Case Title: IA Const. Corp. v. Carney

Citation: 341 Md. 703

Docket Number: 73/95

State: maryland

Court: Maryland Supreme Court

Date: 1996-03-08T00:00:00Z

Document:
IA Construction Corporation v. Robert E. Carney, Jr., No. 73,
September Term, 1995.
[MechanicsU Liens - Sequence:  Work On Mortgaged Premises; Petition
To Establish Lien; Mortgage Foreclosure Instituted; Sale Held At
Which Mortgagee Buys In For Mortgage Debt; Interlocutory MechanicUs
Lien Established; Sale Ratified.  Held:  MechanicUs Lien
Extinguished.]
Circuit Court for Harford
County Case #18069
IN THE COURT OF APPEALS OF MARYLAND
No. 73
September Term, 1995
____________________________________
IA CONSTRUCTION CORPORATION
v.
ROBERT E. CARNEY, JR.
____________________________________
Murphy, C.J.
Eldridge
Rodowsky
Chasanow
Karwacki
Bell
Raker, 
JJ. 
____________________________________
Opinion by Rodowsky, J.
____________________________________
Filed:  March 8, 1996
     Unless otherwise indicated all references to statutory
1
sections are to Md. Code (1974, 1996 Repl. Vol.), Real Property
Article. 
This case involves the mechanicsU lien law (the Act), Md. Code
(1974, 1996 Repl. Vol.), §§ 9-101 through 9-114 of the Real
Property Article.   In IA Construction Corp. v. Carney, 104 Md.
1
App. 378, 656 A.2d 369 (1995), the Court of Special Appeals held
that a mortgage lender 
"at the time he was granted legal title ... via mortgage
in 1989, was a bona fide purchaser for value, and
therefore took free and clear of [the mechanicUs lien
claimantUs] right to establish a mechanicsU lien when [the
lender] subsequently obtained beneficial and equitable
title to the subject property at the foreclosure sale."
Id. at 392, 656 A.2d at 376.  We granted the lien claimantUs
petition for certiorari, 339 Md. 445, 663 A.2d 1271 (1995), and we
shall affirm, but for reasons that differ from those of the Court
of Special Appeals.
 
The material facts of this case are undisputed.  They arise
out of the attempted development by Birchwood Manor, Inc. (BMI) of
a residential community in Harford County.  Through various
conveyances BMI had assembled a tract of land that was subdivided
into sixty-five residential lots.  One of the conveyances into BMI
was by deed dated June 28, 1989 from the respondent, Robert E.
Carney, Jr. (Carney).  That deed recited a consideration of
$135,000.  That same day Carney took back a mortgage on the
property that he had conveyed, securing $35,000, all due and
payable on December 1, 1989.  Both instruments were promptly and
-2-
     The petition, as amended, named as defendants others in
2
addition to BMI and Carney, because there were mortgages on
portions of the BMI subdivision other than that acquired from
Carney. 
duly recorded.  Three lots created out of the Carney conveyance,
Nos. 59, 61, and 62, are the subject of the mechanicUs lien claimed
in this case.  
The petitioner, IA Construction Corporation (IA), entered into
contracts with BMI on July 9 and October 20, 1992 for construction
and repair work on streets, curbs, and gutters.  The last of the
work is alleged to have been done on November 30, 1992.  BMI did
not pay IA which, on May 24, 1993, petitioned to establish a
mechanicUs lien in the amount of $27,269.   
2
Carney, on June 22, 1993, instituted foreclosure of the
mortgage from BMI to him, and provided notice thereof to IA.  We
were advised by IA at oral argument that BMI had curtailed the
principal of the Carney mortgage by $9,000 prior to foreclosure.
At the foreclosure sale, held July 9, 1993, Carney bought in the
property for $26,000.  "IA concedes that it appears the foreclosure
proceedings were correctly instituted and finalized."  Brief for
Petitioner at 13.  
