Simard v. White
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David J. S imard v. E lizabeth A. W hite, et al. No. 96, September Term, 2003 Headnote: The proposition that a defaulting purchaser at a mortgage foreclosure sale is entitled to receiv e the ex cess fu nds, (i.e., the difference of the bid price at a resale above the bid price at the original sale) from a resale of the property is not the com mon-law of Ma ryland. A def aulting purc haser norm ally will not be entitled to reim burseme nt for impro vements a nd/or repairs to the property absent fraud or extraordinary circumstances. Circuit Co urt for Prince George s County Case #CAE99-04205 IN THE COURT OF APPEALS OF MARYLAND No. 96 September Term, 2003 David J. Simard v. Elizab eth A. W hite, et al. Bell, C.J. Raker Wilner Cathell Harrell Battaglia Eldridge, John C. (retired, specially assigned), JJ. Opinion by Cathell, J. Filed: October 7, 2004 This case arises out of conflicting claims to the excess funds1 resulting from a resale after a purcha ser d efau lted i n a prior f orec losu re pr ocee ding in respec t to prope rty located in Prin ce G eorg e s C ounty. 2 David J. Simard, petitioner, the original and subsequent purchaser, challenges a Court of Special Appeals decision allowing the contractual waiver of petitioner s alleged common-law entitlement to the excess of proceeds from a property s resale. Elizabeth A. White, Nancy P. Regelin and Patrick M. Martyn (hereinafter, the Trustees ), together with Washington Mutual Bank, FA, a successor to Home Savings of America, F.S.B. (hereinafter, the Len der ), the h olde r of a note secu red b y a Deed of Trust from Theodore B. McCann are the respondents. 3 The interm ediate appe llate court s decision overturned the decision of the Circuit Court for Prince George s County, which had sustained petitioner s exceptions to an Audito r s Rep ort follo wing th e resale of the p roperty. See Wh ite v. Simard, 152 Md. A pp. 229, 831 A .2d 517 (2003). Petitioner filed a Petition for Writ of Certiorari and this Court granted it on December 18, 2003. Simard v . White, 378 Md. 617, 837 A.2d 928 (2003). The sole question petitioner initially presented for our review asks: 1 By excess funds or excess proceeds, we mean, under the circumstances of this case, the difference resulting from a higher bid at the resale than the bid at the initial sale. We use surplus funds o r surplus p roceeds to denote the positive difference, if any, between the price at the fo reclosure sa le(s) and the o utstanding lie n instrume nt debt. 2 The lien instrument was a deed of trust containing a power of sale. Th e foreclosure proceedin gs were c onducted under the p ower of sale. We sh all use the terms deed of trust and mortgage interchang eably through out, althoug h, as we ex plain later, there is a difference. That d ifferen ce doe s not af fect the issues in this partic ular cas e. 3 Hereinafter, the Trustees and the Lender w ill be sometim es collectively ref erred to as respondents. Whether parties to a pow er of sale foreclosure may contract out the common law rule that the defaulting purchaser is entitled to any surplus proceeds of resale by placing such a provision in the advertisement of sale? [4] We hold that the supposed right of a defaulting purchaser to receive the excess proceeds from the resale of the property is not the common-law of this State. For that reason, we need not resolve petitioner s original question. After the initial briefing and oral arg ument, the C ourt sched uled additional oral argument and requested the parties to brief and address two additional questions proposed by the Court. They were: 1. Should the [alleged 5 ] common-law rule that a defaulting purchaser at a mortgage foreclosu re sale is entitled to any surplus proceeds resulting from a resale caused by the default, be modified or abolished? 2. If that rule is modified or abolished, and a surplus res ults at a secon d sale after a default, should the court otherwise have authority to reimburse the defaulting purchaser from the surplus for the cost of the improvements made to the property by him/her prior to the resale? We need not answer the first question as we hold that there does not exist in Maryland a common-law rule entitling a d efaulting p urchaser a t a mortgag e foreclosu re sale to any of the excess f unds resu lting from a higher bid a t the resale cau sed by the def ault. 4 There w as no surp lus above the amou nt of the de ed of trust d ebt. Even af ter the resale there re maine d a def iciency. The surplus pr oceeds th at petitioner is ref erring to is in respect to the difference in the resale price above the original sale price not a surplus above what was owed on the lien instrument. The difference between the two sa le prices is what w e have noted p reviou sly as exc ess fun ds or excess procee ds. 5 For the purpose of our question we had assumed the parties were correct in their belief that su ch a com mon-law rule existed. T hey were no t. -2- To the second question p resented by th e Court we respo nd that, so long as there remains a deficiency in respect to the or iginal m ortgag e debt, a defaulting purchaser at the first sale is not entitled to claim any of the excess funds resulting from a higher bid at the resale. Further, we hold that if the sum bid at the second sale is both higher than the bid at the first sale and is more than sufficient to pay off the mortgage debt, the defaulting purchaser at the first sale, ab sent fraud or extraord inary circumsta nces, still is not en titled to receive any such excess funds in respect to any costs or expenses incurred in making improvem ents and/or repairs to the property prio r to the resale. The total bid price that results in excess funds reflects the true value of the land and normally such funds are due the original mortgagor, or those claiming through him, junior lien holders, etc. I. Facts 6 Beginning on April 1, 1999, the Trustees advertised the sale of an improved feesimple parcel of real property located at 5511 Fisher Road, Temple Hills, Maryland (hereinafter, the property ). The sale w as to take place on April 20, 1999, at the steps of the Prince Geo rge s Co unty C ourthouse. The advertisement specifically enumerated the TERMS OF SALE . Among these terms were the following provisions: The purchaser shall comp ly with the term s of sale with in ten (10) days after ratification the reof by the C ircuit Court from P rince Ge orge s Co unty, Maryland, unless said period is extended by the S ubstitute Tru stees, their 6 In accordance with Maryland Rule 8-413 (b), petitioner and respondents filed an agreed statement of facts with the Court. Due to the statement s length, we shall include only those facts relevant to the issues in the case sub judice. -3- successors or assigns for good cause shown; TIME BEING OF THE ESSENCE. If the purchaser shall fail to comply with the terms of the sale or fails to go to settlem ent, in addition to any other available legal or equitable remedies, the Substitute Trustees may declare the entire deposit forfeited and resell the premises at the risk and cost of the defaulting purchaser. In such event, the defaulting purchaser shall be liable for the payment of any deficiency in the purchase price , all costs and expenses of sale, reaso nable attorney s fees, all other charges due and incidental and consequential damages. The pu rchaser sh all not be entitled to any surplus proceeds or profits resulting from any resale of the property. If the Substitute Trustees cannot convey insurable title, purchaser s sole reme dy at law or in e quity shall be the re turn of the dep osit. [E mpha sis adde d.] 7 Petitioner made the high bid, $53,000, at the first sale on April 20 th and signed a Memorandum of Purch ase at Pub lic Auction averring to that fact. The memorandum stated, I, the undersigned purchaser hereby acknowledge that I . . . have this day purchased the property described in the attached advertis emen t, subjec t to the co ndition s stated th erein . . . . The sale was ratified by the Circuit Court for Prince George s County on September 24, 1999. As a resu lt of the fore closure sale b eing insuff icient to pay the secured debt and accrued in terest fully, a deficie ncy of $51,4 24.34 then remained on the mo rtgage acc ount. Petitioner, however, did not complete settlement within ten days after the ratification of the sale by the circuit court, as required under the terms of sale, and thus defaulted on his purchase of the prop erty. As a result, on Decem ber 10, 199 9, the circuit court issued an Order Directing Resale Of Mortgaged Property At Risk And Cost Of Defau lting Purchaser, pursuant to Md. Rule 14-305 (g). The order provided, No cause to the contrary having been 7 There is no indication in the record that any of these terms were amended orally by the auctioneer at the judicial sale or at the later resale. -4- shown . . . it is hereby ordered by the Circuit Court for Prince George s County, Maryland . . . that the subject property shall be resold at the risk and co st of the defaulting purch aser, David Simard, and furtherm ore that the purc haser s dep osit is hereby forfeited. The trustees then placed a second advertisement of sale in a local newspaper of general circulation. The relevant terms of this second a dvertiseme nt of sale were identical to those of the April 1, 1999, advertisem ent of sale. T he resale occurred on February 22, 2000 an d petitioner ag ain was the high bidder, with a bid of $101,141.55, and again signed a Memorandu m of Purchase at Public A uction, a me morand um with the identical ter ms as the p revious memorandum. As there were no exceptions to the resale, the circuit court ratified the second sa le on Ap ril 7, 2000. A fter the bid at th e resale there still remained a deficiency as to the mortga ge debt. Petitioner again failed to comple te settlement o f the resale of the prop erty in a timely fashion, but filed a P etition To S ubstitute Purchasers for the resale in the circuit court on May 26, 2000. Petitioner asserted that he had as signed his rig hts as the pu rchaser in the resale to Jose W. Baria s and Da ysi Y. Alvare nga (herein after, the Substitute Purchasers ) and the Substitute Purchasers had agreed to go to settlemen t. Petitioner, however, retained prima ry responsibility for all liabilities in connection with the performance of [the Sub stitute Purchasers ] contract to purchase the property and for compliance with the term s of the sale as set forth in the Trustee s Notice of Sale (alteration added). This petition was granted by the circuit court on May 26, 2000. -5- Pursuant to Md. Rule 14-305 (f), 8 after ratifying the resale, the circu it court referred the matter to an auditor. The auditor compiled a report on August 2, 2000, which stated that the property s resale produced the excess sum of $46,831.29 above the price bid at the first sale (albeit it w as sti ll insufficien t to pay the mortg age lien debt in full). The aud itor, pursuant to Md. R ule 2-543 (e), th en authoriz ed the paym ent of this co mplete resa le price to the deed of trust debt and thus to the or iginal granto r s (mortgag or s) accou nt. 9 The auditor included notes with the auditor s report explaining why the auditor did not authorize the payment of the surplus to petitioner. The notes stated: Ge nera lly, in the event of a resale which has been ordered by the Court to be at the risk and cost of the def aulting purc haser the p roperty is resold as the defaulting purchaser s risk and cost which means that he has the risk of and is responsible for any decrease in sales price and any additional costs. Likewise, he has the benefit of and is entitled to any excess in the sales price at the resale, less the additional costs. The excess in the sales price resulting from the resale is credited to the defaulting purchaser and not the mortgage account. Howev er, in the instant c ase, the trustee s advertisem ent of sale specifically states that in the e vent of a re sale as a resu lt of d efau lt by the purchaser the purchaser shall not be entitled to any surplus proceeds or profits resulting from any resale of the property. In foreclosure sales, the advertisement of sale becomes the contract between the trustees and the foreclosure purchaser, and the terms of sale specified in said advertisement becomes binding between them. As a result of this agreement, the surplus proceeds resulting from the resale have been applied to the mortgage debt as opposed to being awarded to the de faulting purchaser. 8 Md. Rule 14-305 (f) states: Up on ratification of a sale, the c ourt, pursua nt to Rule 2-543 , may refe r the ma tter to an auditor to state a n acco unt. 9 In other w ords, the diff erence be tween the prices bid at th e two sales was app lied to the mortgage (deed of trust) debt. According to the figures contained in the record, after the resale price, a deficiency in the mortgage debt still remains. -6- The defaulting purchaser has filed he rein a claim against the surplus proceeds and has stated that the reason for the higher price obtained by the trustees at the resale was due to sub stantial impro vements m ade to the property by him between the time of the first and seco nd sales. H oweve r, this claim has not been substantiated and as a result has not been considered by the Auditor in this report. Had this be en prove n, reimburs ement of the cost of s aid improv emen ts wou ld have been a llowed . As a result of this audito r s report, petition er filed exce ptions in the C ircuit Court for Prince George s County and, after conducting a hearing on petitioner s exceptions to the auditor s repor t, the circu it court f ound, inter alia, that: the provision in the advertisement indicating that in the case of a default that the successful purchaser at the first sale (defaulting purchaser) shall not be entitled to any surplus pro ceeds or p rofits resulting from a re-s ale of prope rty is contrary to the Maryland law governing said circumstance and that no valid consideration existed for the forfeiture of the right of surplus to which the defaulting purchaser would otherwise be entitled. The Court further finds that the language contained in the adve rtisement cannot operate to alter the principles of law go verning en titlement to sur plus and th at to so allow would be a contract of adhesion and can have a chilling effect on securing foreclosure bids. That court then remanded the case to the auditor to re -state his acco unt in acco rdance w ith the findings of the Circuit Court for Prince George s County. On remand, in an April 2, 2001, report, the auditor credited petitioner with the excess proceeds of the resale, but did award responde nts $11,95 1.75 in attorn ey s fees in relatio n to the litigation of petitioner s exceptions. Respondents filed exceptions to the auditor s report, made solely to preserve for appeal [respondents ] claim previously presented to the Court that the terms of the advertisement of sale should have been enforced regarding the surplus, and made a motion to pay [the] surplus [i.e., excess proceeds] into [the] registry of the court, as opposed to -7- directly crediting petitioner with the excess fun ds (alterations added). On July 9, 200 1, the Circuit Court for Prince George s County issued an order granting respondents motion, thus ratifying the auditor s report and authorizing the clerk of the court to accept and hold the surplus proceeds pending further order from the court. On July 24, 2001, the trial court issued an order directing respondents to pay the excess proceeds from the resale, minus the attorney s fees awarded by the trial court, into the registry of the trial court pending further orders from the court. Respondents subsequently paid $29,686.37 into the registry on July 27, 2001. Both parties filed cross-appeals with the Court of Special Appeals. The Court of Special Appeals reversed the trial court s decision and remanded the case to the trial court for further proceedings, holding that petitioner was not entitled to the excess proceeds of the resale because the specific term s in the adve rtisement of sale contractua lly waived petitioner s alleged common-law entitlement to these excess proceeds. The intermediate appellate court did not address the merits of whether the trial court prop erly awarded attorney s fees to respondents, because it h eld that petition er failed to preserve that issue.10 II. Historical Perspective on Mortgages and D eeds of Trust Because we are undertaking consideration of a relatively recent alleged common-law provision, it is helpful to address the common-law of mortgages generally in order to add 10 As the pa rties did not raise this issue on appeal to this Cou rt, we do no t address it. -8- proper perspective to the priority issues the Court is resolving. The right to private prop erty predated for centuries the Magna Carta.11 The right of 11 One of the well regarded works on the origins an d purpose s of private p roperty is Richard Pipes Property and Freedom, published in 1999. Pipes, twice a Guggenheim Fellow and the Baird R esearch Professor o f History at Harvard U niversity, in addition to analyzing bas ic private pro perty concep ts, includes histo rical referenc es to the ancientness of private property. He notes that Aristotle, disagreeing in part with Plato, regarded the institution of prope rty as indestructible and ultima tely a positiv e force . Additionally, Pipes notes at pag e 11 that: The main Ro man con tribution to the idea of prope rty lay in the realm of law. Roman jurists were the first to formulate the conc ept of abso lute private ownership, which they called dominium and applied to real estate . . . . For an object to qualify as dominium, it had to satisfy four criteria: it had to be lawfully obtained, exclusive, absolute, a nd permanent. . . . Roman jurisprudence went to great lengths to stipulate every conceivable nuance of property rights: how acquired and how lost, how transferred, how sold. The rights implicit in dominium were so absolute that ancient Rome knew nothing of em inent do main. Pipes also notes at pages 35-41 Locke s thoughts as stated in Two Treatises of Government, (first published anonymously in 1690): [t]he great and chief end . . . of Mens uniting into Commonwealths, and putting themselves under Government, is the Preservation of their Prop erty, and Rousseau s statement in his Discourse on the Origin of Inequa lity (1755) that The first person who, having enclosed a plot of land, took it into his head to say this is mine and found people simple enough to believe h im, was the true found er of civil society. Pipes also discusses the original assertion of rights to property, which became known as the Rig ht to First Oc cupancy u pon wh ich some v ery early claims to private property were based. In the concluding chapter, Pipes points out at page 225, what to him may be a continuing problem: The rights to property and the liberties associated with them a re subverted by a variety of devices, some open and seemingly constitutional others oblique and of dubious legality . . . . The assault on property rights is not always app arent, becau se it is carried out in the na me of comm on goo d, (contin ued...) -9- land owners to pledge their parcels as security for debt also arose relatively early in the history of the recorded law of prop erty. There are early references in England to the practice that concerned statutes and the common-law regulation of lending practices. In Vol. III of Statutes of the Rea lm, at p. 933, the text refers to a statute passed in the year 1542 to 1543 that addresses an already existing practice in respect to mortgages. That statute, identified as 34 & 35 Hen. VIII ch. 26, provided: That no mortgages of land, tenement, or hereditament, made on and after the saide fe aste of Sainte John Baptist, whiche was in the saide XX Xii th yere of the reigne of our saide, Soveraigne Lorde, or that hereafter shall be had or made, with in any of the saide Shyres or places, shall be hereafter allowed or admitted, otherwyse thenne after the course of the common Lawes and Statutes of the Realm e of Eng lande: any usa ge or custo me hereto fore had to the con trarye there of not w ithstand ing. See also Richard M. V enable , The Law of Real Property and Leasehold Estates in Maryland 177 (1 892). 