Szaleski v. Goodman

Singley, J., delivered the opinion of the Court. In the early summer of 1968, Dan Goodman and his wife, Ada, (the Goodmans), were the owners of four adjacent waterfront lots, Nos. 10, 11, 12 and 13, on Powhatan Beach Road in Anne Arundel County. The lots were improved by three houses, one of which, situated on parts of Lots 11, 12 and 13, was occupied by the Goodmans. At a date unspecified, William P. Szaleski and his wife, Pamela, (the Szaleskis), evidenced interest in a house adjacent to the Goodmans’, and in July this interest culminated in the execution of an undated “agreement of sale,” prepared by Mr. Goodman.

The portion of the agreement relevant to the controversy was this: “This contract is for the sale of the house and lot, in fee, including garage, pier, plus one-half ownership of swimming pool and artesian well located at the bottom of the hill near the swimming pool. This property is located on the North ²⁶ side of Powhatan Beach Road, 5 East of Shirley Avenue, Lot #10 and a portion of Lot #11 which has been added to Lot #10. This portion of Lot #11 shall end at the fence now in position. Total price of the above property is $17,-700.00.

A downpayment of $1,500.00 has been paid.” There was a provision requiring the Szaleskis to make monthly payments of $140 from which it was contemplated that there would be deducted interest at $y%°fo on the unpaid balance of purchase price, $250 for taxes, subject to adjustment for any increase, $46 for insurance, and one-half of the taxes on the swimming pool. There followed a table of computations which projected a reduction of the unpaid balance of purchase price by $341 each year, assuming that payments were made as stipulated. The Szaleskis obligated themselves to pay the balance of purchase price within five years. In September of 1968, the Szaleskis investigated the possibility of financing the unpaid purchase price by a borrowing secured by a mortgage and discovered that a survey would be required.

In March of 1969, Mr. Goodman had a survey made which developed the perimeter of a lot having a road frontage of 74 feet and a water frontage of 72 feet. By July, Szaleski had taken the position that this was not what he had bargained for, because the water frontage should have been 89 feet, and that if he could not get what he had bought, he would “terminate the contract.” In August, the Goodmans instituted an action in equity in the Circuit Court for Anne Arundel County against the Szaleskis, alleging that the agreement was a “land installment contract” as defined by our Land Installment Contract Law (the Act), Code (1957, 1966 Repl. Vol.) Art. 21, § 110 (1); that § 111 (5) of the Act requires the recording by the vendor of a land installment contract within 15 days of execution; that the Goodman-Szaleski contract was not so recorded; that in the event of failure to ²⁷ record, § 111 (5) gives “the vendee the unconditional right to cancel the contract and to receive immediate refund of all payments and deposits made * * ; and that the Szaleskis had indicated a desire to cancel, but had not done so. The Goodmans prayed that the agreement of sale be declared null and void, and that the court determine the rights of the parties in amounts paid by the Szaleskis.

The Szaleskis answered, admitting the allegations regarding the sale and the effect of the Act but denying that they desired to cancel. After an evidentiary hearing, the court concluded that the contract was lacking in certainty and entered a decree which held the agreement to be null and void and ordered the Goodmans to pay to the Szaleskis the sum of $1,057, which was arrived at by deducting from $3,667, the amount stipulated to have been paid by the Szaleskis to the Goodmans, the sum of $2,610, or $145 per month, from 1 July 1968 to 31 December 1969, which the court found to be the fair rental value of the property. The Szaleskis have appealed, arguing that the agreement was a land installment contract within the meaning of § 110 (1) of the Act and that since it was not recorded, they are entitled under § 111 (5) to the return of all amounts paid, without any adjustment for fair rental value. They place their principal reliance on Spruell v. Blythe, 215 Md. 117 , 137 A. 2d 183 (1957).

The General Assembly enacted the Land Installment Contract Law by Chapter 596 of the Laws of 1951, in an effort to curb “serious actual or potential evils,” Hudson v. Maryland State Housing Co., 207 Md. 320, 331 , 114 A. 2d 421 (1955) ; Spruell v. Blythe, supra, 215 Md. 117, 122 . See also, Levin, Maryland Rule on Forfeiture Under Land Installment Contracts. . .A Suggested Reform, 9 Md.L.Rev. 99 (1948). Judicial interpretations of the Act have been few, but we regard Spruell , on which the Szaleskis rely, as inapposite. In Spruell , there was no written contract, and no copy could be delivered to the vendee.

Consequently, the ²⁸ vendee could take advantage of § 111 (3), then § 119 (3), of the Act which gives a vendee the unconditional right to cancel a