Bilbrey v. Strahorn , 153 Md. 491 ( 1927 )

While I do not understand that the majority of the court agree that is so, it seems to me that the full purport of their decision must be that, whenever a second sale is found necessary upon any one of the possible grounds of exception to a sale, after report of foreclosure under a power, it must be made by the court as vendor, and no longer under the power of sale with its ordinary incidents, upon which the proceeding started and has been based up to that time. For either the resale is made under the power, with all the freedom which derivation from that source gives, or it is made by the court with no freedom in its selling agent or trustee except such as is given by orders of court. There is no middle ground. The sale is made by the court or is not made by the court as vendor. And it is only when a sale is made by the court as vendor that the selling agent would be restricted as the assignee is found to have been in this case. I do not see that this transformation of the proceeding necessarily follows from the mere fact that, when such a sale is reported for the usual ratification and distribution of the purchase money, the court must proceed just as it does in winding up the results of sale made by itself under a decree for sale. There is nothing in the statute which says that its jurisdiction for ratification and distribution so shifts the proceeding to a new foundation, or is anything more than the orderly consummation of the proceeding under the power. And there is nothing in the mere fact that the court takes jurisdiction in the course of the proceeding for foreclosure, which necessitates its taking entire charge of the foreclosure, to the extent of denying any right to continue in the full exercise of the power if found necessary or desirable. The order for resale is not included in the record in this case, but from the fact that the resale was advertised by the appellee as assignee under the power, it would appear that it was ordered to be so made. Suppose the first sale should be set aside because it was found that the terms of the power had not been exactly complied with, must the court of equity still take over the selling and foreclosure itself in order to have the terms complied with? Or, with the sale converted into one by the court as vendor, may it disregard any terms attached to the power from that time on? I do not see sufficient reason for holding that the court must, whether the facts of a particular case seem to require it or not, compel a mortgagee to forego the exercise of the power of sale given him by the mortgage.

The rule seems to be that a court of equity may take jurisdiction of a foreclosure for such purpose as the substitution of a trustee for foreclosure, without detracting from the right to the exercise of the power. Jones onMortgages, sec. 1775, says: "The sale is by virtue of the power and not of the decree when the court enforces the power. Upon the death of the trustee named in the deed of trust, a court of equity has power to appoint a new trustee to execute the power of sale, and to determine the amount of debt secured by the trust; but a sale by such trustee professedly by virtue of the trust deed made in pursuance of such decree, is not a sale made under a decree of foreclosure, but one made by virtue of the power in the trust deed." And there seems to be no more reason for regarding the foreclosure as shifted to a new foundation, just because the court has charge of ratification of the sale, and distribution in ordinary course.

Section 10 of article 66 of the Code, the next section following that from which the majority infers that a second sale must be made by the court after a first one reported has failed, provides that "if such sale be set aside by the court, a resale may be ordered to be made by the party who made the previous sale, or the court may, if justice requires it, appoint a trustee to sell the same." And this seems to contemplate a resale under the power if the court does not find it unjust to do so.

In Reeside v. Peter, 35 Md. 220, 222, this Court held that, after a sale under a power had been reported to the court and set aside, the trustee named in the power could make the resale under the power without any order of court at all. "It would certainly be a safer and better practice to obtain such order," said Chief Judge Bartol, "but the resale would not be invalid without it, nor is the want of it a good ground for setting the sale aside, if it be fairly made and free from objection on other accounts. The power to sell in this case is not derived from the court, but from the deed, and as it may be exercised in the first instance, and the property sold without the court's order, so may it be resold without such order, where the first sale has been set aside." And here we seem to have a clear decision that the court could order a sale under the power, as well as under a decree. Judge Bartol says it would be a safer and better practice to obtain the order which in the present case is found, in effect, as I see it, not permissible or feasible, once the foreclosure under the power is brought into the court for ratification.

The conclusion of the majority would, as I see it, logically deprive a mortgagee of the right, after a resale has been ordered, to enter into a contract with the mortgagor, looking to the avoidance of a second sale, without permission of the court. But it was held in Stratmann v. Haile, 142 Md. 32, that a mortgagee could, without an order of court, dismiss the proceedings, after the setting aside of a sale under a power and after an order for a resale, without losing the right, subsequently, to sell under the power.

The trial judge would seem to be right in his conclusion that the claims of the exceptant for repayment did not involve any objections to the account distributing the purchase money, unless it be to the item of interest charged and distributed in that account. The accounting was one between the mortgagor and the mortgagee, and was, as this Court said in Boteler v. Beall, 7 G. J. 389, 397, "a matter in which the purchaser has no interest and unless for some special reason he be made so, * * * is no party." In Hadaway v. Hynson, 89 Md. 305, 314, the Court said, "The sale having been ratified, the court has now jurisdiction to distribute the proceeds of sale according to the principles of equity, but it has no authority to entertain and decide issues not relating to the mortgage debt, and not arising between parties to that instrument or their assignees." In the case at bar, the claims presented by the appellant's exceptions had nothing to do with the mortgage debt or the proceeds of sale being distributed, and raised no objections to that distribution, unless the demand for a refund of the interest paid be considered as an objection to the distribution of that item. The amount was distributed to the mortgagee and creditors intervening, there being insufficient assets for payment of all the creditors. There would seem to be an entire absence of objection to the account now excepted to, and no apparent reason for not ratifying it, and then letting the appellant proceed with his own claims separately, as the trial court left him to do.

It appears from the record that, in entering into the agreement with the purchaser, Strahorn was not acting as an officer of the court, but as agent of the mortgagor, who, in my opinion, had the right, as a consideration for stopping the resale, to exact from the purchaser an agreement on his part to assume the burden of fees, which otherwise the mortgagee would have been liable for to Strahorn for services which the mortgagee had been required to engage by reason of the obstacle interposed by the purchaser.

Chief Judge Bond authorizes me to say that he himself concurs in these views.