Opinion ID: 1962394
Heading Depth: 1
Heading Rank: 2

Heading: The proceedings in the circuit court

Text: Dorsey assigned the mortgage to his attorney for foreclosure and collection. Thereupon the Beads filed a bill of complaint seeking to invalidate and set aside that mortgage and promissory note. They sought and obtained an ex parte injunction prohibiting the sale pending determination of the case on its merits. The bill recited the contract of sale and the purchase price specified therein; the settlement, at which time [, it said,] the purchase price was paid in full ...; execution of the deed at settlement; their taking possession prior to settlement; that on or about May 14, 1976, Dorsey came to their home stating that he had not been able to collect about $5,000.00 owed him from the realtor involved in the transaction, that he desired that they pay him this sum, and then presented to them the note, the loan disclosure statement, and an agreement as to the contractual rate of interest; that he advised them that they were required to pay him the monies which he demanded and he further required them to execute the various documents including the second mortgage; that they executed the instruments and began making payment on the note and mortgage under the mistaken belief that they were liable to Defendant, Harold H. Dorsey; that they stopped making payments in January of 1978; that the mortgage was assigned for foreclosure and sale had been scheduled; that there was no consideration for the mortgage and note; that they were not indebted for any monies whatsoever under the mortgage or otherwise; that Dorsey fraudulently induced them to execute the mortgage and note by telling them that they were liable for these sums when in fact ... at the time he made said representations he knew that they were not liable and he did not disclose the facts of the matter to the Plaintiffs concerning who was liable to him for said monies; that he failed to comply with Maryland Code (1975) § 12-401 et seq., Commercial Law Article, concerning secondary mortgage loans; that Dorsey failed to advise the [Beads] that they had the right of recission with regard to the Note and Mortgage which they executed; and various other items not here relevant. The allegation of the Beads relative to § 12-401 et seq. of the Commercial Law Article concerning secondary mortgage loans was held to be without foundation. No cross-appeal on that point was filed. The Beads contended that under the Act Dorsey was a creditor as defined in the statute, the chancellor said, We 1635 to disclose to the Beads their right of recission under the Act; and that since this was not done the Beads were not obligated to Dorsey, the bill of complaint having amounted to notice of intent to rescind. In response to Dorsey's contention that he was not a creditor as defined in the statute, the chancellor said, We believe he has misconstrued that definition. He went on to say, after quoting from the Act and from Eby v. Reb Realty, Inc., 495 F.2d 646 (9th Cir.1974): The credit extended by Dorsey to the Beads was not an isolated instance. Dorsey, in our opinion, is clearly at least an arranger of credit and as such was required to comply with 15 U.S.C. § 1601, et seq. when he extended credit to the Beads. He found the bill of complaint to be sufficient notice under § 1635 (a) of recission by the Beads. We need not decide this latter point. The trial judge also rested his decision upon the established principle of law that a deed made in full execution of a contract of sale of land merges the provisions of the contract therein, including all prior negotiations and agreements leading up to the execution of the deed, becoming the final and exclusive agreement between the parties by which their rights are to be determined. Under this he held that Dorsey could not be heard to contend that the mortgage represented a sum still due him since this would be inconsistent with the deed and ... would tend to contradict it. He pointed out, There is nothing in the contract of sale that would indicate any agreement that the terms of the contract made prior to the deed were to survive the execution of the deed. Finally, he held that Mr. Dorsey, having misled the lending institution and the settlement attorneys as to the actual down payment made by the Beads, is now estopped to assert a claim inconsistent with his previous action.