Oxenham v. Mitchell

Parke, J., delivered the opinion of the Court. Many years ago James A. Oxenham was the owner of a tract of land called “Asbury,” containing 317 acres, in .Talbot County, and he desired to borrow $3,500 of William M. Poisal. He offered the land to secure the loan, but. Poisal ■demanded the usurious rate of eight per centum, and the loan and the lien to be put in a form which would at once conceal the usury and preserve the essential features of a mortgage deed.

So a scheme was devised and was executed. On December 21st, 1877, Oxenham and wife conveyed the tract of land to Poisal in fee simple; and simultaneously Poisal granted the same tract to Oxenham for a term of ninety-nine years from December 21st, 1877, renewable forever, upon an annual rental of $280, payable on the 20th of August, subject, to the provision that at any time during the ²⁷¹ period of two years beginning on August 20th, 1878, on the payment to the said Poisal, his heirs and assigns, by the said Oxenham, his heirs and assigns, of the sum of $3,500, and all rent owing and apportioned to the day of settlement, the said Poisal, his heirs and assigns, would grant and convey to the said Oxenham, his heirs and assigns, the land and premises demised, free from the rent reserved and of all the estate and interest of the said Poisal and all claiming under him whether by way of dower or otherwise. Oxenham remained in possession of the land and died intestate without paying the principal of the debt, and left surviving him a widow and eight children as his next of kin and heirs at law. Letters of administration were granted to his widow, Elizabeth E. Oxenham, on September 19th, 1882, and two days later the widow and the heirs at law of James A. Oxenham paid to Poisal the full sum of $3,500 and all the rent or interest apportioned to the day of settlement, and Poisal and his wife, pursuant to the covenant of the grant, conveyed in fee simple the tract of land mentioned to the widow and heirs at law of James A. Oxenham.

On October 3rd, 1882, the administratrix returned an inventory of the personal estate of her intestate that did not embrace any leasehold property; and on December 28th, 1882, the Orphans’ Court of Talbot County passed her first and final administration account, which showed a residue of $916.32 for distribution. The widow and heirs remained in possession of the property until a bill in equity was filed for the purpose of making-sale of the tract in question and of several other parcels of land of which James A. Oxenham died seised and possessed. There is no dispute that all the parties in interest were joined in the proceeding’s, and a sale was decreed on January 1st, 1927, and a trustee appointed, who made sale and conveyed on August 4th, 1927, upon the payment of the purchase money of $21,500 for all the tracts, the interest of the parties to the cause in the land to the purchasers, Millard C. Oxenham, Hester E. Oxenham, and James A. Oxenham, as joint tenants. The decree was passed in the belief that an ²⁷² absolute fee simple title was the subject of the adjudication, and the sale was so made, and the deed specifically conveyed all the right and title of the parties to the cause.

An audit was stated and the proceeds of sale distributed among' the parties in interest. The three joint tenants took possession of the property under the deed, and one of the joint tenants, James A. Oxenham, having died on March 4th, 1928, Millard C. Oxenham and Llester E. Oxenham became the surviving joint tenants, who sold the tract involved, called “Asbury,” in 1929. The purchasers had the title examined, and declined to comply with their contract bn the ground that the leasehold estate created in 1877 was subsisting and an unadministered asset of the estate of the lessee, James A. Oxenham, in whose estate a purporting", final administration account had been passed in 1882. The owners took counsel, and, notwithstanding the facts here stated and the further circumstances that since September 19th, 1882, the specific rent reserved, or any part of it, had never been paid or demanded, and that the property had been so enjoyed and held as an absolute fee simple estate by the joint tenants and those under whom they claimed since 1882, the owners were informed that to give a good title it would be necessary to have a< further administration upon this extinct leasehold estate.

Code, art. 53, sec. 27: Safe Deposit Co. v. Marburg, 110 Md. 410 , 72 A. 839 ; Lewis v. Kinnaird, 104 Md. 653 , 65 A. 365 ; Sowers v. Keedy, 135 Md. 448 , 109 A. 143 ; Rosenthal v. Traub, 155 Md. 167, 169-172 , 141 A. 558 . In pursuance of this advice, Millard G. Oxenham, a joint tenant, as the only surviving son of the original owner and lessee, James A. Oxenham, filed on October 1st, 1929, in the Orphans’ Court of Talbot County a petition wherein is set forth the circumstances which induced the execution of the deed and lease between Oxenham and Poisal instead of the usual mortgage deed, and the further fact that the leasehold interest had never been considered an asset of his father’s .estate, but that “because of the existence of said lease your petitioner: is advised that further administration on said es- ²⁷³ tide "will be necessary.” The petitioner renounced his right to administer, and a third party was appointed administrator de bonis non, who, on October 3rd, 1929, filed an inventory and appraisal, containing as its single item the ancient leasehold estate in the tract called “Asbury” and its appraisement at $6,000. The administrator de bonis non thereupon filed on October 8th a petition and report, wherein he laid before the orphans’ court a complete narrative of all that had previously occurred. He .further stated that the joint tenants, Millard C. Oxenham and Hester E. Oxenham, his wife, have the entire ownership of Asbury, except the “bare legal title to the above mentioned leasehold interest,” and, in order to perfect their title, are willing to pay the appraised value of the leasehold estate, and that he recommended that he be authorized to make the sale.

