Opinion
Decided June 24th, 1915.
Receivers and trustees named in mortgages.
In general, the mere appointment of receivers does not affect the lien of a mortgage. p. 562
Decided June 24th, 1915.
Appeal from the Circuit Court of Baltimore City. (DOBLER, J.)
The facts are stated in the opinion of the Court.
The cause was argued before BOYD, C.J., BRISCOE, BURKE, THOMAS, URNER, PATTISON, STOCKBRIDGE and CONSTABLE, JJ.
J. Edw. Tyler, Jr. (with whom was Edwin W. Wells on the brief), for the appellants.
D. List Warner and Harry E. Karr, for the appellee.
In the opinion of this Court filed February 10, 1915, in the case of the Manufacturers and Merchants Company v. Julius E. Pyles and Joseph B. Mitchell, Receivers, 125 Md. 317, the facts disclosed by the proceedings prior to the appointment of the receivers were fully stated. That was an appeal by the mortgagee, the appellee in this case, from the order appointing receivers for the property mentioned in the bill. We held, for the reasons stated in the opinion, that the appellant was not injured by the order appealed from, and the appeal for that reason was dismissed. In the course of the opinion we said that the bill upon which the receivers were appointed asked no relief against the appellant's mortgage; that the order appointing receivers did not affect the appellant's rights under the mortgage; that their appointment did not disturb or divest the lien of the mortgage; that the receivers held the property subject to the mortgage, and without the written consent of the mortgagee could sell only the equity of redemption. We further said that instead of appealing from the order the appellant should have applied to the Court for permission to sell the property, and if the Court had improperly refused the application it could have appealed; that upon the record as it then stood there was no reason to suppose that the Court would have denied the mortgagee permission to enforce whatever rights it may have had to collect the mortgage.
After the Court had dismissed the appeal, the mortgagee filed a petition in the receivership proceedings in which it was alleged that prior to the appointment of receivers it had instituted proceedings in Circuit Court No. 2 of Baltimore City to foreclose its mortgage; that receivers had applied to that Court for an injunction to restrain the petitioner from foreclosing the mortgage upon the ground that the mortgage had been invalidated by the institution of the proceedings for the appointment of receivers, and that an order nisi had been passed upon the petition. The petition of the appellant referred to the appeal in the former case and quoted from the opinion of this Court to show that its mortgage was not invalidated, or its rights thereunder in any manner impaired by the institution of the receivership case or by the appointment of receivers. It alleged "that since the date of the taking of the appeal, as aforesaid, no further proceedings have been taken by any of the parties to this case, and that the case as presented to this Court at the present time is based on the same pleadings and circumstances as was contained in the record upon which the appeal in this case was taken." It asked the Court to pass an order permitting it to foreclose the mortgage.
The answer of the receivers admitted that no further proceedings had been taken in the case since the prior appeal, except the filing of the petition by the mortgagee for permission to sell the property. It then recited the facts upon which the petition filed in Circuit Court No. 2 for an injunction to restrain the foreclosure of the mortgage was based, viz: That the mortgage was given pending the application for the appointment of receivers, and for that reason the trustees appointed to sell could not give a good title to the purchaser; that the property was in custodia legis, and could not be sold by any one but the receivers; that the original bill of complaint was filed and the defendant summoned before the execution of the mortgage; that this Court assumed in its opinion in the former case, without, however, so deciding, that the mortgage "was good until attacked and determined to be otherwise."
On March 10, 1915, the receivers petitioned the Court for authority to sell the property, and on the same day the Court passed two orders, — the first order dismissed the petition of the receivers which asked that they be authorized to sell the property, and the second granted permission to the appellant to foreclose its mortgage. This appeal was taken by the receivers from both orders.
We have referred with some particularity to the proceedings to show that nothing has occurred since the decision in the former appeal to affect the lien of the mortgage. No proceeding was taken to set it aside, and upon the facts as they existed at the date of the order authorizing the sale, — which were as regards the appellant's mortgage in no material respect different from those presented by the record in the former appeal, — the Court committed no error in passing that order.
We held in the prior case that the mere institution of a suit and the mere appointment of receivers did not affect the lien of the mortgage, and we see no occasion to change or modify that conclusion. Had proceedings been instituted, since that decision, to set aside or annul the mortgage a different situation would have been presented, and pending such proceedings the lower Court would have been fully justified in refusing to authorize the foreclosure of the mortgage. Having given the mortgagee permission to sell the property, the petition of the receivers for authority to sell was properly refused.
Orders affirmed, with costs.