Baden v. Castle

Moore, J., delivered the opinion of the Court. This appeal arises out of a controversy over 8.51 acres of real property in Prince George’s County, improved by a dwelling and encumbered by a mortgage to the First National Bank of Southern Maryland and by two deeds of trust securing the Small Business Administration of the United States of America and The Home Bank of Sutton, West Virginia. The adversaries are a mother, age 71 at the time of the proceedings below, and daughter, then 51 — both of whom have had substantial experience in the real estate title field as title abstractors. The principal determination reached by the Chancellor (Couch, J.) in an action for specific performance and other relief brought by the mother, Evelyn D. Baden, against the daughter, Regina Baden Castle and other parties, * 1 turned upon the court’s interpretation of ⁶⁶ a deed dated August 31, 1964 between Mrs. Baden, her husband, Ambrose A. Baden, Sr. and their daughter Regina. * 2 This was a conveyance of two separate parcels, the first consisting of the 8.51 acres and the second of 34.16 acres. 3 There was a difference between the granting clause and the habendum clause.

The former granted and conveyed unto the daughter, “her heirs and assigns” the described realty “in fee simple.” The habendum clause, however, reserved to Mr. and Mrs. Baden a life estate and contained a covenant by Regina to join in a conveyance with her parents should the latter desire to convey it during their lifetime. The printed language of the habendum clause was as follows: “TO HAVE AND TO HOLD the aforesaid pieces or parcels of ground and premises above described or mentioned, and hereby intended to be conveyed, ⁶⁷ together with the rights, privileges, appurtenances, and advantages thereto belonging or appertaining unto and to the only proper use, benefit and behoof forever of the said . . Beneath the printed words, the following was typewritten: “Ambrose A. Baden Sr. and Evelyn D. Baden, his wife reserve a life estate. Also said Regina Baden Barkman covenants and agrees that if at any time during the lifetime of said Ambrose A. Baden Sr. and Evelyn D. Baden should they desire to convey said property she will join in said conveyance.” After the death of her husband in December, 1972, Mrs. Baden entered into a contract of sale for the 8.51 acres with a corporate organization known as Prince George’s Homes, Inc., of which her son Mark was president and in which her daughter-in-law, Mark’s wife, owned a stock interest.

Mrs. Baden was herself a vice president of the corporation but testified that she owned no stock. At the time she entered into the contract with Mark’s company, both he and his wife were residing with her in a residence located on one acre of the property. 4 Her daughter, Regina Castle, refused to join in the contract of sale. Prior to the execution of the contract, she and Mr. Castle had encumbered the parcel with the aforementioned two deeds of trust, aggregating in total principal amount the sum of $55,000 (n. 1, supra). When Mrs. Baden brought suit below to compel the daughter to join in the sale and for an Order that the 8.51 acres be transferred “free and clear of the Deeds of Trust and that the Deeds of Trust are null and void except as between the parties thereto,” the daughter and her husband interposed a general denial and also responded with a cross bill to ⁶⁸ impress a constructive trust in Regina’s favor upon the 8.51 acres.

After two days of hearings in July, 1974 and oral argument on August 30, 1974, the Chancellor filed a memorandum opinion and decree on September 19,1974. He granted the “specific performance” relief requested by Mrs. Baden, ordering the daughter to join in a conveyance to Prince George’s Homes, Inc. but denied Mrs. Baden’s prayer seeking to have the conveyance free and clear of the deeds of trust in favor of the Small Business Administration and the Home Bank of Sutton, West Virginia. 5 The court also denied the daughter’s prayer that a constructive trust be impressed upon the property. From this decree, Evelyn Baden and Regina Castle noted appeals to this Court. Mrs. Castle, the original appellant, did not file a brief and, on April 1, 1975, her appeal was dismissed.

The case is before us, therefore, with Evelyn Baden (originally a cross-appellant) as appellant, and Regina Castle, the trustee under the deeds of trust, the Home Bank of Sutton and the Small Business Administration as appellees. Mrs. Baden urges that the lower court erred in its application of the doctrine of equitable estoppel and that she should be allowed to transfer the property free and clear of the deeds of trust. The Home Bank of Sutton, West Virginia contends (a) that the evidence was not legally sufficient to support the decree compelling specific performance, (b) that Mrs. Baden waived any rights she had to convey the property unencumbered by the deeds of trust and (c) that she is estopped from conveying the property unencumbered. The Small Business Administration argues (a) that Mrs. Baden concealed her life estate from the mortgagees and is estopped from avoiding the deeds of trust and (b) that under the doctrine of unclean hands the Chancellor properly denied her prayer that she be permitted to convey the 8.51 acres unencumbered. ⁶⁹ I In determining the legal effect of the deed dated August 31, 1964, the court below considered the circumstance that although the granting clause conveyed a fee simple interest, the habendum clause reserved a life estate to the grantors, with power to convey during their lifetime.

