Eversole v. Maull

• Decision Date: 12 December 1878
• Parties: SARAH A. EVERSOLE, Administratrix of A. S. Eversole v. EDWARD A. MAULL.
• Court: Maryland Court of Appeals

50 Md. 95

SARAH A. EVERSOLE, Administratrix of A. S. Eversole v. EDWARD A. MAULL.

Court of Appeals of Maryland

December 12, 1878

Appeal from the Circuit Court of Baltimore City.

The case is stated in the opinion of the court.

The cause was argued before BARTOL, C.J., BOWIE, BRENT and MILLER, JJ.

B Howard Haman and John P. Poe, for the appellant.

The appellant maintains that the sale of the mortgaged property ought to be set aside, or if the validity of the sale is not impeached, the proceeds ought to be awarded to the appellant.

Because no proper affidavit was made of the mortgagee's claim that by Maull being inoperative, as he was not the mortgagee nor was he in any way authorized to make the affidavit.

Because the decree for the sale of the mortgaged premises was entered to the use of Maull upon a mere written order of Mr Eversole's solicitor, whereas it is provided in the Code of Pub. Loc. Laws, Art. 4, sec. 789, that "the said entries (to the use) shall not be made without an order or direction in writing, to be acknowledged before the judge of said court or a justice of the peace by the persons purporting to sign the same, and filed and recorded by said clerk."

Maull took as assignee of this overdue and dishonored note the rights of the assignor, and nothing more. Annan v. Houck, 4 Gill, 331; Renwick v. Williams, 2 Md. 356; Newell v. Gregg, 51 Barb. 263; Sylvester v. Crapo, 15 Pick. 92; Angle v. Ins. Co. 92 U.S. 330; Clarke v. Dederick, 31 Md. 148; Arents v. Commonw. 18 Gratt. 750; Emerson v. Crocker, 5 N.H. 159; Vermilye v. Adams Ex. Co. 21 Wall. 138; Stevenson v. O'Neal, 71 Ill. 315; Cumb. Coal & Iron Co. v. Parish, 42 Md. 613, 614.

The intervention of the equitable principle, that "where one of two innocent parties must suffer, he must suffer who misled the other," cannot be successfully invoked by the appellee, because he is not, in the eye of the law, an innocent party. Maull's position is worse than that of an assignee of a mere chose in action under similar circumstances; for the fact that the note was overdue when transferred to him is of itself notice of the fraud, and of the consequent defect in Frame's title. How can a particeps fraudis take advantage of this equitable principle? Fisher v. Leland, 4 Cush. 456; Foley v. Smith, 6 Wall. 492.

Even if the note in controversy is to be regarded in the light of an ordinary chose in action, or a chattel, Maull has no title to it. Title cannot rise higher than its source. Thomas v. Kinsey, 8 Ga. 421; Decan v. Shipper, 11 Cas. (Pa.) 243; Gurney v. Behrend, 3 El. & B. 633; Bank v. R. R. Co. 3 Kern. 599; Dows v. Perrin, 16 N.Y. 333.

William Shepard Bryan, for the appellee.

The case made by the petition was heard on petition and answer, and, thereby, all the statements of the answer were admitted to be true. Warren v. Twilley, 10 Md. 39. The answer shows that Maull purchased the note bona fide, for value, without any knowledge of the alleged fraud.

The note was endorsed by Eversole "without recourse," and invested the holder (Frame) with all the visible and usual evidences of ownership. The party thus holding the note sells it to a bona fide purchaser for value, who has no notice of any supposed fraud. This sale carried the entire right. Story on Agency, sec. 228; Story's Eq. sec. 1503.

In Foley v. Smith, 6 Wall. 492, the real owner of the note entrusted the Bank of Kentucky with the note, to be collected when due; and the court say that the trust ceased when the note was protested. The sale in that case, of the note after protest, was made by one who held no authority from the owner; the authority previously given having terminated. But in the case at bar Frame's authority did not commence until the note was overdue, and it was still in full effect when the sale was made to Maull.

