Walker v. Stone

• Decision Date: 28 October 1863
• Citation: 20 Md. 195
• Parties: JERRY WALKER v. STEPHEN STONE, et al.
• Court: Maryland Court of Appeals

20 Md. 195

JERRY WALKER v. STEPHEN STONE, et al.

Court of Appeals of Maryland.

October 28, 1863

APPEAL from the Circuit Court for Baltimore City:

This is an appeal from an order of the Circuit Court for Baltimore City, dissolving an injunction granted by that Court upon the bill of complaint of the appellant, flled on the 31st of October 1862. The opinion of the Court below (KREBS, J.) will be found to contain a full statement of the pleadings and evidence in the cause and the questions arising therefrom:

" The relief prayed by the complainant in the bill filed in this case, is, that the Court will decree the proceeds of the sale lately made, of the furniture and effects of the Gilmor House, or so much thereof as may be necessary to be applied to the payment of his mortgage claim set up in the proceedings. This claim is made under a transfer by way of mortgage executed to him by the defendant Smith, of his interest in the furniture and effects of the said hotel establishment, then owned and conducted by him; subject however, to four previous mortgages to secure debts amounting altogether to nearly forty thousand dollars.

Three of these mortgages contain express grants of power to the mortgagees to sell the property mortgaged, upon default, on such terms as they may think proper, either at public or private sale. These mortgages being all forfeited, the mortgagees at private sale sold and transferred all the furniture and effects above mentioned, to the defendant Stone, by separate bills of sale, in which they respectively recited, that they had taken possession of the property and so sold it in pursuance of power and authority given to them respectively, in said mortgages. Stone having determined to close the establishment, advertised in three daily papers published in this city, a sale of the furniture and effects to take place in ten days after the first advertisement. The sale was made, and yielded about $14,805.72.

The complainant claims the right to have the sum of $5834.42 part of the proceeds of sale applied to the satisfaction of his mortgage. This right is claimed upon the ground, that the transaction between these several mortgagees and Stone, was a satisfaction and payment by him of their mortgage claims, and not a purchase or assignment by which he acquired their right as mortgagees or obtained a title to the property; and the complainant therefore insists, that there is now no obstacle to the satisfaction of his mortgage debt out of these sales, though they have not amounted to one half of the sum of the several mortgages that were prior to his. In his mortgage of this property it is expressly declared, that he is to have and to hold it, ‘ subject, nevertheless to the legal and equitable effect of the mortgages heretofore executed and recorded, upon the said goods and chattels.’ These mortgages include the four above referred to. Conceding that the sales made to Stone by these several mortgagees were irregular, and not made in such a manner as effectually to foreclose their mortgages, yet there can be no doubt that they had the effect of transferring to him their respective mortgage claims. In Hilliard on Mortgages, vol. 1, page 338, the author says: ‘ Although a sale made by a mortgagee is irregular, his deed operates as an assignment of the mortgage; ’ and in Olmsted vs. Elder, 2 Sandf. S.Ct. Rep., 325, the Court says: ‘ The deed was sufficient at least to transfer to the defendant the money due on the mortgage. The interest on the mortgage was in arrear, and the mortgagees were entitled to foreclose. The defendant occupies the position of a mortgagee in possession of the premises mortgaged, the money secured being due and unpaid.'

I am of opinion that this was the position in which Stone stood when he gave the public notice of the sale of his property in the newspapers of this city. He is to be regarded by a Court of Equity as the assignee of these mortgages, and the parties who had the right to redeem, having been for a long time in default, he was entitled upon such notice as he gave, to sell the property and to apply the proceeds to the satisfaction of the sums of money to secure which their mortgages had been given, for which purpose it was altogether insufficient. And further, I am of opinion that these transaction between Stone and these mortgagees had no such effect as is ascribed to them by the solicitor for the complainant. The payment by him of the moneys for which they executed these bills of sale by no means extinguished the mortgages. It is clearly settled in numerous cases that a payment made to a mortgagee by a third party, who is under no obligation by contract to pay the debts, will not operate as a satisfaction of it, unless it be manifestly the intention or interest of the party making the payment, that it should so operate. In Hilliard on Mortgages, 1 vol. 337, it is said the ‘ enquiry usually answered in this class of cases is whether a transaction shall operate as an assignment or a discharge of the mortgage, and that the intention or interest of the party will control the literal import of the word used.’ In McGiven vs. Wheelock, 7 Barb., 29, the Court say: ‘ Equity will sometimes keep alive a mortgage which has been substantially satisfied, but it is always for the advancement of justice.’ In Brown vs. Topham, 3 Cushing, 554, 555, Chief Justice Shaw says: ‘ Whether a given transaction shall be held in legal effect to operate as a payment and discharge, which extinguishes the mortgage, or as an assignment which preserves and keeps it on foot, does not so much depend upon the form of the word used, as upon the relation subsisting between the parties advancing the money and the party executing the transfer and release, and their relative duties. If the money advanced is by one whose duty it is by contract or otherwise, to pay and cancel the mortgage, it shall be held to be a release and not an assignment; when no such controlling obligation or duty exists, such an assignment, shall be held to constitute an extinguishment or an assignment according to the intent of the parties, and their respective interests on the subject will have a strong bearing on the question of such intent.’ Freeman vs. McGaw, 15 Pick, 82. Howard vs. Agry, 9 Mass., 179. Now it cannot be supposed that Stone, in taking a bill of sale of this furniture and effects from these mortgagees, and paying to them respectively the sums mentioned thereon as the consideration thereof, intended to pay off and extinguish the prior mortgages and thus let in that of the complainant. Nothing could have been more foreign from his purpose. He intended to conduct this establishment, and deemed it necessary to become the owner of the furniture and effects...