The court’s opinion then stated: “Plaintiff [Mrs. Baden] contends that the granting and habendum clauses may be construed together in order to determine what the parties intended and having done such the deed may be specifically enforced. The Defendant argues that the two clauses are repugnant and that even in the event they can be reconciled by looking at the intentions of the parties, the power to dispose of the property reserved by the life tenants could only be exercised during the joint lifetimes of Ambrose and Evelyn Baden.” The Chancellor recognized that the early decisional law in Maryland, as traced in Winter v. Gorsuch, 51 Md. 180 (1879), holds that where there is a conflict or repugnancy between the granting and habendum clauses in a deed, the granting clause must control and the habendum clause rejected. The court there quoted from Budd v. Brooke, 3 Gill 198 (1845): “. . . where the habendum is repugnant and contrary to the premises it is void, and the grantee shall take the estate given in the premises.” The court in the instant case felt, however, that this rule was “qualified” by later decisions evidencing a “more modern approach.” In Winter , the granting clause conveyed a fee simple interest and the habendum conveyed a life estate. The Court of Appeals held: “Here then by the premises of this deed an unqualified and absolute interest is given to the daughter, and by the habendum that interest is cut down to a life estate with contingent limitations to her children and the heirs of the grantor.

The repugnancy and conflict between the two is ⁷⁰ apparent and irreconcilable, and, in our opinion, there could not be a plainer case for the application of the doctrine above stated. The limitations in the habendum clause must therefore be rejected, and the absolute estate granted by the premises to the daughter must prevail.” (p. 186). In the instant case, two decisions were relied upon by the Chancellor to support his conclusion that the Maryland rule had been changed: Weinbeck v. Dahms, 134 Md. 464 (1919) and Beranek v. Caccimaici, 157 Md. 144 (1929), which the trial court stated was “factually similar” to the present case. We do not agree.

In Weinbeck the granting clause itself conveyed an absolute interest but first reserved to the grantor the power to convey, sell, or dispose of the property during the term of her natural life. Moreover, the court observed that “[t]he habendum clause of the deed follows exactly the language of the granting clause.” Indeed, the Court of Appeals in Weinbeck reaffirmed the rule set down in Winter v. Gorsuch, supra, when it stated: “It is proper to say that there can not be any dispute as to the proposition that where there is a repugnancy between the granting clause of a deed and the habendum, where an estate which has been granted in fee is sought to be cut down to a lesser estate, or limited by conditions, that such attempt will be rejected as void, being in derogation of the absolute estate previously granted.” (p. 466). In Beranek , the granting clause conveyed a fee simple estate to a son and daughter as tenants in common, subject, however, to a life estate in the grantor and a reservation of the power “to mortgage, sell or otherwise dispose of or encumber” the devised lot. Again, as in Weinbeck , the court noted that “[t]he language of the grant is repeated in the habendum, and there is no repugnancy nor conflict anywhere with the operative part of the deed.” We find Beranek and Weinbeck, supra, to be inapposite.

Neither case presents a conflict between the granting and the habendum clauses. Even were this not the situation, we ⁷¹ find no support for the Chancellor’s conclusion that there has been a departure from the traditional Maryland rule. On the contrary, since the decision in Winter v. Gorsuch in 1879, the Court of Appeals has often restated and reaffirmed the rule. Marden v. Leimbach, 115 Md. 206 (1911) and cases there cited; Literski v. Literski, 166 Md. 641 (1934); Adams v. Parater, 206 Md. 224 (1955); Green, Tr. v. Eldridge, 230 Md. 441 (1963); D.C. Transit Systems v. S.R.C., 259 Md. 675 (1970); Lazenby v. F. P. Asher, Jr. & Sons, 266 Md. 679 (1972).

In Marden v. Leimbach, supra, the Court stated: 6 “It is, of course, elementary that where there is a conflict between the granting and habendum clauses, the former • will prevail. A familiar illustration of such a repugnancy is where the granting clause is in fee and the habendum is only for life. Winter v. Gorsuch, supra. But there is no such conflict unless the habendum, divests the estate granted and substitutes another.” (Citations omitted.) (p. 209). 7 In 1970, the Court of Appeals quoted the above statement of the rule in Marden in the case of D.C. Transit Systems v. ■ S.R.C., supra.