11 (...continued) an elastic concept, defined by those whose interests it serves. ... The notion that every need creates a right has acquire d a quasireligious status in modern America, inhibiting rational discussion (footnotes omitted ). [Foo tnotes o mitted.] One of the prov isions of the Magna Carta was a provision affecting the right of the Sovereign to negate certain private property rights. Over a long period of time prior to the Magna Carta, private property rights in land had been extracted from the Kings of England. Immediately prior to the Magna Carta, the reigning sovereign was attempting to restore to the Crown the property or to reinstate the rights that had previously been forced from the Crown. Accordingly, the Magna Carta did not initially create private p roperty rights in Engla nd, as is s ometim es said; it p rotected long ex tant priv ate prop erty rights. -10- By the early 18 th Century, and apparently much earlier, a mortgagee was considered the owner of the pledged proper ty subject to a cond ition. A debtor who timely paid the debt in full, acquired the right to eject the creditor (mortgag ee) if neces sary, and re-take complete title to the property. However, if the debt at any time became in default, or the mortgage was otherwise in default, the creditor (mortgag ee) was c onsidered the own er of all of th e property free of the con dition. It did not make any difference whether ninety percent or one percent of the debt was unpaid and in default. Such creditor/debtor arrangements came to be known as strict mortgages for obvious reasons. It appears that in ea rly times redem ption rights of the mo rtgagors w ere also mu ch more lim ited than pre sent. Mortgagees, in these early times, apparently utilized ejectment actions as well, even though they were considered to be the o wners of all the pledged property, because they had to be able to free it of the condition that might cause a defeasance of their title. In other words, under the lien instruments of the time, even though the mortgagee acquired complete ownersh ip upon default, the mortgage documents (however called) facially created a possibility by way of the condition of a defeasance, reversion or reverter back to the mortgagor. In order to c lear title of that condition, m ortgagees a lso used ac tions at law in ejectment, i.e., ejecting the rights potentially existing by way of the condition. In explaining the origin of the concept of a mortgage, Venable stated: These pledges took the form of estates on condition. The debtor, or borrow er, conveyed lands to the creditor on condition that if the money was repaid in a designated time the debtor might reenter or the conveyance was to be void, or the lands were to be reconveyed. This conveyance (or mortgage) transferred -11- to the grantee (or mortgagee) an estate on condition; that is, an estate to be defeated on the performance of a condition subsequent (the payment of the money). Courts of law, of c ourse, recognized this form of conditional estates, as they did other forms; but they held the parties strictly to the very terms and stipulations of the mortgage. If the mortgagor paid the mortgage debt in the time agreed, he thereby acquired a right of entry on the mortgaged premises, and could eject the mortgagee (4 Kent Com. 140). If, however, the debt was not paid in the time stipulated, he forfeited all interest in the property, and the mortgagee became the absolute owner of the estate. Courts of law thus refused to regard the fact that the real nature and intent of the transaction was that the land was to be held as a security for a debt, and, regarding merely the form of the transaction, insisted on enforcing the rules relating to estates on condition in all their strictnes s. . . . Id. Venable went on to discuss the mortgagor s equitable right of redemption,12 fully 12 The equ ity of redem ption as ap plied to present lien instrument transactions, is the right to reacquire clear title to property mortgaged to secure a debt, upon repayment of that debt. It, in esse nce, upon proper payment of the mortgage debt, divests the mortgaged premises of the lien created by the mortgage. The right to redeem, even in a mortgage context, can be itself divested by a valid mortgage foreclosure sale, or by a waiver made subsequent to, and outside the mortgage instrument itself. In Washin gton Fire Ins. Co. v. Kelly, 32 Md. 421 , 439-441 (1870 ), the Court discussed the equity of redemption in a mortgage contex t (although the case w as not a mortgage c ase): Mortgages are now unive rsally regarded, in Courts of Equ ity, as mere securitie s for the paymen t of mo ney, . . . . The mortgag or is t he su bstantial own er of the p rope rty, though the legal estate is in the mortgagee, and he can transfer or vest his interest at his own pleasure, so long as the right of redemption exists, and the interest of the mortgagor is also liable to attachment and execution. ... Courts of Equity, though a mortgage be forfeited, and the estate absolutely vested in the mortgagee, at common law, yet they will allow the mortgagor, at any reasonable time, to redeem his estate. . . . [A]nd no agreement in a mortga ge will be su ffered to make the property irredeemable. Notwithstanding the mortgages upon the prop erty, the mortgagors he ld the equity of rede mption, the real and be neficial estate , equivalent t o the fee simple a t law. . . . (contin ued...) -12- established by the time of the reign of Charles I and then known as the mortgagor s Equity of Redemption, where the mortga gor, due to mishap o r misfortune, failed to pay timely the last portion of the debt. Over time, courts of equity had begun to intervene in such situations and bega n to regard th e true intent of the mortga ge as a secu rity for a debt. Such resulted in compelling the mortgagee, on tender by the mortgagor of the mortgage debt and interest even after default, to reconvey the property to the mortgagor. Id. The courts, however, did not give the mortgagor an indefin ite time to repay the debt. The court imposed a time-limit for the mortgagor to repay and under proper circumstances allowed the mortgagee to file a bill to foreclose even after equity proceedings were taken in respect the equity of redemption. This foreclosure of the mortgage then cut off the mortgagor s right of redemption.13 12 (...continued) Thus, the right to redeem is merely the right of the mortgagor to reassert complete fee simple ow nership of the land, up on paymen t of the deb t and any othe r charges rig htly assessed under the terms of the lien instrument or under statutory provision. 13 In Union Trust Co. v. Biggs, 153 M d. 50, 13 7 A. 509 (1927), the Court later revisited the concept of the mo rtgagor s eq uity of redemption to emphasize the divergence of the interests held by the mortgagor and by the purchaser follow ing the ju dicial sa le. Union Trust involved a mortgage foreclosure sale that yielded a surplus after satisfaction of the mortgage debt. The Court determined that Union Trust had neither a legal nor an eq uitable lien in the excess funds since it did not obtain a judgment until after the foreclosure sale. In short, after the sale, equity regarded the property in the land as in the buyer, and the property or the price as in the a ssignee and mo rtgagor. It is true that the sale is inco mplete until ratified by the court, and that t he purch aser 's title is an inchoate and equitable one from the day of sale until the final ratification, which, however, retroacts so that the purchaser is regarded by (contin ued...) -13- In an attempt to further regulate the foreclosure process, England passed the Statute of 7 Ge o. 2, ch. 20 in 1 734 (Ale x. Stat. 725). T hat statute stated , in relevant pa rt: W HEREAS Mortgagees frequently bring Actions of Ejectment for the Recovery of Lands and Estates to them mortgaged, and bring Actions on Bonds given by Mortgagors to pay the Money secured by such Mortgages, and for perform ing the Co venants the rein contained, and likew ise comm ence suits in his Majesty s Courts of Equity, to foreclose their Mortgagors from redeeming their Estates; and the Courts of Law, whe re such Ejectments are brought, have not P ower to c ompel such Mortgagees to accept the principal Monies and Interests due on such Mortgages, and Costs, or to stay such Mortgagees from proceeding to Judgment and Execution in such Actions; but such Mortgagors must have Recourse to a Court of Equity for that Purpose; in which Case likewise the Courts of Equity do not give Relief until the Hearing of the Cause; For Remedy thereof, and to obviate a ll Objection s relating to the same; Be it enacted by the King s most Excellent Majesty, by and with the Advice and Consent of the Lords Spiritual and Tem poral, and C ommen ts, in this present Parliament assembled, and by the Authority of the same, That from and after the first Day of Easter Term one thou sand seve n hundre d and thirtyfour, where any Action shall be brought on any Bond for Payment of the Money secured by such Mortgage, or Performan ce of the C ovenants therein contained, or where any Action of Ejectment shall be brought in any of his Majesty s Courts of Record a t Westminister, or in the Court of Great Sessions in Wales, or in any of the superior Courts in the Counties Palatine of Chester, 13 (...continued) relation as the equita ble owner from the time of the sale, and entitled to all the intermediate rents and profits of the estate. Although he thus becomes the substantial owner from the time of the sale and the property is at his g ain if it appreciate and at his risk in case of lo ss by fire or throu gh depre ciation, yet, notwithstanding the purchase money be paid, the legal title of the purchaser does not v est until th e dee d to h im is deliv ered , but, upo n its d elive ry, this deed is not effective merely from the day of its ex ecution, bu t vests the pro perty in the purchaser from the day of sale. It follows that, after the day of sale, the mortgag or's equity of rede mption generally ceases to exist a s an interest in land. Id. at 56, 137 A. at 512. -14- Lancaster, or Durham, by any Mortgag ee or M ortgagees, h is, her, or their Heirs, Executo rs, Admin istrators or Assigns, for the Recovery of the Possession of any mortgaged Lands, Tenements, or Hereditaments, [14] and no Suit shall be then depending in any of his Majesty s Courts of Equity in that Part of Great Britain called England, for or touching the foreclosing or redeeming of such mortgaged Lands, Tenements or Hereditaments; if the Person or Person s having R ight to redeem such mortgaged Lands, Tenem ents, or Hereditaments, and who shall appear and become Defendant or Defe ndants in such Action, shall at any Time, pending such Action, pay unto such Mortgagee or Mortgagees, or in case of his, her, or th eir Refusa l, shall bring into Court, where such Action shall be depending, all the Principal Monies and Interest due on such Mortgage, and also such Costs as have been expended in any Suit or Suits at Law or in Equity upon such Mortgage . . . , the Monies so paid to such Mortgagee or Mortgagees, or brought into such Court, shall be deemed and taken to be in full Satisfaction and Discharge of such Mortgage, and the Court . . . may . . . compel such Mortgagee or Mortgagees, at the Costs and Charge o f such M ortgagor o r Mortga gors, to assign, surrender, or reconvey such mortgaged Lands, Tenements, and Hereditaments, and such Estate and Interest, as such Mortgagee or Mortgagees have or hath therein, and deliver up all Deeds, Evidences, and Writings, in h is, he r, or their Cus tody, relating to the Title of such mortgaged Lan ds, . . . unto such Mortgagor or Mortgagors, who shall have paid or brought such m onies in to the C ourt, . . . or to such oth er Person o r Persons, as he, she, or the y, shall for that Purpose nomin ate or ap point. [ Footn ote add ed.] Similar provisions further add ressed rights o f redemp tion. Carefu lly read, this statute provides additional protections for the rights of mortgagors. These statutes modified what 14 Hereditaments are things capable of being inherited. Corporal hereditam ents are permanent objects capable of being inherited, including, but not necessarily limited to, land, i.e., the thing itself. L and is, how ever, the on ly real corpor al hereditament. Incorporal hereditam ents are things, rights generally, arising out of co rporal h ereditam ents. See Catonsville Nursing Home, Inc. v. Loveman, 349 Md. 560, 709 A.2d 749 (1998) and Cristofani v. Board of Education of Prince G eorge s C ounty, 98 Md.App. 90, 632 A.2d 447 (1993). -15- had been known as strict foreclosure 15 by apparently providing a method for persons, having gone into d efault, to pay the balance of the entire debt, and retaining and/or recove ring the ir prope rty. Nevertheless problems continued to arise, where, as Venable states in The Law of Real Property , at p. 178, in reference to the early strict mortgages, that complete forfeitures may have still survived: By it the whole mortgaged estate became the property of the mortgagee abso lutel y, when a portion of it, if sold, might be sufficient to pay the mortgage debt; and, instead of securing to the mortgagee an expeditious payment of the deb t, to secure w hich the m ortgage w as execute d, it might result after delays in tran sferring to h im the prop erty absolutely. [Citation omitted .] We dealt with such a situation in the case of Boteler and Belt v. Brookes, 7 G. & J. 143 (1835), which, althoug h it concerned the rights and obligations of trustees and their amenab ility to suit, made a full discussion of the Legislature s intent in passing a Maryland statute, 1785 Md. Laws, Chap. 72, that soug ht to remedy further these perceived problems with the foreclosure process. In that case, a suit was brought to compel the sureties of a trustee to bring into C ourt, the proceeds of a sale of mortgaged premises, sold in pursuance of a decree of a Court of equity. Boteler, 7 G. & J. at 150. Th e Court co ncerned itse lf with 15 As indicated elsew here, in strict foreclosure, if any payment was not made, the mortgagee simply owned the property. In other words, if the last 5% of the mortgage debt came into defau lt, the mortgag ee could a ssume all rights to all of the property without regard to its value. There was no common-law process for the judicially supervised sale of the property, with excess above the debt owed g oing to the m ortgagor. T he mortga gor simply lost all rights to the property regard less of how much he owed o n it. -16- the question of whether it had the power to force the trustee to bring into court the monies received by the sale of the mortgaged property. In answering that que stion, the Court discussed the implications of the third section of 1785 Md. Laws, Chap. 72, which appears to be an early (the second) Maryland statute authorizing the sale of mortgaged premises, albeit, according to its languag e it may have b een intend ed only to app ly where the lending docume nts involv ed the rig hts of in fants an d incom petents . The Boteler Court, nonetheless, applied it in a case not involving infants or incompetents. The Co urt quoted f rom this statute: III. A ND BE IT ENACTED, That in all cases of application to the chancellor to foreclose any mortgage, he shall have full power and auth ority, in case the party against whom the bill shall be filed does not pay the sum due upon the mortgage by the time lim itted in the dec ree for paying the same, to order and direct that the mortgaged premises, or so much thereof as may be necessary to discharge the money due and costs, b e sold for ready mo ney, (unless the plaintiff shall consent to a sale on credit,) by a proper person to be appointed by the chancellor, and to order that the money raised by such sale be brought into court to be paid to the p laintiff; and th e person e mpow ered to make such sale shall give bond, with good security, to be approved by the chancellor, for the faithful execution of the trust, and full compliance with the order of the c hance llor, and upon failure to exe cute such tru st, the party grieved shall have a right to bring suit on such bond, or a copy thereof, against principal and security or securities, and shall recover the money for which the mortgaged premises shall have sold, and the plea of non est factum[16] shall not be received, unless verified as aforesaid; and the chancellor may also issue attachment of contem pt against the person em powere d to sell as aforesaid, and his security or securities, and may thereupon commit both principal and securities until his order shall be fully complied with, and co ntemp ts cleare d. 1785 M d. Law s, Chap . 