Ten Hills Co. v. Ten Hills Corp.

• Decision Date: 26 April 1939
• Docket Number: 7.
• Citation: 5 A.2d 830,176 Md. 444
• Parties: TEN HILLS CO. v. TEN HILLS CORPORATION.
• Court: Maryland Court of Appeals

5 A.2d 830

176 Md. 444

TEN HILLS CO. v. TEN HILLS CORPORATION.

No. 7.

Court of Appeals of Maryland

April 26, 1939

Appeal from Circuit Court of Baltimore City; Samuel K. Dennis Judge.

Suit in equity by the Ten Hills Corporation against the Ten Hills Company, a body corporate, to foreclose a mortgage. From an order overruling defendant's exceptions to and ratifying a trustee's sale of mortgaged property, defendant appeals.

Affirmed.

Eldridge Hood Young, of Baltimore (Grymes & Hofferbert and Young & Crothers, all of Baltimore, on the brief), for appellant.

Harry E. Karr, of Baltimore (Richard M. Carlin, of Baltimore, on the brief), for appellee.

Argued before BOND, C.J., and OFFUTT, PARKE, SLOAN, MITCHELL SHEHAN, JOHNSON, and DELAPLAINE, JJ.

OFFUTT, Judge.

Under and by virtue of a consent decree passed in the mortgage foreclosure proceeding of the Ten Hills Corporation against the Ten Hills Company by the Circuit Court of Baltimore City Harry E. Karr was appointed a trustee to sell the mortgaged property which comprised a number of unimproved and vacant lots lying in Ten Hills, a suburban development in the Northwestern section of Baltimore City.

Acting under that authority the trustee advertised and sold the property to Florence H. Caughy for $18,000, subject, however, to a prior mortgage on which there was then due a balance of $20,751.37. Exceptions filed to that sale were sustained and the sale set aside. Thereupon the trustee again advertised the property and on September 6, 1938, sold it at a public auction held on the premises to Florence H. Caughy, for $18,000, subject to the lien of the prior mortgage. The Ten Hills Company, mortgagor, excepted to that sale on the grounds, (1) that the sale price was grossly inadequate, (2) that the property was inadequately and insufficiently advertised, (3) that the advertisement and plats exhibited in connection therewith were misleading, confusing and did not accurately describe the property, (4) that the terms of sale were incompatible with any fair sale of the property, (5) that the property should have been offered first by lots and then as an entirety, and (6) that the property was subject to certain beneficial restrictions not shown by the advertisement nor announced at the sale.

Evidence was offered in connection with the exceptions, the parties heard, the case submitted, the exceptions overruled, and the sale ratified. This appeal is from that order.

The mortgaged property included more than fifty lots identified on certain plats by number and section, and no description of them would have been intelligible without reference to those plats, or to other plats based on them identifying the relative locations of the lots. In the advertisement of the first sale, which was set aside, reference was made to plats, but no adequate information as to where those plats were to be found was given. In the advertisement of the second sale, that under consideration, the advertisement itself included a plat showing the location of the lots to be sold, and provision was made for making all other plats referred to in the description of the lots available to persons interested in the sale.

The second mortgage dated March 6, 1929, which was guaranteed by Herman A. John and Anne S. John, provided that each of the lots described therein would be released from its operation upon the payment to the mortgagee of $500 in the first year of the mortgage, or of $750 during any year thereafter, and while the first mortgage was not in evidence, there was testimony that each of the lots covered by it would be released upon the payment of $1200. Before the foreclosure proceeding certain of the mortgaged lots had been released from the operation of the second mortgage, so that the trustee was only authorized to sell the lots which had not been so released. Because of the number of the lots, their relative location, the fact that some of them were parts of larger lots, and of the location of the releassed lots, the description of the mortgaged property found in the mortgage, would not have informed a prospective purchaser of the location and extent of the property to be sold, nor would any verbal description of reasonable length have afforded that information unless supplemented by a plat.

Although the mortgaged property is described as divided into lots identified by number and section delineated on plats recorded and unrecorded which also indicate the existence of certain roads, or streets adjacent to them, there is nothing on the ground itself to show with any certainty the separation of the lots, or the location of the roads or streets. The land itself was overgrown with weeds and bushes, and apart from the plats and separate surveys it would apparently have been difficult if not impossible to identify the several lots.

