Cunningham v. Davidoff

Grason, J., delivered the opinion of the Court. On April 26, 1945, the appellee filed an amended bill of complaint against the appellant in the Circuit Court of Baltimore City. It alleged a deed of assignment dated April 26, 1936, from Aetna Realty Company to appellee, conveying leasehold property known as 3424 Holmes Avenue, Baltimore, Maryland; that the appellant and his wife, since deceased, acquired title to the property by deed of assignment dated December 18, 1917, from the Park Improvement Company; that appellant and wife, by deed of assignment dated January 10, 1921, conveyed the property to Jacob and wife, and on the same day Jacob and wife executed to appellant and wife a mortgage for $1,500, payable in six months from date, with interest at 6 per cent, per annum; that by mesne conveyance the title to the leasehold interest in the property has been acquired by the appellee; that no payments have been made on account of the principal of said mortgage or interest thereon since the date of its execution; that any action for the collection of the debt secured by said mortgage, or for the sale of the property covered by said mortgage, is barred by the statute of limitations; that appellee has requested the appellant to execute a release of said mortgage but he refuses to do so; that no release of said mortgage has been recorded among the land records of Baltimore City and that the mortgage constitutes a cloud upon the title of appellee. The bill prayed: (1) That the mortgage be decreed to be barred by the statute of limitations.

(2) That the court enjoin the institution of prosecution of any action for the foreclosure of said mortgage or the collection of the debt originally secured thereby. (3) That the court decree said mortgage does not constitute a lien or cloud upon the title of said property and (4) for other relief. ⁴⁴⁰ To this bill the appellant demurred, which was overruled, and an appeal was taken to this Court. The decision in that case will be found in 187 Md. 134 , 46 A. 2d 633 , 161 A. L. R. 1383. This Court sustained the bill and remanded the case.

The answer thereafter filed admitted the allegations of the bill, but denied its conclusion that the mortgage referred to therein was barred by the statute of limitations. It set up other matters in defense, which we need not repeat. The case was heard by the chancellor and on the 17th day of October, 1946, he decreed that the mortgage dated the 10th day of January, 1921, from the Jacobs to Cunningham and wife “does not constitute a lien or cloud upon the leasehold interest in said property subject to an annual ground rent of $90.00 as conveyed to Dora Davidoff by Assignment dated April 26, 1936, and recorded among the Land Records of Baltimore City * * * from the Aetna Realty Company to Dora Davidoff.” He further decreed that the appellant “his personal representatives or assigns, be and they are hereby forever enjoined from the prosecution of any action against the said Dora Davidoff (appellee), her personal representatives or assigns for the foreclosure of said mortgage or for the collection of the debt originally secured by said mortgage.” He further decreed that the appellant pay the costs of the proceeding. From this decree the case comes here on appeal.

The decree refers to the mortgage in question as being dated January 10, 1921, but the agreed statement of facts states that this mortgage was dated January 19, 1921. The principal point in this case is the legal status of a mortgage over twenty years old, upon which nothing has been paid on account of principal or interest since its execution. This leads to the inquiries: (1) Is there a statute of limitations which bars the foreclosure of a mortgage under such circumstances? (2) If there is no statute of limitations, does laches apply, which equity sets up, whereby its remedy is refused to those who seek to enforce stale claims?

(3) Will the court, in such a case, ⁴⁴¹ apply the twenty-year period which governs in actions at law, when the requisite elements are present, in the cases of prescriptive title? If so, is the twenty-year period in a case such as this absolute limitation, or does it give rise only to a rebuttable presumption that the mortgage has been paid ? In Baltimore & O. R. Co. v. Trimble, 51 Md. 99, 100 , the court dealt with $1,167 allowed as owelty to the heirs of Trimble. It held the same to be an equitable lien upon the land allotted to Flannigan in a partition proceeding.

