Erb v. Grimes

50 A. 397, 94 Md. 92

• Court: Court of Appeals of Maryland
• Decided: November 5, 1901
• Status: Published

Opinion

Schmucker, J.,

delivered the opinion of the Court.

The appeal in this case was taken from an order of the Circuit Court for Carroll County finally ratifying the sale of a farm, located in that county, made by the appellee as assignee of a mortgage under the power of sale which it contained. Exceptions to the ratification of the sale were filed by the appellant upon various grounds, but only two of them were insisted upon at the hearing of the appeal. These two grounds of exception will be stated hereafter.

The mortgage in question was made,on February 3rd, 1877, by John T. Erb and his wife to Charles T. Reifsnider by .whom it was assigned on April 24th, 1882, to Apalonia Reifsnider and, she having died, it was assigned on January 10th, 1887, by her executor, John L. Reifsnider to the Westminster Savings Institution, and finally on July 25th, 1900, it was assigned by the Westminster Savings Bank to the appellee. The mortgage contained a power of sale, in case of default, in the usual form to the mortgagee, his heirs, executors, administrators and assigns.

The farm was conveyed, subject to the operation of the mortgage, by the mortgagor and his wife to the appellant on February 17th, 1879.

Default having occurred in the payment of the mortgage debt the appellee filed on the equity side of the Circuit Court the usual order to docket suit against the appellant accompanied by a bond, which the Clerk approved, and a certified copy of the mortgage with the several assignments endorsed thereon and the original single bill secured by the mortgage. He then made sale of the farm under the power contained in the mortgage and to the ratification of that sale the exceptions before us were filed.

The appellant in his exceptions does not deny the validity of the mortgage, nor does he claim that the debt secured by it has been paid. The two grounds of exception relied upon by him relate to alleged defects in the title of the appellee as assignee of the mortgage.

The first of these alleged defects is that the mortgage was never validly transferred from the Westminster Savings Institution to the Westminster Savings Bank, because the latter never had any legal corporate existence and therefore the assignment by it to the appellee conferred no title upon him. The second supposed defect concerns, strictly speaking, the regularity of the appellee’s proceedings in making the sale rather than the validity of his title to the mortgage itself. It is that the certificate of the Register of Wills of the issuing of letters testamentary on the estate of Apalonia Reifsnider to John L. Reifsnider was not filed in the mortgage proceedings until after the sale had been made. This latter ground of exception was not strenuously insisted upon in the argument of the case the substantial controversy being over the one first mentioned.

We will consider these grounds of exception in their inverse order.

It was not necessary for the appellee to file in the mortgage proceedings, in advance of making the sale, the certificate of the Register of Wills of the issue of letters testamentary to the executor of Apalonia Reifsnider. It may be a commendable practice for one about to make the sale authorized by Art. 66 of the Code of mortgaged property, under a power of sale, to file along with the bond required by section 7 of that Article, the original or certified copies of the documents constituting the evidence of his title, but the law does not require him to do so. As was said by this Court in Heider v. Bladen, 83 Md 243: “ The only preliminary requisite to a sale under this Article of the Code is set forth in the seventh section. It is there enacted that before the person duly authorized shall make, any such sale he shall give bond as provided in that section. Nothing else is required to be done as a condition precedent to the sale.”

We will now consider the merits of the exception chiefly relied upon by the appellants.

The Westminster Savings institution was incorporated on October 4th, 1869, under the provisions of Art. 23 of the Code then in force. The certificate used in effecting its incorporation stated that the terms of existence of the corporation was to be twenty-five years.

After the adoption of the present Code of 1888 the Savings Institution determined to embrace the opportunity thereby afforded and cause itself to be reincorporated in the manner prescribed in Art. 23. The requisite steps to that end as set forth in sections 81 to 84 of that Article were taken and a certificate of incorporation under the name of The Westminster Savings Bank was executed and, after having been submitted to the Chief Judge of the Circuit Court for Carroll County and by him certified to be in conformity with the provisions of the law authorizing the formation of the corporation, it was duly filed and recorded in the office of the Clerk of the Circuit Court. The only portions of this certificate of incorporation which are material to the present controversy are the declarations therein contained that the name of the new corporation shall be ‘ ‘ The Westminster Savings Bank ” and that the term of its existence shall be forty years. It is therefore unnecessary for us to set out the certificate at length or to state the remainder of its contents.

