Kingsley v. Makay

McWilliams, J., delivered the opinion of the Court. The alienability of an equitable interest in realty is the topic of this causerie. Appellants argue that if an equitable interest is created by a recorded instrument, even though recording is not required, it can be transferred only by another recorded instrument. The trial judge (Shook, J.), with whom we agree, held to the contrary.

There seems to be no significant controversy about the facts. In March 1963, Margaret Dorsey agreed, in writing, to sell to Joe Bolt, Jr. (Bolt) and the appellees, 1 her 107 acre farm, near Old Germantown, in Montgomery County. A down payment of $5,000 on account of the $105,000 purchase price was required and the buyers were given five years to pay an additional $25,000, after which Mrs. Dorsey agreed to convey title and take back a $75,000 purchase money mortgage. The agreement was recorded a week later.

In May the buyers agreed in writing in regard to the quanta of their respective interests. Bolt’s interest was 20%. In March 1964, after Bolt sold 25% of his 20% interest to appellee Rein, a supplemental agreement was executed showing a decrease in Bolt’s interest to 15% and a corresponding increase in Rein’s interest. In July 1964 a similar transaction evidenced by a second supplemental agreement reduced Bolt’s interest to 10%.

In February 1965 Bolt sold his remaining 10% to one of the original buyers and one (Trapp) who had just joined the venture. All of this was evidenced by a third supplemental agreement. None of the three supplemental agreements was recorded. From and after the third supplemental agreement Bolt no longer had any interest in the property.

He received a total of $16,400 for the 20% interest which had cost him only $2,775. In March 1966, more than a year after Bolt had completely disposed of his interest in the property, the appellant Kingsley obtained a judgment against him for $11,320. At the same time the appellant Day obtained a judgment for $3,200. ²⁷ In May 1967, $30,000 having been paid on account of the purchase price, the appellees called upon Mrs. Dorsey to convey to them title to the property subject, of course, to the purchase money mortgage of $75,000. She refused on the ground that the judgments against Bolt might be a cloud on her title as mortgagee.

The appellees were refused title insurance for the same reason. In July 1967 they filed a bill of complaint in the Circuit Court for Montgomery County against Mrs. Dorsey and the five judgment creditors of Bolt (only two, Kingsley and Day, have appealed), seeking the specific performance of their contract and a declaration that the judgments are not liens on the property. In January 1968 Mrs. Dorsey, having obtained a quitclaim deed from Bolt and his wife, conveyed the property to the appellees whereupon they dismissed, in March 1968, as to her, with prejudice, their bill of complaint. The case came on for a hearing on appellees’ motion for summary judgment, before Judge Shook, on 29 March 1968.

On 17 May she filed a decree declaring the judgments not to be liens or encumbrances. As we have said, only Kingsley and Day have appealed. It has long been established that a purchaser of land under a contract of sale acquires, not a legal title, but an equitable title. Stebbins-Anderson Co. v. Bolton, 208 Md. 183 , 117 A. 2d 908 (1955), and the cases cited therein.

The legal title to land, of course, does not pass, other than by operation of law, until a