Again, in the 1972 case of Lazenby v. F. P. Asher, Jr. & Sons, supra, Judge Smith quoted “some of the rules for construction of deeds [which] were summed up for the Court by Chief Judge Bruñe: in Adams v. Parater, supra, including the following: “If, however, we entertained doubts as to the ⁷² proper construction of the deed and were forced to rely upon a technical rule of construction, we believe that the rule which, in case of repugnancy, gives effect to the first of two conflicting clauses in a deed, should be followed in this case. [Citing cases.] The most frequent application of this rule is in cases where the granting clause is held to prevail over the habendum. . . . The reason for the rule suggested by Tiffany, Real Property, 3rd Ed., Sec. 979, seems clearly applicable and pertinent here — that it is ‘to prevent the revocation by implication, by a later clause, of an earlier provision made in clear, explicit and unambiguous words, such a revocation being required to be in terms no less clear and explicit than those of the earlier provision.’ ” Id. at 236-37 . (Underscoring added.) Ordinarily, therefore, under the strict Maryland common law rule, the habendum clause here would have been disregarded since it reserved a life estate in the grantors notwithstanding the provisions of the granting clause whereby they granted title to the property in fee simple. This habendum clause, however, contained a specific independent covenant by the grantee, who also executed the deed, whereby she agreed that “if at anytime during the lifetime of said Ambrose A. Baden, Sr. and Evelyn D. Baden should they desire to convey said property she will join in said conveyance.” In March, 1973, the grantee was formally advised by counsel representing the surviving grantor 8 of the latter’s desire to convey the property.

This letter, dated March 13, 1973, was addressed by Mrs. Baden’s counsel to Mrs. Regina B. Castle, Box 3312, Upper Marlboro, Maryland and read as follows: “Dear Mrs. Castle: This office has been retained to represent Mrs. ⁷³ Evelyn D. Baden in the sale of her property, parcel #1 containing 8.51 acres as recorded in Liber 3031, Folio 482 in the Land Records of Prince George’s County, Maryland. Mrs. Baden has a purchaser for the noted property and it is her desire to convey said property to the purchaser. Inasmuch as you have heretofore agreed, by deed recorded in Liber 3031, Folio 482, to join in the conveyance of said property at any time, you are hereby requested to sign a deed conveying the subject property. The deed may be signed in my office at any time.” It is plain from the above evidence that the grantee was informed (1) that the grantor had a purchaser for the property and (2) it was her desire to convey it.

The grantee’s commitment to execute a conveyance was unconditional. It was also specifically enforceable and the Chancellor properly ordered compliance with its provisions. Browne v. Browne, 1 Harr. & J. 430 (1803) (conditional intrafamilial covenant to convey specifically enforced); see also Cataldo v. Compiano, 76 N.W.2d 214 (Iowa, 1956) (vendor’s conditional option to repurchase specifically enforced upon occurrence of condition). We put aside the contentions made by the appellee, Home Bank of Sutton, West Virginia, that the evidence adduced on behalf of Mrs. Baden was not legally sufficient to support the lower court’s decree requiring Mrs. Castle to join in the conveyance.

It is true, as appellee argues, that the contract of sale with Prince George’s Homes, Inc., although identified, was not received in evidence; and that Mrs. Baden testified that she did not remember the terms of the contract or the settlement date; and that a copy of the deed was not offered in evidence. On the other hand, however, Mrs. Castle herself disclosed on direct examination her knowledge of the existence of the contract and, indeed, testified that she had seen it: “Q Did you have a conversation with Mr. Burroughs [attorney for Mrs. Baden] regarding the contract on the 8.51 acres? ⁷⁴ A Yes. Q And did Mr. Burroughs show you the contract? A Yes, he did.

Q And who was the contract with, if you know? A It was with Mark Baden. Q And who is Mark Baden? A P. G. Homes, Inc. Q And who is Mark Baden?

A Mark Baden is my brother.” Furthermore, Mrs. Baden testified that the contract of sale was with Prince George’s Homes, had been prepared by Mark and that she had a copy of it at home. She also told the Chancellor that, since the execution of the agreement, the company (intending purchaser) had been paying all the utility bills and the mortgage installments to First National Bank. Case authority urged upon us by the appellee bank relating to the requirements for specific performance of a contract for the sale of real estate, Beck v. Bernstein, 198 Md. 244 (1951); Tarses v. Miller Fruit and Produce Co., 155 Md. 448 (1928) and Kalavan v. Hamburger, 178 Md. 218 (1940) are inapposite. The contract here that was required to be specifically enforced — and properly so — was the covenant of Mrs. Castle to join in a conveyance of the property at any time the grantors desired to do so.

This covenant was contained in a deed which, according to the undisputed testimony of Mrs. Baden, was prepared by Mrs. Castle herself — • an individual experienced in title and mortgage transactions. (According to her own testimony, she was a title examiner at the courthouse in Upper Marlboro for ten years and, later, an officer in The Atlantic Mortgage Company for some two years.) Furthermore, the court had before it the testimony of Mrs. Baden concerning the inclusion of the covenant in the deed: “I had to put that in the deed because that is all I had in the world was