In the subject mechanicUs lien action the Circuit Court for
Harford County on July 20, 1993 held a show cause hearing under
§ 9-106(a) and Maryland Rule BG73.c, concluded that IA had
established probable cause, and, by an order under § 9-106(b)(3)
and Rule BG73.d.2, established an interlocutory mechanicUs lien in
-3-
     In order for the sale to have been ratified, Carney, under
3
Rules W74.e and BR6.b.3, was required to file an affidavit that
included the statement that "he has not directly or indirectly
discouraged anyone from bidding for the said property."  Rule
BR6.b.3(3).  
the amount of $27,269 in favor of IA that was docketed August 10,
1993.  
The mortgage foreclosure sale to Carney was ratified September
8, 1993.   Rule W74.e requires an audit following mortgage
3
foreclosure sales.  Under the facts of the instant matter, the
report of the auditor would have reflected that no money was
available for distribution to lienors junior to Carney.  
Carney moved for summary judgment in the subject mechanicUs
lien action after ratification of the mortgage foreclosure sale.
He argued to the circuit court that, even if IA were to establish
a final lien, it would not take priority over CarneyUs previously
recorded mortgage.  IAUs response was that, when the foreclosure
sale was held on July 9, 1993, IA was merely a general creditor of
BMI, that the mechanicUs lien would not be established until the
entry of a "final" order, and that because IA had no interest in
the property at the time, the foreclosure sale extinguished
nothing.  Further, IA argued that Carney could not be a bona fide
purchaser within the contemplation of § 9-102(d).  Because IA had
instituted its mechanicUs lien action before Carney instituted his
mortgage foreclosure action, IA submitted that § 9-102(e) applied
to prevent Carney from becoming a bona fide purchaser.  
-4-
     It is well settled in Maryland that an appellate court will
4
ordinarily limit its review of the granting of summary judgment to
those grounds relied upon by the trial court.  Maryland Rule
8-131(a); Blades v. Woods, 338 Md. 475, 478, 659 A.2d 872, 873
(1995); Davis v. Dipino, 337 Md. 642, 647-48, 655 A.2d 401, 403-04
(continued...)
The two subsections of § 9-102 to which IA referred read as
follows:
"(d) Exemptions. -- However, a building or the land
on which the building is erected may not be subjected to
a lien under this subtitle if, prior to the establishment
of a lien in accordance with this subtitle, legal title
has been granted to a bona fide purchaser for value.
"(e) Filing of petition constitutes notice to
purchaser. -- The filing of a petition under § 9-105
shall constitute notice to a purchaser of the possibility
of a lien being perfected under this subtitle."
CarneyUs reply was that, if by operation of § 9-102(e) he was
on notice as of May 24, 1993, he was still protected by § 9-102(d)
because, under the title theory of mortgages, Carney had become a
bona fide purchaser on June 28, 1989 when he took the mortgage from
BMI.  IA rejoined by arguing that the statutory construction
advocated by Carney gave no protection to mechanics who worked on
property that was subject to a mortgage and would destroy the
purpose of the Act.  
The basis of the circuit courtUs grant of summary judgment for
Carney is encapsulated in the following statement:
"ItUs undisputed that a valid foreclosure has taken
place, and in my mind, as a matter of law, that defeats
the PlaintiffUs claim for a Mechanics Lien for work
performed on the property prior to the foreclosure
proceedings."   
4
-5-
     (...continued)
4
(1995); Board of Trustees of the Maryland Teachers & State
Employees Supplemental Retirement Plans v. Life & Health Ins. Guar.
Corp., 335 Md. 176, 201-02, 642 A.2d 856, 868 (1994); Gross v.
Sussex Inc., 332 Md. 247, 254 n.3, 630 A.2d 1156, 1159 n.3 (1993);
Galola v. Snyder, 328 Md. 182, 186 n.1, 613 A.2d 983, 985-86 n.1
(1992); Finci v. American Casualty Co., 323 Md. 358, 387, 593 A.2d
1069, 1083 (1991); Three Garden Village Ltd. Partnership v. United
States Fidelity & Guar. Co., 318 Md. 98, 107-08, 567 A.2d 85, 89
(1989); Geisz v. Greater Baltimore Medical Center, 313 Md. 301, 314
n.5, 545 A.2d 658, 664 n.5 (1988).  
