Residential Indus. Loan Co., Inc. v. Weinberg

• Decision Date: 24 February 1977
• Docket Number: No. 120,120
• Citation: 279 Md. 483,369 A.2d 563
• Parties: RESIDENTIAL INDUSTRIAL LOAN COMPANY, INC. v. Manuel M. WEINBERG, Trustee, et al. FREDERICK CONTRACTORS, INC., et al. v. METROPOLITAN FEDERAL SAVINGS AND LOAN ASSOCIATION OF BETHESDA.
• Court: Maryland Court of Appeals

Page 483

279 Md. 483

369 A.2d 563

RESIDENTIAL INDUSTRIAL LOAN COMPANY, INC. v. Manuel M. WEINBERG, Trustee, et al.

FREDERICK CONTRACTORS, INC., et al. v. METROPOLITAN FEDERAL SAVINGS AND LOAN ASSOCIATION OF BETHESDA.

No. 120.

Court of Appeals of Maryland.

Feb. 24, 1977.

Arthur C. Elgin, Jr., Rockville (Thomas S. Jackson and Jackson, Campbell & Parkinson, Rockville, on the brief), for Residential Industrial Loan Co., Inc., appellant.

Rex. L. Sturm, Frederick (Brown & Sturm, Rockville, Manuel M. Weinberg, Carville M. Downes, David M. Guggenheim and Weinberg, Michel & Stern, Frederick, on the brief), for Manuel M. Weinberg, Trustee, and others and Frederick Contractors, Inc.

Carlton M. Green, Hyattsville, for Metropolitan Federal Savings and Loan Association of Bethesda, appellee.

Argued before MURPHY, C. J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and ORTH, JJ.

DIGGES, Judge.

This suit involves the ordering of priorities among three real property lien creditors of the bankrupt Bel Pre Medical Center, Inc., two of which are owners of deeds of trust notes, and the order of which is a holder of a mechanics' lien. Concluding that under our ruling in Barry Properties v. Fick Bros., 277 Md. 15, 353 A.2d 222 (1976), the mechanics' lien was not established until after the recordation of the deeds of trust, it follows that it is junior in priority to both of them.

Although we can only surmise from the facts of this case, we have little doubt that Frederick Contractors, Inc., which has been trying for the past four yours to obtain payment for work completed in 1973, must at this point wonder why it has never gotten beyond the veritable Slough of Despond ¹ which has prevented it from achieving even a modicum of success during all these years. Back in August of 1971, Frederick entered into a contract with Bel Pre to construct an addition to its nursing home in Silver Spring, Montgomery County, and work was begun shortly thereafter. In the autumn of 1972, before the addition was completed, Bel Pre sought to obtain a permanent first trust loan from Metropolitan Federal Savings and Loan Association of Bethesda, and by letter dated November 1, 1972, Metropolitan committed itself to make that loan in the amount of $1,400,000. At the settlement on November 30, Bel Pre executed a deed of trust covering the real property on which the nursing home is located securing its note for the $1,400,000 to Metropolitan; this deed of trust was duly recorded on December 12, 1972. Although the facts are not undisputed, it seems that at the time of this settlement, these parties together with Frederick contemplated that $150,000 of the loan would be held in escrow to insure completion of the addition and to secure the waiver of any mechanics' liens Frederick could claim for labor performed or materials provided through November 29, 1972. Following completion of the addition in January of 1973, Frederick demanded payment of a little over $148,000 from the $150,000 Metropolitan was then holding, but was unable to collect the money. Subsequently, an attorney for Frederick advised Metropolitan of its intent to file a mechanics' lien against the property owned by Bel Pre, and on March 22, 1973, Frederick recorded such an instrument. On April 30, 1973, Frederick filed a bill of complaint to foreclose its claimed lien.

Before the foreclosure proceedings could be terminated, several things happened: Bel Pre obtained another loan secured by a second deed of trust; pursuant to its contract with Frederick Bel Pre demanded arbitration of Frederick's claim for payment; and Metropolitan disbursed to Bel Pre the $150,000 it was holdig. Specifically, the record discloses that on April 18, 1973, a deed of trust securing a loan of 160,000 from Residential Industrial Loan Company, Inc. (RILCO) was executed, and this was recorded on May 11, 1973, subsequent to Frederick's bill of complaint to foreclose, but prior to any judicial determination of the issue. The next several years, however, found Frederick unable to establish its claim because it was entangled in a dispute, initiated by Bel Pre on May 22, 1973, over whether arbitration of Frederick's demand for payment was required before the mechanics' lien could be foreclosed. The matter was not finally resolved until this Court issued its opinion on March 26, 1975, staying the foreclosure proceeding 'until arbitration (was) concluded or Bel Pre's demand (was) withdrawn.' Frederick Contr. v. Bel Pre Med., 274 Md. 307 316, 334 A.2d 526, 531 (1975). In the meantime, on May 23, 1974 to be exact, Bel Pre had requested and obtained disbursement to it of the $150,000 Metropolitan was then holding.

Had the mechanics' lien litigation been promptly terminated following our decision in Frederick Contr. v. Bel Pre Med., the parties probably would not be here today, but unfortunately for Frederick, the chain reaction initiated by Bel Pre's demand for arbitration was to continue into 1976. The proceedings were delayed, and although the hearing was eventually scheduled for January 15 and 16, 1976, Bel Pre withdrew its arbitration demand at the eleventh hour. Finally free to pursue once again its mechanics' lien foreclosure case, Frederick promptly petitioned the Circuit Court for Montgomery County for an early hearing, which it received on February 26, 1976. On that day, the court entered a 'Decree for Enforcement of Mechanics' Lien and Appointment of Trustees for Foreclosure Sale.' But it was already too late-two weeks earlier this Court had decided Barry Properties v. Fick Bros., 277 Md. 15, 353 A.2d 222 (1976), where we held that, prior to the judicial establishment of a mechanics' lien, no such lien attaches to the real estate. Learning that the foreclosure sale was scheduled for April 9, 1976, Metropolitan and...