Stump v. Warfield
| Decision Date | 20 December 1906 |
| Citation | 65 A. 346,104 Md. 530 |
| Parties | STUMP et al. v. WARFIELD et al. |
| Court | Maryland Court of Appeals |
Appeal from Circuit Court, Baltimore County; Frank I. Duncan, Judge.
Action by Charles A. Warfield and others against H. Arthur Stump and others, trustees. From a judgment in favor of plaintiff's, defendants appeal. Affirmed.
Argued before McSHERRY, C.J., and BRISCOE, BOYD, PEARCE, SCHMUCKER JONES, and BURKE, JJ.
Edward W. Herrmann and William Grason, for appellants.
Robert H. Gordon and Elmer J. Cook, for appellees.
This is an appeal from a judgment rendered in favor of Charles A Warfield and others (appellees) against Messrs. Stump and Herman, trustees (appellants), in an action of ejectment brought to recover a tract of land in Baltimore county. On February 6, 1869. Timothy A. Carroll, in consideration of the sum of $8,000, conveyed the property in controversy to Charles D. Warfield, in trust for the benefit of his wife Isabella, during her life or widowhood, she to collect the rents, issues, income, and profits therefrom, for her sole and separate use free from the power, disposal, or control of her husband, and after her death or marriage in trust for their children, etc. Then, after making provision that, in case Mr. Warfield survived his wife, upon her death the property should be for their children, etc., the deed proceeds as follows: "With power, however, to the said Isabella Warfield, with the consent and approbation of the said trustee, to grant and convey absolutely said property at any time, and the proceeds to reinvest in other property upon similar trusts as are herein declared, no purchaser, however, to be bound to see to the application of the purchase money." On the same day "Isabella Warfield and Charles D. Warfield, her husband and trustee," gave a mortgage to Mr. Carroll to secure three promissory notes, amounting in the aggregate to $3,119. It recites that they were given in part payment of the purchase money for said property, and that the trustee united to show his consent and approbation of the conveyance. On July 21, 1870, Isabella Warfield and Charles D. Warfield, trustee, gave a mortgage to Clara A. Ross, which recites that she was the assignee of the mortgage and the three notes given to Carroll, which then amounted to $3,391.91, and that she had loaned Isabella Warfield $900, "which last sum the said Isabella hath used in extinguishing claims against her incurred on account of the interest aforesaid and other debts contracted for the benefit of the property hereby mortgaged, making in all an indebtedness of four thousand dollars." It also states that Charles D. Warfield had given his note for the $900, and four notes of $120 each, being the interest on the said sum of $4,000, payable in 6, 12, 18, and 24 months, respectively. The notes are all signed by him individually. An assignment of the first mortgage and of the three notes described therein to Clara A. Ross was executed by Carroll and duly recorded. There was a power of sale in the first mortgage to Timothy A. Carroll, or Samuel D. Schmucker, his attorney, and one in the second to Clara A. Ross, or Luther M. Reynolds, her attorney or agent. The second provides for the payment of the notes mentioned in the first, as well as the others mentioned above. A petition was filed in the circuit court for Baltimore county by Clara A. Ross, showing that she was the holder of the two mortgages, alleging that they were in default, that she was desirous of selling the property, and asked the court "to accept and approve the bond of the attorney in the later mortgage named, that he may proceed to sell." Mr. Reynolds gave bond, advertised the property, and on July 15, 1871, sold it to Elias Livezy for $4,450. Exceptions were filed to the sale, but were overruled, a petition was filed to open up the decree, which was dismissed, and the case which will be hereafter referred to was brought to this court. Finally, on August 18, 1873, a writ of possession was ordered, requiring Mr. and Mrs. Warfield to deliver possession of the property to Elias Livezy, the purchaser, which they did. On January 19, 1874, Luther M. Reynolds, attorney, and Elias Livezy and wife conveyed the property to Eliza J. Miller, she having purchased the interest of Mr. Livezy. On March 28, 1878, Mrs. Miller and her husband conveyed the property to William H. Reid, and the appellants represent his interest, through some proceedings in the circuit court No. 2 of Baltimore City. The defendant filed the general issue plea and a plea on equitable grounds. The latter was demurred to and the demurrer was sustained. The case was tried before the court, and at the trial an agreed statement of facts and certain record evidence were offered. The court found in favor of the plaintiffs (now appellees), and its rulings on the demurrer to the equitable plea and on the prayers present the questions before us. Before passing on the plea and prayers separately, it will be well to consider the principal points involved.
1. It is conceded by the appellees that the first mortgage (the one to Mr. Carroll) was validly executed, but it is contended that the second only passed Mrs. Warfield's life interest, because the mortgagors had no power to mortgage any other interest. It is undoubtedly the general rule that "a power to sell and convey does not confer the power to mortgage." It was so held in Tyson v. Latrobe, 42 Md. 325, and the court added: The latter part of the quotation adopted the language of 2 Perry on Trusts, § 768. See, also, Wilson v. Md. Ins. Co., 60 Md. 150; Price v. Courtney, 87 Mo. 387, 56 Am. Rep. 453; Bloomer v. Waldron, 3 Hill (N. Y.) 361; Hoyt v. Jaques, 129 Mass. 286; 1 Jones on Mortgages, § 129. Although the appellees concede that the first mortgage was valid, it will be well to examine some of the authorities which announce an apparent exception to the general rule, and determine that, when a trustee is authorized to sell and dispose of trust property and reinvest the proceeds, he can give a mortgage for the purchase money, or any part thereof, in order that we may see the reasons for such exception. In Gernert v. Albert, 160 Pa. 95, 28 A. 576, the testatrix gave the trustee "authority to sell and dispose of the said real estate at such price or prices as he may deem best to the advantage of my said minor children, and to reinvest said proceeds in other real estate." The trustee sold the trust property for $4,750 and purchased another tract for $3,210, subject to a widow's dower of $890. He paid $2,210 cash, and gave a mortgage for the balance of the purchase money. The deed was dated April 2, and the mortgage April 10, 1884, but both were recorded on the latter day and were treated by the court as one transaction. The court held that the mortgage for the purchase money was valid. In passing on that question it said: The court distinguished between that case and Wilhelm v. Folmer, 6 Pa. 296, where it was held that a judgment given for purchase money a week after the deed was made, but not recorded for another week, was invalid against the trust estate. In Mavrich v. Grier and Smith, 3 Nev. 52, 93 Am. Dec. 373, Mrs. Smith, a feme covert, entered into a contract with Mavrich for the purchase of a house and lot. The transaction was consummated by a conveyance to Grier, to be held in trust for Mrs. Smith. As a part of the transaction, Mrs. Smith gave her note for $2,000, the price of the house and lot. Grier as trustee for Mrs. Smith gave a mortgage for the $2,000, stating that it was for the purchase money of said property, and he and Mrs. Smith signed the mortgage. It was held that the mortgage was valid to secure the purchase money, "the conveyance and mortgage being executed at the same time and being part of the same transaction." In Coutant v. Servoss, 3 Barb. (N. Y.) 128, the court said that when, upon the sale and purchase of land, a deed is executed and a mortgage given for the purchase money, or part thereof, the presumption is that the deed and mortgage were executed at the same time and the whole is considered one transaction, and taking the whole together the vendee only acquires the equity of redemption. In Hannah v. Carnahan, 65 Mich. 601, 32 N.W. 835, the wife conveyed real estate to her husband in trust for their minor children. The husband was authorized to sell and convey the property in his discretion and to reinvest the moneys for the benefit of the children, and, in case he survived his wife, to control and govern the...
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