Schlosser v. Creamer

Smith, J., delivered the opinion of the Court. We are here concerned with whether appellant, Henry W. Schlosser, Sr. (Schlosser), held title in land in Baltimore County sufficiently without doubt as to merchantability to justify his suit for damages against appellees, John J. Creamer and Frances E. Creamer, his wife, (the Creamers). On the basis of an alleged title defect they had declined to proceed under a contract to purchase. We shall reverse the judgment for costs entered in the Creamers’ favor by the trial judge who heard the case without a jury.

Schlosser contracted to sell to the Creamers a home at 1 Woodlawn Avenue in Catonsville. The provisions in the contract relative to title were: “Title to be good and merchantable, free of liens and encumbrances except as specified herein and except: Use and occupancy restrictions of public record which are generally ap ⁵⁸⁵ plicable to properties in the immediate neighborhood or the sub-division in which the property is located, and publicly recorded easements for public utilities and any other easements which may be observed by an inspection of the property.” The land in question is a corner lot situate at the northeast corner of Woodlawn Avenue and Frederick Road. On the theory that a picture is worth a thousand words, copy of the location survey is attached to this opinion which the reporter is directed to reproduce. The deed to Schlosser in 1925, in addition to restrictions against saloons and the keeping of swine and specifications as to the distance from any street for the erection of any stable, contained a restriction which stated: “That no residence or dwelling shall be erected on the lot hereby conveyed within seventy five feet of the lines of the streets and avenues designated on said plat.” Counsel for the Creamers advised Schlosser the title was not marketable “because of restrictions contained in [his] deed,” pointing to the fact, “[a]mong other things,” that there was a “violation of the restrictions which state in part that no dwelling shall be erected on the property within 75 feet of the lines of the streets and avenues on the plat,” stating that “a recent survey [showed] the dwelling is only 44 feet from Woodlawn Avenue and only 28 feet from Frederick Road.” This letter was said to have been based upon the report of a title insurance company to the bank to which the Creamers proposed to mortgage the property.

That company proposed placing an exception in its policy stating: “Subject to a violation of restrictions which states in part that no dwelling shall be erected on the property within 75 feet of the lines of the streets and avenues designated on said plat, whereas, according to survey dated May 1, 1967 ⁵⁸⁶ prepared by General Surveying Company, the dwelling is only 44 feet from the street line. This policy specifically guarantees that the dwelling can remain as located, however the policy will not guarantee or insure the marketability of the subject property.” Counsel for Schlosser replied prior to the settlement date set in the contract: “After a thorough investigation, we find that the title to the property is good and merchantable and there are two different title companies which are willing to issue their certificate insuring title to the property. The restrictions contained in the original Deed were placed there before the streets were widened and for this reason, along with other information disclosed as a result of our investigation, the restrictions are no longer valid and binding.” He then went on to state that suit would be entered against the Creamers for Schlosser’s damages if settlement were not made in accordance with the contract. Settlement was not made nor, apparently, did the attorney receive any reply to that letter.

No inquiry was made as to what title companies might have been willing to insure title to the land. An officer of one title company testified in the circuit court that his company would have been willing to insure the title. A building line is not shown on the original subdivision plat which was made and recorded in 1892. Lots were measured from the center of Woodlawn Avenue which has since been widened.

It will be noted that a porch on the Schlosser home is 44 feet from the presently existing Woodlawn Avenue and 66 feet from the center of Woodlawn Avenue, extending 11 feet beyond the dwelling, making the dwelling itself 55 feet from Woodlawn Avenue. We interpret the survey as showing the distance from Frederick Road to be 28 feet. ⁵⁸⁷ It was established that the Schlosser home was built prior to 1930. Schlosser’s daughter Ruth testified that she was 51 years old at the time of the trial in 1971 and that she was about 3 years old when her parents moved to that home. It was further established that the house had not been moved since it was built.

Changes had been made, however, in Woodlawn Avenue and Frederick Road. A survey was introduced showing that the four homes nearest to the Schlosser home in the same block and on the same side of Woodlawn Avenue as the Schlosser home were set back from Woodlawn Avenue as now laid down 44.8, 44.4, 45.4, and 39.5 feet, respectively, thus placing them in apparent violation of the restrictions set forth in their deeds. The corporate developer and grantor in the deed to Schlosser is said to be out of existence. We were advised at argument that no assignment had been made of the rights of that company arising from the restrictions in the various deeds.

It appears that the restrictions in the various deeds in the subdivision were not uniform as to setback lines. The restrictions are silent as to the length of time the land was to be bound by them. Schlosser and his wife (now deceased), the grantees, did not bind themselves to use similar restrictions in any subsequent deed, nor was there an agreement on the part of the grantor in the deed that similar restrictions would be placed in other deeds relative to the development. For the purposes of this opinion we assume, without deciding, that the restrictions at the time they were made could have been enforced by a neighboring property owner and by the original grantor.

Cf. Summers v. Beeler, 90 Md. 474 , 45 A. 19 (1899); Ringgold v. Denhardt, 136 Md. 136 , 110 A. 321 (1920); and Chevy Chase Village v. Jaggers, 261 Md. 309 , 275 A. 2d 167 (1971). Evidence was presented relative to the damage said to have been suffered by Schlosser when he ultimately ⁵⁸⁸ sold the property. No finding on this subject was made by the trial judge, however, since he determined the Creamers had no liability for the damage.

Whether the suit be one for specific performance or one by a purchaser to recover a down payment made on real estate, or whether the point at issue be an exception to a judicial sale based upon the title to be conveyed, the test is the same, whether a marketable title can be conveyed. Wm. H. McCeney, Inc. v. Thibadeau, 215 Md. 77 , 137 A. 2d 206 (1957); Zulver Realty Co. v. Snyder, 191 Md. 374 , 62 A. 2d 276 (1948); and New Freedom Corp. v. Brown, 260 Md. 383 , 272 A. 2d 401 (1971). It follows, therefore, that the same test should be applied in determining whether a purchaser who reneged on his contract to buy real estate is liable to the seller for damages.

Our most recent pronouncement on the subject of marketable title is found in New Freedom where Chief Judge Hammond at page 389 said for the Court, “A title to be marketable need not- be flawless.” He then went on to describe the test as “well enunciated” in Zulver Realty Co. v. Snyder, supra. There the Court said: “A marketable title is a title free from encumbrances and any reasonable doubt as to its validity. No specific rule can be laid down as to what doubts will be sufficient to make a title unmarketable. The general rule is that the purchaser is entitled to a deed which will enable him to hold the land in peace and, if he wishes to sell it, to be reasonably certain that no flaw will appear to disturb its market value.

However, a title, in order to be marketable, need not be free from every conceivable technical criticism. It is not every possibility of defect or even threat of suit that will be sufficient to make a title unmarketable. Objections based on frivolous and captious niceties are not sufficient. In other words, a marketable title is one which a ⁵⁸⁹ reasonable purchaser, who is well informed as to the facts and their legal bearings, and ready and willing to perform his contract, would be willing to accept in the exercise of that prudence which business men ordinarily use in such transactions.” Id. at 384 , While cases are legion in which no reasonable doubt as to marketability has been found, the number of cases are few in which such reasonable doubt as would excuse a purchaser from taking title has been found.

The latter include Wm. H. McCeney, Inc. v. Thibodeau, supra, (contract in 1954, title based on patent from the State in 1956 with testimony of an attorney that he had been unable to find any claim of title to the premises, that the property “appears to be lost property”); Berlin v. Caplan, 211 Md. 333