The court authorized the sale, 'which was reported and finally ratified and confirmed. The two joint tenants paid the purchase price, and on March 4th, 1930, the administrator d. b. n. reported to the orphans’ court that, after stating his administration account, there remained in his. hands, as the residue of the sale, the net sum of $5,449.66 for distribution among the next of kin of the decedent, and set forth the next of kin at the death of the intestate, and those taking under them by representation. The administrator then repeated the circumstances which have been here recited, and the claim of the joint tenants that, because of them and their substantial ownership, which was only incomplete to the extent of the naked legal title in the leasehold estate at the time the proceedings to clear the title were begun, the joint tenants were entitled to the net proceeds of sale of the alleged leasehold estate in Asbury. Because of this situation, the¡ administrador d. b. n. then prayed for a distribution or payment of the fund to be made under the provisions of section 148 of article 93 of the Code, and the orphans’ court fixed a day for this purpose, and the prescribed notice was given.

As a result of this action, Millard C, Oxenham and Hester E. Oxenham, joint tenants, first filed their claim to the whole residue by virtue of their rights as joint owners; and then, later, they filed a claim for the ²⁷⁴ yearly rent of $280 from 1882 to 1930, but reduced its large aggregate to $6,000 to correspond to the sum they had been required to pay to the administrator d. b. n. to acquire the legal title to the leasehold interest in Asbury. Five of the parties in interest assigned to the joint tenants their rights, and on the day fixed by the orphans’ court John W. Mitchell, a sole legatee of a dead daughter of the intestate, appeared and objected by counsel to the account filed by the joint tenants, and demanded full proof. The only testimony offered was that of the surviving son, one of the joint tenants, Millard C. Oxenham, who was put upon the stand by the attorney for Mitchell, the sole objector. Oxenham’s testimony established the substance of what has been set forth, and that he had acted in the belief that the administration d& bonis non was a mere formality to perfect his and his wife’s title, and that, after the costs and expenses were deducted, he and his -wife as joint tenants would receive all the residue of the amount they had paid to the administrator d. b. n.

In order to have additional assurance, he put in his claim for rent, and took assignments from some of the parties in interest. The distribution made by the orphans’ court demonstrated that his belated precautions were well advised. By its decree of June 24th, 1930, the orphans’ court adjudged 53.33+ per centum of the residue to Millard C. Oxenham as next of kin and legal representative of other next of kin of the intestate; 20.16+ per centum to Millard C. Oxenham and Hester E. Oxenham as the assignees of other legal representatives of dead next of bin of the intestate; and the remaining 26.50+ per centum to the remaining four legal representatives of dead children of the intestate. An appeal was taken on July 22nd, 1930., by Millard O. Oxenham and Hester E. Oxenham.

It has been necessary to state the gradual development of an exceptional and complicated situation in order to perceive and understand why a comparatively few facts will control. The basic fact is that the deed and demise were actually a cover for a loan of $3,500 at eight per cent, interest with a tract of land as the pledge for its payment. ²⁷⁵ The jurisdiction of the orphans’ court is administered upon equitable principles. Phelp’s Jurid. Fq., sec. 164(7); Orem v. Wrightson, 51 Md. 34, 43-48 ; Linthicum v. Polk, 93 Md. 84, 94-96 , 48A. 842; McComas v. Wiley, 132 Md. 406, 410 , 104 A. 52 ; Randall v. Hodges, 3 Bland. 478.

