Union Trust Co. v. Biggs

• Decision Date: 08 April 1927
• Docket Number: 30.
• Citation: 137 A. 509,153 Md. 50
• Parties: UNION TRUST CO. v. BIGGS.
• Court: Maryland Court of Appeals

137 A. 509

153 Md. 50

UNION TRUST CO. v. BIGGS.

No. 30.

Court of Appeals of Maryland

April 8, 1927

Motion for Reargument Denied May 6, 1927.

Appeal from Circuit Court, Anne Arundel County; Robert Moss, Judge.

"To be officially reported."

Mortgage foreclosure proceeding, in which the Union Trust Company and Eleanor B. Biggs filed petitions for allowance of claims from surplus funds in the hands of the assignee of the mortgage after payment of the mortgage indebtedness. From a decree allowing the last-named petitioner's claim priority over that of the Trust Company, the latter appeals. Affirmed, and cause remanded.

Argued before BOND, C.J., and URNER, OFFUTT, DIGGES, PARKE, and SLOAN, JJ.

Ridgely P. Melvin, of Annapolis, and Walter H. Buck, of Baltimore for appellant.

Daniel R. Randall, of Baltimore, for appellee.

PARKE J.

On June 23, 1922, Eleanor B. Biggs caused to be issued out of the circuit court for Anne Arundel county an attachment against Mary W. F. Speers, a nonresident, on an alleged debt of $3,650, and the sheriff laid the attachment on the day of its issuance on certain land of the debtor, and made on that day the return of "property attached as per schedule and copy posted at Ct. House door," as appears from the docket entry in the attachment case. On the same day the short note case was docketed. Nothing was done in either case until October 9, 1922, when separate motions were made in the attachment case by the Speers Land & Clay Works, Inc., and by the debtor to quash the attachment. The ground upon which this corporation and the debtor intervened was that the latter had conveyed to the corporation on May 31, 1922, 100 acres of land of the tract of 152 then owned by the debtor and on which the attachment had been attempted to be levied. While these motions were filed separately, they were identical in the grounds assigned, which attacked the sufficiency of the affidavit of the cause of action of the short note case and of the description of the property scheduled, which denied the issuance of a summons for the defendant or an actual levy having been made upon the land and which asserted that, although the tract of land was occupied, the sheriff had falsely returned that no person was in possession. The next and final act of the parties in the attachment case was on November 9, 1922, when it was agreed in writing by the attaching creditor and debtor that the attachment should be released as to the 100 acres of land conveyed by the debtor to the corporate intervener before the attachment was issued, and that the attachment "is retained as a valid attachment against the remainder of the tract of which the said 100 acres was a part, to avail to the extent of the recovery, if any, of the plaintiff against the said Mary W. F. Speers in the case. Short note case No. 12 appearances October term, 1922, for trial at April term 1923. " This agreement contained a reference to the date and place of record of the deed for 100 acres, and was filed, with an order for a release of the 100 acres, on November 9, 1922.

No further action was had in the short note case until July 11, 1923, when the suit was tried and a verdict of $2,525.60 was rendered in favor of Eleanor B. Biggs against Mary W. F. Speers. The verdict was followed by a motion for a new trial, which was overruled, and judgment was extended on the verdict on March 19, 1924.

At the time the attachment was begun there was a mortgage lien upon the residue of the tract of land owned by Mary W. F. Speers, and, because of her default, foreclosure proceedings, under the power contained in the mortgage, were begun on February 28, 1923, by the assignee of the mortgagee, who made sale of the property and tiled his report of such sale on March 22, 1923, whereupon an order nisi was passed, and afterwards exceptions were filed to its ratification, but the sale was finally ratified on March 5, 1924, and later the funds became available for distribution. After the beginning of the foreclosure proceedings and after the assignee of mortgagee had filed his report of sale, the Union Trust Company of Maryland obtained on May 11, 1923, a judgment by confession against Mary W. F. Speers in the circuit court for Anne Arundel county for the sum of $812, with interest and costs of suit and counsel fees of $81.20.

The Union Trust Company and then Eleanor B. Biggs filed in the mortgage foreclosure proceedings their respective petitions to be allowed their claims out of the surplus funds remaining in the hands of the assignee of the mortgagee after the payment of the mortgage indebtedness, and the auditor gave preference to the judgment claim of the Union Trust Company, which left an insufficient residue to pay in full the Biggs claim The appellee excepted to the auditor's account and the chancellor decided that Eleanor B. Biggs was entitled to be allowed priority, and from this decree the Union Trust Company has appealed.

