heard testimony on exceptions of receivers of the mortgagor company, offered the mortgagee an option of having the sale ratified upon her waiving her legal right to a judgment for a deficiency between the amount brought and the amount due under the mortgage, or of standing upon her rights and having the sale set aside unconditionally; and, the mortgagee having declined to waive her rights, the unconditional setting aside of the sale followed.

The property mortgaged consists of a leasehold lot numbered 221 to 225 West Twenty-Fifth Street, in Baltimore City, and is improved by a converted brick dwelling of three stories in height, containing a room for a bank or building association and facilities for small assemblies. The mortgage was executed by the appellee, now in receivership, in the year 1915, to secure a loan by the appellant of $5,000 for two years, and it has been continued beyond its maturity. Interest was paid until March 18th, 1932, but not since that date, and taxes on the property are overdue and unpaid for the years after 1928. The annual ground rent is $150.

Under the decree for foreclosure, the property was first offered for sale at public auction, after due advertising, on December 28th, 1932, and, the only other bid having been one of $900, the mortgagee herself bought the property in on a bid of $950; but exceptions of the receivers to this sale were sustained by the court, without prejudice to a further sale by the trustee under the existing decree. The second sale, on April 6th, 1933, brought no new bidders, although it appears that there was a small attendance, and the mortgagee again bought the property in, this time on a bid of $1,000. The setting aside of this sale, under the circumstances recited, is the subject of the appeal.

There is no evidence, and no contention, of irregularity or impropriety in procedure in making the sale. It is insisted that the price brought was grossly inadequate, but the inadequacy is attributed only to the inopportuneness of the time for a sale. The mortgagee is also charged with laches in delaying foreclosure during the fifteen years since the principal became due and collectible, and until the present time of depression, but this, too, appears to be merely an objection to sale at this time. Foreclosure has not been delayed long after default. Waring v.Nat. Savings Trust Co., 138 Md. 367, 380, 114 A. 57. Continuation of a mortgage beyond the date specified for its maturity, and until default in the covenants, is entirely regular, and at the option of both parties, and is in accordance with common practice. Tessier v. Wise, 3 Bland, 28, 35. The objection is to the accident of time and conditions rather than to continuation or delay by the mortgagee. And it is on the comprehensive ground of denial of ordinary rights and remedies at this time that the decision must be based. Testimony as to the situation and condition of the property, and charges to be paid by a purchaser, seems to this court to cast some doubt on the fundamental assumption that salability of this property at a much higher price at some future time can be regarded as assured, but it is the opinion of the court that, if this could be found as a fact, the court of equity should not for that reason interpose to deny the mortgagee her legal rights under her contract and the laws of the state.

No statute has been passed in this state purporting to prevent or delay foreclosures of mortgages; and it is the view of the majority of the judges that the court, having no actual statute in question before it, should not express an opinion on constitutional objections raised to such legislative measures. It seems sufficient for the purposes of this case that all of the members of the court are of opinion that a court of equity should not make such a departure from the law as this order involves. It cannot be disputed that, on the law as it has been laid down for the court, the mortgagee is entitled to apply her security to the debt by foreclosure sale, and by refusing to ratify the best sale that can now be made, so far as appears, and relegating the mortgagee to the chances of the future, the court seems to withhold or reject the law it has been appointed to administer. The conclusions reached, and the expedients suggested, in the Wisconsin case of Suring State Bank v. Giese, 210 Wis. 489, 246 N.W. 556, and in other cases which have followed its suggestions, have not been overlooked; on the contrary, they have been studied carefully, but this court has not been able to reach the conclusion that it is proper for the court of equity to make these departures from the regular course of the law. It seems to us that it is not for that court to adopt a moratorium for the legal rights of litigants. The order must be reversed, and the cause remanded for the overruling of the exceptions to the sale and ratification of it, and for further proceedings thereafter.

Order reversed, and cause remanded for further proceedings inaccordance with this opinion, with costs to the appellant.