The court quoted McCormick v. Gibson, 3 Gill & J. 12, 19, and said: “In discussing this equitable lien, he (the chancellor) holds that there is no difference between it and the lien secured by a mortgage; and"applies to it by analogy the lapse of twenty years as necessary to raise the presumption that the lien has been satisfied. Again, in Moreton v. Harrison, 1 Bland 499 , the Chancellor says: ‘This equitable lien is so far a mortgage, that the limitation or presumption of satisfaction arising from the lapse of twenty years as applicable to ordinary mortgages does in like manner furnish evidence, or a presumption, that such equitable lien has been satisfied or discharged. An equitable lien is founded upon the principle, that the legal title has not been parted with or ought not to be considered as completely vested in the vendee until the whole purchase money has been paid; because it is deemed unjust to consider any one as the absolute legal owner of property which he has purchased, but has not paid for. * * * If the formal legal title has been parted with by the vendor before payment, then his having so ceded it, gives him an equitable right to enforce payment here with all the advantages he had as actual holder of the legal title, that is as a mortgagee coming here to foreclose ; in which case, by analogy to the Statute of Limitations, no time short of a lapse of twenty years is deemed sufficient to raise a presumption of satisfaction’.” (Last italics supplied.) ⁴⁴² The court further stated: “The court manifestly puts a vendor’s lien, so far as the applicability of limitations is concerned, upon the same ground with a lien by mortgage. The latter, it is well settled, continues for twenty years, not because of the seal attached to the mortgage, for sealed instruments in this State are barred by twelve years, but because it is a deed of conveyance, the rights under which are not barred except by the lapse of twenty years, by analogy to the time of limitations under the Statute of James, which saves the right of entry for that period.” That case reviews a number of the earlier decisions of this Court.

There is no Statute of Limitations in Maryland applicable to foreclosure of mortgages. An equity court deals with stale claims through the doctrine of laches, but laches is not applicable to proceedings brought to enforce an old or stale mortgage. Such cases are exceptions to usual equity proceedings regarding stale claims, “the rights under which are not barred except by the lapse of twenty years, by analogy to the time of limitations under the Statute of James, which saves the right of entry for that period.” Baltimore & O. R. Co. v. Trimble, supra. In Brown v. Hardcastle, 63 Md. 484 , the bill prayed for the sale of real estate for the payment of a mortgage debt.

In that case the opinion states that “Alexander Hardcastle, in his answer denies the amount claimed to be due, and pleads payment, and the. Stateute of Limitations.” The court said: “The présumption of payment in favor of a mortgagor in possession over twenty years is not conclusive, but may be rebutted by evidence of part payment of principal or interest, or by admissions of the debt’s existence, or other circumstances from which it may be inferred the debt has not been paid.” (Italics supplied.) Morse v. National Central Bank, 150 Md. 142 , 132 A. 598, 599 , was an action at law. In that case a lady over ninety years of age died, and in her possession were ⁴⁴³ two bank books. There had been no entry made on these books for nearly fifty years.

Suit was brought by her representative against the bank, which pleaded payment. The court quoted 21 R. C. L. 128: “The presumption of payment is conclusive in the sense that where it appears that the requisite time has elapsed and no countervailing evidence is given, neither the court nor the jury is at liberty to find that the debt was not paid; but it is not conclusive in the sense that the plaintiff may not introduce evidence to disprove the fact which by force of law the lapse of time establishes.” The court further said: “Unless made shorter by statute, the lapse of time required to raise the presumption is 20 years, and no such presumption arises merely from a lapse of less time. 30 Cyc. 1274. “The distinction between such a presumption and the statute of limitations is well stated in Reed, v. Reed, 46 Pa. 239 , where it is said: ‘The latter is a prohibition of the action, the former, prima facie, obliterates the debt. The bar is removed by nothing less than a new promise to pay, or an acknowledgment consistent with such a promise. The presumption is rebutted, or, to speak more accurately, does not arise where there is affirmative proof beyond that furnished by the specialty (or the instrument upon which suit is brought) itself, that the debt has not been paid, or where there are circumstances that sufficiently account for the delay of the creditor.’ See copious note to Sheafer v. Woodside, [ 257 Pa. 276 , 101 A. 753 ], 1 A. L. R. 775, upon presumption of payment from lapse of time. “This presumption of payment arising from lapse of time is universally recognized * * *.” In Miller v. Horowitz, 172 Md. 419 , at page 432, 191 A. 906 , at page 912, this Court said: “It is true that equity, under certain circumstances, will deny equitable relief in the enforcement of a lien upon real or personal