Mackubin v. Boarman

• Decision Date: 02 July 1880
• Citation: 54 Md. 384
• Parties: JAMES MACKUBIN v. ROBERT R. BOARMAN, Trustee in Insolvency of THOMAS WARD.
• Court: Maryland Court of Appeals

54 Md. 384

JAMES MACKUBIN v. ROBERT R. BOARMAN, Trustee in Insolvency of THOMAS WARD.

Court of Appeals of Maryland

July 2, 1880

APPEAL from the Circuit Court for Baltimore County.

The case is stated in the opinion of the Court.

The cause was argued before BARTOL, C.J., BOWIE, MILLER, ALVEY and ROBINSON, J.

James Mackubin, for the appellant.

R R. Boarman and Wm. Shepard Bryan, for the appellee.

MILLER J., delivered the opinion of the Court.

This appeal is from a pro forma order of the Circuit Court for Baltimore County, ratifying a sale of the real estate of Thomas Ward, made by Boarman, his trustee in insolvency. The facts by which the main question in the case is presented, are briefly these: On the 1st of December 1870, Ward and wife mortgaged this real estate to Arthur Pue to secure a loan of $7000, with interest. This mortgage contained a power, in pursuance of sec. 5, of Art. 64, of the Code, authorizing the mortgagee "or James Mackubin" to sell the property in case of default. On the 11th of October, 1879, Ward applied for the benefit of the insolvent laws, and Boarman was duly appointed his trustee. Mackubin and Boarman both claimed the right to sell, and took the necessary steps for that purpose, the former under the mortgage and the latter as trustee in insolvency. The Court decided that the power in the mortgage was annulled by the application of Ward for the benefit of the insolvent laws and that the trustee in insolvency could alone sell the property. The question then for our determination is, in which of these two parties is the power of sale vested?

This is one of the very few cases in which a question of this kind can now arise. The new insolvent Act of 1880, ch. 172, will govern as to all cases arising after its passage, and in that it is expressly provided that "if any real or personal property of the insolvent shall have been decreed to be sold by virtue of any decree of any Court of equity, or advertised to be sold by virtue of any power contained in any mortgage or bill of sale, the filing of the petition by or against the insolvent as herein before provided, shall not disturb the right of the trustee or other person so advertising, to proceed with such sale, unless otherwise ordered by the Court having jurisdiction in insolvency." This makes a clear and satisfactory provision for all future cases of this description, and settles the question by whom the power of sale shall be executed. The present case however, arises under the old system of insolvent laws, and is to be determined by the construction and effect of those laws in connection with the power given to parties to contract in the mortgage itself, as provided in section 5, of Article 64, of the Code. Without doubt it is the settled construction of the former insolvent system that the application with the appointment of a trustee supersedes and annuls every power of sale of the insolvent's property, vested in trustees under decrees in equity, whether passed upon mortgages or otherwise, as well as of sheriffs or constables acting under fi. fas, issued upon judgments. The cases cited by the appellee's counsel conclusively establish this proposition. But these decisions were made without reference to, and not in view of the 5th sec. of Art. 64, of the Code, and up to the present time no case has been decided by this Court to the effect that a valid conventional trust deed by which a debtor conveys a portion of his estate to a creditor to secure a bona fide debt, with power to the trustee to sell in case of default, could be set aside, and the power of sale vacated by the application of the debtor for the benefit of the insolvent laws. The case of Zeigler vs. King, 9 Md., 330, was the case of a mortgage under the Act of 1833, ch. 181, in which the mortgagor had declared his assent to the passage of a decree for the sale of the mortgaged property, according to the terms of that statute, and in which a decree had been passed and a trustee thereby appointed to make the sale. In the case of White & Elder vs. Malcolm, 15 Md., 529, the sale had been made by the attorney of the mortgagee under the provisions of the Act of 1826, ch. 192, before the mortgagor had petitioned, and the Court held that the purchaser acquired a good title under this sale, notwithstanding the subsequent application, and appointment of a trustee in insolvency. This is all that that case actually decides upon this subject. The Court rest their decision overruling the exception to the sale founded upon the fact of the subsequent application of the mortgagor for the benefit of the insolvent laws, upon the ground that the application was subsequent to the sale, and say, "there has been no case in Maryland in which it has ever been held that a sale of mortgaged property, actually made and reported for ratification to a Court having jurisdiction over the subject, has been set aside simply because the mortgagor, after the sale and report thereof and before the ratification, became an insolvent petitioner and had a trustee appointed." Basing their decision upon this ground, the Court did not consider or decide what would have been the effect in that case where the sale was made in pursuance of the Act of 1826, if the application, and appointment of the trustee had preceded the sale. But the Act of 1826 is not identical in terms or effect with the section of the Code, under and in pursuance of which the power of sale was embodied in this mortgage. That section for the first time in the history of the legislation of this State, provides that "in all mortgages there may be inserted a clause authorizing the mortgagee, or any other person to be named therein, to sell the mortgaged...