McGinnis v. Chance

Finan, J., delivered the opinion of the Court. ³⁹⁴ The episodic maze of facts presented by this case defies economy of composition and necessitates the recounting of events in detail. Arthur J. McGinnis, one of the appellants and a plaintiff below, obtained an option from John J. Rogers and wife, dated April 4, 1963, for a consideration of $200 to purchase the parcel of land here involved, located in Anne Arundel County, for the sum of $50,000. On May 3, 1963, McGinnis gave notice of his intention to exercise the option and shortly thereafter removed the timber from the property with the Rogerses’ permission. He then tried to sell his interest in the option to a Mr. Hurd, but was unsuccessful because a title search revealed that there were certain apparent defects in the Rogerses’ title because of the lack of compliance with certain statutory requirements when the property was sold to the Rogerses at a tax sale held on October 11,1932.

After this information was given to- the Rogerses, they entered into a new contract with the appellant, dated September 23, 1963, reciting the same consideration of $200 and other good and valuable considerations for a purchase price of $50,000. With reference to the date for settlement and its duration the contract contains the following provisions: “SETTLEMENT to be on or before ninety (90) days from the date that the Sellers are able to give such title as a title insurance company permitted to do business in the State of Maryland, will approve and insure in the amount of Fifty Thousand Dollars ($50,-000). “It is further agreed that the Sellers will join in any proceedings deemed necessary by the Buyers’ attorney to rectify the defects in the title and to execute any pleadings, documents, etc., necessary for the Sellers to deliver a marketable title and insurable title by said title company. “Buyer will immediately proceed with due diligence to clear title to said property but in no event will the time of this contract exceed eighteen (18) months. “BUT, in case such defects in the title are not rec ³⁹⁵ tified and the Seller cannot deliver a marketable title, insurable by said title company, the Buyers shall have the option to declare this contract null and void; and, if so declared, the deposit of Two Hundred Dollars ($200.00) paid hereunder is to be returned to the Buyer.” On October 1, 1963, this contract was assigned by the appellant McGinnis to appellant Charles Dudley, plaintiff below, for a consideration of $10,000, of which $6,000 has been paid, the balance to be payable at settlement. No proceedings were instituted in any court by or on behalf of the appellants to clear the title, but William E. Dixon, Esq., attorney for appellants (also brother-in-law of Mrs. Dudley and the president of The Monumental Title Company), on behalf of appellants, first employed Garrett Larrimore, Esq., to take action to clear title, and employed John P. O’Eerrall, Esq., to investigate the law with reference to the title of the Rogerses. Mr. O’Ferrall prepared and gave to Mr. Dixon an opinion as to the validity of the title of the Rogerses, concluding that the real question was whether the Rogerses had title by adverse possession, having been in possession and control of the property under a deed from the County Commissioners from 1940 to 1963. tie concluded the tax sale was probably technically bad and noted that Ch. 182 of the Acts of the General Assembly of 1964 provided that all tax sales prior to 1944 in Anne Arundel County could not be subject to further attack after June 1, 1966.

He recommended that tactically it would he well to postpone settlement until June 1, 1966, if possible, rather than file a bill to quiet title before that date. Dixon stated that he thought it best not to bring a suit for specific performance at that time because if no attack was made on the title before June 1, 1966, the Rogerses would have a good title by the Act and it was easier to sit back than to take affirmative action. However, Dixon and appellants all knew the terms of the contract called for final settlement within 18 months, which would have been March 23, 1965. The appellee, Thomas E. Chance, defendant below, in the meantime had investigated the title to this parcel of land and ³⁹⁶ had obtained deeds from the heirs of William Queen who was the record owner at the time of the tax sale in 1932.

The grantee in these deeds was Helen Clarke, an employee of the Chance family, and according to the stipulation filed in the proceedings, had no interest in the title. The appellee, at the time of his deposition, stated he was representing a third party as attorney and refused to name his client. An order of court was entered requiring him to name the real owner of the equitable title, and it has been stipulated that the client for whom appellee was acting was his father, Edward G. Chance, who subsequently conveyed all of his right, title and interest to the appellee. On July 1, 1964, Helen L. Clarke, who, a stipulation shows, was acting as agent for appellee, filed a bill in equity in Anne Arundel County (No. 16,484 Equity) alleging, among other matters, that the tax sale of the property owned by William H. Queen was defective, and that she “owns a good and merchantable, fee simple title to the aforementioned real estate, having acquired title by deeds dated June 23, 1964, the grantors being all the heirs at law of William H. Queen.” An answer in that case was filed by the Rogerses on September 2, 1964, denying the right of the plaintiffs to the relief sought.

Depositions were taken, witnesses were summoned, exhibits filed and testimony taken. As a result of these proceedings, a decree of court was entered on October 19, 1964, in which the tax sale was set aside. Mr. Raphael Urciolo, a member of the bar, in his deposition taken on November 11, 1965, testified that the first time he came in contact with Mr. Rogers was when the above case was in process, at which time Rogers was represented by his attorney, Mr. Gott. Mr. Urciolo also represented the Rogerses in an advisory capacity, and it was then that he saw the contract between the Rogerses and McGinnis dated September 23, 1963.