In the circuit courtUs view it made no difference whether the
mechanicUs lien claim was "perfected" or "unperfected."  The dispute
as to whether Carney had actual knowledge that IA had not been paid
by BMI was not considered to be a dispute of a material fact.  
IA appealed to the Court of Special Appeals.  In its brief to
that court IA submitted that, contrary to the circuit courtUs
holding, the mortgage foreclosure had not extinguished the
mechanicUs lien claim because nothing in the Act effected that
result.  In apparent anticipation of arguments by Carney, IA also
contended that Carney was not a bona fide purchaser for a number of
reasons, including lis pendens.  
In his four page brief to the Court of Special Appeals, Carney
rested exclusively on extinguishment of the mechanicUs lien by the
ratification of the foreclosure sale, citing § 7-105(a) and
Southern Maryland Oil, Inc. v. Kaminetz, 260 Md. 443, 272 A.2d 641
(1971).  Section 7-105(a) provides that a mortgage foreclosure sale
"after final ratification by the court and grant of the property to
the purchaser on payment of the purchase money ... operates to pass
-6-
all the title which the borrower had in the property at the time of
the recording of the mortgage or deed of trust."  Southern Maryland
Oil held, inter alia, that a lease of realty that was subject to a
mortgage was extinguished when the mortgage was later foreclosed.
260 Md. at 449-50, 457, 272 A.2d at 644-45, 649.
The Court of Special Appeals affirmed.   IA Constr. Corp.,
104 Md. App. at 393, 656 A.2d at 377.  It collapsed IAUs no-
extinguishment argument into IAUs no-bona fide purchaser argument.
Id. at 384-85, 656 A.2d at 372-73.  The court considered the amount
available from the mortgage foreclosure sale for distribution to
junior lienors to be irrelevant, because it viewed IAUs contention
to be that "its right to establish a mechanicsU lien against the
foreclosed property has continued vitality after the foreclosure
sale."  Id. at 385 n.4, 656 A.2d at 372 n.4.  
The court also rejected CarneyUs argument that the mortgage
foreclosure had extinguished IAUs claimed lien.  Id. at 388-89, 656
A.2d at 374.  Because Southern Maryland Oil involved the
extinguishment of an estate by a mortgage foreclosure, the court
construed § 7-105(a) to distinguish between estates on the one
hand, and liens and encumbrances on the other.  Id.  From this the
court concluded that, in the operation of § 7-105(a), the
extinguishment of interests junior to a foreclosed mortgage was
limited to later estates.  Id.  Consequently, the court held that
§ 7-105(a) "does not operate to extinguish liens and encumbrances
-7-
     In a footnote introduced with a "[b]ut see" signal, the Court
5
of Special Appeals referred to § 9-108, discussed infra.  104 Md.
App. at 388 n.7, 656 A.2d at 374 n.7.
incurred subsequent to the mortgage."  104 Md. App. at 388, 656
A.2d at 374.  
5
 The Court of Special Appeals then addressed the bona fide
purchaser protection provisions of § 9-102(d).  The court said that
Carney had acquired legal title to the property when the mortgage
was made in 1989, and equitable title when the mortgage was
foreclosed.  Id. at 390, 656 A.2d at 375.  Thus, reasoned the
court, if Carney were a bona fide purchaser when he acquired legal
title, he would be protected by § 9-102(d).  Id.  IA submitted that
Carney could not be a bona fide purchaser because he was on notice
of a possible lien (1) by the filing of the petition to establish
the mechanicUs lien, and (2) by his knowledge, at least as alleged
by IA, that BMI had not paid IA.  Id. at 390-91, 656 A.2d at 375.
