Gross v. Stone

Offutt, J., delivered the opinion of the Court. In October, 1925, Annie E. Gross bought a house and lot known as 609 Newkirk Street in Baltimore City for $4,300. She paid $1,000 in cash and eventually paid the balance. She used the property as a boarding house, and among the persons who boarded there was John T. Stone, ⁶⁵⁶ the appellee.

Mrs. Gross is a widow, somewhat advanced in years, and in straitened circumstances. Prior to 19.35 the boarding house business had gone through a lean period, her taxes were back, there were no boarders other than Stone, and she needed money. She discussed her situation with Stone, and after that she borrowed on mortgage from the Arrow Permanent Building Association $520, apparently to retire a prior loan and to pay the overdue taxes. Following that, Stone asked her what she wanted for the house, and she said $1,500.

He asked whether that included the ground, and she said that it did not. After some further negotiations slie agreed to take $1,000 for the house, and to create a $45 ground rent on the ground, which she was to retain. He then took her to his lawyer’s office, where a contract for the sale of the property was drawn and executed. That contract provided for a sale of the property in fee for $1,000, of which $520 was represented by the mortgage then on it, and the balance was to be secured by a second mortgage from Stone for $450, bearing no interest and maturing in five years.

About a year later, having received no rent, she showed her copy of the contract to a friend, who told her that she had conveyed the land as well as the house to Stone. She said that the information shocked her, because she had understood that she had conveyed only the house, and that she did not know when she signed the contract of sale and the deed that she was conveying the land as well as the house. In August, 1935, Stone borrowed money on the property to pay off the balance due on the mortgage for $520, and also the mortgage for $450 to Mrs. Gross. In the follow-" ing May Mrs. Gross filed the bill in this case, in which she alleged in effect the facts stated above, and prayed that the deed conveying the property to Stone be set aside.

The defendant answered, denied that the transaction was inequitable, and denied that it had been induced by fraud. The case was tried on the bill, answer, and the plaintiff’s evidence. At the conclusion of the plaintiff’s case, the court, after the case had been submitted on ⁶⁵⁷ “the testimony of the complainant and the pleadings” dismissed the bill “without prejudice.” The appeal is from that decree. The first point presented is appellee’s contention that the appeal should be dismissed, on the ground that since the bill was dismissed “without prejudice” the decree was not final.

The decree finally and completely terminated this proceeding in favor of the defendant. It effectually denied the relief prayed by the plaintiff upon the facts shown in the evidence given in her behalf, and determined that upon those facts she was entitled to no relief, and it required her to pay the costs. It also prevented her from having her right to relief upon those facts litigated in any future proceeding. It would indeed be difficult to formulate a decree more definitive in its nature than it is, and the motion to dismiss the appeal is therefore overruled.

Code art. 5, sec. 30; 4 C. J. S., Appeal and Error, sec. 121, and notes; Miller's Equity Proc., sec. 305 et seq.; Hendrickson v. Standard Oil Co., 126 Md. 577, 581 , 95 A. 153 . The second and more important question is whether equity can relieve the appellant against the consequences of a unilateral mistake on her part as to the legal -effect of an instrument conveying her property to another, when the mistake was due to her ignorance, was in part at least induced by her reliance upon, and confidence in, the grantee, whose relations with her were close, friendly, and in a sense confidential, when the transaction was unconscionable, where she was advanced in years and had little business experience and relied upon him for advice, and when he knew that when she executed the conveyance she did not understand its legal effect. Appellee’s contention is that appellant is bound by her deed, and that in the absence of “fraud or duress” she is estopped from denying that it conveyed to the appellee a good, merchantable, and unassailable title to the property described in it. Appellant, on the other hand, contends that if she executed it in ignorance of its legal effect, and that, contrary to her belief and intention, it ⁶⁵⁸ granted a greater interest in the property than she intended to grant, that if appellee, knowing that she relied upon his good faith, and knowing that when she executed it she did not understand that she was granting her entire interest in the property, nevertheless accepted it without explaining its effect to her, and that the bargain was unconscionable, that she is entitled to have it canceled, upon restoring to the appellee such moneys as he may have paid to her on account of the transaction.