72. See Boteler, 7 G. & J. at 153. 16 A plea de nying the exe cution of a n instrume nt. -17- This statute, in its entirety, impos ed upon courts of e quity certain requ irements protecting the interests of mortgagees in the passing of decrees for the sale of mortgaged property and, subsequent to the statute, when a sale occurre d, the proce eds were to apply initially to the costs of the sale, then the principal mortgage debt and then the interest owed the mortgagee. Any surplus, however, apparently went to the mortgagor under this 1785 statute. The process, prior to this statute, had been known as common-law foreclosure (by way of actions in ejec tment at law filed by mortgagees or perhaps in equity to clear clouds on title), and even after the modifica tion broug ht about by this statute affecting the distribution of the proceeds of sale, this type of foreclosure was still known as common-law foreclosure, although by that time it had been statutorily modified. Common-law foreclosu res appare ntly are still viable in Ma ryland, alth ough, o ne sup poses r are. See infr a. Common-law foreclosure, unlike foreclosures conducted under powers of sale and assent to decrees, required the completion of a judicial proceeding, and, prior to 1784, the obtaining of a cou rt order in ejectment or some similar order before title could be affirmed in the mortgagee or reaffirmed in the mortgagor depending upon the evidence presented. It is unclear whether, under the prior com mon-law foreclosu res, the courts had the power to provide that the property be sold and direct the disburse ment of p roceeds in a ny particular m anner. Th is was clarified by the 1785 statute (and ap parently by a 1784 statute as well). In interpreting the 1785 statute in Boteler, this Court further stated: -18- The Legislature had, no doubt, a tw o-fold ob ject in view , in authorizing a sale of mortga ged pre mises. As regarded the mortg agor him self, it was [a remedy ] in m any case s beneficial to him, as it was calculated to save a portion of his estate from passing to the mortgagee, beyond the power of redemption, while at the same time, full justice was done to the mortgagee; who obtained by a sale the amount loaned, and thus effectually reaped the fruits of his security in the most speedy and expeditious manner. The remedy by foreclosure alone, from its tedious character, w as calculated to abridge very much this form o f security; and w ith the view of avoiding difficulties sometimes growing out of foreclosures, the parties themselves had introduced, in man y cases, the practice of inserting trusts for sale in mortgages. By simplifying remedies, by furnishing speedy redress, and by rendering these securities available ac cording to th e design o f the parties, in entering into them, in the shortest time practicable, the Legislature, therefore, no doubt designed to encourag e this kind of contract an d security. Wh ile the law he ld out to capitalists the greatest possible facilities, to the obtention of full inde mnity, through the medium of the Courts, it at the same time, gave to those who might desire to take up money on such securities, much more ample means of accomplishing their object. These too, were designs well deserving the attention of the Legislative body, presiding as it does, over the interests of a commercial comm unity, where e very effort to b ring into cap tivity unemployed capital, is necessarily calculated to advance the interests of the State. Such objects are clearly designed by the Act of 1784,[17] which appears to be the first law authorizing the sale of mortgaged premises, and which furnished encouragement to foreigners to lend their capital to citizens of the State; and the Act of 1785, ch. 72, was but the carrying out of the same great objects among our own citizens, by extending the authority to sell, in all cases of mortgages, where a default had occurred in the payment of the money secured to be paid. Providin g thus the means by a sale, and summary process, for the extinguishment of the mortgaged debt, it was evidently that which was solely looked to, and not the interest of the mortgagor, or any person who might, as his assignee, be incidentally interested in any possible surplus; for as has been very justly obse rved, it was not co ntemplate d that more should be sold than was necessary to extinguish the debt due on the mortgage. And when the 17 We have found no earlier cases that mentioned or discussed the 1784 statute. Acc ordingly, the Boteler discussion presents the first understanding of this particular statutory scheme. -19- remedies by the third section are provided, they look only to such sum as would accom plish that ob ject. If indeed the law could have a practical operation, by limiting the sales in all cases, to the exact amount of the mortgage debt, such a proceeding would reach with precision the object of the Legislature. But it is impossible in anticipation to know, that a given number of acres will produce a specific sum of money, and as a sum of money equivalent to the mortgage debt has to be raised, the trustee, to carry the Act into effect at all, even where the decree limits him to the sale of only so much as may be necessary to satisfy the debt, must necessarily often have a surplus in hand, which must belong to the mortgagor or those, who, in the eye of a Court o f Equ ity may repre sent him . Boteler, 7 G. & J. at 151-52 (emphasis added) (footnote added). It is clear that the Boteler court interpre ted the Leg islature s intent in passing this s tatute, in substa ntial part, to be to protect the interests of the mortgagor to recover any excess value of his land realized as a surplus at a sale abo ve the am ount of the mortgage debt. According to another of our early decisions, this Act and the Court s interpretation of it, did not remove common-law foreclosure, or apparently even altogether eliminate strict foreclosure, but merely added another remedy to address default, a foreclosure by judicial sale and advanced in the statute certain protections for the mortgagors. In Andrews v. Scotton, 2 Bland 629, 66 6 (1830), although that case did no t involve a mortgage f oreclosure but a judicial sale arising out of an estate matter, with a subsequent default, the Court compared mortgage foreclosure sales, saying: The Court has been authorized by an Act of Assembly to decree a sale of the mortgaged property; 1785, ch. 72, s. 1, 2 and 3; 1837, ch. 292; but the provisions of that Ac t have bee n always co nsidered as having m erely introduced an additional remedy, and not as having abrogated any pre-existing mode of relief , to which the mortgagee was entitled, or to have altered the proceedings in this Court on mortgages, in any other respect whatever, and -20- therefore, the mortgagee may now, notwithstanding the provisions of that law, have a decree of fore closure instead of a de cree fo r a sale. By the time of Vena ble, the foreclosure by sale had practically supplanted the strict foreclosure in Ma ryland. See Richard M. Vena ble, The Law of Real Pr operty 178 (1892). See also Pannell & Smith v. Farmers Bank of Maryland, 7 H. & J. 202 (1826); 4 Kent Com. 181. A proble m continu ed to exist, however, in that the mortga gee still had to comme nce to proceed, first by way of a b ill of equity in orde r to foreclose a mortgage. To reme dy this problem, mortgagees began the practice of inse rting pow er of sale p rovisions into their mortgages. As Venable defines it, power of sale provisions expressly stipulated in the mortgage that, on defa ult by the mortg agor, the mortg agee might sell the property in the manner and on the terms specified in the mortgage, without obtaining a prior decree authorizing the sale. Richard M. V enable , The Law of Real Pr operty 179. In discussing power of sale mortgage provisions, Venable said: Courts of equity in Eng land rec ognize d and e nforce d these powe rs. The great objection to them was that they committed a power to the mortgagee which was not comp atible with h is relation to the mortgagor. He was prac tically a trustee to sell for the benefit of himself and of the mortgago r; but his interests were not identical with those of the mortgagor, and he was subjected to a temptation to abuse the position of trust which he occupied by not exerting himself to sell to the best advantage. In some of the United S tates the cou rts of equity refused to recognize these powers, and in others they were viewed with such disfa vor that Deeds of Trust to Secure supplanted mortgage s with powers to sell (3 M d. 96-7). In these deeds of trust the borrower conveyed the property inte nded to secure the debt, not to the lender, but to some third person, and empowered him to sell on default (4 Kent Com. 146-7). In Maryland, however, mortgages with power to sell were recognized and th e powe r enforced ; but in order to remove all doub t as to the right to e xercise such p owers (3 Md . 96), and to -21- remove the manifest objection s to such m ortgages, A cts were p assed to regulate the exercise of the pow er and prev ent its abuse (1785, c. 72; 1825, c. 203; 1826, c . 192; 18 33, c. 18 1; 1836 , c. 249, 1 874, ch . 460; 1878, c. 483; codified in 2 Md . C. Art. 66, ss. 6 -20). Thes e Acts cloth ed the mo rtgagee w ith the responsibilities and duties of a trustee, and strictly directed the method of his procedure in exercising his power to sell. And, in order to prevent the mortgagor from ham pering the m ortgagee b y filing bills in equity to e njoin him on frivolous pretexts intended to delay or gain time, the mortgagor s right to enjoin was restricted to certain specified cases (1826, c. 292; 1836, c. 249, codified in 2 Md. C. Art. 66, ss. 16-18). In consequence of these provisions the mortgage with a power to sell is by far the most prevalent f orm of se curity in Maryland, although de eds of trust to secure may exist and are of frequent occurr ence. Id. (emphasis added ). This Court, in Charles v . Clagett, 3 Md. 82 (1852), set out a brief background as to power of sale clauses. Judge Eccleston, speaking for the Court, stated: Mortgages with power of sale, are treated of at marg. p. 124 of 1 Coote, (69 Law Lib .) 170; and this authority was much relied upon by the appellant s counsel, as sustaining his view of the subject. Where the power of sale is given to a mortgagee himself, or to a third person, merely as a naked power to sell, it need not, nor do I presume that it does, at all, impugn or interfere with the o rdinary and usual rights of a mortgagee, which exist in a mortgage, similar, in all other respe cts to such a deed, exc ept in regard to this power. But when the estate is conveyed to a third party in fee, in trust to sell, the deed is but a quasi or equitable mortgage. This power o f sale is regulated in New York and some other States by statutes. Our act of 1825, ch. 2 03, on this su bject, particular ly the third section, has been insisted upon by the appellant s counsel, as conclusive authority, for holding the present deed to be a mortgage within the meaning of the act of 1846. ... According to my opinion , this provision relates to such mortgages as give special powers of sale to the mortgagees, or to others: the special powers to othe rs me anin g me rely naked powers, and not co nveyances o f estates, to -22- third person s in trust, to sell. At one time doubts were entertained as to the validity of sales, under powers contained in mortgages, unless made with the concurrence of the mortgagor, or the sanction of a cou rt of equity. An d it would seem that some such co nsidera tion ind uced th e legisla ture to p ass the a ct of 18 25. . . . Id. at 95-96. In Charles the Court, as indicated above, recognized that the Legislature sought to clear up any doubt as to the valid ity of a power of sale mortgage when it enacted the Act of 1825, ch. 203. That Act, in relevant part, stated: 4. And be it enacted, That all suc h powe rs to mortgage es made, o r to be made, authorising sales, shall be executed, acknowledged and recorded as deeds and conveyances usually are before the conveyances for the sale be executed, and every such sale [under a power of sale contained in a mortgage] shall be at public auc tion or vend ue, and pu blic notice sh all be given thereof by adver tisemen ts . . . . 5. And be it enacted, That in every case . . . an affidavit . . . by the printer . . . and also an affidavit . . . by the person who fixed the [advertisem ent] upon the [court house] door; and also, an affidavit stating the circumstances respecting the sale . . . made by the person who acted as auctioneer at the sale . . . shall be received in ever y court of law or equity in this state, as prima facia eviden ce of th e facts in such af fidavit s et forth . [Altera tions ad ded.] This statute evidences an early statutory authorization, or acceptance, of fo reclosure sales under powers of sale contained in mortgages, in that it addressed and resolved problems that had appa rently arisen in those types of foreclosures. It did so by enacting re quiremen ts for the s ales and the repo rting of the sales to the co urts. Venable next notes that the City of Baltimore sought greater protection of mortgagees interests than was prov ided by the A ct of 1825 . This greate r protection, th en applicab le only -23- in the City o f Baltim ore, first was provided by the Act of 1833, ch. 181.18 This Act specifically stated , in relevant pa rt: Sec. 2. And be it enacted, (in order to the facilitating the enforcement of mortgag es of real p rope rty and esta te in the city of B altimore,) that in all cases of conveyances by way of mortgage of lands o r hereditam ents or chatte ls real, situate in the city of Baltimore, and where in the said conveyances the mortgagor shall declare his assent to the passing of a decree as hereinafter mentioned, it shall and may be lawful for the mortgagees or their assigns, at any time after filing the same to be recorded, to submit to the Chancellor, or to Baltimore county court or any Judge thereof, the said conveyances or copies under seal of said county court thereof, and the said Chancellor or court or Judge aforesaid, may thereupon forthwith decree, that the mortgaged premises shall be sold . . . . [ Footn ote add ed.] As the text of the statute reveals, the Act of 1833, ch. 181 permitted a particular type of mortgage commonly referred to in the present day as an assent to decree mortgage or lien instrument. As Venable states, this type of security provides: [T]hat the mortgagor may incorporate in the mo rtgage an assent on his p art to the passage of a decre e in equity for th e sale of the property on h is default. Under this consent the mortgagee may, immediately on taking the mortgage, file an ex parte petition for a decree of sale to be made on default; and, immedia tely on default, the trustee appointed in the decree may procee d to make sale in conformity with the terms of the decree; or the mortgagee may file his ex parte petition after de fault an d have a decre e for the sale. Richard M. V enable , The Law of Real Pr operty 180. Evid ently, because th e statute origin ally only provided assent to decree foreclosures in Baltimore City, the particular process became prevalent in that jurisdiction - and remains so. It is less frequently utilized in other 18 For later versions of this statute, see 1836 Md. Law s, Chap. 249; 1839 Md. Laws, Chap. 9; 1852 Md. Laws, Chap. 148, 198, which were codified in 1 Md. C.P.L.L. Art. 4, §§ 692-704. -24- jurisdictions, even th ough th ey are now auth orized s tatewid e. See Md. C ode (19 74, 2003 Repl. V ol.), § 7-1 05 of th e Real P roperty A rticle. In the case of Hays v. Dorsey, 5 Md. 99 (1853), this Court affirmed a decree of the Superior Court of Baltimore City, which was sitting as a court of equity, that had directed the sale of mortga ged pre mises. Hays dealt with a mortgage that was duly executed pursuant to the Ac ts of 18 33 and 1836. We stated that [t]he mortgagor, by executing his conveyance under the act, gives his assent to the passage of the decree; and so far as the authority of the court to pass it is involved, it is only necessary to file a petition and the mortgage. Id. at 101. With resp ect to foreclo sures pursu ant to an ass ent to a decree, this Court, in Ahrens v. Ijams, 158 Md. 412, 148 A. 816 (1930), said: [T]he mortgagees had at their command two plain remedies wh ich were prescribed by statute, whereby they could at one time and in one proceedings sell the entire lot, by beginnin g, either in the c ity or the county, [at the time of the mortgage, the prope rty was intersected by the boundary betw een Baltimore City and Baltimore County and the mo rtgage w as recorde d in both jurisdictions] a bill of com plaint for fo reclosure in accordance with ancient equity practice [common-law foreclosure] or a sale under the power specifically confe rred by the mortga ge upo n the m ortgag ees, their personal representatives or as sign s, or their attor ney named in the m ortgag e. Supra; Code, art. 16, secs. 90 , 92; art. 66, sec. 1 5; Baltimore City Charter & [Public Local Laws] (1927), art. 4, se c. 730, p. 43 8; Miller s Equity Proc., secs. 445-447, 452-458, 472. Instead of choosing either of these two methods, the mortgagees avai led th emselve s of the th ird re med y of a foreclosure under assent to a decree. B y this election the mortgagees, and those claiming title as successors in title to the purchaser at the mortgage foreclosure sale, are bound. ... The practice of a foreclosure sale under an assent to a decree originated with the Act of 1833, ch. 181, and has continued to the presen t. It -25- affords a summ ary remedy for th e benefit o f mortgag ees. Its operatio n is limited to cases where the mortgagor ha s in the mor tgage dee d declared his assent to the passa ge forthw ith of a dec ree, in conf ormity with the provisions of the act, providing, before default, for a sale of the mortgage premises. The proceeding is ex parte until after the decree and a sale u nder the decree. In order to obtain the decree it is only necessary to file the mortgage and a petition for the d ecree. No sum mons is ne cessary, and no notice is requ ired to be given to the mortgagor or any person claiming under him, and neither prior nor subsequent