No assignment or formal transfer of the mortgage under consideration was ever made from the old corporation to the new one, but the latter body and the appellee as its assignee rely for title to the mortgage on the devolution thereof upon new corporation by force of the provisions of sec. 84 of Art. 23 of the Code. That section says that when the new cer tificate thereby contemplated has been duly certified by the Judge and recorded the corporation described therein shall be a body corporate in fact and in law under the name set forth in the certificate * * * “ and the former charter of said corporation shall be deemed to be thereupon surrendered and all of the property and assets belonging to the said former corporation of whatsoever nature and description shall, upon such recording as aforesaid, be devolved upon the said new corporation which shall for this purpose be regarded as substituted by operation of law in the room and stead of said former corporation.” These provisions are so full and explicit that if the Savings Institution in the present case was within the description of those designated by the Code as entitled to a re-incorporation thereunder and it complied with the terms of the law in the steps taken by it to accomplish its new incorporation, there is no room to doubt that the present mortgage and the debt thereby secured devolved upon and became the property of the new corporation prior to the assignment of them by it to the appellee.

Sec. 81 of Art. 23 in defining what organizations are intended to be embraced within its operation uses the following language: “Any corporation heretofore formed under the general laws of this State or under any special Act for any purpose for which a corporation may be formed under this Article may cause itself to be incorporated under this Article.” This description is certainly comprehensive enough, if it is to be understood in its ordinary sense, to include the Westminster Savings Institution which had been formed prior to the adoption of the present Code under the then existing general law of this State.

The appellant, however, contends that the present Code is merely a revision of the laws in force at the date of its adoption, and therefore expressions found in it relating to time should be referred to the respective dates of passage of those pre-existing laws. In that connection he insists that when sec. 81 of Art. 23 of the Code declares that corporations "heretofore formed" maybe re-incorporated under its pro vi sions it speaks as of the date of passage of the Act of 1868, ch. 471, upon which Art. 23 is based, and confers the privilege of re-incorporation only upon corporations created prior to that date. Of course if that contention be correct The Westminster Savings Bank has not been legally incorporated and the title to the mortgage in question never devolved upon it.

In support of his contention the appellant suggests that the evident purpose of permitting corporations created prior to the Act of 1868 to re-incorporate themselves under that Act was to give to them the benefit of its provisions and so place them upon an equality with such corporations as might thereafter be created under it, but that no such reason exists for allowing corporations created under the Act of 1868, as the Westminster Savings Institution was, to be re-incorporated under the Code, for they would thereby secure no advantage which they did not already possess under the Act of 1868. He further suggests that to give to corporations formed under either of these general laws the power to re-incorporate themselves would enable them not only to extend their existence beyond the limit of forty years but to perpetuate themselves and thus both defeat the settled policy of the law and nullify the express limitation to their duration which was imposed by the Act of 1868 and has been preserved by the amendments thereto .and by the Code itself.

We cannot yield our assent to these contentions of the appellant. The Code of 1888 is more than a mere arrangement or codification of the laws in force at the time of its adoption. It is expressly declared by the Act of 1888, ch. 74, to stand in lieu of and as a substitute for them, and it ■ has been so treated by this Court. McCracken v. State, 71 Md. 153; Trustees Western Md. College v. McKinstry, 75 Md. 191. It should therefore be primarily construed according to the natural and ordinary meaning of its own language if that be clear rather than by reference to earlier laws. It is true that, as was said by this Court in Roland Park v. State, 80 Md. 451, cited on the appellant’s brief, “ The mere words which the Legislature may use are not always controlling. If the obvious purpose of an enactment is beyond the literal meaning of the language employed it will not be restricted in its scope * * * The real intent when ascertained will always prevail over the literal sense of the language.” We have also held in other cases that every part of an Act as well as the cause or necessity for making it or even foreign circumstances would be considered in order to ascertain the intent of the Legislature. Frazier v. Warfield, 13 Md. 301; Gill & Fisher v. Cacy, 49 Md. 246; Johnson v. Heald, 33 Md. 352.

The language of sec. 81 of Art. 23 of the Code, which forms the context of the expression “heretofore formed” is in our judgment clear and manifests no. purpose on the part of the Legislature to go beyond or depart from its ordinary and literal meaning, but if we inquire into the cause and necessity for the use of that expression in the section referred to we see no reason to modify or restrict its usual significance and make it include only such corporations as were created prior to the Act of 1868.

The reason why the Legislature permitted corporations formed prior to the Act of 1868, ch. 471, to be re-incorporated under that Act could not have been merely t'o give them the advantages secured by its provisions. Sec. 216 of the Act substantially accomplished that purpose for such corporations without reorganization, just as sec. 303 of Art. 23 of the Code does for corporations existing at the time of its adoption. Nor is the present policy of the law any more averse to facilitating the reorganization or the continuation of the existence of corporations than it is to providing a convenient system for their original formation.

