Maryland Construction Co. v. Kuper

Boyd, J., delivered the opinion of the Court. On the 18th day of January, 1897, the Maryland Construction Company, through its agent, J. D. McCubbin, Jr., and John Kuper entered into an agreement for the sale by the former to the latter of some lots on Park avenue (formerly called Grundy street) and one on Preston street, in the city of Baltimore. Kuper paid $25.00 on account of the purchase money, which was to be returned in the event that the title should be found to be not marketable. Thirty days was allowed for the examination of the title, upon the completion of which and the execution of a deed for the property the balance of the purchase money was to be paid.

Kuper having declined to accept the deed and pay the purchase money, a bill wás filed by the appellants for the specific performance of the contract, which, after hearing, was dismissed by the decree of the Court below. From that decree this appeal was taken. Several objections to the title of the lots are urged by the appellee, and it is also contended that there was no mutuality of contract between the parties. We will first consider the latter question. 1.

It appears from a petition of the receivers of the Baltimore and Ohio Railroad Company, filed in the Circuit Court of the United States for the District of Maryland, a copy of which is by agreement of counsel made a part of this record, that the Maryland Construction Company undertook the construction of the Baltimore Belt Railroad, which connected the main line of the Baltimore and Ohio Company at Camden station with its Philadelphia branch, near Bay View. The Baltimore and Ohio held all the stock of the construction company and made large advances to it. ⁵⁴⁰ The construction company acquired a number of parcels of land which it did not convey to the Belt Railroad, and which were not within the right of way of that company, including the lots now in controversy. The United States Court, after hearing the counsel representing various iñterests affected by the petition, passed a decree authorizing the receivers to issue certificates of indebtedness to an amount not exceeding $956,000.00, to be dated December x, 1896, payable three years thereafter, and redeemable on the first of June, 1897, or on any interest day thereafter, the proceeds of which were to be applied as therein directed. The decree provided that the receivers, as a condition precedent to the issuance of, the certificates, should require the construction company to execute to them an agreement or declaration of trust, acknowledging and agreeing that it did and 'would hold all its property for the benefit and protection of said receivers, and that it would in no case sell or in any way dispose of any of its property without their consent in writing, and that it would upon the request of the receivers sell, lease, convey, transfer, assign or dispose of in any way the whole or any part of said property and assets as the receivers might direct—they being authorized to receive and receipt for all moneys derived from such sales.

On the 27th day of November, 1896, the construction company executed the declaration of trust in accordance with that decree, which was duly recorded. It is by reason of it that the appellee contends there was no mutuality o contract, as the agreement for the sale to him was not signed by the receivers, but only by the construction company. The appellee has referred to the cases of Geiger v. Green, 4 Gill, 476 ; Duvall v. Myers, 2 Md. Ch. 401 ; Gelston v. Sigmund, 27 Md. 344 , and King v. Warfield, 67 Md. 246 , in support of his contention. In Geiger v. Green, the Court, after referring to a number of authorities, including the doctrine as stated by Lord Redesdale in Lawrenson v. Butler, 1 Schoale and Lefroy’s Reports, 18, said: “It is now established that unless there is to found in the contract this ⁵⁴¹ essential ingredient of mutuality, a Court of Equity will not compel its specific execution. ” In Duvall v. Myers the Chancellor said : “ The right to a specific execution of a contract, so far as this question of mutuality is concerned, depends upon whether the agreement itself is obligatory upon both parties, so that upon the application of either, against the other, the Court would coerce a specific performance.” And in the other cases referred to similar expressions are used.

But, without in any wise questioning the doctrine as established by them, do they interfere with the right of the construction company to maintain this bill ? By the very terms of this agreement that company has obligated itself to sell and convey the property and the appellee to purchase and pay for it. The uncontradicted evidence shows that Mr. McCubbin was the agent of the company and was authorized to make the sale. There is nothing on the face of the agreement to show lack of mutuality, and “it is obligatory upon both parties.” The doctrine announced in the above cases therefore does not prevent the construction company from maintaining its bill for specific performance.

It is said, however, that it was not in a position to convey the property by reason of the declaration of trust, and as the receivers were not parties to the agreement there was the lack of mutuality complained of. But the title to the property was not conveyed to the receivers. The company still held the title, and the declaration of trust only prevented it from conveying it, without the consent in writing of the receivers. It, in reality, was no greater incumbrance on the property than a mortgage, for when the indebtedness intended to be thereby secured was paid it had the unquestioned right to be relieved from the effects of its provisions.

