Adams v. Avirett

Hammond, C. J., delivered the opinion of the Court. The appeal is from an order that the trustee under a deed of trust had the right to proceed with the foreclosure of the deed. That right had been challenged by John Adams and Evelyn, his wife, the makers of the deed, by a bill of complaint to set it aside filed after foreclosure proceedings had been instituted, which alleged that in June 1966 they had agreed in writing with Albee Maryland Homes, Inc. for the purchase of building materials for a model home, that the materials Albee delivered did not meet the specifications and therefore they terminated the agreement on December 1, 1966, and demanded repayment of $101.00 they had paid on account, and further alleged that the deed of trust is “fraudulent, defective and invalid” because its affidavit and affidavit of consideration are “fraudulent, defective and invalid,” in that they fail to comply with Code (1966 Repl. Vol.), Art. 21, Sec. 1 (“No estate * * * shall pass * * * un ⁵⁶⁸ less the deed * * * shall be executed, acknowledged and recorded as herein provided * * *”); Sec. 12 (similar language) and Sec. 29 (“Deeds of mortgage conveying any use, estate, or interest in land shall be executed, acknowledged and recorded as absolute deeds of the same”).

Judge Naughton, after considering exhibits, testimony, memoranda of law and arguments, held that the deed of trust “is valid and enforceable betw.een the parties thereto, there being no fraud in the inducement or execution thereof,” dismissed the bill and authorized the continuation of the foreclosure. In this Court the Adamses do not argue fraud or bad faith on Albee’s part. They rely on the claim that their affidavits are null, void and of no effect, having been taken over the telephone by a notary in Albee’s office in Pennsylvania, whom they never saw, and the claim that an unacknowledged deed of trust passes no estate and is invalid and ineffective even between the parties. Albee counters by asserting that the Curative Act of 1967 (Ch. 228 of the Laws of 1967, Code (1968 Supp.), Art. 21, § 99) validated defective acknowledgments in all deeds and deeds of trust executed prior to its effective date of June 30, 1967, and that the instant deed of trust, even if not legislatively validated, nevertheless created an equitable lien on the land described therein which a court of equity will enforce between the parties according to its terms.

We find it unnecessary to discuss or consider whether the acknowledgment was merely defective or was void or the effect of the Curative Act of 1967 because, assuming for the purpose of decision, that the acknowledgment was, as the Adamses contend, entirely null and void and the deed of trust therefore completely unacknowledged and that the acknowledgment was not a defective acknowledgment validated by the Curative Act, we find that the deed of trust created an equitable lien fully valid as far as Albee and the Adamses are concerned. “In equity, any agreement in writing, however informal, made by the owner of land, upon a valid consideration, by which an intention is shown that the land shall be security for the payment of money by him, creates an equitable lien upon the land. Such an ⁵⁶⁹ informal instrument or contract, by which the owner of land agrees or undertakes to secure his creditor upon the land, is ordinarily referred to as an ‘equitable mortgage,’ an expression which originated in the consideration that a transaction of this character, while absolutely ineffective at law, as not involving a transfer of the legal title, was effective in equity for the purpose for which a legal mortgage was ordinarily utilized, to secure the payment of money.” 5 Tiffany, Real Property (3rd Ed.), § 1563. See also 4 American Law of Property, Ch. II, §§ 16:21, 16:23, 16:27 and 16:30, in which the author says: “By the very great weight of authority, ranging from cases so early that the attempted conveyance was by feoffment and failed because there was no livery of seizin down to the present, the courts have held consistently that a defectively executed mortgage or trust deed mortgage, although it fails to create a legal mortgage will be given effect as an equitable mortgage * * *. “The very fact that the parties clearly tried to give a present legal mortgage would seem sufficient without more to