Accordingly, she asked (1) that the deed be annulled; (2) that pending the proceedings he be enjoined from disposing of the property. Before considering the evidence affecting those contentions, some reference to what the transaction actually was should be made. Before she executed the deed Mrs. Gross owned a property for which she had paid $4,300, which was subject to a mortgage for $520. Under the contract of sale she agreed to convey that property by a good and merchantable title to Stone for $1,000.

She later executed a deed carrying out that contract. She received no cash then, for of the purchase price of $1,000, $520 remained in the first mortgage which she had given to the Arrow Building Association, $450 was represented by a second mortgage from Stone to her, payable in five years without interest, and it does not appear with any certainty that he even paid her the balance of $30. Later he borrowed on the same property money to pay off the two mortgages, one' to the Arrow Building Association for $520, and one to her for $450. From the proceeds of that loan he paid her on account of the balance due on the mortgage to her, which was then $395, $360.05, leaving still an unsecured balance due her of $34.95, which is still unpaid.

Before she released it, he had paid her from time to time, on account of his mortgage debt of $450 to her, $55. So that the result of the transaction is that for perhaps $12 or $15 of his own money Stone acquired the appellant’s property. For the $360.05 in cash, which she received, was obtained by Stone’s mortgaging the very property she had conveyed to him. ⁶⁵⁹ The relations between Mrs. Gross and Stone, and the circumstances attending the transaction, are perhaps best described in these excerpts from her testimony: “Now, then, what happened in 1934 or 1935 that made you sell the house? A. Well, there were taxes due and I got a loan and I could not pay that, and it was the time of depression, there were no roomers, no boarders, and I could not make it and I got back.

Q. Who was Mr. John T. Stone? Where did you meet him? A. He was boarding in the house. Q. How did he come to buy the house ?

A. Well, he knew I was worried and he said he would see what he could do, so he did see what he could do and he told me he could not get any loan from his relation. So he went up to where I got my loan on another house there and they would not give it to him. Then Mrs. Harris went up and pleaded, I don’t know what she said, but anyway, they agreed then to give him a loan. * * * Q. Who gave him the loan? A. The building and loan. * * * He asked how much I wanted for the house and I said— Q. Was there a ground rent on the house when you bought the house that day?

A. No, I bought the ground with the house. Q. How much ground rent was on it when you bought it first? A. $45. Q. Then you bought the ground with the house?

A. Yes, sir. Q. Now then go ahead and tell his Honor in your own words what happened? A. Then he said ‘How much do you want for the house?’ I said, ‘Well, I think I ought to have $1,500.’ He said, ‘With ground and all’? I said, ‘No, positively, I am not selling the ground.’ I said, ‘As long as I have that bit of ground rent coming in, I would not feel so impoverished, if I needed a hat or pair of shoes I could look forward to that.’ I said, ‘Do like other people do, buy the house first and then buy the ground, if you want to buy the ground—.’ Q. Who were you talking to then?

A. I was talking to Mr. Stone. Carrie says, ‘Yes’ and I don't know whether he winked to her or what, but she shut up like a clam, like that. I thought both of them were true friends of mine just the same as I was to them. I was like a mother to them.

Q. Who ⁶⁶⁰ is Carrie? A. That is Mrs. Harris sitting over there. Q. Who is she? A. I took her in and gave her a home.

Her home was broken np and I give her a home and was like a mother to her, and that is what I got. Anyway, I said, I would rather sell the house cheaper. I said, T will take $1,000 for the house, rent it and sell the ground.’ There was never a word said about the ground. When he took me up to that place, I did not know where he was taking me— Q. Where did he take you.

