Brooks v. Sprague

Ubx-er, J., delivered the opinion of the Court. The bill of complaint in this case alleges that the plaintiff is the owner of certain real estate in Baltimore which he sold, on May 3rd, 1920, under a conditional contract of sale, to Etta T. Sprague, who. had been a valued employee of the plaintiff, for the sum of $5,000, which was less than its true value, $200 of the purchase price being payable when the contract was signed, $1,300 within sixty days thereafter, and the balance, together with taxes, water rent and interest, in weekly instalments of $12.75; that the contract by its terms was to be null and void, at the plaintiff’s option, if a breach of any of its covenants or conditions occurred, and in that event the payments on account of the purchase were to represent liquidated damages and not a penalty or forfeiture; that the contract was not acknowledged and contained the stipulation: “By mutual consent this paper is. not to be recorded”; that the purchaser made the cash payments required by the agreement and paid some of the weekly instalments; that on October 12th, 1925, there was due to the plaintiff, under the contract of sale, the sum of $3,345.14, and he has received no payments on account of the purchase since that date; that the plaintiff and the purchaser agreed that she could not complete the transaction and that the plaintiff should exercise his option to declare the contract null and void, which he accordingly proceeded to do, and the purchaser, on or about April 19th, 1926, surrendered the property to. the plaintiff, who has since held it in his sole possession; that in June;, 1927, the plaintiff con ¹⁶² tracted to sell the property to Ida P. Thomas, but objection was made to the title because of the fact that the plaintiff’s contract of sale with Etta T. Sprague, together with an acknowledged assignment thereof, dated September 15th, 1922, to the Baltimore Acceptance Corporation, was recorded on January 8th, 1923, and because a paper writing in the nature of a mortgage, executed, but not acknowledged, by Mrs. Sprague and her husband, to secure the sum of $3,760, advanced by her mother, Anna B. Tuckerman, to cover the initial payment of $1,500 on the price of the property purchased, from the plaintiff, and to^ provide $2,260 for its improvement, had also been filed for public registration; that, prior to his sale of the property to Ida P. Thomas, the plaintiff was unaware that the contract of sale to' Mrs. Sprague and her mortgage to her mother had been recorded, but he had been informed in the early part of 1926, by a representative of the Baltimore Acceptance Corporation, of the assignment to it by Mrs. Sprague of her contract of purchase, and had been requested by its representative to recognize the assignment, but the plaintiff refused such recognition; that the assignment, while absolute in form, was actually intended as a security for certain loans. It is averred by the bill that the recording of the plaintiff’s contract with Mrs. Sprague, contrary to its terms, was unwarranted and prejudicial to the plaintiff’s interest, and subjects him to the necessity of invoking the aid of a court of equity for the removal of the cloud thus cast upon his title. Relief to that end is sought by means of a proposed decree, declaring null and void the contract of sale with Mrs. Sprague and its assignment to the Baltimore Acceptance Corporation.

The answer of Mrs. Sprague and her husband to the bill of complaint admitted that sire had surrendered the property in question to the plaintiff because of her inability to continue the payments stipulated by the contract of sale, and she disclaimed responsibility for the recording of the contract and assignment. Her mother, Mrs. Tuckerman, filed an ¹⁶³ answer, which did not contest the right asserted by the plaintiff, but claimed that the interest of the Baltimore Acceptance Corporation under its assignment was inferior to that created by her previously executed though subsequently recorded mortgage. In its answer the Baltimore Acceptance Corporation stated that, on or before January 1st, 1923, the plaintiff had actual knowledge of the assignment to it from Mrs Sprague of her contract of sale; that the purpose of the assignment was to secure the repayment of certain advances on which there is a balance now due amounting to $5,073.50, with interest; that until April, 1926, Mrs. Sprague and her husband continued to have possession of the property purchased from the plaintiff and to spend large sums of money in its repair, maintenance and alteration, and, in answer to inquiries from the corporation, Mrs. Sprague always said that the weekly payments to the plaintiff were not in arrears; that on numerous occasions prior to April 19th, 3926, a statement of the balance due under the assigned contract was demanded of the plaintiff by the corporation, which at the same time proffered to pay the amount