Because both of these contentions involved events that "occurred
subsequent to the passage of legal title to [Carney] via mortgage
in 1989," the events "have no effect on [CarneyUs] status as a bona
fide purchaser for value."  Id. at 391, 656 A.2d at 376.  The same
analysis also disposed of IAUs lis pendens contention.  Id. at 393,
656 A.2d at 376-77. 
We granted IAUs petition for certiorari.  In this Court, IA
advances the arguments it made to the Court of Special Appeals.  In
addition, IA argues that 
-8-
"the appealed decision can be taken to the logical
conclusion that mortgaged property in Maryland can never
be subjected to a mechanicsU lien for work performed
subsequent to the granting of the mortgage, although
under contract with the record owner, since legal title
passed by such granting and the mortgagee UpurchasedU the
property in good faith at that time."
Brief for Petitioner at 8.  Carney reads the opinion of the Court
of Special Appeals in the same way as IA.  In this Court Carney
"asserts that the status of the Mortgagee as a bona fide purchaser
pursuant to 9-102(d) of the [Act] is not the test upon which the
case should be resolved."  Brief for Appellee at 5.  
 
I
The interlocutory lien in favor of IA in this case was not
established until after the property had been sold at foreclosure
sale.  "[T]he sale of the mortgaged premises ... virtually
foreclose[s] the mortgage and divest[s] all rights of redemption
which had remained in the mortgagor until the sale."  Union Trust
Co. v. Biggs, 153 Md. 50, 55, 137 A. 509, 512 (1927).  "After the
foreclosure sale the purchaser had the equitable interest in the
land commensurate with that conveyed by the mortgage deed, and [the
purchaser] was entitled to the legal title upon the final
ratification of the sale by the court and the payment of the
purchase money."  Id.  "[A]fter the sale, equity regard[s] the
property in the land as in the buyer."  Id. at 56, 137 A. at 512.
"The day of sale ... [marks] the close of the period in
which any creditor could acquire a lien upon the
mortgagorUs interest in the mortgaged land or equity of
redemption by simply obtaining a judgment against the
-9-
mortgagor, since a judgment lien upon real estate or an
equitable interest in land only exists because it gives
the judgment creditor the right to make his debt out of
the land or equitable interest in land of the judgment
debtor, with the correlative liability of such property
of the debtor to be sold by way of execution for that
purpose."
Id.  See also Pagenhardt v. Walsh, 250 Md. 333, 243 A.2d 494
(1968); Waring v. Guy, 248 Md. 544, 237 A.2d 763 (1968); Butler v.
Daum, 245 Md. 447, 226 A.2d 261 (1967); Wethered v. Alban Tractor
Co., 224 Md. 408, 168 A.2d 358, cert. denied, 368 U.S. 830, 82 S.
Ct. 53, 7 L. Ed. 2d 33 (1961); Billingsley v. Lawson, 43 Md. App.
713, 406 A.2d 946, cert. denied, 286 Md. 743 (1979), and cert.
denied, 446 U.S. 919, 100 S. Ct. 1853, 64 L. Ed. 2d 273 (1980); In
re De Souza, 135 B.R. 793 (Bankr. D. Md. 1991); In re Wallace, 31
B.R. 64 (Bankr. D. Md. 1983).  This rule of law is similar to the
rule under which a judgment against the vendor of realty, docketed
after an equitable conversion has occurred as the result of the
contract of sale, does not effect a lien on the realty.  See
Caltrider v. Caples, 160 Md. 392, 153 A. 445 (1931). 
In York Roofing, Inc. v. Adcock, 333 Md. 158, 634 A.2d 39
(1993), and in Himmighoefer v. Medallion Indus., Inc., 302 Md. 270,
487 A.2d 282 (1985), we analogized to the lien of judgments in
holding that the mechanicsU liens sought in those cases did not
attach to the property.  In Himmighoefer we considered that a
petition for a mechanicUs lien, filed after the contract of sale,
could give no greater rights to the lien claimant than would a
-10-
judgment against the owner-vendor entered after the contract of
sale.  Id. at 278-81, 487 A.2d at 286-88.  In York Roofing the lien
claimants argued that the purchasers knew that the lien claimants
had not been paid for work that was done after the contract of sale
had been effected and before the deed had been delivered.  Id. at
169, 634 A.2d at 44.  We held that "that knowledge, without more,
would be insufficient to expose [the purchasers] to a lien
established after equitable title to the property had passed to
them."  Id.  If the analogy to judgments applies under the facts of
the instant matter, then the interlocutory lien did not attach to
the property after Carney had purchased at the foreclosure sale.