It was a declaration that it held the property for the security of the debt and was very similar to a mortgage with a provision in it that the mortgagee should have the use and control over the property until the debt was paid. The testimony shows that Mr. McCubbin was also agent of the ⁵⁴² receivers, and that he was authorized by them to make the agreement. It is true that he does not say whether he had, in advance, that authority in writing, but if that was deemed material the appellee could have asked him the question, but the receivers did unite in the deed that was tendered the appellee, and there is no' suggestion in the record that there was ever any question about their willingness to do so. The deed executed by the construction company and the receivers, who thereby gave their consent in writing, if they had not done so before, was tendered to the appellee, and he refused it, giving no other reason for doing so than he thought when he agreed to make the purchase that the two ground-rents were redeemable, and after-wards ascertained they were not, but there was nothing in the contract on that subject.

There was no objection then made on the ground of lack of mutuality in' the contract, or for any defect in the title. While it is true that a vendor must be ready and able to convey a marketable title to the purchaser, it is not necessary that he possess such a title at the time the contract is entered into—provided he shows that he made the contract in good faith and was able to convey it when called upon by his agreement to do so. The great weight of authority is that he is only required to be able to convey it by the time the decree is entered, if time is not of the essence of the contract, and he acts in good faith. Hepburn v. Auld, 5 Cranch, 262 ; Hepburn v. Dunlop, 1 Wheat, 179; Mason v. Caldwell, 10 Ill. 196 ; Dresel v. Jordan, 104 Mass. 407 ; Luckett v. Williamson, 37 Mo. 395 ; Jenkins v. Fahey, 73 N, Y. 355; Oakey v. Cook, 41 N. J, Eq. 350; Miller v. Cameron, 45 N. J. Eq. 95; Guild v. R. R. Company, 57 Kan. 70 (s. c. 33 L. R. A. 77); Reformed Dutch Church, v. Mott, 7 Paige, 77 , and many other cases cited in 22 Ency. of Law, 960.

So far as the cases in this State reflect upon the question they are in accord with that view. In Buchanan v. Lorman, 3 Gill 77 , it was said: “ The ability of the vendor to convey should exist when his duty by the contract ⁵⁴³ arises to convey, or at the time of a decree for a conveyance, where time is not of the essence of the contract.” That is repeated in Dorsey v. Hobbs, 10 Md. 417 , and again in Foley v. Crow, 37 Md. 59 . In Linthicum v. Thomas, 59 Md. 574 , the parties had agreed to exchange properties free from incumbrances, except those specified, and Thomas executed a deed, which was without his authority put on record, but Linthicum’s property was not clear and he had not acquired the legal title to part of it. Thomas proceeded in equity to have the deed annulled and the agreement declared void.

The Court said that Linthicum’s title when the bill was filed “ was so manifestly defective, that a Court of Equity would not for a moment have considered it such as a purchaser would be bound to accept, in a case of specific performance. * * * As against these bills he could not take the ground that he could have his title ready at the time of the decree, as is allowed the complainant in a bill for specific performance. ” The authorities are therefore ample to establish the doctrine that the mere fact that the vendor’s property is encumbered, or his title is defective, at the time the contract of sale is made, will not prevent his enforcing the contract in equity, if he has removed the incumbrance and perfected the title by the time he is required by his contract to convey it, and, generally, when he has acted in good faith relief will be granted him, if he is ready to furnish a clear title at the time of the decree, provided the delay has not prejudiced the purchaser and time is not of the essence of the contract. If this were not so, an owner of land who has incumbrances upon it might pay them off for the purpose of giving the purchaser a clear title and then not be able to enforce the contract of purchase, or he might be subjected to heavy costs in order to have his title cleared and then not be able to require the purchaser to perform his part of the contract. In this case there is no evidence of any difficulty in the way of the construction company giving a clear title (so far as this declaration of trust is concerned), ⁵⁴⁴ as the receivers had consented to the sale and actually joined in the deed before any objection now urged had been made, so far as known to the company. 2. The first objection to the title is based on two alleged errors in the description of lot No. 3, on the plat filed.

They arise in the deed from William H. Geiman to the construction company. One of them is that the beginning of the lot is described to be “ on the southwest side of Grundy street at the distance of