mortgagees or incumbrancers need be made parties. The mortgagee is entitled to the decree at any time after the recording of the mortgage, and without regard to default. If there has been no default, the decree is entered pro spectively. If no default oc curs, it never becomes effective, but, should there be a d efault afterw ard occurr ing, the decr ee is enforced. See Miller s Equity Proc., sec. 474 et seq. Ahrens, 158 Md. at 417 -18, 148 A. at 819 (a lterations added). Thus, the historical differences between power of sale and assent to decree foreclosures is that the former was created initially by the common-law and later formalized by statute while the latter is purely a creature of statute. There fore, whe n necessa ry to examine the respective foreclosures, commo n-law histo ry may be impo rtant in respec t to strict foreclosures, common-law foreclosures and power of sale fore closures, bu t relatively unimp ortant in assent to decree foreclo sures. As of 1892, when Venable published his The Law of Real Pr operty, he stated that mortgage law w as regulated in the follow ing manner: Mortgages with power to sell, being regulated in Maryland by general law applicable to the whole State, are in the city of Baltimore called County Mortgages, although th ey may and do exist in the city of Baltimore. Mortgages with an assent to a decree, being regulated by local law, ex ist only in the city of Baltimore, and are generally called City Mortgages. Mortgages in which there is neither a power to sell nor an assent to a decree are called, by way of d istinction , Common Law M ortgages. -26- Richard M. V enable , The Law of Real Pr operty 180 (foo tnote omitted). V enable also points out that it was co mmon at that time, in Baltimore City, to have both an assent to a decree and a pow er of sa le prov ision w ithin a sin gle mo rtgage. Id. Cur rently, the Maryland Rules state that Power of sale mean s a provision in a lien instrument [ mort gage, a deed of tru st, a land installm ent contrac t, Md. Ru le 14-201 (b) (5)] authorizing a person to sell the prope rty upon a specified default, Md. Rule 14-201 (b ) (6), and that Assent to decree means a provision in a lien instrument declaring an assent to the entry of an order for the sale of the p roperty su bject to th e lien up on a sp ecified defau lt, Md. Rule 14-201 (b) (1). Both types of mortgage provisions are now governed by the current Maryland Rules, and are, as we have indicated, authorized by Md. Code (1974, 2003 R epl. Vol.), § 7-105 of the R eal Pro perty Arti cle. A short note on the advent of deeds of trust is in order in that the lien instru ment in the present case is a deed of trust with a power of sale. As used in the case at bar, and as such lien instruments are often used, they operate much as would a mortgage with a power of sale, except that the trustees would be exercising the power, not the mortgagee or mortgagee s assigns. Deeds of trust apparently came into being in this country as a result of the harshness of strict foreclosure, and as an intellectual reaction to mo rtgages w ith power s of sale include d. In his 1892 treatise, Venable describes the distinctions between deeds of trust and -27- mortgages: It has already been seen . . . that a debtor may pledge his lands as a security by conveying them to a third perso n in trust for th e creditor, as w ell as by conveying them directly to the creditor as in the case of a mortgage. Conveyances of property, as a security or indemnity to some person other than the person secured, are called deeds of tru st to secure, or simply deeds of trust or trust m ortgag es. They differ from technical mortga ges in their form and manner of execution and in the rights of the parties. . . . The parties to a mortgage are the mortgagor (debtor), and mortgagee (creditor). The parties to a deed of trust to secure are the grantor (debtor), the grantee (trustee), and the cestui que tru st (credito r). . . . ... . . . In M arylan d wh ere a debtor w ishes to secur e a cr edito r by a pledge of lands the mortgage is the common form of security, although the deed of trust is freque ntly used in such ca ses. But where the number of creditors to be secured is great, and the bonds or notes or debts secured are held by different persons, who m ay assign them with o r without en dorseme nt, it is almost a necessity to use th e deed of trust. . . . And so where a number of cred itors are to be secured, the deed of trust is practically in universal use. ... . . . The grantor s rights ar e usual ly stated in th e deed . . . . The rights of the cestui que trust are those of cestuis que trust generall y, except as modified by the terms of the de ed. The creditors are strictly cestuis que trust and not mortgagees. They have no rig ht, consequ ently, on defau lt, to take posse ssion of the property and a pply the rents and profits to the payment of their claims; nor have they any right of foreclosure such as a mortgag ee would hav e under a technical m ortgage (3 Md. 82, 94-5). T heir only reme dy is to compe l the enforc ement o f the trust according to its terms (45 M d. 396, 408). The rights and duties of the grantee (trustee) also depend on the terms and co ndition s of the deed. The Law of Real Property at 253- 55. Even prior to Venable s The Law of Real Pr operty, Richard H. Coote, in his A Treatise on The Law of Mortgage (1837), discussed power of sales in refere nce to both -28- regular mo rtgages and deeds of trust. Coote s tated: It is now f requent in practice to give the mortgagee a power of sale . . . . The mod es of acco mplishing this are various. In some instances, the estate is limited to the use of the mortga gee for a te rm of years, w ith the usual proviso fo r redemptio n, and sub ject thereto to the use of trustees in fee upon trust to sell. . . . [A]nd, in other instances, it is limited to the mortgagee in fee, with the usual proviso for redemption, atten ded with a declaration, th at if default is made in payment at the given time, it shall be lawful for the mortgagee, his heirs or ass igns, after no tice in writing requiring p ayment, to sell, . . . Either instance is valid and effectual, but the latter is most to be recommended; for on breach of the proviso, it bestows on the mortgagee an absolute estate; and at the end o f a further tim e gives him a power of sale; and leaves open to him the option , in the m ean tim e, of filin g his bill to foreclo se. A Treatise on the Law of Mortgage 55 (alter ation ad ded). So while the instruments, as most often used, are similar in operation, there are many more uses of deeds o f trust tha n are pr actical f or mor tgages . Multiple bond holders, multiple creditors, the need for the identity of the ultimate beneficiaries to remain unknown , etc. are all practical in a deed of trust format and impracticable, or impossible, under a mortgage format. Often, for commercial lenders par ticularly, deeds of trusts are mu ch more e fficient, while for private lenders not in the banking or mortgage business, the use of the mortgage format m ay be more e fficient. Since perhaps a s early as pre-M agna Ca rta times, and certainly no later than the early 18 th Century, there have been four types of mortgages (and deeds of trust) and four modes of foreclosure. There have been strict mo rtgages, comm on-law mortgag ees (and perhaps common-law deeds of trust), mortgag es with powers to sell, and mortgages with assent to decrees. Common-law mortgages contain no power to sell or assent to decree -29- provisions. Some mortgages and deeds of trust may contain both a power to sell and an assen t to decre e. Similarly, there have been strict foreclosures, common-law foreclosures, foreclosures under powers to sell and foreclosures under assents to decree. Strict mortgages and strict foreclosures have not survived the test of time and have been statutorily rendered obsolete. Common-law mortgages and common-law foreclosures have survived, although their use is now rare because almost every mortgage or deed of trust contains either a pow er to sell or an a ssent to dec ree provisio n. How ever, if a draf ter forgets to include one or the other of the last mentioned provisions, all is not lost - a common-law foreclosure can still occur, although one supposes tha t, at least currently, it is a rare practitioner who will com e across a comm on-law mortgag e. In other words, if a mo dern mortgage contains neither a power of sale or an assent to de cree, the mo rtgagee, up on defau lt of the mortgage debt, can still file a Bill of Complaint requesting relief, including a judicial sale of th e pro perty. III. Discussion With this historical perspective to guide us, we address the issues in the present case, especially the alleged common-law rule, said to have been crea ted by this Cou rt s relatively recent case law, i.e., common-law, that a defaulting purchaser is entitled to any excess funds from a resale of mortgaged premises. We next comment on the specific history, or lack thereof, of this alleged rule. -30- One of the first Maryland cases involving the measures to be taken upon a default by a purchaser at a judicial sale was Andrews v. Scotton, 2 Bland 629 (1830), on remand after a prior Cou rt of App eals decision in Anderson v. Foulke at 2 H. & G. 346 (182 8). It is important to note that, w hile the sale was a ju dicial sa le, it was not a mortgage foreclosure sale. It was a jud icial sale arising o ut of the ad ministration o f an estate. Scotton had contracted to purchase from Andrews property that Andrews had purchased from another (but had not yet received a deed thereto). There was no mortgage or deed of trust ever executed. Scotten had made several payments on the property to Andrews, but still owed a considerab le sum when he died. Upon his death it was discovered that he was insolvent. As a way out, the p arties went in to court and had th e court dec ree a judicial sa le in referen ce to his estate. The h igh bidder a t the sale, An derson, sub sequently defaulted, after claiming (and losing on the claim ) that the title to par t of the prop erty was not clear. The Chancellor initially directed that A nderson b e put in detention for contempt for failing to go through with the purchase.19 Upon appeal to the Court o f Appeals, it upheld the power of the Cha ncel lor to hold And erso n in c onte mpt and to order a resa le of the p rope rty. At several poin ts in the variou s proceed ings, both before the Court of Appeals initial decision an d after it, the C hancellor n oted: The manner of sending property into the market, as well as the mode of sale, generally adopted in this State, differs, perhaps, in some particulars, 19 Appare ntly, defaulting p urchasers in the early ninetee nth century still were subject to incarceration under the theory that the failure to pay the purchase price due from a judicial sale arising as a result of esta te administra tion was a contemp t. -31- from that of othe r countries. The form of ordinary sales of merchandise by auction is the same in this State as in England. But the mode of makin g a sale of property under the authority of the Court of Chan cery in Englan d is differe nt. . . . In this State the manner and terms of sale are p articularly prescribed in the de cree; an d the tru stee is dir ected to confo rm ther eto. . . . ... But whateve r variety or diffe rence ma y exist as to the m ere moda lity of sale, the intentions and general ob jects are the same every where an d in all cases. The ben efit of the inte rested parties, for whom the Court makes the sale, is always a nd chie fly regard ed. . . . To attain them [the ends in tended], in England, if after the biddings are closed, anyone else comes in and offers a much higher price, the biddings may be opened, and the additional offer accepted. This phrase of opening the biddings, which, in the English books, occur s o frequ ently . . . . In this State, there has been no instance of opening the bidd ings . . . . ... From these authorities it appears to have been the settled law of the English Court of Chancery long before, and ever since our Revolution, that on a purchaser s failing to comply, the Court would, on application, after the ratification of the sale, compel him to complete his purchase by process of attachment for contem pt. [In other words, the defaulting purchaser would be locked up. It ap pears th at there w as then no othe r remed y in Mar yland.] ... It is a clear and well settled principle of this Court, that where [estate] property has been sold under its decree, the Court, as the vendor for the ben efit of those interested, retains an equitable lien for t he payment of the purchase mon ey. The most usual way of enforcing this lien, has been by petition of a party interested, setting forth the facts, and praying that the property may be re-sold to pay the balance of the purchase money. And a sale may be ordered accord ingly, at the risk of th e delinq uent pu rchase r. In concluding, the Chancellor ordered: And it is further decreed, that the trustee . . . bring into this Cou rt, all sums of money he may receive or recover in any of the modes hereinbe fore specified, and make report of his proceedings accordingly, to the end, that no more may b e collected by the said several modes of proceeding, than one entire satisfaction of the whole amount of principal, interest and costs, which -32- ought t o be pa id by the sa id Sam uel An derson . Andrews, 2 Bland at 642-7 0 (alterations added) (citations omitted). As can be seen, this case is silent as to the distribution of excess funds remaining after accounting for the original purchase price from Scotton, but primarily co ncerned itse lf with the alternativ es availa ble in 18 30, wh en a pu rchase r defau lted, i.e., incarceration for contempt or a resale at the risk of the defaulting purchaser. The Court explicitly reserved a resolution as to the excess sum distribution. If the Chancellor believed at the point of time of a resale that the excess proceeds at the second sale automatically belonged to the defaulting purchaser at the first sale, there would have been no need to reserve determining the distribution of the excess until Scotton s creditors were notified, because the proceeds would not hav e inured to Scot ton s es tate in the first insta nce, bu t to And erson, and thus would not have been av ailable to creditors of Scotton s estate. This case, accordingly, is not a case supporting a common-law holding, even in sales arising out of estate matters, that such a defaulting purchaser is entitled to excess proceeds upon resale. While Andrews and Anderson concerned the remedies against defaulting purchasers, which included a resale, the next M aryland case more directly involved the matter of the distribution of excess proceeds at a resale above the proceeds at the original sale. But again, the sale, while a judicial sale, was not a mortgage or deed of trust foreclosure sale. In other words, there was no private contract involved. In Mealey v. Page, 41 Md. 172 (1874), the original sale was conducted by an executor under a power of sale contained in a will for the -33- purpose of being able to make disbursements to the heirs of the testator. There was no debtor or creditor involved; there was no possibility of a deficiency decree simply because it was not that type of judicial sale. The purchaser defaulted, and, pursuant to a statute, the court ordered a resale of the property at the risk of the defau lting purcha ser. At the res ale the bid was higher than the bid at the original sale. The first sale was un der a power g ranted by w ill, and the second sale conducted pursuant to a statute. Neither arose under an instrument of indebtedness. The Court stressed that all of the proceedings leading to that particular order of resale, had treated the property to be sold at the resale as the property of the defaulting purcha ser. In the instant case, however, upon the failure of the property to bring in a sufficient sum at the original sale, a large deficiency remained, and even after the resale, a deficiency still remained. In both sales in the instant case, it appears that the property being sold was being sold pursu ant to the righ ts of the mortgagee and in which th e mortgag or retained rig hts to see to the sufficiency of the purchase price and the methods of sale, even as to the resale. The two advertisements were identical in identifying the property to be sold as that encumbered by the debt of Theodore B. McCann, and the advertisement for the resale made no mentio n of the re havin g been an initial s ale. Therefo re, in each sale th e property w as sold as that of the debtor. In other words, it would appear that the original mortgagor retains rights to challenge the procedures, advertisement, etc. at the second sale, in order to protect himself from a deficiency. The situations in Mealey, in comparison with the present case, -34- and w ith lien in strume nt forec losure s ales gen erally, acco rdingly, ar e very dif ferent. In Mealey, the Court noted that the resolution of the issue as to whom the excess funds in that type of case belonged depended upon: [A]nother question, and that is, whether the property sold a t the re-sale was sold as the property of the first purchaser, or as that belo nging to the estate of the testator, without reference to any rights or liabilities growing out of the first sale . That Court resolved the issue under the circumstances there present, answering: Instead of rejecting a ltogether the a ppellant s [o riginal defau lting purchaser] claim to the surplus proceeds o f the re-sale, the Orphans C ourt should have disposed of the product of that sale in the following m anner: First, by deducting the costs and expenses attending the re-sale, including a reasonab le fee for services of counsel in filing petition and procuring the necessary orders thereon for re-sale; secondly, by deducting the executor s commissions on the whole amount of the proceeds of the re-sale; thirdly, then the amount of the original purchase money, with interest thereon from the date of the first sale to the time of the receipt of the purchase money by the executor from the purchaser at the second sale; and, lastly, after all these deductions, whatever balance of such proceeds of re-sale may have remained, should have been awarded to the appellant. Id. at 185-86. As is clear no mortgage debt or lien was involved in Mealey. A crucial