The instant matter, however, is factually distinguishable from
York Roofing and Himmighoefer.  In the former case the petition to
establish a mechanicUs lien was filed after the contract of sale had
been formed and the deed was delivered, York Roofing, 333 Md. at
161, 634 A.2d at 40, and in the latter, the petition to establish
a mechanicUs lien was filed after the contract of sale was formed,
Himmighoefer, 302 Md. at 271, 487 A.2d at 282-83.  In the matter
now before us, the petition to establish the mechanicUs lien
antedated the foreclosure sale.  
IA submits that this factual distinction produces a different
legal result.  IAUs submission, in effect, is that under § 9-102(d)
the mechanicUs lien attaches to the improved property whether it is
owned by the contracting owner or by a transferee who is not a bona
-11-
fide purchaser.  Here, IA argues, Carney cannot be a bona fide
purchaser because, under § 9-102(e), the previously filed petition
to establish a mechanicUs lien "constitute[d] notice to [Carney] of
the possibility of a lien being perfected" under the Act.  We shall
assume, arguendo, that the interlocutory lien attached to the
property after Carney had purchased at the foreclosure sale.
Nevertheless, under the facts of this case, that lien, if any,
would be junior to the lien of the Carney mortgage and, therefore,
would be extinguished as a lien on the land no later than upon
ratification of the foreclosure sale.
Approximately one month after the Court of Special Appeals
filed its opinion in the instant matter, this Court decided G.E.
Capital Mortgage Servs., Inc. v. Levenson, 338 Md. 227, 657 A.2d
1170 (1995).  There, a mortgage lender had acquired a first lien by
equitable subrogation to a released first mortgage.  Id. at 242,
657 A.2d at 1177.  We held that foreclosure of the senior lien, so
acquired, extinguished junior liens obtained by judgments.  Id. at
251, 657 A.2d at  1181.  Thus, we do not agree with the Court of
Special Appeals that a distinction is drawn between estates and
liens intervening after the mortgage is created and before it is
foreclosed.  
Garner v. Union Trust Co., 185 Md. 386, 45 A.2d 106 (1945), is
also in point.  In that case a first lien was held by a mortgagee
on the fee simple interest in property.  Id. at 388, 392-93, 45
-12-
A.2d at 107, 109.  This priority resulted from the combination of
(1) a mortgage that, at law, effectively encumbered only a
leasehold interest, (2) an equitable lien on the reversionary
interest when it was later acquired by the mortgagor, and (3)
operation of the doctrine of merger.  Id. at 392, 45 A.2d at 109.
Subsequent to the merger, judgments were entered against the
mortgagor.  Id.  When the mortgage was later foreclosed, the
foreclosure purchaser unsuccessfully contended that the foreclosure
title was not good and merchantable, absent releases of the
judgments.  See id. at 392-93, 45 A.2d at 109.  This Court said:
"[T]he title of the purchaser at the foreclosure sale is
not affected by these judgments, because they are not
superior in right or lien to the equitable lien of the
mortgage.  The law is clear that a judgment is a general
lien relating to the time when it is recorded and is
subordinate to the superior equity of a prior specific
lien."
Id.  See also Leonard v. Groome, 47 Md. 499 (1878); Lee v. Early,
44 Md. 80 (1876); Brawner v. Watkins, 28 Md. 217 (1868) (senior
mortgage satisfied out of proceeds on sale under creditorUs bill;
junior judgment lien extinguished); E. Miller, Jr., Equity
Procedure §  518 (1897).  
