Golden v. Kovner Bldg. & Loan Ass'n

• Decision Date: 07 December 1928
• Docket Number: 35.
• Parties: GOLDEN v. KOVNER BUILDING & LOAN ASS'N.
• Court: Maryland Court of Appeals

143 A. 708

156 Md. 167

GOLDEN v. KOVNER BUILDING & LOAN ASS'N.

No. 35.

Court of Appeals of Maryland

December 7, 1928

Appeal from Circuit Court No. 2 of Baltimore City; Joseph N. Ulman Judge.

Suit by Lilly Golden against the Kovner Building & Loan Association. From the decree, plaintiff appeals. Affirmed.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, DIGGES PARKE, and SLOAN, JJ.

Joseph Sherbow, of Baltimore (E. Milton Altfeld and Allen Eli Cohan both of Baltimore, on the brief), for appellant.

Joseph Fax, of Baltimore, for appellee.

PARKE J.

Lilly Golden instituted proceedings in equity on January 27, 1927 against the Kovner Building & Loan Association of Baltimore city for the purpose of obtaining a permanent injunction restraining the sale of her leasehold property in the foreclosure proceedings under a mortgage from Samuel Highkin, William Paper, and Lilly Golden to the association. The plaintiff alleged that the inclusion of her property and her execution of the mortgage were obtained by fraud.

The testimony is that William Paper was the owner of a leasehold property known as No. 2130 East Lombard street, and sold it to Sarah Miller for $6,000. Neither Mrs. Miller nor her husband could take title to the property, as there were judgments of record against her, and the husband was in bankruptcy, so, for Mrs. Miller's benefit, it was arranged that her brother, Samuel Highkin, would take the title and borrow the necessary money in his name, although the property was to be held for Mrs. Miller, and she was to pay the debts thus incurred. On the assumption that a loan of $4,000 could be obtained on a first mortgage lien, Highkin applied on October 8, 1925, to the association for a loan of $2,000 to be secured by a second mortgage on the property bought and on plaintiff's leasehold property at No. 2203 East Lombard street. The association appointed a committee to examine the properties and to report their valuation on each, but, as Highkin had mistakenly given No. 2007 East Lombard street as plaintiff's property, the committee only examined No. 2130 East Lombard street and reported, on October 15, 1925, that this property would be sufficient security for a second mortgage loan of $1,000. Highkin then submitted as additional security for the loan applied for the plaintiff's property, whose number he again incorrectly gave as No. 2209 East Lombard street; and No. 2222 East Lombard street, which he stated was owned by William Paper. The association's committee went upon the premises at No. 2222 East Lombard street, and met Mrs. Paper, who said that she owned the property, and would not unite in the proposed mortgage. The committee found the plaintiff did not live on the premises named by Highkin, but, learning her residence from the neighbors, went to her property and examined it. As a result of their report the association agreed to lend Highkin $2,000 to be secured by a second mortgage lien on the leasehold property to which he was taking title and on the property of the plaintiff, with Paper signing the mortgage as a guarantor of the loan. The association then left the details of the transaction to their attorney, G. Joseph Walpert.

While these negotiations were proceeding, the original amount of the loan on the first mortgage lien was reduced to $3,500, and this made a difference of $500, which was agreed to be obtained by a loan made by the Pen Mar Permanent Building & Loan Association on five notes of $100 each, to be given by Highkin, Paper, and plaintiff. On December 28, 1925, the parties met at the office of Walpert, and the papers were signed and executed while Highkin, Paper, Mrs. Miller, and the plaintiff sat around a table, which was used for such purposes. When the transaction was completed, under the supervision of Walpert as attorney for the association, Paper had executed and delivered a deed granting the leasehold lot known as No. 2130 East Lombard street to Highkin, who then had executed and delivered a first mortgage lien thereon to Concetta Glorioso for $3,500, and who, together with Paper and the plaintiff, and for the purpose of securing the loan of $2,000, had executed and delivered to the defendant a mortgage, which was a second lien on the property bought by Highkin for Mrs. Miller and a lien on the leasehold property of the plaintiff; and Highkin, Paper, and the plaintiff had also made and passed five notes of $100 each to the Pen Mar Permanent Building & Loan Association. The consideration for these loans was $6,000, and the difference between this amount and the purchase price and the fees, commissions, costs, and expenses was then adjusted in a manner with which the court is not now concerned; and the matter was finished and the deeds and mortgages recorded. Mrs. Miller, the beneficiary of these negotiations, did not pay the obligations which Highkin and the others had assumed in her behalf, but which she had promised to discharge, and, because of her default, the association instituted proceedings to foreclose its mortgage on both properties.

The evidence on the record is conclusive that the association would not have made the mortgage loan to Highkin, if the plaintiff had not pledged her property, and that the transaction was in the routine of its business for the consideration set forth in the mortgage and free of all fraud and misrepresentation on the part of the association, unless by these means its agent, the attorney Walpert, induced the plaintiff to unite in the mortgage in question.

The plaintiff's participation in the getting of the money for the purchase of the leasehold property was through her friendship for her neighbor, Mrs. Miller, who successfully solicited her financial aid, but who left the negotiations with the association to her brother, whose representation that the plaintiff would join in the mortgage for the purpose of pledging her property was accepted in good faith by the association. The plaintiff, therefore, had not been at any meeting of the association nor at its offices; nor had she had any personal contact with any of its executive officers or any representative who had authority to lend before she met Walpert at his law office on the day the papers were to be signed.

The evidence discloses that the original plan for raising the purchase money contemplated a first mortgage loan of $4,000, and, when the mortgagee could only lend $3,500, there was a corresponding increase in the money to be otherwise secured. It was apparently then that the plaintiff was requested to increase the amount of the loan on notes for which she would be responsible jointly with paper to $500; and the entire matter hung fire until she was persuaded by Mrs. Miller to consent. It was the plaintiff's testimony that this was all she ever consented to do; and in this she is supported by the evidence of Mrs. Miller, Highkin, and Paper. Their evidence, however, is neither consistent nor convincing. They were present when the mortgage in controversy was executed and acknowledged, and it is unbelievable that they would have kept silent and permitted the plaintiff not only to sign the notes for $500 but also to execute the mortgage which pledged her property, if this had not been the understanding. Indeed, none knew better than these three witnesses that the association would not grant the loan of $2,000 on the security of a mortgage which did not convey the plaintiff's leasehold estate. It was the association, and not Walpert, who prescribed, as an indispensable condition to the loan, that the plaintiff's leasehold property be embraced in the mortgage; and no one was produced who testified that Walpert made any misrepresentation to the plaintiff of the nature of the instrument which she signed and acknowledged or practiced any deceit upon her. All that the plaintiff can charge against him is that, when she went to his office on the day of the settlement, "he said to her: 'Mrs. Golden, you come in to sign a note for Mrs. Miller.' I said, 'Yes.' So he said, 'All right, sit down.' I sat down on the chair and he handed me the papers; I signed, and that is all."

Walpert had never requested the plaintiff to sign either note or mortgage, but he did know that there had been a delay because it was necessary for the purchaser to get the plaintiff's consent to be bound for $500 on notes to the Pen Mar Permanent Building & Loan Association before the purchase price could be paid. So his greeting to her was a natural inquiry about the only thing which, as he explained, had been a subject of some uncertainty on the part of the principal borrower. There was unquestionably no misrepresentation nor deceit practiced in asking such a question and placing before her in turn the mortgage deed for her signature and acknowledgment....