Watson v. Watson

⁵⁰ RODOWSKY, Judge. In this case we face the question of whether a written antenuptial agreement in which the holder of record title to realty promises to convey an interest therein to an intended spouse in consideration of marriage can, without an effective deed, pass equitable title so that a post-marriage judgment against the holder is not a lien on the realty. Rufus S. Watson, Jr. (Rufus), one of the plaintiffs, and Stacey Sue Watson (Stacey), one of the defendants, had been husband and wife, but were divorced during the period relevant to this case. Rufus owed Stacey money.

Stacey obtained a judgment in the District Court of Maryland for« the debt and that judgment was recorded, apparently on October 31, 1980, in the Circuit Court for Prince George’s County. All parties agree that, in the course of supplementary proceedings which Rufus places as having occurred on December 4, 1980, Rufus exhibited to counsel for Stacey a paper writing purporting to deed a residential property titled solely in Rufus’ name to Rufus and Teresa S. Watson (Teresa), as tenants by the entireties. The parties agree that Teresa and Rufus had married after his divorce from Stacey, but the record is silent on the precise date of that marriage. It is also agreed that the deed form exhibited at the supplementary proceedings, while signed by Rufus, contained no acknowledgment.

Stacey immediately caused a writ of fieri facias to be issued against the property described in the deed form, namely, lot forty-two in a subdivision in Prince George’s County. That execution on judgment precipitated an action by Rufus and Teresa (collectively, “Plaintiffs”) out of which the present appeal arises. Plaintiffs sued Stacey, the attorneys representing Stacey in the debt collection suit, and the Sheriff of Prince George’s County. Count I of the declaration sought compensatory and punitive damages for alleged wrongful execution, and count II sought to enjoin execution proceedings against lot forty-two.

By agreement between the parties the execution proceedings were stayed. ⁵¹ In response to a motion under former Maryland Rule 326, Plaintiffs filed a copy of their deed to lot forty-two as part of their declaration. The deed recites that it is “[m]ade this 29th day of November, 1979 ... in consideration of our mutual love and affection and other good and valuable considerations.” There is an acknowledgment before a notary public dated January 12, 1981. The deed was recorded January 14, 1981, among the Land Records of Prince George’s County. Above the printed heading, “THIS DEED,” the words, “No consideration,” appear in longhand.

The appeal before us evolves out of count II. Judgment on demurrer had been entered for the defendants on count I and that judgment has previously been affirmed by the Court of Special Appeals in an unreported per curiam opinion. That appeal also remanded for further proceedings on count II. During the course of further proceedings in the circuit court lot forty-two was sold at private sale, and a sum of money derived from that sale was first escrowed by the title attorney and later deposited in the registry of the circuit court.

Although the court order authorizing the deposit does not specify the terms of the escrow, the parties seem to be in substantial accord that the fund will be paid to Stacey if the lien of her recorded judgment against Rufus attached to lot forty-two. A second issue which the parties consider to have been raised in the circuit court is whether the transfer by Rufus to Teresa and himself as tenants by the entireties can be voided as a fraud on creditors, even if the judgment lien had not attached to lot forty-two prior to the transfer. Count II has never been amended from a claim for injunction. The last demurrer to it was overruled.

There is no counterclaim by Stacey seeking, in the alternative, to set aside the deed as fraudulent. The record does not contain any stipulations of fact or any discovery material. There were no motions for summary judgment. In that posture, the case came on for bench trial on the merits on November 21, 1983.

We are obliged to quote liberally from the transcript of those proceedings. ⁵² THE COURT: What is in front of me? [PLAINTIFFS’ COUNSEL]: What you are really determining is, as to this writ, whether or not that deed is senior to their writ, or whether that deed is [effective vis-a-vis their writ, or whether that writ is or was enforceable against that property. If this Court finds that their writ is senior to our deed, they get the amount of their judgment and the interest. THE COURT: Let me ask you this, I could look in there and see that their deed is senior to your writ. It wasn’t acknowledged until after they filed their writ.

I looked through the file. I looked at the date your deed was acknowledged. And I looked at the date that the writ was filed. And the writ was filed before you acknowledged your deed. [PLAINTIFFS’ COUNSEL]: That does not make that writ senior to that deed.

THE COURT: Tell me why that is not a matter of law. Why do I need any proof? [PLAINTIFFS’ COUNSEL]: That issue is, I agree with you. The way I see it, there are two issues. THE COURT: What’s the second issue? [PLAINTIFFS’ COUNSEL]: That these defendants have raised, is whether or not the conveyance by Mr. Watson to the — to Mr. and the new Mrs. Watson is — the Uniform Fraudulent Conveyance Act is the— THE COURT: Well— [PLAINTIFFS’ COUNSEL]: —that I think you need testimony on.

That’s the only issue you need testimony on. THE COURT: If I rule on the first one, isn’t the second one moot? [DEFENDANTS’ COUNSEL]: Yes. [PLAINTIFFS’ COUNSEL]: If you rule they’re senior. ⁵³ THE COURT: If I rule that they are senior, it makes the second issue moot, is that right? [PLAINTIFFS’ COUNSEL]: The problem is there is a case. THE COURT: That says what? [PLAINTIFFS’ COUNSEL]: That says they are not senior. THE COURT: What case is that? [PLAINTIFFS’ COUNSEL]: If the Court will indulge me just a minute.

In fact there are several cases. Price v. McDonald, 1 Md., 403 [(1851)] cited— THE COURT: Is that 1 Md.App. or 1 Md.? [PLAINTIFFS’ COUNSEL]: I just got the — if the Court will ind[ul]ge me, I got a copy of the case here. I show it as 1 Md., 403 , 1851 case. THE COURT: 1851.