These precedents concerning junior liens by judgments are
applicable to junior mechanicsU liens.  The Act expressly recognizes
that the ordinary priorities in judicial sales apply between
mechanicsU liens, as a class, and other liens.  Section 9-108,
-13-
captioned "Sale under foreclosure or execution of land against
which lien established," reads as follows:
"If all or any part of the land or buildings against
which a mechanicUs lien has been established pursuant to
this subtitle shall be sold under foreclosure or a
judgment, execution or any other court order, all liens
and encumbrances on such property shall be satisfied in
accordance with their priority, subject to the limitation
in the next sentence of this section.  If the proceeds of
the sale are insufficient to satisfy all liens
established pursuant to this subtitle, then all proceeds
available to satisfy each such lien shall be stated by
the court auditor as one fund, and the amount to be
disbursed to satisfy each lien established pursuant to
this subtitle shall bear the same proportion to that fund
as the amount of such lien bears to the total amount
secured by all such liens, without regard to priority
among such liens."
Here, where we deal with only one mechanicUs lien, the second
sentence of § 9-108 is not involved.  The first sentence, however,
makes it quite plain that the General Assembly contemplated that
the ordinary rules relating to judicial sales would apply when a
mortgage was foreclosed that was senior to a mechanicUs lien.  
Section 9-108 also defeats the suggestion permeating IAUs
argument that an interlocutory lien, or even a final lien, that is
not satisfied out of the proceeds on foreclosure of a senior
mortgage somehow survives the mortgage foreclosure and continues to
encumber the improved land after legal title has been conveyed to
the mortgage foreclosure purchaser.  Section 9-108 directs that on
a mortgage foreclosure sale "all liens and encumbrances on such
property shall be satisfied in accordance with their priority ...."
We construe § 9-108 to recognize extinguishment of a junior
-14-
mechanicUs lien on foreclosure of a senior mortgage to the same
extent as a junior judgment lien would be extinguished, as to the
specific property, on foreclosure of a senior mortgage.  Thus,
under the facts of this case we need not decide whether Carney
became a bona fide purchaser at the foreclosure sale, within the
meaning of § 9-102(d).  Even if IAUs interlocutory lien attached,
the admittedly valid and ratified foreclosure sale would have
extinguished it.  
IAUs argument also suggests that, even if an unsatisfied
mechanicUs lien is extinguished as a lien by the mortgage
foreclosure, the right to claim a mechanicUs lien survives
ratification and can still be asserted against the land titled in
the purchaser.  But, in mechanicsU liens actions, the claim and the
lien are coextensive.  Although IA, as a contractor, has a contract
claim against BMI that survived the mortgage foreclosure, the
mechanicUs lien claim of IA, or of any subcontractor working on the
same project, is a remedy that is limited to a lien on the
specific, improved land.  When that lien no longer exists, a claim
for that lien no longer exists.
The foregoing analysis also answers, adversely to IA, its
contentions based on lis pendens, or based on the language of
§ 9-102(e), to the effect that "[t]he filing of a petition under
§ 9-105 shall constitute notice to a purchaser of the possibility
of a lien being perfected ...."  We assume, arguendo, that Carney
-15-
was on notice of a possible mechanicUs lien and that an
interlocutory 
lien 
was 
established. 
 
Any 
such 
lien 
was
extinguished, however, in the foreclosure proceedings.  The
provisions of § 9-108, dealing specifically with mortgage
foreclosures, control over the general provisions of § 9-102(e). 
For these reasons, the mandate of the Court of Special
Appeals, affirming the judgment of the Circuit Court for Harford
County, will be affirmed.
II
For guidance in future cases, it is appropriate that we
express our views on the ratio decidendi employed by the Court of
Special Appeals in this case.  That analysis considered a mortgagee
to be a purchaser on the theory that the mortgage transferred legal
title to the mortgagee.  IA Constr. Corp., 104 Md. App. at 389-92,
656 A.2d at 375-76.  Further under that analysis, in this case,
because the mortgage from BMI to Carney was made years before the
work done by IA, Carney was a bona fide purchaser.  Id.
