Gibbs v. Didier

Boyd, C. J., delivered the opinion of the Court. On August 20th, 1909, Jacob Goldstein executed a lease to Jackson Q. Eoree for the term of 99 years of a lot of ground on Madison avenue, in the City of Baltimore, which contained the usual covenants and provisions in such leases, amongst others a covenant by the lessee for himself, his heirs, executors, administrators and assigns, to pay the rent reserved, taxes and assessments when leg'ally demandable. The rent reserved was $500.00 per annum, payable in equal quarterly instalments on the first days of September, December, March and June. By mesne conveyances the reversion became vested in John S. Gibbs (the appellant) and the lease- ⁴⁹¹ bold in Thomas McGreevy.

On February 1st, 1910, Mc-Greevy executed a mortgage to Louise FT. Didier (the appellee), for $1,200.00. The mortgage being in default, proceedings were instituted to foreclose it, and E. Contee Rose was by a decree dated October 3, 1912, appointed trustee to-sell the property. The trustee sold it on October 29th, 1912, to the appellee, but the sale was set aside on exceptions filed’, by her.

On October 17th, 1913, the appellant instituted an action of ejectment against Louise FT. Didier, Evan W. Hood and Jackson Q. Force—the latter being the original lessee and Mr. Hood being the assignee of the lease, subject to the mortgage. On April 3rd, 1914, there was a verdict in favor of' the plaintiff for the property and one cent damages and costs.. The plaintiff filed a motion for a new trial, which was subsequently dismissed, and judgment was made absolute on May 22nd, 1914, against the appellee.

On March 21st, 1914, the appellee conveyed to R. Victor Hedian all her interest in the mortgage, together with her interest and estate in the property. The appellant filed a bill in equity against the appellee' (Louise FT. Didier) and R. Contee Rose, trustee, to compel them to pay the ground rent alleged to be due him and money expended by him for taxes and sewerage charges levied agáinst the property. The lower Court sustained a demurrer-filed by R. Contee Rose, and dismissed the bill as to him,, and the case then proceeded against Louise FT.

Didier, resulting in a decree in her favor, from which this appeal was; taken. In her answer she relied on the defense of res adjudicatetf, claiming that the judgment for the plaintiff for the-property mentioned in the declaration and one cent damages-in the ejectment ease was conclusive. The decree recites that “The Court being of opinion that all the matters in issue in this cause were in issue, and were settled and determined in the action of ejectment between the same parties of which the- ⁴⁹² record was offered in evidence in this proceeding,” etc. That was the main question argued before us. It may be helpful to us to recall some of the decisions of this Court in reference to the liability of the assignee of a lease on the covenants contained therein.

In Hintze v. Thomas, 7 Md. 346 , it was held that “A suit at Icuio can not be maintained against the assignee of a lessee after he has assigned over for rent falling due subsequent to the assignment to him, and before the assignment over, the remedy of the lessor in such case being in equity alone.” That was followed by Mayhew v. Hardesty, 8 Md. 479 , where it was held that “The mortgagee of a term, after forfeiture, has the whole estate therein, and is liable on the real covenants in the lease whether he becomes possessed of or occupies the premises in fact or not.” In Donelson v. Polk, 64 Md. 501 , it was said: “The principle of law is a familiar one, that the liability of an assignee of a term to the original lessor, or those claiming under him, grows out of the privity of estate, and that such liability continues only so long as such privity of estate exists. So long as the privity of estate continues, the assignee is liable upon all covenants that run with the land-, such as covenants for the payment of rent, and of taxes assessed upon the premises (Lester v. Hardesty, 29 Md. 50 ), and for any breach of such covenants the lessor may sue him during the continuance of the assignment.” Judge Ai.vey, after reviewing some cases, and intimating that but for the decision in Hintze v. Thomas the Court might have held otherwise, held that such action at law could not be maintained after assignment for breaches of covenant committed by the assignee during the time of his holding, but the remedy was m equity. Other cases might be cited to the same effect, but while the rule is well established that after forfeiture a mortgagee is regarded as the assignee of the term, and hence is liable on the real covenants, there is danger of great hardship being imposed on a mortgagee, and the right to hold one liable on ⁴⁹³ such covenants should he very thoroughly established before recovery is permitted—especially should this be so in a court of equity. Ho more striking illustration of the possible hardship of the rule need be given than this case.