And it is well settled in equity that a conveyance, whatever may be its form, if it be taken as a security for an existing debt or a contemporaneous loan, will be treated as a mortgage, so as to permit the debtor, and those deriving title through him, to redeem the land from the operation of the instrument so employed. Venable's Syllabus on Law of Beal Property (Brodie Ed.), 226-228; Montague v. Sewell, 57 Md. 407 (deed and lease); Odd Fellows v. Merklin, 65 Md. 579 , 5 A. 544 (deed and lease); Packard v. Corp. for Relief of Widows, 77 Md. 240 , 26 A. 411 ; Pickett v. Wadlow, 94 Md. 564, 567 , 51 A. 423 ; Artz v. Grove, 21 Md. 456 ; Baugher v. Merryman, 32 Md. 185 ; Booth v. Robinson, 55 Md. 419, 450 . Not only was this the nature of the real transaction, with a right of redemption consequently inhering for the benefit of the owner of the land and his widow and heirs at law, but the right of redemption, upon the payment of the debt as prescribed, was expressly reserved by the demise for the benefit of the lessee, his heirs or assigns. Whether the concealing form of a deed and demise be stripped away and the documents be regarded as a mortgage security, or the deed and demise accepted according to their tenor, the right of redemption in either event exists, as it is implied in the one case and explicitly conferred by the lease in the other.

Consequently, while Oxenham lived, the leg’al title to the land was in Poisal, the mortgagee, as security for the debt, with the equity of redemption in the land in Oxenham. WTien Oxenham died intestate, the legal title was unaffected in Poisal, the mortgagee, but the equity of redemption passed to the heirs at. law of Oxenham, subject to the dower rights of the wielow. Neither Oxenham’s estate in life, nor that of his heirs at law and widow at his death intestate, was personalty, but was realty which passed by law according to ²⁷⁶ the statute of descent. Venable's Syllabus of Laio of Real-Property (Brodie Ed.), 197-199; Washington Fire Ins.

Co. v. Kelly, 32 Md. 421 . Tiffany on Real Property (2nd Ed.), sec. 609. So, when the widow and heirs at law of Oxenhanx paid to the mortgagee the full amount of the principal and interest of the debt for which documents of title had been passed to pledge the land for the loan, the heirs and widow had redeemed the land and were entitled to receive such assurances from the mortgagee as would vest an unincumbered fee simple estate in the land in the heirs at law, subject to the dower of the widow. Tiffany on Real Property (2nd Ed.), sec. 640.

Tn the present case, the terms of the demise provided the simplest and most effective method of making the record title conform to the actual estate of the heirs and widow in the land. In the demise, the ostensible owner of the estate-in reversion, but the mortgagee in fact, had covenanted, when paid the sum of $3,500, the amount of the mortgage debt, and rent, which was a disguise for an usurious interest, to-grant and convey to the lessee (mortgagor), “his heirs or assigns, by a good and sufficient deed the land and premises hereby demised, freed from the yearly rent of two hundred and eighty dollars, hereby reserved, and from al'l estate and interest therein of the said William M. Poisal and all persons claiming under him whether by way of dower or otherwise.” The lessor waived the limitation of time within which the right to redeem was to be- exercised, and this covenant was fulfilled on September 21st, 1882, by such a deed to the heirs at law and widow. When this deed was executed and delivered, the lease, whether regarded as a mortgage or a demise, ceased to exist; and thereafter the heirs at law, sub-jet to the dower of the widow, were seised and possessed of an unincumbered fee simple estate in Asbury. Montague v. Sewell, 57 Md. 407, 411-418 ; Grand Order of Odd Fellows v. Merklin, 65 Md. 579, 586 , 5 A. 544 ; Packard v. Corp. for Relief of Widows, 77 Md. 240 , 26 A. 411 ; Safe Deposit Co. v. Marburg, 110 Md. 410, 417, 418 , 72 A. 839 ; Jones v. Rose, 96 Md. 483 , 54 A. 69 ; Tiffany on Landlord and ²⁷⁷ Tenant, vol. 2, secs. 256, 263, 265; Tiffany on Real Property (2nd Ed.), sec. 59(c).

Consequently, when the administratrix of the personal estate of James A. Oxenham filed an inventory and appraisement on October 3rd, 1882, there was no estate for years to list in the return, and none upon which she could administer. The heirs at law and the widow, therefore, held and enjoyed the land in fee simple by right of descent and survivorship, and, on the widow’s death, the land was sold for the purpose of partition, and the proceeds of its sale as an unincumbered fee simple estate were distributed among’ all the parties in interest. The joint tenants, therefore, were seised and possessed of a good and marketable title to a fee simple estate. The purporting lease for years did not affect their title, as, by the exercise of a right given by its terms, it had long since been determined.

Xo effort to revive this demise could impart vitality to its obligations, yet, after forty-seven years of repose, its ghost is made the basis for an administration, and $6,000 is paid by the frightened owners to acquire an estate which was embraced in the one which they already enjoyed. The supplementary administration, the sale, its ratification,, and the grant to the purchasers, concerned nothing which had an existence in law or in equity, and the single thing effected was to secure $6,000 from the joint tenants without any consideration moving to them. These remarkable proceedings were the result of a mistake, which was unquestionably honest in origin, and common to the parties. The mistake was that the purporting lease was subsisting, and