We note that Judge Eli Frank, in his work, Title to Real and
Leasehold Estates and Liens (1912), stated that "[t]he view
generally held in equity is that the mortgage is a mere security
for the debt, and that the title for most purposes, remains in the
mortgagor."  Id. at 231.  The Act, which was effective before the
procedural merger of law and equity, directs circuit court clerks
to "docket the proceedings as an action in equity ...."  § 9-
-16-
105(b).  Judge Frank also observed in his work, at 238, that "[a]s
a consequence of the influence of equity upon law, the mortgagor,
while in possession and before default, is now at law regarded as
the substantial owner of the property as against everybody, except
the mortgagee."
Without fully reviewing the current extent or vitality of the
title theory of mortgages in this State, it is sufficient to hold
that, for purposes of the Act, the "owner" of mortgaged land is the
mortgagor.  "Owner" is defined in § 9-101(f) to mean "the owner of
the land except that, when the contractor executes the contract
with a tenant for life or for years, UownerU means the tenant."  In
this definition, the exceptions from the conventional meaning do
not include a mortgagee.  Further, "contractor," as defined in
§ 9-101(d) for purposes of the Act, means "a person who has a
contract with an owner."  The mechanicUs lien is "for the payment
of all debts ... contracted for work done for or about the building
and for materials furnished for or about the building ...."  § 9-
102(a).  If, under the Act, a mortgagee is a purchaser of the
property, then no contractor or subcontractor could obtain a
mechanicUs lien on mortgaged property, even as a second priority,
unless the contractor had entered into an agreement with the
mortgagee "for doing work or furnishing material, or both, for or
about a building."  § 9-101(c).  This has not been the
contemporaneous, practical construction of the statute.  D.
-17-
     The amended petition involved more property than the three
6
lots with which this appeal is concerned, and it involved more
parties defendant.  The amended petition also utilized brackets to
indicate matter deleted from the original petition and underlining
to indicate new matter added.  We have eliminated bracketed
material and underlining in setting forth the allegations below. 
"24. At all times set forth herein, Respondents
Bank, BOB, Trustees, Carney and GMH had actual or
constructive knowledge of the financial condition of BMI
and its inability to pay for work performed by IA under
the above-stated Proposal-Contracts.
"25. Notwithstanding 
such 
knowledge, 
said
Respondents failed to give IA notice of the financial
condition of BMI, the foreclosure proceedings, and the
inability of BMI to pay for work performed.  
"26. Notwithstanding 
such 
knowledge, 
said
Respondents allowed IA and its subcontractors to perform
(continued...)
Albright, Jr. et al., MechanicUs Liens and the Maryland Trust Fund
Law, at 18 (MICPEL 1991), states that the Act "grants a lien on the
entire interest of the UownerU of the property" with the exception
noted above.  There is no indication that practitioners under the
Act ever considered "owner" to mean a mortgagee as of the time the
mortgage was made.  
III
IA also argues that the instant matter should be remanded to
the circuit court for the purpose of allowing IA to undertake
discovery in order to develop facts supporting the allegations of
its petition concerning CarneyUs knowledge of BMIUs inability to pay.
We set forth in the margin the allegations of the amended petition
to establish a mechanicUs lien.   The thrust of the allegations is
6
-18-
     (...continued)
6
the work described herein thereby increasing the value of
the land sought to be liened.
"27. For those reasons set forth Respondents, in
their capacities as legal and/or equitable owners of the
land described herein, are not bona fide purchasers for
value."
that Carney could not be a bona fide purchaser, so that the lien
attached, even after the foreclosure sale.  Inasmuch as we have
held that, assuming the lien attached, it was extinguished when the
sale was ratified, the timing and extent of CarneyUs knowledge of
BMIUs inability to pay are immaterial.
These allegations do not attempt to allege a form of deceit
based on contracting with no present intention to perform.  Compare
Alleco, Inc. v. Harry & Jeanette Weinberg Found., Inc., 340 Md.
176, 197, 665 A.2d 1038, 1048 (1995); Councill v. Sun Ins. Office,
146 Md. 137, 150-51, 126 A. 229, 234 (1924) (jury could infer
release procured by promise never intended to be performed).  
JUDGMENT OF THE COURT OF SPECIAL
APPEALS AFFIRMED.  COSTS TO BE PAID
BY THE PETITIONER.