He stated that an agreement was entered into between Clarke and the Rogerses to the effect that regardless of the outcome of the suit (Clarke v. Rogers (sic)) the property would be titled in the names of Clarke and the Rogerses — one-half interest in each ■ — and that this agreement was reached “either prior or simultaneously” to the taking of testimony in that case. He stated that ³⁹⁷ he then advised the Rogerses to enter into an agreement whereby title would be transferred to the appellee and Joseph Urciolo (Raphael’s brother), who would hold the title for the benefit of the Rogerses and Clarke. He knew that the title was bad and that the September 23, 1963 contract was about a year old, but since appellant McGinnis had done nothing to clear the title, which he was required to do promptly under the contract, he, Urciolo, considered the contract to be worthless. He felt that it would be more expeditious to hold the matter in abeyance until after March 23, 1965 — the expiration of the eighteen months-settlement date in the contract — than to go into court prior to that time to set aside the contract.

Urciolo further testified that he made no effort to inform McGinnis of these transactions. Early in January of 1965, Dixon, on behalf of the appellants,, after receipt of the O’Ferrall memorandum, endeavored to- contact Mr. Rogers. After numerous attempts he succeeded in making contact with him and was told by Rogers that Urciolo was-acting as his attorney and he was the one with whom to speak. Rogers did not mention the proceedings in the case of Clarke v. Rogers (sic), nor his agreement with appellants and Urcioloto execute a deed to them on March 24, 1965.

Dixon told Mr. Rogers at that time of O’Ferrall’s memorandum, which recommended that the best way to perfect the Rogerses’ title would' be to take no action until after June 1, 1966. Appellant Dudley was ready and willing to settle by March 23, 1965, if the extension were not granted, but because of the O’Ferrall memorandum Dixon advised postponement if the Rogerses were willing to postpone. Dixon made numerous attempts from early January to the first of March 1965 to contact Urciolo, attorney for the Rogerses. Urciolo admitted that he received many messages that Mr. Dixon had called, but returned none of the calls.

On or about March 2, 1965, Dixon finally reached Urciolo on the telephone. He told Urciolo of the O’Ferrall memorandum in which it was recommended that the best way to perfect the Rogerses’ title was to wait until June 1, 1966. Urciolo, in answer to the-direct question: “What was your response to Mr. Dixon’s request for an extension of time in order to perfect the title of Rogers?” said: “Well, send me a copy of the memorandum ³⁹⁸ [meaning O’Ferrall’s report on the title] and I’ll be in touch with you.” Dixon, in response to the request of Urciolo, on March 3, 1965, wrote to Urciolo and sent him a copy of the memorandum. He said in his letter, “we would like to go through with this contract but would like to postpone it until after June 1, 1966 * * When Dixon did not hear from Urciolo promptly, he again made efforts to contact him by telephone, but to no avail.

Dixon, ■on March 29, 1965, again wrote to Urciolo stating that he had been unable to contact him and that he had again spoken to Mr. Rogers who informed him that he should work through Urciolo. Thereafter, when still unable to contact Urciolo and having received no reply to either letter, he recorded the contract of sale (between McGinnis and the Rogerses) on April 4, 1965. He made further efforts to contact Urciolo by telephone and wrote to him on April 22, 1965, informing him that the contract had been recorded and stating that he was interpreting the failure of Urciolo to contact him as an acquiescence to an extension of the agreement. In the meantime, the Rogerses and Clarke executed a deed on March 24, 1965 (one day after the expiration date of the Rogerses’ contract with appellant McGinnis), which was recorded March 29, 1965, whereby title was conveyed to appellee and Joseph Urciolo as joint tenants.

On June 11, 1965, Dixon learned from a surveyor, Hall, that some deed had been recorded conveying title to the Rogerses’ property. A run-to-date of the Rogerses’ title was made which ■disclosed not only the deed from the Rogerses and Clarke to -appellee and Joseph Urciolo on March 24, 1965, but also disclosed the equity proceedings in July of 1964. Dixon contacted ^appellee and had a conference with him on June 15, 1965, and ■informed him that, in his opinion, the proceedings in the Circuit Court in the matter of Clarke v. Rogers (sic) were invalid. A bill of complaint was then prepared and filed on July 2, 1965 in the instant case.

Appellee and Joseph Urciolo, on May 26, 1965, sold the property to a combine composed of John V. Arban, Pascal Della Badia (two clients of Urciolo’s) and Florence E. Urciolo (wife •of Raphael Urciolo) for a consideration of $90,000. A purchase ³⁹⁹ money mortgage was executed back to appellee and Urciolo for $70,000. Raphael Urciolo testified at the time of his deposition that he had a title report which showed the outstanding recorded contract from the Rogerses to appellant McGinnis, but that he did not inform any of the members of the combine (for whom he was acting as attorney while also acting as trustee for the Rogerses as to their one-half interest) of the existence of this exception stated in the title report. The learned chancellor granted summary judgment for the appellee finding time to be of the essence of the contract, and that even if it were not that the contract should have been performed within a reasonable time under the circumstances of the case, which the appellants