When under the then existing condition of the law a corporate charter possessed all of the elements of a contract between the State and the corporation and could not be altered without the consent of both parties to it, public policy required that the duration of corporate bodies should be limited. But since the State has by the terms of its Constitution reserved to itself the right to alter or amend at will all future corporate charters whether formed under general laws or granted by special act, public policy has undergone a corresponding modification and every facility is now afforded to the citizens of the State to avail themselves of the supposed benefits of corporate organization in an easy and convenient manner. Hughes v. Antietam Co., 34 Md. 324.

The Legislature in adopting the present Code frequently changed the language of the existing law when it was desired to preserve the original signification of words or expressions found therein importing limitations of time. For example ‘‘ hereafter executed” relating to deeds found in ch. 236 of the Acts of 1886 appears in sec. 83 of Art. 21 of the Code as “executed after the 7 th day-of April 1886,” and the expression “ Previous to the passage of this Act ” relating to creditors of a grantor or mortgagor which appears in the Act of 1888, ch. 485 is changed, in sec. 82, of the same Article of the Code, to “previous to the 5th day of April, 1881.” So the words “ hereafter made ” relating to leases, found in ch. 485, of the Act of 1884, and ch. 395 of the Acts of 1888, respectively appear in sec. 85 of Art. 21 of the Code as “between the 8th day of April, 1884, and the 5th day of April, 1888,” and “after April 5th, 1888.” Similar changes of expression are found in other parts of the Code, which were evidently inserted there for the purpose of carrying out a like intention. When, therefore, we find the expression “any corporation heretofore formed ” retained without change in sec. 81 of Art. 23 of the Code the presumption is that the Legislature did not intend it to refer only to corporations formed prior to the Act of 1868, which formed the basis of that section. There is nothing in the present record to change this presumption.

If the restricted meaning contended for by the appellant were to be given to the words “heretofore formed” it would follow that a corporation whose term of existence was about to expire could be re-incorporated under Article 23 of the Code and its term of existence extended for forty years, provided it has been originally formed prior to 1868, but it would be denied that privilege if it had been formed since that date. There has been a great development of corporate activity in recent years and the corporations created in this State since 1868 doubtless far outnumber those existing at that time. It would involve a violent assumption to ascribe to the Legislature an intention to exclude all of these recent companies from the benefits of reorganization under the Code and to limit that valuable privilege to the relatively few which were formed many years ago.

The appellant also contended in the argument on the appeal that The Westminster Savings Bank was not validly incorporated for the reason that its name was different from that of the Savings Institution whose successor it claims to be, and also because the name of Carroll County in which it was formed did not form part of its official title. The Code does not require a corporation when it avails itself of the privilege of reincorporation to continue to use identically the same name which it originally bore. On the contrary the fact that sec. 83 of Art. 23 requires the certificate of re-incorporation to state both “ the proposed name of the new corporation” and “the former name of said corporation” indicates that it was the purpose of the Legislature to permit modifications of the corporate name to be made in the process of re-incorporation.

The obvious purpose of the requirement of Art. 23 of the Code, that the name of a corporation created under it shall always include the name of the county or city in which it is formed, was that the corporate name itself may indicate to persons dealing with the corporation the place of its location and the Judicial Circuit in which its charter and other papers required by law to be recorded may be found. When the corporation is formed in a well-known city, such as Westminster is, the name of that city answers the purpose of the law quite as fully as the name of the county in which it is located would, and it is therefore not necessary to construe the word city appearing in Art. 23 of the Code in that connection as meaning only Baltimore City. When the city of Baltimore alone is referred to in that Article it is ordinarily described as “Baltimore City” or “the city of Baltimore.” The appellee on his brief refers to sixteen distinct sections of the Article in which that designation is used and we have verified his references and find them to be correct.

(Decided November 22nd, 1901.)

We do not consider the objections of the appellant to the corporate existence of the Westminster Savings Bank tenable but we regard its incorporation as valid and effectual.

It follows that the title to the Erb mortgage and the debt thereby secured devolved upon that Bank at its formation and passed to the appellee under the assignment from it to him appearing in the record. The power of sale contained in the mortgage passed to him in like manner and he was authorized to make the sale to the ratification of which the appellant excepted.

The order appealed from will be affirmed.

Order affirmed with costs.