McCann v. McGinnis, 276

• Decision Date: 03 April 1970
• Docket Number: No. 276,276
• Citation: 263 A.2d 536,257 Md. 499
• Parties: Hazel G. McCANN et al. v. D. Franklin McGINNIS.
• Court: Maryland Court of Appeals

Page 499

257 Md. 499

263 A.2d 536

Hazel G. McCANN et al. v. D. Franklin McGINNIS.

No. 276.

Court of Appeals of Maryland.

April 3, 1970.

Charles B. Keenan, Jr., Bel Air (Edward C. Wilson, Jr., Bel Air, on the brief for Hazel McCann, and others; Leonard J. Kerpelman, Baltimore, on the brief for Frank N. Caruso), for appellants.

David S. Cordish, Baltimore (Cordish & Cordish, George W. White, Jr. and Buckmaster, White, Mindel & Clarke, Baltimore, on the brief), for appellee.

Before HAMMOND, C. J., and McWILLIAMS, SINGLEY, SMITH and DIGGES, JJ.

SMITH, Judge.

This case involves the liability of the defaulting purchaser and the proper procedure to be followed when the purchaser at a foreclosure sale defaults. For procedural reasons we shall be obliged to dismiss the appeal. Pursuant to Maryland Rule 885, however, to avoid a further appeal to this Court, we shall indicate our views relative to liability and procedure.

A sale was held pursuant to the power of sale in the event of default contained in a mortgage. D. Franklin McGinnis, the appellee, was the reported purchaser. He is an attorney. Although there is a contention that he acted on behalf of the estate of one of the mortgagors of which estate he was the executor, McGinnis executed the affidavit required by Maryland Rule BR6 b. 3 indicating that he was the sole purchaser and was not acting as agent for anyone. The sale was duly ratified. Terms of sale required payment of the balance of the purchase money upon final ratification of the sale. Payment was not made. The attorney named in the mortgage filed a petition to require McGinnis 'to comply with the terms of the sale or show cause to the contrary * * * and upon failure to comply with such terms of sale, or show good cause to the contrary * * * to rescind the ratification of (the) sale and to order a resale of said real estate at the risk and cost of * * * the purchaser.' An order to show cause was passed. The McGinnis answer claimed that he did not purchase individually but to protect the interests of an estate, that the Orphans' Court had refused to allow the purchase by the estate, and that through the Register of Wills 'a letter was sent to the Attorney General's Office for an advisory opinion as to the power of the Executor to make such a purchase', to which no answer had been received. He further stated that a petition was being filed simultaneously in the Circuit Court asking it to take jurisdiction as to the power of the estate to purchase the property and to ratify the sale of property to the estate.

Apparently, a number of conferences were held and attempts made to move the property at private sale at the same or a greater figure. These efforts proved fruitless. Accordingly, on April 22, 1969, the chancellor passed an order in which he rescinded the order ratifying the sale, directed resale 'at the risk and expense of the purchaser', and appointed to conduct the sale the attorney who made the original sale, he having been the attorney named in the mortgage.

On May 8, 1969, McGinnis filed what was entitled 'Motion for Clarification of Decree', stating in pertinent part:

'1. That by Order * * * dated the 22nd day of April, 1969, the ratification of sale in the above matter of September 10, 1968, was rescinded and a public sale was ordered to be held * * * at the risk of your Movant.

'2. That this foreclosure proceeding was instituted against the subject property by the First National Bank and Trust Company * * * (hereinafter called 'National') as first mortgagee under subtitle 'W' of the Maryland Rules of Procedure * * *.

'3. That the debt owing to National on this mortgage was in the amount of $25,000.00 and upon the covenants contained in the mortgage, the attorney named in said mortgage would be the only person entitled to maintain an action at law for a deficiency as prescribed in Rule 'W-75.'

'4. That although the property was originally bid in for a price of $46,000.00 ¹ the risk to National under the mortgage foreclosed cannot exceed the sum of its mortgage debt plus interest and expenses.

'Wherefore, your Movant respectfully requests this Honorable Court to clarify its Order for Resale and, more particularly, to specify in the said Order the amount of the debt owing to National and the risk to be incurred by your Movant as the defaulting purchaser.'