difference in estate sales as contrasted with lien instrument foreclosure sales, is that in estate sales there is no debtor, and thus, the re is no possib ility of a deficienc y as to the mortgage debt. Moreover, in mortgage and deed of trust transactions, the mortgages or deeds of trust are actual conveyances of property to the mortgagee or trustee, with conditions that cause a defeasance of title upon the satisfaction of the inde btedness. A nd in the sale procedures, the selling en tity is charged w ith making appropriate efforts to generate proper -35- prices, not only to address the satisfaction of the deb t, i.e., protecting the creditor, but also to protect the interests of the mortgago r, i.e., to realize the full value of the land. As indicated, resales generated during proceedings arising out of lien instrument indebtedness foreclosures, encomp ass much more exte nsive interests than the intere sts of the pa rties in Mealey and its p redece ssors. The next case involving this general issue, Early v. D orsett, 45 Md. 462 (1877), also arose out of estate issues and did not involve liens of indebtedness. Again, the court decreed a sale of rea l estate devised by will, for the purposes of distribution amongst the devisees. The original purchaser, Sasscer, first complied with the term s of sale w hich require d him to give bond for the balance of the purchase price. However, before he paid the balance of the purchase price an d had re ceived a deed , he mo rtgaged the pro perty to E arly. Thereafter, Sasscer defaulted on the balance of the purchase price he had bid at the original estate sale, and thus neve r received leg al title to the land, but had noneth eless mortgaged it. The c ourt ordered a resale in respect to the original sale arising out of the estate adm inistration. Early thereafter recovered a separ ate judgm ent (based u pon the de bt secured b y the invalid mortgage) in another separate case against Sasscer (the defaulting purchaser who had mortgaged the property to Early), and issued an attachment against Sas scer and ca used it to be laid in the hands of the selling trustees a s to any and all p roceeds fr om the sec ond estate sale that might belong to Sasscer. No mortgage foreclosure sale was involved in the actions. Early then assigned h is interest in the jud gment to D orsett and o thers. Sassce r, Early, Dorsett -36- and others then began to f ight over w ho was e ntitled to the total proceeds. The total proceeds included the depos it sum that Sa sscer had a ctually paid purs uant to the o riginal sale and the price paid at the second sale. Presumably the total of those sums exceeded Sasscer s bid at the original sale. The Court states the difference as bein g $1,71 8.55. The refo re, te chnically, the case did not involve a bid at the second sale in excess of the bid at the f irst sale, but a combining of the actu al cash dep osit paid at the first sale b efore def ault and the bid price at the resale. Additionally, although there was a mortgage involved (Early s from Sasscer), that mortgage was not an instrument generating the judicial sale involved in that case and Early did not involve a mortgage foreclosure sale under that, or under any mortgage, although one of the issues was whether and what amount of the proceeds Early and or his assigns might be due. The original sale and the resale were primarily sales to produce funds for distribution in an estate. The Court then relied on Mealey: The grounds upon which in a case like this, where there is a re-sale at the purchase r s risk, to enfo rce paymen t of unpaid purchase money, the purchaser is held respon sible for the defic ienc y, and is entitled to the surplus resulting from the re-sale, are very fully stated in the recent case of Mealey . . . . Id. at 466. Accordingly, the first three Maryland cases on the general subject did not involve sales arising out of private c ontracts , i.e., mortgage foreclosure sales, but were sales arising out of estates in order to raise funds for distribution to heirs or other distributees. There w ere no debtors an d creditors directly involved. We find this to be instructive. In those cases there were no other interests to be protected, such as the contractual interests of mortgagees -37- to recover all sums due them, or the contractual rights and interests of mortgagors to protect themselves from deficiency decrees or to recover any equity representing land value due to them for th e value of the land ov er and abo ve the am ount of the mortgage debt. Although it is not entirely clear, it ap pears that Brundige v. Morrison, 56 Md. 407 (1881), also involved proceedings arising out of estate matters. It involved the sale of personal prop erty, and does not appea r to have involved any lien instrument. In that case the Court, consistent w ith the three previous cited cases, held that the original defaulting purchaser was entitled to any excess proceeds between the prices at the second sale and the prices at the first sale. The second sale was a private sale and it is unclear whether the first sale was a priv ate or public sale. The opinion itself cites to no prior cases, although the synopsis contains a reference to Anderson (on risk to the defaulting purchaser issue ) and the earlier case of Billingslea v. B aldwin,20 23 M d. 85 (1 865). Billingslea appears to have no relevance to the present issue, or to the issue it was cited to in Brundige. Aukam v. Zantzinger, 94 M d. 421, 51 A . 93 (1902 ), appears to b e the first case in which the Court opined, albeit only as dicta, in the context of a lien instrument foreclosure sale and su bsequ ent resa le upon defau lt by the orig inal pur chaser , that the defaulting purchaser from the first sale was entitled to the difference in the price paid at the second sa le as it related to the first sale, if the second sale price was higher than the first sale price. In 20 Billingslea also arose out of estate matters involving reversionary interests in real prop erty, and the proceedings appear to be in the nature of complaints for a partition sale. It did no t involv e a fore closure of a m ortgag e or dee d of tru st. -38- the case the Court said , as dicta: The proceedings for a resale, after final ratification, treat the first contract as bindin g on the o rigin al pu rcha ser. T he prope rty is resold as the property of the defaulting purchaser, and at his risk. He is therefore entitled to any excess in the proceeds of sale at the resale, just as he would be responsible for any deficiency. Miller s Eq. Proc., 620 (sec. 526), and cases cited. Aukam, 94 Md. at 427, 51 A . at 95. The o nly cases cited in the section of Miller s Eq. Proc. are Mealey, Early and Brundige, discussed supra, none of which involved mortgage or deed of trust foreclosure sale and resale proceedings. The actual holding in Aukam, however, was that the defaulting purchaser at the first sale had a right to file exceptio ns to the ratifica tion of the se cond sale because under the aforementioned cases, the court believed th at he migh t be entitled to excess proceeds because he was responsible for any shortage . Defau lting purcha sers may we ll have stand ing to file exceptions to the manner in which a resale is held because of their continuing liability for shorta ges, but that circumstance in and of itself, affords them no claim to any excess sums bid at the resale. O nce the sum received a t the resale is ab ove the pric e bid at the initial s ale and also covers the costs of both sales, there is no shortage for which he may be liable. At that point he has no remaining interest to protect in the resale or any claim to proceeds from the resa le. Thus, it is at this point in the evolutionary process, that the language, apparently dicta, in our Aukam decision in 1902, that th e alleged co mmon -law rule that a defaulting purchaser at a mortgage foreclosure sale is entitled to excess proceeds at resale caused by his own -39- default, came into being in this State. In other words, prior to our 1902 Aukam decision, it had not been clearly state d (if stated at all) in Maryland. A dditionally, in con ducting our research into the early origins of lien instrument law in England, we have uncovered no mention of it in the pre -Revolutio n era of tha t country. It is a rule (if it is a rule) that appears home grown, with none of the ancient traditions of so much of our common-law of real prop erty. Acc ordingly, in our resolution of the question posed by the Court as to whether the alleged common-law rule first mentioned in Aukam, should be retained, we are not restrained by a thousand years of the common-law - but restrained only by our own, relatively recent possible creation. Even then, the seeds out of which it grew were not lien instrument foreclosure sales and re sales, but cases involving sales and re sales in respe ct to estate matters, in whic h there w as neve r any que stion of private c ontracts , lien instruments of debtors and creditors, deficiency decrees, the language of lien in strume nts, and the like. Nonetheless, at first glance, an argument can certainly be made that the supposed present common-law rule in Maryland (arising only out of the dicta of Aukam v. Zantzinger, 94 Md. 421, 428 , 51 A. 93, 95 (190 2)) might be that a defau lting purchaser in a foreclosu re sale is entitled, gene rally, to any excess funds stemming from a foreclosure resale which was necessary because of the defaulting purchaser s failure to comply with the terms of the first sale. See Alexa nder G ordon , IV, Gordon on Maryland Foreclosures, § 28.02 at 840 (3d ed. 1994) . -40- Howeve r, another of our early cases was Werner v. Clark, 108 Md. 627, 71 A. 305 (1908), decided just six years after Aukam. The Werner Court discussed the case of State v. Second Nat. Bank of Hoboken, 84 Md. 325, 35 A. 889 (1896), which pre-dated Aukam, but was not mentioned in Aukam. Hoboken involved a specific local law provision in Baltimore City relating to taxing of auction sales. Hoboken is especially important because all of the cases relied on in Aukam arose out of estate sales and thus the language was intended to be applic able in estate sale situations. The sales in Hoboken, however, involved mortgage foreclosu re sales and resales. Thu s, relevant lang uage the C ourt used in Hoboken, that postdated the estate cases relied on by the Aukam court, apparently refers to sales arising out of the foreclosu re of lien instru ments and, as indicated, was not considered by the Aukam court. In Hoboken, there had been a defaulting purchaser at the first sale, and then a resale. Baltimore City was attempting to tax both of the sales. There, the C ourt first addressed the then practice in equity relating to foreclosure sales where the original sale and been set aside due to sale irregularities (not including a de fault by a purchaser): This is, of course, not a case similar to a sale by a Court of Equity after a former sale has been set aside by the C ourt. Of co urse, in such cases, under every principle of law, the first sale is a nullity. The theory upon which it is set aside is that the agents of the Court have not acted prope rly or wisely in makin g the atte mpted sale. In su ch case s there is only one sale. Id. at 327. The Court then discussed the rule as to the general nature of resales when the first sale is not consummated by the original purchaser, which is the situation in the case at bar, -41- and the situation, for that matter, in Aukam: It is obvious the tax or duty is intended to be collected only when there has been a sale that is a consummated sale; and whilst under a judicial resale the property is in fact again put under the hammer, it is put there not as a new, distinct independent procedure, but as a means and solely as a means to realize the money which the original but defaulting purchaser failed to pay. The resale takes place under the original decree, supplemented by an order. It is made by the same trustees, in the same proceedings and with a view to pay off the same indebtedness for the payment of which the property was sold in the first instance, and the money realized by it is always applied precisely as would have been applied the money bid at the original sale had that money been paid by the first purchaser. The resale is simply an execution of the decree for a sale. Its very name imports that it is not such a new sale as to be a distinct proceeding. Hoboken, 84 Md. at 330, 35 A. at 890 (emphasis added). The Court in Aukam failed even to mention Hoboken. Hoboken was subsequent to all of the cases mentioned in Millers Equity Pro. relied on by the Aukam court - Billingsly (1865), Bundridge (1881), Early (1887), Mealey (1874), Scotten (1830) and Anderson (1828). Accordingly, the Court in Aukam relied on the language in opinions arising out of estate cases not involving lien indebtedness predating 1888, when there was an 1896 case which discussed, albeit also as dicta, the contrary procedures to be used when the judicial sales and resales resulted from defaulting purchasers under lien in struments . Accordingly, the Aukam Court relied on inappropriate authority when it arrived at its dicta. Almost immediately afterwards in 1908 the correct procedure from Hoboken was laid out in the Werner case, but apparently not thereaft er cle arly recognized. The case of Mizen v. Thomas, 156 Md. 313, 144 A. 479 (1929), also concerned the -42- procedures when there was a defaulting purchaser and a resale, but in a somewhat different context, although it w as concern ed with de ficiencies in re spect to the o riginal mortg age debt, which is also an issue in the case sub judice. The Court described the issue there as: The only que stion pre sented . . . is whether, where a trustee, appointed to make sale of mortgaged property to satisfy the debt secured by the mortgage, reports a sale of the prop erty to the purch aser, and pe rmits the sale to be ratified, and subsequently, upon the failure of the purchaser to com ply with the terms of sale, asks permission to resell the property at the purchaser s risk, the mortgagors remain liable for any deficien cy [in the mortg age debt] which may result after applying the net procee ds of the re sale to the payment of the a moun t due un der the m ortgag e, plus in terest an d costs. Id. at 317, 1 44 A. a t 481 (a lteration added ). The first sale purchase price was $11,600; the resale price was $5,670.83, a shortage of more than five-thousand dollars.21 The first sale price, had it been paid, wou ld have be en sufficie nt to pay off th e mortgag e indebted ness in full. The lower price bid at the second sale, however, resulted in a deficien cy in respect to the mortgage debt of $5 ,805.87. T hus, the resa le resulted in a deficiency which was also a shortage although the respective sums of each may have been diffe rent. The mortgago rs were contending that they were entitled to be credited on the mortgage debt with the price bid at the first sa le on the the ory that, [W]hen the trustee allowed the sale to be ratified and stand, said Laurel Development Company [the defaulting purchaser at the first sale] was thereby 21 For c larity o f term inology th is Co urt uses defi cien cy to indicate the difference between the mortgage foreclosure sale price and the mortgage debt and employs shortage to refer to any negative difference in the prices obtained at the first foreclosure sale and at the resale. The mortgagor remains liabl e for a def icien cy, while the defaulting pu rchaser, on the other hand, assumes the risk upon resale that there will be a shortage between the price at the first sale and the price at the second sale. -43- accepted not merely as the equitable owner thereafter of said property, but as the party solely entitled to any of the surplus should such resale have resulted in a surplus, and solely liable for any deficiency resulting from said resale, and that said trustee shou ld be require d to prosecute his [deficiency] claim against said Laurel Development Company [the defaulting purchaser of the first sale] for this reason. Id. at 316, 144 A. at 48 0 (alterations added). In other words, the original mortgagors were relying on the theory arising out of the pre-Aukam judicial sales involving estate sale situations, the very cases on which the Aukam Court, via Miller s Equity Proc., had relied in its discussion. The mortgagee s assignee argued, however, that: [N]eith er the ratification of the sale to an irresponsible and defaulting purchaser, nor the resale at the purchaser s risk, could affect the liability of the mortgagors for the payment of the mortgage debt, nor their liability for the payment of any deficiency resulting from the inadequacy of the mortgaged proper ty to satisfy th at debt. Mizen, 156 Md. at 318, 1 44 A. a t 481 (a lteration added ). The Court than described the situation that resulted, in exactly opposite terms than the Aukam Court h ad desc ribed it tw enty-six yea rs earlier . If we disregard technicalities, and look only at the actualities, the case is rather a simple o ne. The trustee attempted to sell mortgaged property to a purchaser who happened to be wholly worthless and irresponsible, but the sale was never consummated because the purchaser failed to comply with its terms [the case here]. The property was then resold at the purchaser s risk, but the proceeds of the resale w ere not sufficient to pay the mortga ge deb t. Prior to the resale the title to the prop erty rema ined in the m ortgagor s, because it could not have been divested except by deed, and no deed was given, and after the resale a part of the mortgage debt still remained due and unsatisfied [the exact sa me situa tion exis ts in the p resent c ase]. -44- Mizen, 156 Md. at 318, 144 A. at 481 (alterations added) (em phasis added). The Court goes on to note that where in such a case as this the trustee reports a sale which in due course is finally ratified, the tran saction is spoken of as a sale, and for many purposes it may be treated as a sale, and no mischief is occasioned by that use of the word, Id. at 322, 144 A. at 483, and cites to Miller s Equity Proc., sec. 512, relied on by the Aukam Court. It continues, however, to explain further what really happens, in language that contradicts that in Aukam, and is distinguishable from the cases prior to Aukam, in that those prior cases involved sales arising o ut of es tate distrib utions, n ot forec losures . But strictly speaking it [the