Thomas v. Dore
| Decision Date | 04 December 2008 |
| Docket Number | No. 2268, September Term, 2007.,2268, September Term, 2007. |
| Citation | 183 Md. App. 388,961 A.2d 655 |
| Parties | Sumesh THOMAS v. Thomas P. DORE, et al. |
| Court | Court of Special Appeals of Maryland |
Although the general rule is that if the purchaser of a property at a foreclosure sale fails to make timely payment of the purchase price he thereby becomes obligated to pay interest on the unpaid balance, there have evolved at least three recognized exemptions from the strict application of that general rule. The question before us on this appeal is whether a purchaser's possible entitlement to one of those exemptions can be irretrievably contracted away in the very act of making the successful bid on the property.
The appellant, Sumesh Thomas, on November 29, 2006, purchased the property known as 2350 Sundew Terrace in Baltimore City at a foreclosure sale. The court-appointed substitute trustees who presided over the sale are formally listed as the lead appellees on this appeal. They have not, however, filed an appellate brief and are not participating in the appeal. The sale was timely reported to the Circuit Court for Baltimore City by the trustees on December 7, 2006. Maryland Rule of Procedure 14-305(a). A Notice of Report of Sale was duly issued by the clerk of the court, indicating that unless good cause to the contrary were shown by January 7, 2007, the sale of the property would be ratified by the court. Rule 14-305(c).
It has been recognized for well over a century and a half that the date when a contract of sale in a foreclosure proceeding becomes effective is the date when the court officially ratifies the sale. It is then or at some designated time shortly thereafter that the payment by the purchaser of any remaining unpaid purchase price becomes due. As the Court of Appeals stated in Wagner v. Cohen, 6 Gill 97, 102-03 (1847):
It is certainly true that a contract of sale made between the Court as the vendor of the property, through the agency of a trustee, and the purchaser, is never regarded as consummated until it has received the sanction and ratification of the Court.
(Emphasis supplied).
Updating Wagner v. Cohen by 109 years, Talbert v. Seek, 210 Md. 34, 43, 122 A.2d 469 (1956), similarly provided:
In all sales made under the authority of a decree of a court of equity, the court is the vendor, acting for and in behalf of all parties interested. The contract of sale is a transaction between the court as vendor, and the purchaser, and the contract is never regarded as consummated until it has received the sanction of the court. Before ratification the transaction is merely an offer to purchase which has not been accepted.
(Emphasis supplied). See also McCann v. McGinnis, 257 Md. 499, 505, 263 A.2d 536 (1970) (); Waters v. Prettyman, 165 Md. 70, 75, 166 A. 431 (1933) (); Hanover Fire Insurance Co. v. Alexander Brown & Sons, 77 Md. 64, 71, 25 A. 989 (1893) (); White v. Simard, 152 Md.App. 229, 240-43, 831 A.2d 517 (2003) (); Four Star Enters. Ltd. P'ship v. Council of Unit Owners of Carousel Ctr. Condo., Inc., 132 Md.App. 551, 563-64, 752 A.2d 1272 (2000) ().
In the ordinary course of events, ratification in this case would have been expected to occur on January 8, 2007, and the appellant would have been required to go to settlement within 20 days thereafter and at that settlement to have paid to the trustees the $71,000 remaining due on the purchase price, a deposit of $5,000 having already been paid. For reasons to be discussed, the ratification did not take place on January 8, 2007, but was delayed until March 23, 2007. The ultimate settlement was thereby pushed back to April 12, 2007.
The reason for the delay in ratification was that on December 19, 2006, Bannister Lee Raines, Jr., the former owner and mortgagor of the property, filed exceptions to the foreclosure sale. Rule 14-305(d)(1). The trustees filed a Response on January 2, 2007, arguing that the exceptions showed no grounds for setting aside the foreclosure. A hearing was held in the circuit court on the exceptions on March 23, 2007. The exceptions were overruled and the sale of the property was ratified on that date. Rule 14-305(d)(2).
The appellant subsequently filed a Motion for Equitable Abatement of Purchase Price. The appellant has not informed us of the precise date on which that motion was filed. All we have is a Certificate of Service indicating that copies of the motion were mailed to the appellees and to the former owner of the property on April 17, 2007. The motion sought an equitable abatement of late charges imposed on the appellant between January 8, 2007 and March 23, 2007, the day the sale was finally ratified. No issue was raised in the circuit court with respect to the timeliness of the filing of the motion, however, and that is not an issue before us.
In addition to seeking an abatement of interest due on the remainder of the purchase price, the motion also sought to include an abatement of a variety of other late charges, such as escrow advances, corporate advances for prior legal fees, property taxes, and condominium assessments. The ultimate disposition of the motion, however, dealt exclusively with the issue of the abatement of interest payments on the unpaid balance of the purchase price, and our analysis will be confined to that single issue. The appellant's motion stated his basic argument.
5. The Purchaser had been ready to settle on the property upon ratification of the sale, which should have occurred on or about January 7, 2007.
6. The Purchaser, through no fault of his own, was substantially delayed in completing the purchase of the property because of the delays of this Court in ratifying the sale caused by the Defendant. The Defendant should not profit by a delay which was caused by him. Interest on the bid price and taxes should be abated from the anticipated ratification date to the actual date of ratification.
7. When the purchaser at a judicial sale is prevented from settling with the Substitute Trustees through no fault of his own, the Court may equitably abate the interest on the unpaid balance of the purchase price and taxes when such delay in settlement is caused by the conduct of other persons beyond the power of the purchaser to control or ameliorate, such as the delays in this case occasioned by the exceptions filed by the Defendant.
(Emphasis supplied).
It is appropriate at this point to turn to the Maryland caselaw concerning the possible abatement of interest payments occasioned by a delay in settlement following a foreclosure sale. As early as 1830, Brown v. Wallace, 2 Bland 585, 594, first stated the general rule as one "of ancient lineage" in the courts of chancery:
(Emphasis supplied).
Latrobe and Whistler v. Winans, 89 Md. 636, 655, 43 A. 829 (1899), made it clear that the purchaser of a property is obliged to pay interest during any period of delay in settlement if the purchaser was the party responsible for the delay. The obligation to pay interest was thus treated as a contingent one.
"If the delay in completing the contract be attributable to the purchaser, he will be obliged to pay interest on the purchase money from the time the contract ought to have been carried into effect...."
(Emphasis supplied).
In Leviness v. Consolidated Gas Company, 114 Md. 559, 80 A. 304 (1911), a scheduled settlement was delayed by the necessity of obtaining a judicial decision as to whether there was a good and marketable title to the property. The purchaser argued that, the general rule notwithstanding, he should not be charged with interest on the unpaid purchase price until the judicial decision made it clear that the title was good. The Court of Appeals accordingly exempted the purchaser from the obligation to pay interest, saying at 114 Md. at 573:
The sale here involved was made on April 13, 1910, and $5,000.00 of the purchase money was paid at that time. It was agreed that the balance of the price should be paid two months later upon the conveyance of a "good and merchantable title to the vendee in fee simple." The decree below required the purchaser to pay the $45,000.00 balance of the purchase money ... but interest was allowed the plaintiff only from the date of the decree.... The appellants urge that as these proceedings were necessary to make the title good and marketable, ... they request that the ... interest be adjusted as of the date of the decree in this Court. In our judgment, it is equitable, under the circumstances of the case that the dispositions thus proposed as to interest ... should be adopted, and we will decree accordingly.
(Emphasis supplied).
Oldenburg v. Regester, 118 Md. 394, 85 A. 411 (1912), reiterated that the general rule...
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