New Baltimore Loan & Sav. Ass'n v. Tracey

CourtCourt of Appeals of Maryland
Citation120 A. 441
Docket NumberNo. 64.,64.
PartiesNEW BALTIMORE LOAN & SAVINGS ASS'N v. TRACEY et al.
Decision Date10 January 1923

Appeal from Circuit Court of Baltimore City; H. Arthur Stump, Judge.

Actions by the New Baltimore Loan & Savings Association against Clarence C. Tracey and another to foreclose mortgages. From decrees setting aside audits allowing plaintiff payment in full from the proceeds of sales and directing distribution of the balance, over and above the amounts allowed it, to the Manhattan Land Corporation, plaintiff appeals. Reversed and remanded.

Argued before BOYD, C. J., and BRISCOE, URNER, STOCKBRIDGE, and ADKINS, JJ.

Allan W. Rhynhart and Benjamin H. McKlndless, both of Baltimore, for appellant.

Alexander Preston and William Dvvin Bonn, both of Baltimore, for appellees.

BOYD, C. J. Although the only order for an appeal in this record is: "Mr. Clerk: Please enter an appeal from the decree in this case dated the twenty-eighth day of March 1922, to the Court of Appeals of Maryland," we understand it was intended to be from each of the three decrees of that date, which are in the record, and involve the same question. The three cases were argued together below and in this court, and were practically treated as one. There were three cases in the lower court between the same parties known as "Case A," "Case B," and "Case C." This is the fourth appeal (counting the three in this record as one) which has been before us in connection with the transaction which was the origin of this controversy. One is reported as Manhattan Land Corporation v. New Baltimore Loan & Savings Association, 138 Md. 529, 114 Atl. 469; another is the case of Raith v. Richardson, Trustee, amongst the unreported cases in 139 Md. 696, 118 Atl. 68; and the other one is Raith v. New Baltimore Building & Loan Association, 140 Md. 542, 118 Atl. 67. Motions to dismiss the appeals were filed by the Traceys and the Manhattan Corporation on the ground that the appellant had no such interest as entitled it to appeal, which we will refer to later.

Clarence C. Tracey arranged with the Manhattan Land Corporation to purchase from it three lots of ground at Mt. Washington for $3,500, upon each of which he was to erect a house to cost $6,500. As Tracey did not have the money, he was to borrow $19,500, securing one-third by a mortgage of his wife and himself on each property, and the Manhattan Corporation agreed to take a second mortgage for the $3,500 on the three properties. He did borrow the money from the New Baltimore Loan & Savings Association, and on the 22d of November, 1919, he and his wife gave a mortgage on each of the three properties for $6,500 and on the same date gave a second mortgage to the Manhattan Corporation for the $3,500; that corporation having the same day conveyed the lots to Tracey and his wife. On the 13th of July, 1920, the mortgagors having defaulted in the covenants and conditions in the three mortgages to the loan and savings association, separate foreclosure proceedings were instituted for the sale of the mortgaged premises. Sales were made by John H. Richardson, who was appointed trustee, and reports of them were filed. Exceptions were filed by the Manhattan Corporation, but they were overruled and the sales were ratified. An appeal was taken by the Manhattan Corporation from those orders, but were affirmed by this court in the case reported in 138 Md. 529, 114 Atl. 469. Judge Pattison, in speaking for the court, said that Mr. Tracey procured the loan of $19,500 from the building and loan association through its attorney, John H. Richardson, with the understanding:

"That the sum so borrowed should be expended solely in the erection of said houses; and, to be assured that it would be so expended, it was agreed between Tracey and Richardson that the money should be deposited with the association, to be used as needed in the payment of the costs of the building of said houses, and that its withdrawal from the association should be subject to the control and supervision of Richardson. The above provision was essential to the security of both the appellant and appellee."

After referring to the fact that the Manhattan Corporation was to convey the property without receiving any purchase money in cash, the payment of the whole of which was to be secured by a mortgage subject to the other mortgages, he went on to say:

"Consequently it is absolutely essential to the security of both that the money that was to be loaned by the appellee to Tracey should be expended in the erection of said houses, thereby increasing the value of the mortgaged premises."