original mortgage foreclosure sale] is not a sale, for a sale of real estate is not complete or consummate until the property has been actually conveyed, or at least until the purcha ser has so f ar complie d with the terms of sale as to entitle him to a conveyance . The bid of the purc haser, its acceptanc e, the report o f the trustee, an d its final ratifica tion by the cou rt, are all successive steps in the formation and completion of a perfect and binding contract of sale, but do not amount in themselves to an actual sale. Nor can the property be treated as actually sold until the terms of sale have been met or waived, and the purcha ser has rece ived or is en titled to receive a conveyance thereof . For until then the title to the property is still in the mortgagor, and the only interest acquired by the purchaser is the right to receive a conveyance of the property upon complying with the terms of sale. We are not now dealing with the rights and risks of the purchaser arising under a complete but executory contract of sale, but with the question as to whether there has bee n an ac tual exe cuted s ale. Therefore such exp ressions as are found in . . . Miller s Equity Proc., sec. 512 [The exact section relied on by the Aukam Court], are not strictly applicable, and the statement in Lannay v. Wilson, 30 Md. 550, that a purchaser under a decree in equity becomes the substantial owner of the property from the moment of final ratification of the sale, and he is entitled to and can recover the rents and profits of the estate. He is not only entitled to the possess ion of the p roperty, but it remains at h is risk, notwithstanding the legal title may not be con veyed, was necessarily limited to the facts of the case, and evidently was not intended to be of general application. For it would be singular indeed if a defaulting purchase r could -45- oust the rightful owner fro m the possession of it, without either paying or securin g the pa yment of the pur chase p rice. . . . ... The property wa s sold at the purch aser s risk, but th at did not mean that it was [re-] sold as its property, for it was not. It was [re-]sold as the property of the mortgagors, for notwithstanding the ratification of the [first] sale to the purchaser, since it never complied with the terms of sale and the property was never conveyed to it, the title remain ed in the m ortgagors. A nd it was sold at the purchaser s risk, not because he owned the property, but because he had failed to perfor m his co ntract to buy and pay for it. Mizen, 156 Md. at 322-25, 144 A . at 483-84 (alterations added) (citations om itted). Later, addressing the Mizens interpretation of the language in the Werner case, supra, the Court no ted that Werner, just six years after Aukam, had basica lly rejected the Aukam holding, statin g in relevan t part: Appe llants contend that the case last cited [Werner] is not in poin t, because it only decided that the mortgagors had a right to except to the ratification of a resale when the price realized was less than that accepted at the first sale, but it decided more than that. Because, in deciding that, it had first to decide that the mortgagors had an interest in the property. And since they [the mortgagors in Werner who were trying to except to the ratification of the resale in that case] would not have been entitled to any excess of the amount realized at the second sale over the amount offered at the first sa le (Aukam v. Zantzinger, 94 Md. 421), their o nly interest must h ave been their liability to pay any deficiency in the mortgage debt resulting from the resale. For if the mortgagors [in Werner] were not entitled to share in any surplus realized from the resale over the amount n eeded to p ay the mortga ge debt, interest, and costs, what interest could they have ha d in it excep t their liability to pay any deficiency remaining after the application of the proceeds of such resale to such d ebt. Mizen, 156 Md. at 328 , 144 A. at 485 (alterations add ed). The Cou rt tha n dis cuss ed an othe r fac tuall y different c ase, Continental Trust Co. v. Baltimore Refrigerating & Heating Co., 120 Md. 450, 87 A. 947 (1913), that had quoted -46- from the Mealey case, one of the cases in Miller s Eq uity Proc., sec. 512, which in turn was relied upon in Auka m, the case that first stated that a d efaulting p urchaser is entitled to the excess price upon resale. The Court in Mizen said: [I]t [the court in Continental] did quote w ith approva l an express ion in Mealey . . . to the effect that property resold at the risk of a defaulting purchaser was sold as his property, but in Werner v. Clark, supra, in referring to that expression, it was said: But the last clause of the sentence just quoted, which we have underlined, shows conclusively that the distinguished judge who wrote that opinion [the Mealey opinion] did not mean to be understood as saying that the defau lting purcha ser was to be regarded as the owner of the prop erty, but that he meant that in any event the proceeds of the resale, after payment of costs an d comm issions prop erly allowable, was to be applied to the amount of the purchase money due on the former sale [the entire mortgage debt due under the mortgage], without regard to whom such amount was due. Mizen, 156 Md. at 328 , 144 A. at 485 (alterations add ed). Acc ordingly, the theory relied upon in Aukam, within twenty-six years of its holding had been distinguished if not virtually discredited and overruled in two subsequent cases. McCann v. McGinnis, 257 Md. 499, 263 A.2d 536 (1970), includes Aukam in a string cite for the proposition, albeit as dicta, that the statute at issue there applied to mortgage foreclosure sales conducted un der powers of sale. In its discussion, however, the McCann Court relied on what had been said in Dalrym ple v. Tane yhill, 4 Md. Ch. 17 1 (1853): The Act of 1841, ch. 216, under which the proceeding for a resale was had, gives no countena nce to the id ea that a non -complying p urchaser is regarded as the owner of the estate sold by a trustee. It authorizes a resale of the property at his risk, b ut not as his prop erty, on the contrar y, the order which the Court is authorized to pass by this Act, and the order which was in fact passed in this case is a revocation of the order confirming the sale and destroys any inchoate title which the first -47- purchaser may have acquired by the confirmation. McCann, 257 Md. at 508, 263 A.2d at 540-41 (emphasis added) (quoting Dalrym ple, supra). The McCann Court, addressing the issue bef ore it, whether a defaulting purchaser remains liable for shortages between the purc hase price a t the first sale an d the purch ase price at a resale, also noted: Apparently the chancellor . . . [was] under the impression that a rescission of the order of ratification of the sale a utomatically relieves the p urchaser o f responsib ility for any loss in the event of a resale. At least since Dalrymple v. Taneyhill, supra, such has not been the case. McCann, 257 Md. at 511, 263 A.2d at 542. Similarly, we held in Mizen, 156 Md. at 329, 144 A. at 485, that a resale does not affect the obligation of the mortgagors to pay the mortgage debt, and that they remained after the resale, as they were before, personally liable for the payment of any deficiency remaining after the application of the net procee ds of a ny comp leted sal e of the proper ty under a foreclo sure of the mo rtgage. Both parties contend that, while this Co urt has not specifically discussed the Aukam proposition for nearly one hun dred years, it has n ever been explicitly overruled. As we have indicated, the present Court has examined Aukam and views the underlying basis of its dic ta as limited to situations involving judicial sales ar ising out of estate matters . Moreo ver, its holding was limited to permitting defaulting purchasers at a first sale to file exceptions to the second sale because the first sale defaulting purchaser had possible liability for the difference if a lesser price was realized at the second sale. Nonetheless, the question raised by the petitioner in the case sub judice is whether -48- such an alleged common-law principle may be waived by an express contractual term in the advertisement of sale, a term to which the defaulting purchaser freely consented. The questions added by the Court are whether the Aukam holding sh ould be in th e law in Maryland and whether a defaulting purchaser should be entitled to reimbursement from surplus funds for property improvement and/or repair costs prior to resale. Our holding ren ders petitione r s question m oot. It is incorrect to assert that Maryland s common law permits a defaulting mortgage foreclosure purchaser to obtain the excess proceeds from a resale of the mo rtgaged proper ty. We ho ld that it d oes no t. We now further address the Court s questions in turn. Before we continue to analyze the case sub judice, it is also important to set out a brief background of other principles involved in judicial sales of foreclo sed prope rty and gene rally of the rights held by purchasers of foreclosed property after the sale. A. Judicial Sales As indicated, the power o f sale or asse nt to decree for sale of a de faulting mortgagor s property is now authorized statewide by Md. Code (1974, 2003 Repl. Vol.), § 7-105 (a) of the Real Property Article, which states: A provision may be inserted in a mortgage or deed of trust authorizing any natural person named in the instrumen t, including the secured party, to sell the property or declaring the borrower s assent to the passing of a decree for the sale of th e pro perty, on default in a condition on which the mortgage or deed of trust pro vides th at a sale m ay be ma de. A sale made pursuant to this section or to the Maryland Rules, after final ratification by the court and grant of the property to the purchaser on payment of the purchase money, has the same effect as if the sale and grant were made under decree between the proper -49- parties in relation to the mortgage or deed of trust and in the usual course of the court, and operates to pass all the title which the borrower had in the proper ty at the tim e of the record ing of th e mortg age or d eed of trust. This Court has long said that such a power of sale is derived from the contract of the parties contained in the deed of trust. Waters v. Prettyman, 165 Md. 70, 75, 166 A. 431, 433 (1933). The judicial sale in the case sub judice was authorized by a power of sale clause within a 1993 deed of trust, and such clauses generally allow a trustee to sell the property at a public auction after defa ult by the mortgagor. If a mortgage or deed of trust contains a power of sale, then the procedures for the subsequent sale are governed by Title 14, Chap ter 200 of the M aryland R ules. See Md. R ule 14-20 1 (a) (sta ting, inter alia, that [t]he rules in this Chapter apply to foreclosure of liens upon property that are created or authorized to be created by a lien instrument or are created by a statute providing for foreclosure in the manner specified for foreclosure of mo rtgages ). Md. Rule 14-2 02 (a) discu sses whic h parties ma y institute actions under power of sale or assent to decree actions. Md. Rule 14-202 (b)(1) sets out the requirement that an action cannot be instituted unless the p ower [o f sale] is exerc ised or app lication for an order is made or consented to by the holders of not less than 25% of the entire debt due under the lien instrum ent, while Md. Rule 14-202 (c) lists the exception to Rule 14-202 (b)(1) for actions to foreclose a deed of tru st. Md. Ru le 14-203 concerns conditions p recedent to a sale as w ell as the venue for the sale. Specifically, Md. Rule 14-203 (a)(1) requires: An action to foreclose a lien may be filed after (A) the instrument creating or giving notice of the existence of the lien has been filed for record, and (B) -50- there has been a default in a condition upon which the lien instrument provides that a sale may be made or there is a default in the payment of the debt secured by a statuto ry lien. Commencement of the action is governed by Md. Rule 14-204, which does not require a hearing to be held prior to sale. The procedures prior to a fo reclosure sale, including the notice requ irements, are governed by Md. Rule 14-206. Md. Rule 14-206 (b)(1), which outlines the specific notice by publication requirements, states: After commencement of an action to foreclose a lien and before making a sale of the property subject to the lien, the person au thorized to m ake the sale shall publish notice of the time, place, and terms of sale in a newspaper of general circulation in the county in which the action is pending. Newspaper of general circulation m eans a new spaper satisf ying the criteria set f orth in Code, Article 1, Section 28. A newspaper circulating to a substantial number of subscribers in a county and customarily containing legal notices with respect to property in the county shall be regarded as a newspaper of general circulation in the county, notwithstanding that (1) its readership is not uniform throughout the c ounty, or (2) its content is not directed at all segments of the population. For the sale of an interest in real property, the notice shall be given at least once a week for three successive weeks, the first publication to be not less than 15 days prior to sale and the last publication to be n ot more than on e wee k prior to sale. 22 Md. Rule 14-206 (b)(2)(A) requires that notice of the time, place, and terms of sale by certified and first-class mail be sent to the last known address of the debtor, the record owner of the property and the holder of any subordin ate interest in the property subjec t to the lien . The actual sale of the property is govern ed by M d. Rule 14-20 7. Md. Rule 14-207 (b) discusses the person authorized to make the sale of the foreclosed property for actions under 22 See also Md. Code, Real Property, Section 7-105 Sales, supra. -51- a powe r of sale or an as sent to d ecree. A trustee autho rized to ma ke a sale pu rsuant to Md. Rule 14-207 (b), for either a power of sale or an assent to decree, must be a natural person. Md. Rule 14-207 (c) sets forth the terms of payment under each type of sale. Pursuant to Md. Rule 14-207 (d ), [t]he proc edure follo wing a sa le made p ursuant to this Rule shall be as provided in Rules 14-305 and 14-3 06, excep t that an aud it is mand atory. (alteration added). 23 Md. Rule 14-305 (a) mandates that the person authorized to make the sale shall file with the court a complete report of the sale and an affidavit of the fairness of the sale and the truth of the report. Md. Rule 14-305 (b) mand ates that the purchaser file an affida vit before the sale can be ratified. Md. Rule 14-305 (d) allows for any holder of interest in the prope rty to file exceptio ns to the sale and autho rizes the cou rt to hold a hearing on those exceptions. Md. Rule 14-305 (e) calls for the court to ra tify the sale if (1) the time for filing exceptions . . . has expired and exceptions to the report either were 23 Gen erall y, Title 14, Chapter 200 of the Maryland Rules governs the foreclosure of lien instruments such as a foreclosure action pursuant to a power of sale or an assent to a decree provision contained within a mortgage or deed of trust. Title 14, Chapter 300, however, governs all s ales of prope rty tha t are s ubje ct to r atificatio n by a court, except as is otherwise specifically provided in Maryland Rules 2-644, 3-644 and Chapter 200 of T itle 14. Therefore, Chapter 300 applies to foreclosure sales as much as is specifically provided for by Chapter 200 of the Maryland Rules. Maryland Rule 14-207 (d) s language calls for the post-sale procedures to be governed by two Chapter 3 00 rules (ex cept that an a udit is mandatory), specifically, Md. Rules 14-305 and 14-306, while the remaining Chapter 200 rules control pre-s ale and sale procedures for foreclosure actions under both pow er of sale and assent to decree provisions. In this case, as court ratification of a sale and resales are post-sale procedures, we are concerned, generally, with Md. Rule 14-305, because Md. R ule 14-207 (d) states that Rule 14-305 shall control these procedures. The only Chapter 200 provision governin g resales is M d. Rule 14-207 (e), which authorizes the court to order the resale to be conducted by the person making the previous sale or a special appointee. The record in the case sub judice presents no issue with regard to this rule. -52- not filed or were filed but overruled, and (2) the court is satisfied that the sale was fairly and properly made. Furthermore, [u]pon ratification of a sale, the court . . . may refer the matter to an auditor to state an accou nt. Md. Rule 14 -305 (f) (alteration added). Fina lly, where a purchas er fails to com ply with the term s of settle ment, i.e., defaults, Md. Rule 14305 (g) states that the court, on application and after notice to the purchaser, m ay order a resale at the risk and expense of the purchaser or may take any other appro priate ac tion. Where such a resa le is ordered b y the court, the c ourt may ord er that the pro perty be resold by the person who made the previous sale, or b y a specia l trustee a ppoint ed by the court. Md. Rule 14 -207 (e). In Plaza C orp. v. Alban T ractor Co., Inc., 219 Md. 570, 578, 151 A.2d 170, 174 (1959), in the context of a foreclosure sale resulting from a defaulted mortgage for chattels and real property, we stated: The sale under the decree did not pass the title to the property sold until the sale was ratified and con firmed. Before ratification the transaction was me rely an offer to purchase which had not been accepted. The court was the vendor acting through its agent, the trustee, who had been appointed to make the sale. When he reported the offers of the bidders for the property to the court, no contracts of sale had been completed and no title had been transferred to the prospective purchasers. But, when the offers were accepted a nd the sales to the respective bidders were ratified and confirmed (and the purchase money paid), the contrac ts of sale bec ame com plete and th e title to the prop erty sold passed . [Em phasis a dded.] Cf. Hickey v. Peck, 180 Md . 