Austraw v. Dietz

• Decision Date: 09 November 1945
• Docket Number: 15.
• Citation: 44 A.2d 437,185 Md. 245
• Parties: AUSTRAW et ux. v. DIETZ.
• Court: Maryland Court of Appeals

44 A.2d 437

185 Md. 245

AUSTRAW et ux. v. DIETZ.

No. 15.

Court of Appeals of Maryland

November 9, 1945

Appeal from Circuit Court, Baltimore County; J. Howard Murray Judge.

Suit by William H. Austraw and his wife against Mae Martin Dietz otherwise known as Mae Martin and Mary Gliesman, wherein defendant filed a demurrer. From a decree sustaining the demurrer and dismissing the bill, complainants appeal.

Reversed and remanded.

George M. Berry, of Towson, for appellants.

Walter R. Haile and Elmer R. Haile, both of Towson, for appellee.

Before DELAPLAINE, COLLINS, GRASON, MELVIN, HENDERSON, and MARKELL JJ.

DELAPLAINE, Judge.

William H. Austraw and his wife allege in their bill of complaint (1) That on November 2, 1929, they acquired title to certain real estate at Twin River Beach by a second mortgage from Mary Gliesman and her husband to secure the sum of $1,900 (2) that on November 19, 1930, John F. Oyeman, attorney named in the mortgage for purpose of foreclosure, instituted foreclosure proceedings, and he sold the mortgaged property subject to the first mortgage; (3) that on March 2, 1936, after the auditor's report showed that the proceeds of sale were not sufficient to pay the mortgage debt, Oyeman filed a petition for a decree in personam, whereupon the court directed the clerk to issue a subpoena to the mortgagors to answer the petition and show cause why the decree should not be entered; and on April 22, 1936, after the sheriff had summoned Mary Gliesman and she failed to answer, and it appeared that her husband was dead, the court entered a decree in favor of Oyeman, attorney named in mortgage, for $1,962.45; (4) that Mary Gliesman had abandoned the use of her real name without legal right and had been using the name of Mae Martin for the purpose of fraudulently evading her liability under the mortgage; and that she had married John H. Dietz and subsequently acquired real estate under the name of Mae Martin; and (5) that Oyeman had died and that they are the proper holders of the decree. Complainants pray that the decree be entered to their own use, and against Mae Martin and Mae Martin Dietz. The chancellor took the view that the court had acted without authority in entering the decree in favor of the attorney named in the mortgage. From his decree sustaining defendant's demurrer and dismissing the bill, complainants bring this appeal.

In the early days of the State the court of chancery in a foreclosure proceeding decreed that, unless the mortgage debt was paid by a certain day named in the decree the equity of redemption would be closed and the mortgaged property would become the absolute property of the mortgagee. Usually this form of strict foreclosure resulted in great hardship to the mortgagor. In addition, it was a tedious procedure and made mortgages unattractive to investors. Chancellor Kent said that, even if a sale were decreed in a foreclosure suit, a court of equity had no inherent power to enter a deficiency decree against the mortgagor, because such a suit is an action in rem and not in personam. Dunkley v. Van Buren, 3 Johns. Ch. 330; Wilhelm v. Lee, 2 Md. Ch. 322; Rasst v. Morris, 133 Md. 187, 104 A. 412. Hence, if a mortgagee desired to recover the balance due on the debt, he was obliged to institute a separate suit in a court of law. Noonan v. Lee, 2 Black 499, 67 U.S. 499, 17 L.Ed. 278; Orchard v. Hughes, 1 Wall. 73, 68 U.S. 73, 17 L.Ed. 560. It soon became apparent that there was no valid reason why the case of a mortgage foreclosure should be an exception to the general rule that where a court of equity claims jurisdiction of an action, it will retain it and administer full and complete relief, both equitable and legal, so far as it pertains to the same transaction or the same subject matter. The purpose of this useful rule was to relieve parties from the vexation and expense of two suits, one in equity and the other in a court of law, when the whole controversy could be adjusted in one suit. In a foreclosure suit the chancellor must necessarily retain jurisdiction of the cause until after the sale and report of the auditor, and necessarily must determine the amount of the indebtedness, so that, if there is a deficiency, a determination of the amount becomes a mere matter of subtraction. So there was no logical reason why the parties should be put to further delay and expense in relitigating the same issue, when the chancellor, under a rule so long and generally accepted, could promptly do complete justice between the parties. Kirsner v. Cohen, 171 Md. 687, 190 A. 520; Frank v. Davis, 135 N.Y. 275, 31 N.E. 1100, 17 L.R.A. 306; Young v. Vail, 29 N.M. 324, 222 P. 912, 34 A.L.R. 980, 1002.

In 1785 the Maryland Legislature undertook to remedy the defects of the law by authorizing the court of chancery to order the sale of the mortgaged property for the satisfaction of the debt and, if the proceeds of sale did not satisfy the debt, to enter a decree against the mortgagor, or his heirs or personal representatives, for the amount of the deficiency. The statute applied only to actual loans of money 'by any foreigner to any citizen of this State.' It was intended to encourage nonresident capitalists to invest their money in Maryland. Acts of 1785, ch. 72; Boteler v. Brookes, 7 Gill & J. 143, 151. The statute was later broadened so as to apply to any suit to foreclose. Acts of 1875, ch. 327. The present statute regulating formal foreclosure provides that if the net proceeds of sale in any foreclosure suit shall not suffice to satisfy the mortgage debt and accrued interest, the court 'may, upon the motion of the plaintiff, * * * enter a decree in personam against the mortgagor, or other party to the suit, who is liable for the payment thereof; provided, the mortgagee would be entitled to maintain an action at law upon the covenants contained in said mortgage for said residue of the said mortgage debt * * *.' Acts of 1939, ch. 507, Code 1939, art. 16, sec. 241.

In order to foreclose under the statute, however, it was necessary to file a formal bill of complaint to give the mortgagor an opportunity to show cause why the foreclosure should not be decreed, and in the event of the mortgagee's death it was necessary to make both his heirs and his personal representatives parties to the suit. Worthington v. Lee, 2 Bland 678, 684. This procedure was cumbersome and unsatisfactory, and it became the practice to insert in mortgages a provision conferring upon the mortgagee or some person named therein the power to sell the mortgaged property upon default without obtaining previous authority from the court. While there may still be formal foreclosure in a proper case, that procedure has been generally abandoned in favor of the simpler and more convenient remedy. Hanover Fire Insurance Co. v. Brown, 77 Md. 64, 25 A. 989, 27 A. 314, 39 Am.St.Rep. 386; Hogan v. McMahon, 115 Md. 195, 204, 80 A. 695, Ann.Cas.1912C, 1260; Frank, Title to Real and Leasehold Estates, 233-237. The statute regulating the procedure now...