«REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 1246 September Term, 2013 GREENTREE SERIES V, INC. v. C. LARRY HOFMEISTER, JR., ET AL. ...»
In Burson, the Substitute Trustees made an argument very similar to one considered and adopted by the trial court in the case sub judice. Both the trial court in the case at hand and the Substitute Trustees in Burson, relied on an excerpt from Simard v. White, 383 Md.
at 317, where the Court said that in a mortgage foreclosure “the underlying origins of the proper priorities to be applied to sums received at any foreclosure sale... have been for over two hundred years to primarily protect the interests of mortgagors and mortgagees.” In
Burson, the Court said:
Relying on our decision in Simard v. White, 383 Md. 257, 859 A.2d 168 (2004), the Trustees ask that we apply an interpretation of the rule that protects the interests of mortgagors and mortgagees. They aver that their interpretation, under which the original purchaser’s liability “continue[s] through multiple resales of the property,” best accomplishes this goal. To be sure, the interpretation advocated by the Trustee would enhance the likelihood that mortgagors and lenders would secure a full recovery from their loss caused by the original purchaser’s default, a desirable result. Yet, other considerations must be weighed.
424 Md. at 326 (footnote omitted).
Other considerations that must be weighed include: 1) principles of Maryland contract law that govern the appropriate measure of damages to be applied when a contract is breached (id. at 327-29), and 2) principles governing the interpretation of the Maryland Rules that are “in tune with logic and common sense.” Id. at 324. Based on Burson, we reject the trial court’s implied conclusion that, under Md. Rule 14-305(g), when determining the rights of a defaulting purchaser, the right of the mortgagor and mortgagee are always “paramount” to that of the defaulting purchaser.
Maryland Rule 14-305(g) was derived from former Rule BR6 c, which contained language very similar to that currently found in Md. Rule 14-305(g) except that Rule BR6 c used the phrase “may take such other action as justice may require” instead of “may take other appropriate action.” We see, however, no substantive difference between Rule BR6 c and Rule 14-305(g).4 In McCann v. McGinnis, 257 Md. 499 (1970), Judge Marvin Smith, speaking for the Court of Appeals, provided a brief historical review of the origin and history of Rule BR6 c
[Rule BR6 c] is a restatement of the preexisting statutory law found in Code (1957), Art. 16 § 163 prior to its repeal by Chapter 36, § 1 of the Laws of 1962. Merryman v. Bremmer, 250 Md. 1, 241 A.2d 558 (1968). That
section provided in pertinent part:
Although the statute referred to sales by trustees appointed by the court, it has been held to apply to sales under the power contained in a mortgage. Bilbrey v. Strahorn, 153 Md. 491, 495, 138 A. 343 (1927); Middendorf v. Baltimore Refrigerating and Heating Co., 117 Md. 17, 24, 82 A. 1047 (1911); Aukam v.
Zantzinger, 94 Md. 421, 427, 51 A. 93 (1902).
The statute remained unchanged from the time it was enacted as Code (1888), Art. 16, § 194, until its repeal. It was originally enacted as Chapter 216 of the Acts of 1841. The original enactment was altered when enacted as Code (1860), Art. 16, § 131 by the addition of the words “and enforce such order by execution.” Otherwise, there was no change after the 1841 enactment until the 1962 repeal.
257 Md. at 506-07. See also Simard v. Burson, supra, where this Court had occasion to once again examine the history of Md. Rule 14-305(g) and to apply it. 197 Md. App. at 407-418.
According to appellees, even though Md. Rule 14-305(g) uses the word “or,” a circuit court judge, when implementing that rule, has the discretion to order a forfeiture of the deposit [as other appropriate action] and order a resale of the Property at the risk and expense of the defaulting purchaser.
Webster’s Unabridged Dictionary of the English Language, page 1011 (1981) defines
or... conj. 1. (used to connect words, phrases, or clauses representing alternatives): to be or not to be. 2. (used to connect alternative terms for the same thing): the Hawaiian or Sandwich Islands. 3. (used in correlation) either... or; or... or; whether... or, 4. (used to correct or rephrase what was previously said): His autobiography, or rather memoirs is ready for publication....
In the context of Md. Rule 14-305(g) “or” is a word used to “connect words, phrases or clauses representing alternatives.” Therefore, a circuit court judge, acting pursuant to Md.
Rule 14-305(g), has the power to act only in the alternative. Examples as to when a judge might appropriately act in the alternative and not order a sale at the defaulting purchaser’s risk and expense were provided in McCann v. McGinnis, 257 Md. at 511. The McCann
Court, interpreting Md. Rule BR6 c, said:
That there may be situations in which it would not be just, wise or expedient to direct a resale at the risk of the original purchaser is recognized by the latter portion of Rule BR6 c which authorizes the court to “take such other action as justice may require.” It is possible to think of situations where justice would not require a resale at the risk of the purchaser as, for instance, in the case of insolvency of the purchaser that existed in Sloan v. Safe Dep. & Tr. Co., 73 Md. 239, 20 A. 922 (1890), to which the chancellor made reference, or where the purchaser was insane as in the sheriff’s sale in Cund[e]ll v. Haswell, 23 R.I. 508, 51 A. 426 (1902).
We hold that under Rule 14-305(g), a court cannot order A and B; it can only order A or B. Put another way, once the court selects one of two alternative remedies, it is not appropriate to award the second alternative remedy.5
The circuit court erred when it signed the order, docketed on February 10, 2012, that If the defaulting purchaser is believed by the circuit court to be insolvent, we can see situations where “other appropriate action” might be to allow the Trustee to resell the property at the Trustee’s own risk, but to allow any shortfall from the sale plus all costs and expenses to be paid out of the security deposit.
ordered a forfeiture of the deposit and a resale of the property at Greentree’s risk and expense. The court also erred when it, by an order docketed on August 12, 2013, affirmed the February 10, 2012 order and sustained the exceptions to the auditor’s final report.6 This case shall be remanded to the Circuit Court for Anne Arundel County with instruction to pass an order requiring that the proceeds of the second sale be allocated in accordance with the auditor’s final report.
Nothing in this opinion should be interpreted as preventing the Trustee or mortgagor, in the event of a default by a foreclosure sale purchaser, from utilizing the deposit to offset any losses occasioned by a resale.