289 , 297 -99, 23 A .2d 7 11, 7 16-1 7 (19 42) ( explaini ng, g ener ally, that in the context of a tax sale, a sale made under a decree of a court is subject to the approv al of the court). -53- The trustees, acting under a power of sale, must c omply with certain duties and equitable principles in order for the sale to be ratified and the contract formed. Even then title does n ot pass u ntil the co ntract is p erform ed, i.e., the purchase price paid. The r ole and duty of the trustees in these contractual sales was aptly stated by the intermediate appellate court in the present case, when that court said: Trustees acting und er a pow er of sale co ntained in a deed of trust have discretion to outline the manner and terms of sale, provided their actions are consistent with the deed of trust and the goal of securing th e best obtain able price: While the discretion in the mann er and term s of sale, lodg ed in the trustee und er the terms o f the deed of trust, is contractual, and gives a w ider latitude to th e trustee than that ordinarily allowed trustees making sales under orders or decrees of the court, yet such discretion has never been held to be unlimited. When a sale thus made is attacked, it must be shown that the trustee did not abuse the discretion reposed in him, and that the sale was made under such circumstances as mig ht be fairly calculated to bring the bes t obtaina ble price . The trustee not only represents the holder of the note secured by the deed of trust, but also the owners of the property, who would be entitled to any surplus remaining after the payment of expenses and the note secured by t he dee d of tru st. The power of sale is derived from the contract of the parties contained in the deed of trust, but the report of the sale must be made to and ratified by the court [and the purchase price paid] before a deed for the property is given by the trustee to the purchaser. Upon the sale being reported to the court, it assumes jurisdiction and perm its those intereste d in the sale o r the proceeds thereof to file objections to its ratification. Upon such being filed, it is the duty of the court, in orde r to ratify the sale, to ascertain tha t it was fairly made and under such circumstances and conditions as might be reasonably expected to have produ ced the largest p rice obta inable. Waters, 165 Md. at 75, 166 A. 431 (emp hasis adde d); see also Miller, § 456 at 538 (mortgagee acting under power of sale acts not for himself alone, but -54- as a fiduciary, and for the ben efit of all parties interested in the pro ceedin gs ). White, 152 M d. App . at 241- 42, 831 A.2d a t 524-2 5 (foo tnote om itted). A trustee mus t com ply w ith the duties of obtaining the best possible price for the lender without u nfairly prejudicin g the purch aser befor e the sale will be ratified by the court. Once the court ratifies the sale, e quitable title passes to the purchaser. We said in Merryman v. Bremmer, 250 Md. 1 , 241 A.2d 558 (196 8) (althoug h in the con text of a jud icial sale arising out of estate proceedings and not a foreclosure sale (the post-sale proceedings for both types of actions currently are governed by the same rules, Md. Rules 14-305 and 14306)), that: 24 When the sale is finally ratified, the purchaser s inchoate equitable title, acquired at the time of the acceptance of his offer by the trustee, becomes complete and the purchase r s equitable title is e stablished retro actively to the time of the original a cceptance of the off er by the trustee. T he purch aser is entitled to the rents and profits of the land sold as he has become the substantial owner o f the prope rty. He is not only entitled to possession of the property, but it rem ains at his risk, even thou gh le gal ti tle m ay not be conveyed. If the land appreciates in value that benefit accrues to the purchaser; if it depreciates in value that is the purchaser s loss. The purchaser is entitled to maintain his equitable title as the substantial owner of the land until he i s diveste d of it as provid ed by law . Merryman, 250 Md. at 8, 241 A.2d at 563 (citations om itted). 24 While Merryman and some of the other previously cited cases did not arise out of foreclosure proceedings either pursuant to a power of sale or an assent to decree provision, they are noneth eless applica ble becau se of M d. Rule 14-20 7 (d). As previously mentioned, Rule 14-207 (d) states that post-sale procedures of an action under Title 14, Chapter 200 of the Marylan d Rule s, i.e., foreclosure actions arising out of either a power of sale or an assent to decree provision, are to be governed by Md. R ules 14-30 5 and 14 -306. The post-sale procedures of other judicial sales, such as sales arising out of an e state procee ding like in Merryman, likewise are now governed by those rules. -55- In Merryman, we held th at a purcha ser does no t lose equitab le title and keeps the right to pay the purchase price in full to o btain the deed whe re, after a sale was ratified, the trustee failed to petition the co urt to comp el a resale and th e purchas er delayed in completing the sale for 20 years. U nless the trustee ta kes actio n, i.e., petitions the co urt either to set aside the sale or to compel a resale, the purchaser maintains e quitable title, all risk o f loss on the property and the right to complete the sale by paying the full purchase price.25 Although we stated in Merryman that the increase in value between the sale and conveyance of title accrued to the purchaser, it was in the context of a non-de faulting pu rchaser an d did not involve a resale. B. Resales Although this Court has stated that a purchaser in some types of judicial sales and under some circumstances does not necessarily lose his equitable title in a property after technically defau lting on the paym ent of th e purch ase pric e, see Merryman, 250 Md. at 1112, 241 A.2d at 565-66 (holding that a purchaser did not abandon his equitable title and right to pay fully the purchase price where the trustee did not petition the court for a resale and the purchaser was ready, willing and able to pay the purchase price, although 20 years had passed after the ratification of the sale), the trustee, under mo st circumstan ces of def ault, will normally petition the court to order a resale of the property pursuant to Md . Rule 14-305 (g), which, as previou sly mentioned , states that the resale is at the risk and expense of the 25 In Merryman, we additionally noted that with a long delay between ratification and the completion of the sale due to the fault of the purchaser, the trustees may be entitled to the equitable relief of reim burseme nt of the tax es paid by them w ith certain interest. Merryman, 250 Md. at 12, 241 A.2d at 555-56. -56- purcha ser. The order of resale revokes the ratifi cation o f the firs t sale. See McCann and Dalrym ple, supra. A resale, ho wever, is w ithin the continuation of the original foreclosure even though ad ditional con ditions may attac h to the resale. That wa s pointed o ut in Hoboken, supra, where a decree was passed for the sale of a mortgaged property and the purchaser defaulted on the balance of the purchase mon ey. As stated earlier, this Court said the following in reference to judicial resales relating to defaults of lien instruments: [W]hilst, under a judicial resale the property is in fact again put under the hammer, it is put there not as a new, distinct independent procedure, but as a means and solely as a m eans to realiz e the mon ey which th e original but defaulting purchaser failed to pay. The resale takes place under the original decree, supple mente d by an o rder. It is made by the same trustee s, in the same proceedings and with a view to pay off the same indebtedness for the payment of which the property was sold in the first instance, and the money realized by it is alw ays applied precisely as would have been applied the money bid at the original sale had that mone y been paid b y the first purcha ser. The resa le is simply an execution of the decree for a sale. Its very nam e imports tha t it is not suc h a new sale as to be a dis tinct pro ceedin g. State v. The Second Nat l Bank of Hoboken, 84 Md. at 330, 35 A. at 890 (alteration added). See also Continental Trust Co. v. Baltimore Refrigerating & Heating Co., 120 Md. at 451, 456-57, 87 A. at 949-50 (in the context of a judicial sale and resale arising out of a mortgage to secure an issue of two thousand bonds of the p ar value of $1,000.00 each. ); Werner, supra, 108 Md. at 635, 71 A. at 309 (19 08) (pow er of sale fo reclosure); Schaefer v. O Brien, 49 Md. 253, 256 (187 8) (sale and resale of m ortgaged p roperty after de fault by mortgagor). We hold that there is no co mmon -law rule in M aryland that a de faulting pu rchaser is entitled to excess proceeds realized at a resale, nor should there be. Any interpretation of -57- Aukam to the contrary is rejected. C. The Mortga ge Foreclosure Process Protection of the Mo rtgagor s Interest The process of selling the w hole prop erty at foreclosu re dates bac k to the 178 5 statute and the inte rpretation of it by our 1835 Boteler case, supra. Our interpretation in that case recognized that the statute was designed to protect m ortgag ors. Boteler recognized that although the statute app eared to req uire that only that p ortion of m ortgaged p roperty sufficient to pay off the mortgage debt was to be sold, it was impractical to do so because there was no w ay to determine in advance how muc h property sho uld be off ered for sa le because there was no way to p redict wha t the bids for the property would be. Thus, the Boteler Court provided as an alternative that the whole property be sold with surplus proceeds going to the mortgagor. That early statute recognized that the mortga gor was to retain the land not neede d to satisfy the debt. It was intended to insure that the mortgagor only lost so much of the land as was nec essary to pay the debt. When that process proved impractical, the Court devised another method o f insuring th at the mortg agor retaine d the value of land no t needed to be sold to pay off the mortgage debt, by perm itting the sale of all of the la nd but retur ning to the mortgagor any sums rece ived abov e the costs of sale and the mortgage debt as representing the value o f the land a bove the a mount o f the mortg age debt. Thus, clearly, from ve ry early days, the practice o f mortgage foreclosures was designed to (1) pay the expenses of sa le, (2) pay off the mortgage debt, (3) return to the -58- mortgagor the surplus as representing the true remaining value of the property sold. (Later, of course, other holders of liens, judgments, etc. were inserted into the priorities for payment out of s urplus f unds.) Were the original intents of the 1785 statute to have been accepted and were sales held as that early statute indicated, there would never have been any surpluses or deficiencies. No claims by defaulting purchase rs at a first sale ag ainst excess proceeds at a resale could have been poss ible. The re w ould not b e any. Thus, as we have stated, the underlying origins of the proper priorities to be applied to sums received at any foreclosure sale, be it an initial sale or a resale, have been for over two hundred years to primarily protect the interests of mortgagors and mortgagees. Absent statutory modifications, and we know of none relating to interests of defaulting purchasers in the excess proceeds at resale (and the parties have not directed our attention to any such statute), defaulting p urchaser s have no claim aga inst excess p roceeds a t the resale, alb eit they rem ain liab le for s hortag es. We have undertaken an extensive review of the developm ent of mortgage f oreclosure sales and our examination makes clear that preservation and protec tion of the mortgago r s and the mortgagee s interests have emerged over historical time as the paramount considerations. As the common-law governing lending practices gradually evolved from the draconian strict foreclosure to the more m odern approach that provides the defaulting debtor, not only a right to redeem the property by payment of the outstanding lien instrument debt -59- even after default, but also the ability to derive some benefit from the equity he may have accrued in his property, even in the event of a default, courts have sough t outcomes that are equitable and fair both to the mortgagee and to the mortgagor and other creditors. That is, the mortgage foreclosure process, in its present form , seeks to assure that if any value remains in the prope rty after the credito r (or creditors) h as received full paymen t, it goes to the mortgage deb tor. The antithesis of f airness wa s the early 18 th century (and before) practice of strict mortgages and strict foreclosure, which deprived a defaulting mortgagor of the entire value of the property even where he had defaulted on only a very small portion of the lien instrumen t, and practice of ejectment a ctions, in which mortgag ees who, at that time, w ere the title-holders of the pledged property endeavored to clear the title of the conditions that might allow the debtor to retake the property following a default. Enforcement by courts of these conveyances with, at times severe, conditions seemed to overlook, as stated in our earlier discussion of Venable s The Law of Real Pro perty, the fact that the real nature and intent of the transaction was that the land was to be held a s a security for a debt. Id. at 177. Over time, courts of equity began to ascertain that mortgagors use of their equity of redemption was an expression of the different interests that the mortgagor and the mortgagee held in the property. In discussing the parties interests in Washing ton Fire Ins . Co. v. Kelly , 32 Md. at 440, we stated: Courts of Equity, though a mortgage be forfeited, and the estate absolutely vested in the mortgagee, at common law, yet they will allow the -60- mortgagor, at any reasona ble time, to redeem his estate. So lo ng as the es tate can be shown to have been treated as a pledge, there is a recognition of the mortga gor s title . Thus, our Cou rt recognize d that while the mortga ge is intende d to secure the d ebt, both the interests of debtor and of creditor command certain protections, even in the event of defau lt. In a mortgage context, the property s primary purpose is to secure the repayment of a debt. Sho uld the mo rtgagor fail, once a period of time has elapsed following his default, to repay the entirety of the remaining debt so as to retain and/or recover the property, statutes enable the mortgagee to petition the court for a bill of foreclosure or to proceed to foreclose under the supervision, generally, of the court, while also protecting the mortgagor from complete divestiture of his interest. As indicated, we discussed in Boteler an d Belt v. Brookes, supra, the 1785 s tatute whic h apparen tly was Ma ryland s first statute requiring the sale of the mortgaged premises in default situations and establishing the role of the equity courts (i.e. the chancellor) in ratifying the foreclosure sale and assuring proper priority of payment of the mo ney raised by the sa le through a udits. Boteler noted the Legislature s direction that a sale should occur of only that portion of the property sufficient to satisfy the outstanding mortgage debt, but the Boteler court also lamented that there was no form ula to assure that a designated portion of th e property w ould produce, with certainty, a specific sum of mone y. 7 G. & J. at 154. Thus, the trustee s d uty to satisfy the deb t at the foreclo sure sale might result in a surplus of funds. Accordingly, this 1785 law, as interpreted by the Boteler court, provided that the sale proceeds were to be applied first to the costs of sale, then to the -61- mortgage debt and to interest owe d to the mortgagee. If a surplus remained, however, the mortgagor was entitled to receive it, his lien instrument debt having been discharged. App aren tly, because the price bid at the sale reflected the true value of the property, he was entitled, after paymen t of the mo rtgage deb t and costs, to receive the residual value as reflecting the remaining value of his land. Although the foreclo sure sale cu ts off the m ortgagor s e quitable right of redemption, his legal interest in h is property does not cease until the foreclosure sale is complete and a conveyance has occurred. We stated in Union Trust, supra, that the foreclosure sa le purchaser acquires the equitable interest in the land commensurate with that conveyed by the mortgage deed, and he was e ntitled to the leg al title upon the final ratification of the sale by the court an d the payme nt of the pu rchase mo ney. 153 M d. at 55, 137 A. at 512. Full vesting of his interest, therefore, is subject to his obligatio n to pay wh ich, in turn, is subject to the right to enforce the p ayme nt of any of the purc hase mon ey by a resale at the risk of the buyer. Id. at 55-56, 137 A . at 512. Thu s, when th e purchas er defaults, w hether due to his/her unwillingness or inability to consummate the sale, the f oreclosure process is interrupted, the sale incomplete, and the defaulting purchaser s title remains inchoate. Therefore, a resale is needed to pay off the same indebtedness for the payment of which the property was sold in the first instance, and the money realized by it is always applied precisely as would have been applied the money bid at the original sale had that money been paid by the first purchaser. Hoboken, 84 Md. at 330, 35 A. at 890 (emphasis ad ded). The -62- trustees receipt from the court of a decree for resale divests the defaulting purchase r of his equitable title as the substantial owner of the land. Merryman, 250 Md. at 8, 241 A.2d at 563. As indicated supra, the order of resale effectively revokes the ratification of the first sale. This is not to say that the dec ree necess arily cuts off the defaulting purchaser s interest in the outcome of the resale. He may have an interest because he is respon sible for shortages. He may retain the right to exce pt to the w ay the resa le was h eld, i.e., advertis emen ts, etc., but he has no right to claim excess funds. Our cases have recognized that a defaulting purchaser s interest at the resale is in addition to the undiminished interest of other parties (mortg agor, m ortgag ee, junio r lien ho lders, etc .) that existed at th e foreclosu re sale as w ell as at subsequent sales. We stated in Lannay v. Wilson, 30 Md. 536, 550 (1869), a case involving a judicial sale by a trustee, that the dry legal title, and the right of possession often become complete ly