On the hearing of the petition there was no evidence whatever of fraud. The statements of the petition are not evidence. Briesch v. McCauley, 7 Gill, 189. Everything before the court at the hearing was consistent with the theory that Frame was the actual owner of the note. If he had been the owner he would naturally have used Eversole's name in the mortgage proceedings. But if Eversole was cheated by his agent, to whom he had given the power of disposing of the note, the loss must fall upon him.

Maull being the owner of the note, was in equity entitled to the mortgage. Story's Eq. sec. 1016; Wallis v. Dilley, 7 Md. 250.

He had, therefore, the right to have the suit entered to his use, and was the proper person to make affidavit to the mortgage claim.

The sale was finally ratified April 19th, 1876; and on the 6th of June, 1877, after the lapse of several terms, the petition was filed to set aside the ratification, and for the other purposes mentioned. After the term it was too late to assail the ratification in this way. Young's Estate, 3 Md. Ch. 461.

The court having dismissed the petition, which assailed the entry of the suit to Maull's use, his right to the entry was established, and was no longer the subject of controversy in the court below.

Miller J., delivered the opinion of the court.

It appears from the record in this case that in 1873, David W Caskey mortgaged certain leasehold property in Baltimore, to Abraham S. Eversole to secure a loan of $750, for which he had passed to the mortgagee his promissory note, payable one year after date. The mortgage contained the usual consent clause for a decree under the provisions of the Local Law of Baltimore City, on that subject, and on the 1st of March, 1875, a petition was filed in the Circuit Court by Eversole, through James Frame, his solicitor, for a decree for the sale of the mortgaged property, and on the next day a decree was accordingly passed appointing Frame trustee to make the sale. On the 29th of May, following, an order was filed in the cause signed by Frame as solicitor for the complainant, directing the clerk to enter the decree to the use of Edward A. Maull, and it appears to have been so entered on the docket. The cause remained in that condition until the 15th of March, 1876, when an affidavit was filed by Maull, stating that he was the purchaser, and endorsee of the note secured by the mortgage, and setting forth the amount due thereon and on the mortgage by which it was secured. The trustee then proceeded to sell the property, and sold the same to Maull for the sum of $500. The sale was duly reported, and in due course finally ratified by an order passed on the 19th of April, 1876. The trustee then on the 9th of May following, executed a deed conveying the property to the purchaser, who on the next day mortgaged the same to one Drinkhouse. After this, but before any account disposing of the proceeds of sale had been stated, Frame and Eversole both died; and on the 6th of June, 1877, the widow and administratrix of Eversole, filed her petition in the case, alleging that her deceased husband had employed Frame professionally to institute the proper proceedings to collect the mortgage debt, and for that purpose had delivered to him the mortgage note; that having the note thus in his possession Frame fraudulently endorsed it to Maull, and then the better to consummate the fraud upon his client, undertook to assign the decree to Maull without the client's consent or knowledge, but did so without pursuing the special mode prescribed by law, and hence the attempted assignment is null and void; that the sale was also void because there was no proper affidavit made of the mortgagee's claim prior thereto, Maull not being the mortgagee nor in any way authorized to make the affidavit; that her husband never knew that the same had been made, Frame having concealed the fact from him, and having told him as late as October, 1876, that the property had not been sold; that she has but recently discovered the true state of the facts and the fraud which has been practiced upon her husband and his estate; that she has applied to Maull but is unable to obtain any satisfactory settlement from him, and she therefore prays that he and the administrator of Frame may be required to answer this petition, that the entry of the decree to the use of Maull may be vacated, the sale annulled and its ratification stricken out and for general relief. In his answer to this petition, Maull avers that he purchased the note from Frame and paid him $500 therefor, and when he so purchased it the note bore the endorsement of the name of Eversole the payee, and Frame then endorsed it to him; that the endorsement of the payee was a general one, and not for any special purpose, and he became the innocent holder thereof for value; that he did not know at the time in what manner Frame held the note except by this endorsement, nor for what purpose or consideration it was so endorsed to him, and that he was not aware of any fraud in connection with the purchase of the note, and has no personal knowledge now of any fraud ever having been perpetrated by Frame upon Eversole; that if Eversole did not receive the money due him, it was by reason of his misplaced confidence in Frame in thus endorsing the note generally to him, but this cannot affect respondent's...