The appellant has by the ejectment proceedings not only deprived the appellee of the security she presumably supposed she had when she took the mortgage, but now seeks to hold her liable for about $2,000.00, which the mortgagor ought to have paid,, merely because she held the mortgage on the leasehold interest, although she was not in actual possession of the property. That a party can have any standing in a court of equity to make such claim is suggestive of the desirability of having some legislation on the subject. Before coming to the question of res adjudicata it will be well to pass on some of the items sought to be recovered. There is nothing to show a default in the mortgage until the taxes for 1910 were “legally payable” (to use the language of the mortgage), and therefore the appellee could not be held for the taxes for that year, as there must have been such default in the mortgage as vested the term in her before she could be liable.

Without quoting them, we will only say that the terms of the mortgage were such as to leave the title to' the leasehold in the mortgagor until default. The appellant contends that the ejectment proceeding referred to was under section 13, and not under section 71, of Article 75 of the Code, and he argues that he therefore could not have recovered in that proceeding the taxes, rent and sewerage charge now sought to be recovered. If that be conceded, ex gratia argumenti, it would seem to be clear that the appellant can not recover the quarterly instalments of rent due December 1st, 1913, and March 1st, 1914. The lease contained a provision that if the rent should he in arrear, in whole or in part, for sixty days, it should be lawful for said Jacob Goldstein, his heirs or assigns, to reenter upon the demised premises and hold the same until all the arrearrages of rent and expenses incurred by reason of ⁴⁹⁴ .such non-payment should be fully paid. “And provided further that if said rent shall be in arrear for six months, then the said Jacob Goldstein, his heirs or assigns, may re-enter upon the premises hereby demised and hold the same as if .this lease had never been made.” Section 73 of Article 75, which is in substance the same as section 2 of 4 Geo. 2, Ch. 28, which was in force in this State, provides that between landlord and tenant when there is one-half year’s rent in .arrear and the landlord or lessor hath the right by law to re-enter for the non-payment thereof, “such landlord or les.sor shall and may, without any formal demand or re-entry, •serve a copy of a declaration in ejectment for the recovery -of the demised premises,” etc. “The service of the declaration in ejectment is substituted' for the niceties of demand •of rent and entry required at common law,” 2 Alex.

Br. Stat. 958, or as stated in Campbell v. Shipley, 41 Md. 94 , the statute “dispenses with a previous demand of rent and re-entry, and substitutes therefor service of a copy of the ■declaration in ejectment in all cases where the landlord or lessor has right by law to re-enter.” It is also stated in 2 Alex. Br. Stat. 962, that “The landlord by service of a declaration in ejectment makes his election to determine the lease •and can not, though there has been no judgment in the ejectment, sue for rent due or covenants subsequently broken.

Jones v. Carter, 15 M. & W. 718.” Understanding it to mean that he can not sue for rent subsequently due, that is, in our judgment, a correct statement of the law, and hence the rent falling due subsequent to the filing of the declaration can not be recovered, qua rent. As the record does not ¡satisfactorily show when the taxes for 1913 were due and payable, we can not say whether they could be recovered. 'We will only add on this branch of the cáse that under the decision in Mackubin v. Whetcroft, 4 H. & McH. 135 , the right to rent and taxes due prior to the time of the filing of the declaration is not extinguished by an action of ejectment. But as there are still some items in the appellants’ claim ■which are not affected by what we have said, we must deter ⁴⁹⁵ mine whether the ejectment suit was a bar to the recovery of the rent, taxes, etc., which might have been recovered in that suit. We can not agree with the appellant in the contention that that must necessarily depend upon whether the ejectment was brought under section 71 or section 73 of Article 75, but assuming that it was brought under section 73, we will first see whether the items sued for could have been then recovered, if they had been shown to be due.

Section 73 does not provide for what shall be included in the declaration, but it only says “such landlord or lessor shall and may, without any formal demand or re-entry, serve a copy of a declaration in ejectment for the