Turning now to the exceptions it may be said by way of premise that the burden was not on the trustee to show that the sale was valid, but upon the exceptant to show that it was invalid, Webster v. Archer, Md., 4 A.2d 434, 437.

In their order the first exception is on the ground that the sale price was grossly inadequate. The answer to that objection is that mere inadequacy of price unless it be so glaring and palpable as to indicate fraud or unfairness, or suggest that the trustee lacked the judgment and skill necessary to any adequate administration of the duties of his office, Righter v. Clayton, 173 Md. 138, 144, 194 A. 819, Harvey v. Savings Bank, 170 Md. 295, 297, 184 A. 228, will not be accepted as sufficient ground to set aside a sale fairly made, and there is not the slightest evidence in this case that the selling price reported by the trustee was inadequate, but on the other hand a fair inference from the evidence is that it represented the fair value of the mortgaged property. The mortgagor made no bid on the property at the sale, it made no offer at the hearing although invited to do so, it named no one who would pay more for the property than the price reported by the trustee, it offered no evidence to show that the property was worth more than that price, and although it had been given every opportunity to do so, it had not apparently been able to sell the property for a better price before the foreclosure.

The second and third exceptions present the objection that the sale was not adequately advertised. In the absence of any showing of prejudice, courts will not be inclined to interfere with a sale fairly made because of trivial discrepancies or inconsequential errors, nevertheless since the object and purpose of the advertisement required by the decree was to apprise the mortgagor of the proposed sale of the mortgaged property, and to give to the public such notice thereof that persons who might be interested in purchasing such property as that to be sold might know of the sale and have an opportunity of bidding on the property, any error or omission

in the advertisement substantial enough to mislead the mortgagor or possible bidders would have vitiated the sale. Cases illustrating the application of that rule are Kauffman v. Walker, 9 Md. 229, Richardson v. Simpson, 82 Md. 155, 33 A. 457, Reeside v. Peter, 33 Md. 120, Carroll v. Hutton, 88 Md. 676, 682, 41 A. 1081, Hebb v. Mason, 143 Md. 345, 354, 122 A. 318, Waters v. Prettyman, 165 Md. 70, 74, 166 A. 431, Long v. Worden, 148 Md. 115, 118, 128 A. 745, where sales were set aside because errors in the advertisement were regarded as too substantial to permit the inference that they were not prejudicial, Dickerson v. Small, 64 Md. 395, 397, 1 A. 870, Cooper v. Holmes, 71 Md. 20, 17 A. 711, Stevens v. Bond, 44 Md. 506, 507, Brooks v. Hays, 24 Md. 507, where errors and discrepancies in the advertisement were treated as insufficient to require the sale to be set aside. For a discussion of the rule see Kauffman v. Walker, supra, Alexander v. Walter, 8 Gill 239, White v. Malcolm, 15 Md. 529, Wood v. Patterson, 4 Md.Ch. 335, Patterson v. Miller, 52 Md. 388, Warehime v. Bldg. Ass'n, 44 Md. 512, Dircks v. Logsdon, 59 Md. 173, Mahoney v. Mackubin, 52 Md. 357, South Baltimore, etc., Co. v. Kirby, 89 Md. 52, 59, 42 A. 913, Holton Park Co. v. Gary, 133 Md. 509, 105 A. 751, 41 C.J. 952, Jones on Mortgages sec. 1840, Wiltse on Mortg. Foreclosure sec. 929.

Upon these cases and texts the rule may be assumed that a valid notice of a mortgage sale must itself so describe the property that the buying public may identify it and be informed of its location, area, nature and improvements, or be referred by the notice to some available source of information where knowledge of those facts may be had.

Necessarily there can be no arbitrary rule of thumb for determining in a given case whether an error in the description of the property given by the notice is so inaccurate or misleading as to either mislead the mortgagor or the buying public, or fail to inform them in language which a person of ordinary intelligence may understand of the identity of the property to be sold, but that question must be decided upon the facts peculiar to the case interpreted in the light of practical common sense. So in Fenner v. Tucker, 6 R.I. 551, it was held that a notice which described the land to be sold as containing twice its actual area was sufficient to avoid the sale, because persons who might want to bid on a lot of the size of that which the trustee was authorized to sell might not be interested in a lot twice its size although the same court in sustaining a sale made in pursuance of an advertisement which contained an unimportant misstatement said: 'It is well settled that mere non-prejudicial inaccuracies or irregularities in the notice or conduct of a sale under a power in a mortgage will not vitiate a sale. Newman v....