In the conclusion of that opinion it is said:

"It was claimed by the appellant that the entire amount of the loan secured by the mortgage from Tracey to the appellee never passed from the appellee. If such fact be true, it does not, upon the facts of this case, affect the right of the mortgagee to foreclose the mortgage, there being, as we have said, a default in the covenants and conditions therein contained; but it may be that such fact should be considered in the distribution of the proceeds of sale."

The sales of the properties did not realize enough to pay the first mortgages in full, if the loan and savings association was entitled to the amounts named in the mortgages, less any payments made on them. The lower court found that the appellant had only paid $11,700 in all to Tracey, set aside the audits which had been made allowing the appellant payment in full, and directed the auditor to only allow $3,900, with interest and proper costs in each of the three cases, and to distribute the balance over and above the said allowances to the Manhattan Corporation. It is from these decrees that the appeals were taken.

The motions to dismiss the appeals are based on the alleged reasons:

"First. Because the appellant has no such interest in the subject-matter as would allow it to appeal. Second. Because no injury has resulted to the appellant from the decrees from which an appeal is attempted to be taken."

But, as will be seen later, the appellant has an interest, certainly to the extent of $1,700 and may sustain injury beyond that sum, if the decrees stand. The motions will therefore be overruled.

We will not stop to determine whether section 2 of article 66 is applicable to the appellant, as that question was not raised, and, as its charter is not in the record, we are not informed as to just what sort of an association it is. It would seem that that section does not affect the transaction between it and Tracey. The case of High Grade Brick Co. v. Amos, 95 Md. 571, 52 Atl. 582, 53 Atl. 148, might have been cited against the appellant, if it is not a building association and protected by such cases as Robertson v. American Homestead Association, 10 Md. 397-408, 69 Am. Dec. 145, and Appeal Tax Ct. v. Rice, 50 Md. 302-318, if the amounts of the mortgages were not paid Tracey. But the evidence in this case shows that when the mortgages were given Tracey was credited by the appellant with the full amount of them, which he deposited with the mortgagee, and it was agreed between Tracey and John H. Richardson, representing the association, as was found by this court in 138 Md., supra, that as the work on the houses progressed, certain amounts were to be paid on the approval of Mr. Richardson. They were admittedly so paid to Mr. Richter, the builder, up to the sum of $3,900 on each house. In the meantime Richter was at work completing the houses in accordance with the contract between him and Tracey. That contract provided that 20 per cent. was to be paid when the first floor joists were laid, $1,300 on each house; 20 per cent. when the second floor joists were laid, same amount; 20 per cent. when the roof was on and floors laid, same amount; and 40 per cent. when the job was completed and accepted—being $2,600 on each house. That the final payment was to be made within 10 days after the completion of the work. It was also agreed:

"That the work was to be done under the direction of Dewitz and Webb, architects and engineers, and the owner, and their decision as to the true construction and meaning of the drawings and specifications should be final."

On May 18, 1920, Messrs. Dewitz and Webb addressed a communication to Mr. Richardson, stating that Christian F. Richter had completed the three cottages (the term used in the contract), in accordance with the terms of his contract, and on May 21, 1920, they addressed another communication to Mr. C. C. Tracey that—

"Mr. Christian F. Richter has completed the three cottages for you at Mt. Washington, in accordance with the terms and conditions of the plans, specifications and contract covering the same."

That is marked, "O. K. C. C. Tracey." Mr. Richter took the certificate to Mr. Richardson, and he told him he would not give him the money without Tracey being there. Richardson testified that he sent for Mr. Rusk, who represented the Manhattan Land Corporation, and told him that the builder wanted his money and, although he did not think that he should pay out the money under existing conditions, as Tracey had not completed his contract with the building association and the mortgages were in default, etc. "Then, after that, Rusk said to me; he said he thought the builder should have the money." Objection was made to that statement on the ground that the authority...

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