Kinsey v. Drury

• Decision Date: 17 November 1922
• Docket Number: 30.
• Citation: 119 A. 646,141 Md. 684
• Parties: KINSEY et al. v. DRURY et al.
• Court: Maryland Court of Appeals

119 A. 646

141 Md. 684

KINSEY et al. v. DRURY et al.

No. 30.

Court of Appeals of Maryland

November 17, 1922

Appeal from Circuit Court, Howard County, in Equity; Wm. Henry Forsythe, Jr., Judge.

"To be officially reported."

Suit by William R. Kinsey and others against D. H. Roland Drury and others. From an order dissolving a preliminary injunction restraining defendants from selling certain real estate and forclosing a deed in the nature of a mortgage, plaintiffs appeal. Order affirmed.

Wm. H Surratt, of Baltimore (Paul R. Hassencamp, of Baltimore, on the brief), for appellants.

James Clark, of Ellicott City (William Stanley, of Baltimore, on the brief), for appellees.

OFFUTT J.

This appeal was taken from an order of the circuit court for Howard county in equity, dissolving a preliminary injunction restraining the appellees from selling certain real estate of the Brightwood Sanatorium Company, and from foreclosing a deed in the nature of a mortgage given by that company to D H. Roland Drury and Erlie Talbott, trustees to secure the repayment to Mildred B. Drury of a loan of $22,500, according to the tenor of 10 promissory notes evidencing said indebtedness.

The bill of complaint was filed by William R. Kinsey, Albert E Burley, and Ira S. Crawford as "creditors of the Brightwood Sanatorium Company," against Drury and Talbott; trustees, and A. Howard Earp, auctioneer, and in substance it charges these facts: That on November 17, 1920, the company executed "what purported to be a deed of trust or mortgage of its lands situate in Howard county, at or near Laurel, to secure an alleged loan of $22,500, alleged to have been borrowed from one Mildred B. Drury." It also states that the complainants were "creditors of the company whose claims accrued subsequent to the date" of the mortgage deed of trust, and that their claims were at the time the bill was filed liabilities of the company. It further stated that the defendants had advertised and were about to sell the property because of an alleged default in the payment of the principal and interest due under the deed, and it then charges: (1) That the deed of trust is void because it is in truth a mortgage and is not supported by an affidavit that the consideration therein set forth is true and bona fide: (2) that the consideration set forth in said deed is fictitious and untrue; and (3) that the execution of said mortgage or deed of trust in the nature of a mortgage by the corporate officials of the Brightwood Sanatorium Company was made in pursuance of a plan or scheme between the said body corporate and the trustees mentioned in said mortgage or deed of trust in the nature of a mortgage for the purpose of defrauding the said body corporate and the complainants; and (4) that the actual consideration which passed from the mortgagee was less than that named in the instrument; and (5) that the mortgage deed of trust was usurious on its face, because it provided for the payment of interest at the rate of 7 per cent. on the alleged indebtedness. And it further charges that there was no real default in the payment of the principal or interest due under the deed of trust, but that the foreclosure was collusive and fraudulent and for the purpose of defeating the rights of the plaintiffs. It is also alleged that the deed was not recorded within six months from the date of its execution, and was void as against the complainants, "all of whom became creditors of the said Brightwood Sanatorium Company without actual notice of said mortgage or deed of trust in the nature of a mortgage." And finally it alleged that, if the defendants were allowed to sell the property, the complainants would suffer irreparable injury, and that they had no adequate remedy at law. Upon these allegations the following relief was asked:

"(1) That the said D. H. Roland Drury and E. Erlie Talbott, the trustees named in the said mortgage or deed of trust in the nature of a mortgage, and A. Howard Earp, auctioneer, may be enjoined from foreclosing the same or selling said property or in any manner proceeding against said property, entering thereupon, or taking possession thereof to the prejudice of your orators. (2) That the land mentioned in the bill of complaint and in the Complainants' Exhibit No. 1 be declared by decree of this honorable court to be subject to the payment of the claims of your orators and all others in like situation."

Upon this bill, supporting affidavits, and exhibits, a preliminary injunction issued, and after that answers were filed by the defendants, in which they denied any knowledge of the complainants' claims, but admitted the execution of the deed and of their intention to sell the property referred to in it. They admitted that the deed was without affidavit, and that it was not recorded within six months of its date, and that it provided for the payment of interest at 7 per cent. on the indebtedness, but they denied that the want of an affidavit, or the failure to record it within six months of its date, affected the rights of the parties to the mortgage deed of trust under the circumstances of this case, and they also denied that the consideration named in it was fictitious or untrue, or that there was any fraud or collusion, either in the execution of the deed or in the proposed foreclosure thereof, and they further denied that there was no real default on the part of the company in respect to the covenants of the deed of trust, and they deny that the rate of interest provided in the deed is usurious, because they say the usury laws of the state do not apply to loans to corporations. They deny that any irreparable injury will result to the plaintiffs from a sale of the property under the deed, and deny that the plaintiffs were without notice of the deed at the time their claims accrued. They then set up these defenses:

"That the plaintiffs have not stated in their bill such a case as entitles them to any relief in equity against these defendants.

That the plaintiffs are not parties to said deed of trust nor do they claim any right to or interest in the property thereby conveyed, derived, and accruing after the recording thereof; that they have not, on oath, alleged that the debt therein stated to be secured thereby, and all the interest thereon, has been fully paid, or that some stated part of such debt or interest has been paid, and that credit therefor has been refused; nor have said plai

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