severed, at least f or a time, the legal title remainin g in some of the parties to the cause, while the e quitable estate and right to possession become vested in the purcha ser. See als o Dalr ymple v. Tane yhill, M izen v. T homa s, and McCann v. McG innis, supra. It is the defaulting purchaser s exposure, on the other hand, that somewhat differs from that of the other parties. The trustee (or assignee) at the foreclosure sale and at the resale, acts on behalf of all parties and seeks to enforce the payment of the p urch ase m oney; and one of th e mo st effect ive w ays to accom plish that is a resale of the property at the risk of the purchaser. Aukam, 94 Md . at 427, 51 A. at 95. We have defined the risk to the -63- defaulting purchaser as his liability, stemming from his failure to perform his obligations arising out of the initial sale, that if there be a shortage between the price he bid at the foreclosure sale and the price that the property fetches at the resale he w ill be respons ible to the other parties, i.e. the mortgagee, the mortgagor or trustees, if applicable. Since at least 1785, the Court, then, has remained cognizant of the need to protect the interests of the mortgagor, who has not been relieved of his liability for a deficiency on the mortgage at any time during the sale and resale in the foreclosure process, as well as the interest of the mortgagee who has invoked the power of the court in pursuit of satisfaction of the debt owed to him. In some cases, however, proceeds in excess of the price at the initial sale and also in exce ss of that n eede d to s atisf y the mortgage debt, other liens, costs of sale and commissions may be realized at the resale. In Andrews, supra, our 1830 case involving a judicial sale arising from an estate matter, this Court, even in an estate judicial sale, left open the question of how excess proceeds from a second sale might be distributed pending notification of the decede nt s creditors. We noted in our earlier discussion that the Court s reservation, in Andrews, precludes the conclusion that the defaulting purchaser of the estate property was automatica lly entitled to rece ive the resale s excess fu nds. Had that been th e case, notice to the creditors would have been unnecessary. On revisiting this issue in Mealey v. Page, supra, another judicial sale under th e context o f an estate, tha t Court dete rmined tha t, unlike a mortgage or deed of sale setting, there had been no a ctual co nveyanc e of pro perty. -64- Nevertheless, the Mealey court ruled that the defaulting purchase r would h ave last priority in entitlement to the balance of procee ds from a resale. It was n ot incumb ent upon the vendor in Mealey, a case invo lving distributio n of estate a ssets, to be co ncerned w ith protecting the varying interests of the debtor, the creditor and the defaulting purchaser, as the Court in the instant case must be. Our holding in Brundige v. Morrison, supra, likewise an estate case, echoed our Mealey holding. Accordingly, some of our early encounters with the issue of a defa ulting purch aser s entitlem ent to excess funds a rose from judicial sales in estate matters and did not involve the protection of interests of mortgaging parties that are present in a lien instrument, such as a mortgage or as a deed of trust, as in the instant case. This brings u s, again , to the 19 02 case , Aukam v. Zantzinger, supra, on which the party petitioner primarily bases his claim for entitlement to the surplus funds from the resale. This Court only held in Aukam that a defaulting purchase r was entitled to file excep tions to the second sale prior to its ratification because of his potential liability for the shortage if the second sale resulted in a lower p rice than the initial sale. Our Aukam dicta included the statement on which petitioner relies in support of the supposed common-law rule that a defaulting purchaser is entitled to any excess in the proceeds of sale at the resale. 94 Md. at 427, 51 A. at 95. In Aukam we cited to Miller s Eq. Proc. 620 (sec. 52 6) and its w ithin cases, which included Mealey, Early and Brundige none of which involved a mortgage or deed o f trust fo reclosu re sale a nd sub sequen t resale, i.e., the facts of the case sub judice. Not ably, we decided State v. Seco nd Nat. Bank of Hoboken, supra, in 1896, six years -65- prior to Aukam, but at least fifteen years after the last estate case discussed in Aukam. Although Hoboken s holding, that a first sale, unconsummated by the original purchase r, is rendered a nullity by the resale, an d therefore Baltimore City could no t collect taxes o n both sales, was available to the Aukam court, it apparently was not utilized. Thus, the Aukam court relied upon inapprop riate authority. Soo n thereafter in , Werner v. Clark, this Court borrowed Hoboken s articulation of the correct proc edures in h olding that [t]he resale is simply an execution of the [original] decree for a sale. Werner, 108 Md. at 635, 71 A. at 309 (alterations added) (citing Hoboken, 84 Md. at 330, 35 A. at 890). Aga in, the court s focus centered on its primary obligation to see the sale of the property through to completion and to preserve the interests of the lien instrument parties. Not until 1929 in Mizen v. Thomas, supra, did we again examine the procedures of a mortgage foreclosure sale, and specifically the deficiencies in respect to the original mortgage debt. Our holding in Mizen reflects this Court s recognition of the lien parties continuing paramount interests throughout the sale and resale. Accordingly, we reiterate our holding that there is no comm on-law rule that a defau lting purchaser from a f irst sale is entitled to excess proceeds realized at a resale. D. Defaulting Purchaser s Entitlement to Reimbursement We now determine, where excess sums above the price bid at an initial sale result from a sale following the first default, whether the court should permit or require the reimbursement of the defaulting purchaser for the expenses he incurred in making -66- improv emen ts and/o r repairs to the pr operty pri or to the resale. A purchaser bears the risks of the proper ty upon h is bid, an d as a re sult, a successful bidder may want to take steps to protect the equitable interest that he has received following the foreclosure sale. He does not take these steps, however, for the protection of the parties to the mortgage, but rather for his own protection and benefit. He insures the property, if he does, to protect his interest during the period when he retains that interest. The purchase r, howev er, is not entitled to the full legal benefits of the pro perty, i.e., the legal interes t held by the mortga gor (or a truste e), until he satisfies the terms of sale and receives a conveyance of the property. Sh ould he de fault, as did the purchase r in the instant c ase, he can not claim the benefits of complete ownership because he never fully consummated that ownership. That is, he failed to fulfilled his obligation to comply with the terms of sale and to pay the balance of his purchase price. This Cou rt generally doe s not rewa rd parties for failure to perform obligations, e ven if a pa rty has acted in g ood faith. B ut for the pu rchaser s de fault, thus necessitating a resale, there wou ld be no situation giving rise to a de faulting purchaser s claim for excess funds. And once a resale occurs, the defaulting purchaser s prior equitable interest, an interest that terminate d upon th e order for resale, does n ot entitle him e ither to the excess proceeds of a resale or normally to any sums he may have expended to protect or enhance his interest while he had an interest, since the value over and above the lien instr ume nt de bt be long s to th e mo rtgagor a s the remainin g value o f his prop erty. -67- Petitioner contends that M aryland Rule 14-208(a), 26 governing the proceeds of sale and, specificall y, the distribution of surplus, provides for the protection of a defaulting purc hase r wh o ma kes improvemen ts or e xpends a ny funds f or the ben efit o f the prop erty. We disagree. The rule does not appear to have been created to protect defaulting purchasers but to protect the interests of the lien holders an d other claimants of like ch aracter. Petitioner s argument sounds in equity and, in his view, the defaulting purch aser is afforded claimant status and is to be granted a priority for any improvements or expenditures made for the preservation of the property. In this sense, petitioner equates improvem ents with necessary repairs performed to avo id the property s (further) deterioration. There may be a distinction between improvements to the property, generally, and repairs necessarily made to the property in order to prevent damage, vandalism or waste. Respon dents observe, however, that an increase in price at a resale 27 is not neces sarily attributable to improvements made to the property and such a determination would necessitate an evidentiary hearing 26 Md. Rule 14-208(a) states: At any time after a sale of prope rty pursuant to R ule 14-207 [sale pursuant to foreclosure of lien instrument] and before the final ratification of the auditor s account, any person claiming an interest in the property or in the proceeds of the sale of the property may file with the court an application for the payme nt of that person s claim from the surplus proceeds of the sale. The court shall order distribution of the surplus equitab ly among the claim ants. 27 Petitioner contends, and respondents dispute, that petitioner m ade impro vements to the property that resulted in the higher price at the resale, and, thus, he is entitled to some, or all, of the excess proceeds. -68- As we have observed in Mizen, supra, until the term s of [fore closure] sale have been met or waived, and the purchaser has received or is entitled to receive a conveyance of the prop erty, title to the property remains in the m ortgag or. 156 Md. at 323, 144 A. at 483. The equitable interest that the purchaser receives is subject, of course, to his successful execution of the conditions of the sale. As stated earlier [a]lthough he thus becomes the substantial owner from the time of the s ale, and the p roperty is at his gain if it appreciate and at his risk in case of loss by fire or through depreciation, yet, notwithstanding the purchase money be paid, the legal title of the purchaser does not vest until the deed to him is delivered, but, upon its delivery, this deed is not effec tive merely from the day of its execution, but vests the property in the purchaser from the day of sale. Union Trust, 153 Md. at 56, 137 A. at 512. In other w ords, if the purchaser at the first sale fu lly complies with the terms of sale, pays the purchase price and receives a deed to the property, his title relates back to the date of the sale. Therefore, actions whether precautionary or otherwise taken by the purchaser following the foreclosure sale are intended for his own benefit and protection. They protec t primarily his interests, not the interests of the mortgag or.28 His interest is dependent upon his performance of the obligation s of the sale. M easures tak en by a forec losure sale purchaser including making necessary repairs and/or improvements to the property, securing insurance on the property and paying property taxes are not made for the benefit of the mortgagor. Once a 28 See e.g. Donald v. Chaney, 302 Md. 465, 477 n. 11, 488 A.2d 971, 977 (1985). The Purchasers were in possession of the prem ises from th e day follow ing the sale u ntil the date of settlement and thus had a direct and strong interes t in protectin g the prop erty fr om injury, and rendering it as produ ctive as possible. Wagner v. Cohen, 6 Gill 9 7, 103 ( 1847) . -69- resale order is exe cuted by the co urt, the ratification of the original sa le is either exp licitly or impliedly revoked.29 It is clear, therefore, that where the purchaser continues to make improvements, and/or to pay taxes and insurance premiums after he has defaulted on the terms of the sale and his equitable interest may have ceased, those payme nts, improv ements and repairs are made not only at his own risk, but also for the protection of his/her own interest in the prope rty not the mortg agor s intere st, and normally sho uld not be re coverable from any of the proceeds of either sale. The mortgagor, on the oth er hand, has remained liable for a deficiency on the mortgage debt throughout the foreclosure process, through both the sale and the resale. Denying the defaulting purchaser the excess sums from a resale serves to insulate the mortgagor, and/or lender, from incurring a greater loss where the property was sold at the original sale for a price under the remaining lien debt. At the point of the second sale, the defaulting purchaser at the first sale has failed to perform his obligations and has lost any equitable interest arising from the initial sale, a failure that at one time could have resulted in incarceration for contempt. Albeit his failure to perform may not have resulted from bad faith, he is nonetheless the wrongdoer as to the original sale. W hile there ma y be a benef it 29 We stated in Merryman, 250 Md. at 8, 241 A.2d at 564, that the purchaser maintains his equitable title un til divested of as provided by law, usually by the trustees petition for a resale. Therefore, the purchaser may be operating with or without his equitable interest as the substantial owner, but his equitable title certainly terminates, at the very latest, upon the ham mer s f all at the re sale and probab ly at the tim e the co urt orde rs a resa le. -70- to other interested parties30 it only can be realized if a higher price is procured at resale. It will be extremely difficult for a court ever to determine conclusively the reason or reasons that a property may be more valuable at a resale. A higher price may be due to market conditio ns, diff erent bu yers, or an y numbe r of reas ons. The mortgage e and mo rtgagors alw ays remain at risk that the resale will procure less money for the purchase price than the original sale. In that event, the mortgagor would be subject to a larger deficiency owed to the mortgagee, with the only recourse being an action against the defaulting purchase r who ha s already show n his lack of ability to meet his obligations. The mortgagor is the one placed in larger risk when a resale is necessary. Thus not only is a mortgagor entitled to excess funds by reason of his right to the full value o f his prop erty, his claim to excess funds is at least as equitable as is a defaulting purchaser s.31 In addition, while the mortgagor cannot escape the contractual terms giving rise to the foreclosure sale of his property, the bidder at a foreclosure sale voluntarily chooses to attend the sale. The bidder is under no obligation to attend or, even where the bidder chooses to attend, to bid. The mortgage foreclosure purchaser who fails to settle on his purchase of the 30 For exam ple, a junior lien holder mig ht benefit as well. 31 Even when th e resale bring s a higher p rice, especially w hen the pric e still does not produce a sum suf ficient to pay the mortgage debt, the mortgagor has suffered additional loss. Interest has continued to accrue during the period between the sales. The mortgage debt increases and the remaining value of the mortgagor s interest in his land decreases because of the failure o f the defaulting purcha ser. -71- foreclosed property, even if in good faith, is, technically at least, a wrongdoer. It remains that He who seeks equity must do equity. Persons should not be able to reap w indfalls while the mortgagor and lender are forced to be subjec t to a resale and an elongation of the foreclosure process and possible additional risks. In the case sub judice, petitioner, in fact, defaulted on the terms of sale twice once at the original sale and once at the resale. Such actions illustrate his lack of ability 32 or intention to settle in his own behalf and to comply with the terms of sale. The law should not be quick to rew ard his failure to consummate the purchase of the property where the trustees have sought and accomplished a resale. Therefore, for the reasons stated, this Cou rt holds that, absent fraud or extraordinary circumstances, circumstances not existing in this case, a court should not order reimbursement to a defaulting purchaser for the costs of improvements and/or repairs that he has mad e to a prope rty prior to resale. With our decision on the issues we have addressed, the matter of attorneys fees, even if preserved, is moot. We also do not address the issue of whether the common-law relating to mortgages can be modified by the terms of an advertisem ent of sale o r other contra ct. V. Conclusion 32 If one lacks the ability to settle, he should not bid. In Donald v. Chaney, 302 Md. at 478, 488 A.2d at 977, we obliged the purchasers to pay interest on the unpaid balance of the purchase price w here they had delayed settlement d ue to their inability to obtain financing within the time fixed for settlement. We stated, It plainly is the duty of a purc haser at a judicial sale to assure the court that he is ready, willing and able to comply with the terms fixed for its completion. Id. (citations omitted) (emphasis add ed) (footnote omitted). -72- We hold that the common-law right alleged to exist and gleaned from Aukam s dicta, that a defaulting purchase r is entitled to the excess proceed s arising from the prope rty s resale, is not, in fact, the common-law of this State. Even if Aukam s dicta had in some fashion risen to common-law status we would overrule it based upon the history of the creation of mortgage fo reclosure sales. A defau lting purchaser remains at risk for the difference if the price at the resale is less than the winning bid at the original sale. Because the defaulting purchase r is effectively a wrongdoer insofar as he is unable to, or chooses not to, satisfy the terms o f the forec losure sale, he will not, abse nt fraud or extraordinary circumstances, be entitled to reimbursement of costs for improvem ents, or even for repairs or other maintenance expenses or charges on the property prior to the resale. Accordingly, we affirm the judgment of the Court of Special Appeals, albeit for the reasons we express herein. JUDGMENT OF THE COURT OF SPECIAL APPEALS AFFIRMED. COSTS TO BE P AID BY PETITIONER. -73-
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