55 Md. 547 | Md. | 1881
delivered the opinion of the Court.
This appeal is taken from two decrees of the Circuit Court for Montgomery County, sitting in equity, and the questions'presen ted are as to the priorities of the respective claimants in the distribution of the proceeds of the sales of the propérty decreed to be sold.
It appears from the record that on the first day of July in the year 1868, the Maryland Freestone Mining and Manufacturing Company of Montgomery County, Maryland, a corporation under the general incorporation laws of this State, made and executed coupon bonds, each for the sum of five hundred dollars, to the amount of one hundred thousand dollars, payable at the First National Bank of Washington City in the District of Columbia, on the first day of January, in the year 1881, with interest at six per cent., payable at the same bank in gold coin semi-annually on the first days of January and July in each year, and at the same time executed a mortgage of all the property of the Company to secure the payment of the bonds and coupons so issued, at the times and in the order they might respectively become due and payable. On the first day of January in the year 1870, the said corporation made and executed a second series of coupon bonds of the same denomination as those of the first series and to the amount of one hundred thousand dollars, payable on the fii’st day of January, 1885, at the same bank, with the same interest payable on the same dates and in all other respects like those of the first series, and to secure the payment of them a "second mortgage of the same property as that covered by the first deed, was executed by the corporation.
On the 30th day of October in the year 1872, the corporation executed a mortgage of the same property to Henry C. Swain and William M. Tenney, as trustees, to secure the payment of two promissory notes of even date with the mortgage, one in favor of John L. Kidwell for
On the 28th of March, in the year 1873, Upton Darby obtained, in the Circuit Court for Montgomery County, a judgment against the corporation for the sum of $1179.07, with interest and costs, and issued execution thereon, which was levied on the lands and personal estate of the corporation; and afterwards on the 26th day of August, 1873, assigned the same to Charles W. Hayden, who was then the president and- general manager of the corporation.
On the 14th day of October, 1874, Joseph A. Blunden sued out and levied an attachment on the property of the corporation for the sum of $3687.72, with interest and costs.
Some time in the autumn of 1874 it was discovered that all three of these mortgages were defective in consequence of their not having been acknowledged in accordance with the requirements of the Code and not having the affidavit as required by the 29th section of Article 25, and not having the corporate seal affixed. On the 12th day of October, 1874, the corporation adopted a resolution authorizing and directing confirmatory deeds to be executed, confirming all that was contained in each of the original deeds, as of and from their dates, and that they should be recorded according to their original priorities. Deeds were accordingly executed and acknowledged on the 16th, 19th and 20th October, respectively, and recorded, the first on the 20th and the other two on the 22nd of October. These last three deeds were executed and acknowledged in conformity with the provisions of the Code.
Default having been made in the payment of the coupons of the first series of bonds, Joseph T. Brown, the
1st. The costs of the proceedings in the cause, including trustees’ commissions.
2nd. Darby’s judgment, interest and costs.
3rd. Blunden’s judgment, interest and costs.
4th. Offutt’s $5000 second mortgage bonds, with the coupons belonging to them and overdue at time of sale of the property.
5th. Overdue detached coupons of all bonds held and filed by parties other than the holders of the bonds.
6th. First series of bonds with the coupons overdue at time of the sale.
7th. Second series of bonds, (other than Offutt’s $5000,) including coupons overdue at time of sale.
8th. Kidwell’s and Cooke’s notes with interest.
9th. All other claims filed and proved.
Afterwards, on the 21st day of November, 1878, the Circuit- Court, upon petition filed to modify its decree, changed the fifth, sixth and seventh clauses of the decree so as to authorize payment to the coupon and bond holders, specified in said clauses respectively, who should he bona fide holders for valuable consideration. No question has been made in either the briefs or in the arguments of counsel as to the correctness of the decree in so far as it directs a sale of the property covered by the mortgages.
The only questions raised relate to the order in which the respective claims filed are entitled to he paid, and there is no question that the costs of the proceedings in this cause, and the trustees’ commissions are to he first paid out of the proceeds of sale.
The judgment of Darby was assigned to Hayden on the 26th day of August, 1873. It appears that in 1872 the
Darby is clearly entitled to priority over all other creditors of the corporation in the payment of his judgment less the sum of $185.79. This last amount was a debt which the corporation incurred after Darby, according to his own evidence, had heard, from common report, that the corporation had issued bonds and executed mortgages to secure them. Such common report was sufficient to put him upon inquiry, and had he made inquiry he would certainly have found that such bonds had been issued and mortgages executed and recorded; and though the latter were defective, actual notice of their existence would have been sufficient. Hayden, the assignee of the judgment, is therefore, entitled to a preference in the payment of said judgment less the sum of $185.79, part of said judgment.
The debt to Blunden was contracted before the mortgages of 1874 were recorded, and without notice of the previous defective mortgages, and his judgment is entitled to he paid next after the judgment of Hayden as above provided.
There is no evidence in the record that Offutt had any notice of the first series of bonds, or any actual notice of
When this case was before us at the April Term, we were of opinion that the detached coupons of both the first and second series of bonds, in the hands of tona fide holders for valuable consideration, were entitled to payment pari passu, next after the payment of the five bonds of the second series, in the hands of Offutt, and their coupons. Upon the re-argument we have been referred by the counsel of the respective parties to several authorities upon this point, and they have been carefully considered. Some of the cases referred to by the appellants, hold that an assignee of one or more of several notes, secured by mortgage, is entitled to a priority in payment out of the proceeds of a sale of the mortgaged premises over the assignor, the holder of the other mortgage notes, and it is therefore contended that, the assignees of the detached coupons, should also he preferred to the holders of the coupons attached to the same bonds in the hands of the holders of the bonds.- Whatever the law may he in other States, it has been settled in this State that the assignee of a mortgage note is not entitled to
Decree reversed and cause remanded.