Arnd v. Lerch

Offutt, J., delivered the opinion of the Court. Henry Arnd and Annie Arnd, his wife, on June 7th, 1929, contracted in writing with Milton R. Lerch to sell to him at and for the price of $30,000 a tract of land 252 feet 5% inches by 1,550 feet, more or less, on a proposed road, Wood-ring Avenue, east of the Harford Road in Baltimore City, Md., and to furnish him a good and merchantable title to the same. The vendee paid on account of the purchase price $500, but declined to make further payments, or to proceed ³²⁰ under the contract on the ground that the property was subject to “two outstanding one cent ground rents,” and that for that reason the vendors were unable to “furnish a good and merchantable title” to it. On September 6th, 1930, the vendors filed in the Circuit Court EJo. 2 of Baltimore City their bill of complaint against the vendee, in which, after alleging the execution of the contract, the payment of $500 on account of the purchase price, and the refusal of the vendee to make further payments, they related that they had informed the vendee’s attorney that the ground rents were barred, but that while they held the land in fee simple they would nevertheless co-operate with the vendee in purchasing a release of the supposed rents, but that he refused to' aid them, and declined to perform his part of the contract, and they accordingly prayed that it be specifically enforced.

The defendant in his answer stood on the letter of his contract, and asserted that the outstanding ground rents make the title unmerchantable and excused him from performance of it. The case was heard upon bill, answer, and evidence, and at the conclusion of the hearing the chancellor dismissed the bill. This appeal is from that decree. It was proved without contradiction that the land described in the contract of sale is a part of a 71-acre tract which, on June 9th, 1822, John Spear Smith and others leased to a certain Catherine McDermott subject to' an annual ground rent of one cent “if demanded,” and that since 1910 Charles Gensler, Theodore Messersmith, and Charles L. Kohlstead have held the paper title to both the reversion and the leasehold interest in 49 acres of the 71-acre tract, and that they also own the reversion in the residue of the whole tract.

It is also’ conceded that by mesne conveyances the leasehold title to the whole tract of 71 acres became vested in Elisha Hoddinott in 1888, and that he, by a sublease dated January 13th, 1892, assigned a portion of the entire tract to John and Anna ETeidhardt upon an annual ground rent of one cent “if demanded,” and that the part so subleased by Hoddinott to' the ETeidharts is now vested in ³²¹ Henry and Annie Arnd by virtue of an assignment from John Lfeidhardt-and others dated May 9th, 1907, which contained this clause: “to have and to- hold the said above described lot or parcel of ground and premises, unto and to the said Henry Arnd and Annie Amd, his wife, as tenants by the entireties and to- the survivor of them, their personal representatives and assigns, for all the residue of the term of years yet to come and unexpired therein with the benefit of renewal thereof from time to time forever, subject to the payment of the annual rent of one cent, if demanded.” The only issue of fact in the case was whether the reversioners had ever demanded of the lessees payment of the one-cent ground rent payable under the lease of 1822, and upon that issue there was a sharp conflict in the testimony. Mr. and Mrs. Amd testified that, prior to January 10th, 1930, no demand for the alleged ground rents was ever made upon them, and that prior to that date they did not know of any ground rent on the property but had believed they owned it in fee simple-, but that on that date Iioddinott, Charles Gensler, and a Mr. Kohlstead, acting for the reversioners, did demand rent claimed to be due for 1928 and 1929. Charles Gensler, testifying for the defendant, said that in 1910 he, Theodore Messersmith, and Charles L. Kohlstead acquired the reversion in the 71-acre tract, and that in July of that year he demanded one cent of Amd as rent, and that from time to time he renewed the demand until 1912, when he sold his interest to Kohlstead. John E. Keidhardt, a nephew of the John Heidhardt named in the sublease from Hoddinott, testified that he knew of no demands for rent, but as his connection with the property was not shown, and there was no apparent reason why he should have known even if demand had been made, his testimony is of little value.

It also- appeared that the 19-acre tract, which Gensler, Messersmith and Kohlstead acquired during or prior to 1910, has been laid off in lots as part of a development called Woodholme. Other than vague, uncertain, hearsay testimony, there is ³²² nothing in the record to show how, when, or from whom G-ensler, Kohlstead, and Messersmith acquired their interest either in the reversion or the leasehold interest in the 49-acre tract or the reversion to the 71-acre tract. There is, it is true, a partly illegible photostatic copy of what is called a “chain of title”; but in the absence of some explanatory testimony, which the record does not contain, it is quite unintelligible, and certainly cannot be accepted as the basis for a judicial conclusion. There is also a stipulation in the case as to certain deeds, but it relates exclusively to the devolution of the leasehold interests created by the original lease from Smith in 1822 and the sublease from Hoddinott in 1892.

It may, however, be inferred from statements and admissions by Gensler and Kohlstead, and a statement by counsel for the appellee, that “Hoddinott has the sublease but the original lease is in Theodore Messersmith and Charles L. Kohlstead,” that at some time during or prior to 1910 Gensler, Messersmith, and Kohlstead acquired the leasehold interest in 49 acres of the 71-acre tract, and during that year they acquired the reversion in the 71-acre tract out of which the 49 acres as well as the land now owned by the appellants have been carved. The question in the case is whether those facts show with the degree of certainty required in cases of this character that the appellants have a title to the land described in the contract of sale, which the appellee is bound to accept as merchantable. While not a word of precise significance, by common usage the word “merchantable,” when used in contracts for the sale of land, means free from incumbrances and free from any rational or substantial doubt (Words and Phrases, First, Second, and Third Series; 36 Cyc. 638; Bullock v. Staylor, 125 Md. 699 , 96 A. 398 ; Stewart v. Kreuzer, 127 Md. 1 , 95 A. 1052 ; Cityco Co. v. Friedenwald, 130 Md. 330 , 100 A. 374 ), and the word “incumbrance” has been held to include leases and ground- rents. 39 Cyc. 490. While in this case the rent's are merely nominal, yet the difference between the incidents of a fee simple estate and one subject ³²³ to a rent is so substantial that a leasehold title, although merchantable as such, is not such a title as would satisfy a contract to convey a “good and merchantable title,” where there is nothing in the contract to indicate that anything less than a fee simple title was meant.

In other words, “a good and merchantable title” ordinarily means a title in fee simple, and in the absence of anything in the contract itself to qualify those words, the burden is upon him, who asserts that in a particular contract they have a different meaning, to establish that fact. If then it appears that the title of the appellants to the property described in the contract of sale is subject to two one-cent ground rents, it is not a title in fee simple, and they are not entitled to the relief prayed in their bill. That they did not acquire a fee simple title to the property under the deed of assignment from Heidhardt and others on May 9th, 1907, conclusively appears from the instrument itself, for it granted to them, not a fee simple title, but the unexpired part of a term of years yet to come. So that whether the Neidhardts themselves owned a fee simple title is immaterial, for, whether they did or not, they did not convey such a title to the appellants, and the mere fact that they could have granted a fee simple title cannot change the nature of the deed which they executed, or enlarge that which was á mere assignment of a term to a grant in fee simple.

The converse of that proposition was before the court in Worthington v. Lee, 61 Md. 530 , where the title was leasehold while the grant was in fee, and there it was held that a grant in fee, which was more than the grantor owned, was nothing more than the assignment of a leasehold which he did own. Page 539 of 61 Md. But in this case the assignors, if they held a fee in the property, granted less than they owned, for they conveyed expressly subject to the payment of the annual rent of “one cent” if demanded, and while they themselves have no further interest