Baltimore Trust Co. v. Canton Corn Products Co.

• Decision Date: 03 March 1922
• Docket Number: 24.
• Citation: 118 A. 139,140 Md. 557
• Parties: BALTIMORE TRUST CO. v. CANTON CORN PRODUCTS CO.
• Court: Maryland Court of Appeals

118 A. 139

140 Md. 557

BALTIMORE TRUST CO. v. CANTON CORN PRODUCTS CO.

No. 24.

Court of Appeals of Maryland

March 3, 1922

Motion for Reargument and Petition for Modification of the Court's Order Overruled May 5, 1922.

Appeal from Circuit Court of Baltimore City, H. Arthur Stump, Judge.

"To be officially reported."

Action by the Baltimore Trust Company, as trustee, against the Canton Corn Products Company, to foreclose a mortgage. From an order vacating the sale, the trustee appeals. Order reversed and cause remanded, with directions.

Joseph France and Harry N. Baetjer, both of Baltimore (Venable Baetjer & Howard, of Baltimore, on the brief), for appellant.

Edward M. Hammond and Alfred J. Shriver, both of Baltimore (Karr Hammond & Darnall, of Baltimore, on the brief), for appellee.

URNER J.

On August 1, 1916, the Canton Corn Products Company executed and delivered a mortgage of its distillery plant and property to the Baltimore Trust Company, as trustee, to secure the payment of bonds having an aggregate par value of $125,000. Default having been made by the mortgagor as to the performance of certain covenants in the mortgage, a proceeding in equity was instituted and a decree obtained by the trustee for the sale of the mortgaged property. The decree which was passed on September 20, 1918, appointed the Baltimore Trust Company trustee to make the sale, and provided that the authority thereby conferred should be in addition to the power of sale vested in the trust company as trustee under the mortgage. The property was sold by the trustee at public auction on November 7, 1918, to Morris Schapiro for $114,200. Exceptions to the ratification of the sale were filed by the purchaser on the ground of alleged defects in the title and of the existence of a lien on the property in favor of the government of the United States for taxes on large quantities of whisky and alcohol which had been manufactured and were then stored on the premises. An order was passed on March 1, 1919, sustaining the exceptions and setting aside the sale. In February, 1921, a private sale of the property was made to the same purchaser for the sum of $100,000. This sale was made expressly subject to any liens then or thereafter existing in favor of the United States government or any department thereof, and subject to storage rights reserved by a prior owner of the plant in relation to the whisky in the bonded warehouses on the mortgaged land at the time of the sale, but except as to such liens and reservation it was agreed that the property sold should be free of incumbrances.

Pending the ratification of the second sale the purchaser filed a petition, stating that about 370 barrels of crude alcohol owned by various persons, were then on the premises which he had contracted to buy, and were there prior to the institution of these proceedings, and that he would be unable to acquire full possession until the alcohol was removed. The petition sought to have the trustees required, before the sale was ratified and the purchase money fully paid, to compel the owners of the alcohol to remove it in order that the possession delivered to him might be complete and undisputed. The answer of the trustee to the petition stated that there were stored on the mortgaged property 371 barrels of grain alcohol, which had been pledged by the Canton Corn Products Company as security for loans long overdue at the time of the sale, and that the pledgees had no right to have the alcohol remain in its present place of storage. It was further alleged in the answer that the sale under the decree when consummated, would transfer a title free of incumbrances as agreed, and that the petitioner bought the property with full knowledge of the presence of the alcohol and of the terms upon which it was there stored. The trustee denied that the existence of the alcohol on the property constituted an incumbrance or afforded the petitioner any valid reason for refusing to comply with the terms of his purchase. The question raised by the petition and answer was brought to a hearing, at which testimony was offered, and by an order of the court below the second sale also was vacated. From that order the trustee has appealed.

A motion to dismiss the appeal has been filed on the theory that the appellant has no right to bring the case here for review. It is argued that the sale reported was made solely in the exercise of the authority conferred by the decree in the foreclosure proceeding, and not by virtue of the power of sale in the mortgage, and that a trustee appointed by a court of equity to sell property decreed to be sold is merely an officer of the court, and is without right or interest to complain, by way of an appeal, of its refusal to ratify a sale reported for its approval. In support of this contention the purchaser, as appellee, refers to the decisions of this court in the cases of Lurman v. Hubner, 75 Md. 268, 23 A. 646; Haskie v. James, 75 Md. 568, 23 A. 1030; Warehime v. Graf, 83 Md. 100, 34 A. 364; Knabe v. Johnson, 107 Md. 616, 69 A. 420. In those cases the only authority of the trustee who attempted to appeal was that which he derived from the decree by which he was appointed. In the present case the appellant trust company was acting as trustee under a decree which invested it with powers in addition to those conferred upon it by the mortgage in process of foreclosure. The appeal was taken by "the Baltimore Trust Company, Trustee." In the capacity thus described the appellant had important rights and interests under the mortgage, which were not superseded, but only supplemented by the decree. The character of trustee in which the appellant appears in this court is therefore to be considered in reference not merely to the power of sale in the decree of foreclosure, but also to the substantial property interests conveyed by the mortgage to the trustee in whose name the appeal was entered. As the holder of the legal title to the property for the benefit of the owners of the bonds which the mortgage was intended to secure, the appellant was clearly authorized to appeal from an order which materially concerned the rights and interests thus held and represented. McHenry v. McVeigh, 56 Md. 578; Frey v. Shrewsbury Sav. Inst., 58 Md. 151; White v. Malcolm, 15 Md. 529. The action of the trustee in taking the appeal is properly attributable to the existing...