A. He took me up town some place to a lawyer Cohen. * * * What did you do when you went to the lawyer’s office? A. There was nothing more said about the ground until the contract was wrote and Mr. Cohen says, ‘How about the ground?’ I said, T am not selling the ground.’ And if he would have been honest he would have said then, T ain’t going to buy your house,’ but he didn’t say a word. Mr. Cohen said ‘How much ground rent’? I said, ‘Forty-five dollars.’ When he gave me the contract to read, I seen there was nothing in it about the ground rent, but I thought because he did not buy the ground that was not mentioned, and I didn’t understand that ‘in fee.’ I thought that was buying on time, him paying me in payments.

That is where I got fooled. He said, one time to me out there, ‘Well, Mom, you don’t think I would cheat you.’ I said, ‘Well, I don’t think you would.’ But I didn’t know at the time that he did, because it was nearly a year that I was looking for the ground rent, you know, he had not paid anything on what he owed me. It was five years to pay so much off interest. The Court: Who is ‘he’?

Q. Who do you mean by ‘he’? A. Mr. Stone. * * * Q. When was the first time that you knew you had signed a deed for the whole thing? A. It was almost a year then. Q. Who told you you had signed that?

A. There was a lady asked me to let her see the ground. ‘Maybe they have got your ground.’ ‘No, I didn’t sell the ground.’ She said, ‘Let me see the paper.’ I let her see the contract, She said, ‘Yes, they have your ground.’ * * * Q. What price did you sell the house for to Mr. Stone, what price? A. $1,000. Q. Was ⁶⁶¹ that or not subject to a ground rent? A. $1,000.

Q. Was that or not subject to a ground rent? A. Ground rent, yes. Q. How much was the ground rent? A. $45.

Q. And that was the contract that you understood you made with him? A. Yes, sir. Q. And that is the only contract you ever did make with him? A. That is all I ever did make with him.

Q. And did you know when you signed that deed, that you were selling him the ground. A. No, positively, no.” On cross-examination she testified in part as follows: “And when you read English you understand what you are reading? A. No, I don’t understand ‘in fee.’ * * * Q. Mrs. Gross, did you read that paper? Did you read that paper over in my office?

A. Yes, I guess I did. Q. Do you remember my calling my secretary into the office, in your presence and in the presence of Mr. John T. Stone, and dictating this contract? A. I can’t hear a word you are saying. (The Court: She is a little deaf.) Q. Mrs. Gross, do you remember on March 7th, when I called my secretary in?

A. Yes. Q. To the office where you and Mr. Stone were sitting? A. Yes. Q. And dictated the contract to my secretary, in your presence and in the presence of Mr. Stone, do you remember that?

A. Dictated? Q. Dictated this contract to my secretary in your presence and in the presence of Mr. John T. Stone; do you remember that? A. No, I do not. Q. I told my secretary the contents of this contract, do you remember that, when I called my girl in my office and gave you this contract, which you later signed ?

A. I don’t remember you calling a girl in. Q. Do you know who typed this contract while you were sitting in my office with Mr. John T. Stone? A. I thought you did. * * * Q. Do you remember me telling you in my office, do you want to get yourself a lawyer to represent you? A. No. Q. You don’t remember that at all?

A. No, don’t remember that at all. * * * Q. Just a minute, Mrs. Gross. Did you make any statement to me in my office about any ground rent at all? A. You asked me. You said, how about the ground rent?

I said, I am not selling the ground. ⁶⁶² You said, ‘How much ground rent?’ I said, ‘$45 a year.’ .That is all that was said about it. You never said another word, neither did I. Why didn’t he turn around to me and say, ‘Well, Mom, I am not buying the house, if I - can’t buy the rent’ ? Instead of that you tricked me out of it. * * * Q. And you expected me to create a ground rent for you? A. Well, you ought to have had in there if the ground rent was not to be sold.

You ought to have said then that I was to get $45 a year ground rent. Q. And it had a $520 mortgage. Who was to pay that off before making a ground rent? A. What?

Q. Who did you expect to pay the $520 mortgage off first before creating the ground rent? A. The one who bought the house. Q. You knew that he was earning only so much a week and he had to make those payments to you? A. I wasn’t looking for it all at one time.

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