1. With the filing of his bond, the assignee of mortgagee assumed the discharge of the trust created by the power of sale contained in the mortgage, and, although the jurisdiction of equity did not become complete until the subsequent filing of his report of sale, yet the sale of the mortgaged premises under the power of sale in the mortgage deed virtually foreclosed the mortgage and divested all rights of redemption which had remained in the mortgagor until the sale. Warehime v. Carroll County Bldg. Ass'n, 44 Md. 512, 519; Berry v. Skinner, 30 Md. 567, 572, 574; Miller's Equity, § § 463, 466; Albert v. Hamilton, 76 Md. 304, 307, 25 A. 341. After the foreclosure sale the purchaser had the equitable interest in the land commensurate with that conveyed by the mortgage deed, and he was entitled to the legal title upon the final ratification of the sale by the court and the payment of the purchase money. The assignee, on the other hand, held the legal title in trust for the purchaser for the completion of the sale by its ratification, the satisfaction of the purchase price, and the delivery of the deed, subject to the right to enforce the payment of any of the purchase money by a resale at the risk of the buyer. So the whole beneficial ownership or estate of both the assignee and the mortgagor had passed from the land into the obligation of the purchaser to pay. In short, after the sale, equity regarded the property in the land as in the buyer, and the property or the price as in the assignee and mortgagor. It is true that the sale is incomplete until ratified by the court, and that the purchaser's title is an inchoate and equitable one from the day of sale until the final ratification, which, however, retroacts so that the purchaser is regarded by relation as the equitable owner from the time of the sale, and entitled to all the intermediate rents and profits of the estate. Although he thus becomes the substantial owner from the time of the sale and the property is at his gain if it appreciate and at his risk in case of loss by fire or through depreciation, yet, notwithstanding the purchase money be paid, the legal title of the purchaser does not vest until the deed to him is delivered, but, upon its delivery, this deed is not effective merely from the day of its execution, but vests the property in the purchaser from the day of sale. It follows that, after the day of sale, the mortgagor's equity of redemption generally ceases to exist as an interest in land. The day of sale, therefore, marked the close of the period in which any creditor could acquire a lien upon the mortgagor's interest in the mortgaged land or equity of redemption by simply obtaining a judgment against the mortgagor, since a judgment lien upon real estate or an equitable interest in land only exists because it gives the judgment creditor the right to make his debt out of the land or equitable interest in land of the judgment debtor with the correlative liability of such property of the debtor to be sold by way of execution for that purpose. The real and not the apparent rights of the judgment debtor in the property measures the rights of the judgment creditor. Davidson v. Myers, 24 Md. 538, 555, 556; Poe's Practice (Tiffany Ed.) § § 374, 375, 666; Miller's Equity, § § 453, 454, 463, 466, 498, 510, 512, 513; 1 Pomeroy's Equity Jurisprudence, § § 368, 372; Hampson v. Edelen, 2 Har. & J. 64, 66, and notes in Brantly Edition, 3 Am. Dec. 530; Jordan v. Reynolds, 105 Md. 288, 294, 66 A. 37, 9 L. R. A. (N. S.) 1026, 121 Am. St. Rep. 578, 12 Ann. Cas. 51; Sweet v. Jacocks, 6 Paige (N. Y.) 355, 362, 31 Am. Dec. 252;

2 Freeman on Judgments (5th Ed.) § 963, p. 2022; Gregory v. Chapman. 119 Md. 495, 503, 87 A. 523; Compare Werner v. Clark, 108 Md. 627, 71 A. 305, 28 L. R. A. (N. S.) 94.

What has been said in the course of this opinion is not in conflict with the recognized right of a judgment creditor who secures his judgment at any time after a sale of the mortgaged property and before a distribution of the funds, to acquire by attachment a lien on whatever residue of trust funds may remain belonging to the mortgagor after the payment of the mortgage debt and all prior claims. The appellant, in this case, did not resort to an attachment, and, as his judgment was obtained after the mortgaged property was sold at a sale later duly ratified by the court, and, therefore, at a time when the mortgagor's equitable estate had been determined, the appellant acquired no lien by his judgment on the mortgagor's interest in the obligation of the purchaser to pay the purchase...