No order was passed suspending the April 22 order. Sale was held on May 20, reported on May 21 and ratified on June 26. On June 16 the chancellor filed an opinion relative to the motion for clarification of decree, the concluding paragraphs of which are as follows:

'The Court in the present case is well aware of the facts and circumstances surrounding the foreclosure sale and the uncertainty as to the capacity in which the defaulting purchaser was acting at the sale. In view of these facts and in view of the fact that the Attorney named in the Mortgage has asked that the ratification of the sale to the defaulting purchaser be rescinded, the Court will rescind the ratification of September 10, 1968. The effect of this will be to set aside the first sale as if the Court had never ratified it following the Report of the Attorney named in the Mortgage, pursuant to Rule W 74 (f). Notwithstanding the fact that more than 30 days had elapsed from the date of retification to the date on which the Attorney named in the Mortgage filed his petition praying for the rescission of the ratification, the Court has authority to vacate the sale. See Sloan v. Safe Deposit and Trust Co. (73 Md. 239, 20 A. 922 (1890)), at page 248.

'Because the first sale has been set aside and is now regarded as a nullity, the defaulting purchaser will incur no risk at the re-sale. However, he will incur the expense of all the costs attending the sale set aside. For authority see Schaefer v. O'Brien, 49 Md. 253 (1878). It should be noted that precisely the same result could have been reached if a judicial re-sale had been ordered pursuant to Rule BR 6 (c) since that Rule permits the Court to order a re-sale at the risk and expense of such purchaser, or take such other action as justice may require.'

The docket entries for June 16 show merely 'Opinion fd.' On June 30 certain of the appellants filed a 'petition for revocation and revision of order'. On July 10 another appellant filed a similar petition. The docket entries of July 15 reflect:

'Matter taken up before the Court (Judge Dyer) on Petition of Frank N. Caruso for Revocation and Revision of Order dated June 16, 1969 and Petition of Edward C. Wilson, Jr., Agent for the First Mortgagee and Agent for the Court and Hazel McCann, Concetta DeRosa and The First National Bank of Harford County for Revocation and Revision of Order dated June 16, 1969 and arguments heard and concluded. Both Petitions Denied.'

The appeals filed July 16 each refer to the 'Order' of June 16. It thus will be seen that all parties apparently treated the opinion as an order, although no order was in fact passed.

This Court has had occasion to comment several times recently relative to attempted appeals from opinions. See Suitland Dev. v. Merchants Mort., 254 Md. 43, 53-56, 254 A.2d 359 (1969); Mattingly v. Houston, 252 Md. 590, 593, 250 A.2d 633 (1969); Hayman, Adm'r v. Messick, 252 Md. 384, 388, 249 A.2d 695 (1969); Ballan v. Ballan, 251 Md. 737, 743, 248 A.2d 871 (1969); Bell v. Shifflett, 249 Md. 104, 105-106, 238 A.2d 533 (1968); Kennedy v. Foley, Receiver, 240 Md. 615, 214 A.2d 815 (1965). The reasoning behind this is fully explained in Miller, Equity Procedure, § 260 (1897), where, under the heading 'Distinction between opinion and decree', it is said:

'The decree of a court of equity, and not its opinion, is the instrument through which it acts in granting relief. The opinion of the court does not constitute a part of the decree * * *. It is the expression of the reasons by which the judge reaches his conclusion. The decree on the other hand, is the fiat or sentence of the law, determining the matter of the controversy. An opinion, however positive, is not in any sense a final act; it is not the subject of appeal, and may always be changed before final decree. The reasons assigned for a decree are no part of the decree itself.' (emphasis added)

Under Code (1968 Repl.Vol.), Art. 5, §§ 6 and 7, in this type of case we may consider only an appeal from a final order. This not being an appeal from a final order, the appeal must be dismissed. We now consider the merits of the case.

The court is the vendor in the case of a sale under the power contained in a mortgage, just as it is a vendor in any other chancery sale. Warfield v. Dorsey, 39 Md. 299, 307 (1874). Therefore, the question with which we are faced when, as here, there is the failure on the part of a purchaser to comply with the terms of sale by settlement, is what remedy exists for breach of contract with the court.

Mortgage foreclosure proceedings are now covered by Subtitle W of the Maryland Rules. Rule W74 e provides that after a sale has been reported the procedure on each such report shall be 'as if the sale were made by a trustee * * * pursuant to * * * Rule BR6 * * *.' Rule BR6 c provides:

'In case of default by the purchaser in a sale reported to the court, the court, on application, and after notice to the defaulting purchaser, may order a resale at the risk and expense of such purchaser, or may take such other action as justice may require.'

This rule is a restatement of the preexisting statutory law found in Code (1957), Art. 16, § 163 prior to its repeal by Chapter 36, § 1 of the Laws of 1962. Merryman v. Bremmer, 250 Md. 1, 241 A.2d 558 (1968). That section provided in pertinent part:

'The court shall have full power and authority, on application by * * * petition of the trustee appointed by said court to sell real estate, to compel the purchaser thereof to comply with * * * the terms of such sale, by process of attachment or other execution suited to the...