What’s your second authority? [PLAINTIFFS’ COUNSEL]: On a different issue, MLE, section 26. Under acknowledgements, section 26, [and] the case of Wood v. Owings, United States Supreme Court Case, 5 U.S., 239 [ 1 Cranch 239 , 2 L.Ed. 94 ]. THE COURT: 5 U.S. How old is that case? [PLAINTIFFS’ COUNSEL]: 1803. THE COURT: It’s getting better. [PLAINTIFFS’ COUNSEL]: They’re the law, Judge.

They have not been, in any fashion, changed. THE COURT: Are you telling me that you want me to rule — when was the deed recorded? [PLAINTIFFS’ COUNSEL]: Some time after the lawsuit. I don’t remember. THE COURT: —that I can make out a deed— [PLAINTIFFS’ COUNSEL]: Yes, sir.

THE COURT: —I can make out a deed and stick it in my drawer— [PLAINTIFFS’ COUNSEL]: Well, you have to deliver it. Assuming delivery— ⁵⁴ THE COURT: Just let me finish. I could stick it in my drawer without notice to the world, and then somebody gets a judgment against me, and then attaches on that property, then I decide I didn’t record this deed, or I have never acknowledged this deed, and I do it and I run down — and you want me — to tell me that those two cases say that based on those facts your deed has priority? [PLAINTIFFS’ COUNSEL]: Assuming delivery, that’s exactly right. Assuming delivery.

Of course, hypothetically, I didn’t assume delivery [,sic ]. THE COURT: Anything you want to tell me? Do you agree that it is a matter of law[?] [PLAINTIFFS’ COUNSEL]: I agree that that issue is a matter o[f] law. THE COURT: Then I am going to rule, as a matter o[f] law, that— [PLAINTIFFS’ COUNSEL]: I understand what you’re going to do.

But before you do what you are going to do, may I comm[e]nd you to these cases? They say what they say. THE COURT: I don’t choose to follow those cases. I think that the modern world has outlived those cases.

They may say what you say they say. This is 1983. I don’t choose to follow those cases. We are in Equity, I intend to do equity..... [PLAINTIFFS’ COUNSEL]: For purposes of the record, may I simply make a recitation of exactly what I see as the authorities here, just for purposes of the record?

Because I am afraid we are going to be where we’re going to be. THE COURT: That is up to you. [PLAINTIFFS’ COUNSEL]: The key case, as to priority, is a case of Price v. McDonald. It is the case I suggested to you. It basically says that in the case of an unacknowledged deed, those who take senior to an unacknowledged deed are bona fide purchasers for value.

Should this case have gone to trial we would have demon ⁵⁵ strated that [Stacey’s counsel] and his client were not bona fide purchasers of value. And given the teachings of Price, that which we think is still the law, Mr. Watson and the new Mrs. Watson— THE COURT: You mean to say that his wife was a purchaser for value? [PLAINTIFFS’ COUNSEL]: Yes, sir, that’s exactly what I am telling you..... Should the case have gone to trial we could have demonstrated, I think, that the new Mrs. Watson gave good and sufficient consideration for her interests in that property; and that that consideration was such that it was not a fraudulent conveyance within the meaning of the Uniform Conveyance Act. And indeed there was no intent on either [Mr.] Watson’s part or the new Mrs. Watson’s part to defraud creditors, which we think is required under that statute.

In any event, she gave fair consideration. Essentially what she did, was she agreed to marry the guy. Marriage as consideration is spoken to in several cases. [Emphasis added.] Without taking any evidence the court ruled as a matter of law in favor of the defendants. Judgment was subsequently entered on that ruling.

Plaintiffs appealed to the Court of Special Appeals which affirmed in an unreported per curiam opinion. We granted the Plaintiffs’ petition for certiorari. For reasons hereinafter set forth, we shall remand without affirmance or reversal. At the time the circuit judge ruled the factors relevant to the legal issue before him can be summarized as follows: Factor Date Source Antenuptial contract Unspecified Representation by Plaintiffs’ counsel 1 Signing of deed by Rufus November 29,1979 Inference from date appearing on deed ⁵⁶ copy produced in pleadings Factor Date Source Marriage Sometime before or after, but in proximity to, November 29, 1979 Inference from the use of the name “Teresa S. Watson” on the deed copy produced in the pleadings 2 Judgment recorded October 31, 1980 Mutual agreement by parties in court papers Deed acknowledgment January 12, 1981 Notary’s certification of acknowledgment reproduced in deed copy Deed recordation January 14, 1981 Stamp of circuit court clerk reproduced in deed copy Obviously the trial court analyzed this case exclusively under the recording statutes and applied rules applicable at law.

Plaintiffs, particularly by their emphasis on Price v. McDonald, 1 Md. 403 (1851), sought to have the circuit court apply rules applicable in equity. Undoubtedly the concurrence by Plaintiffs’ counsel in the view that it was a question of law whether the deed had priority over the execution was the basis for the circuit judge’s proceeding to rule on the merits without hearing any evidence. Nevertheless, while the trial court was making exceedingly plain its view on the merits and its readiness to decide the case at that time, Plaintiffs’ counsel retreated from his position that a question of law only was presented and proffered ⁵⁷ that Teresa “agreed to marry the guy” in consideration of the deed. We do not imply that, when a case comes on in open court for trial on the merits, it is necessary for counsel to proffer that which they propose to prove in order to be permitted to put on proof.

Indeed, in Goff v. Richards, 19 Md.App. 250 , 310 A.2d 203 (1973), the Court of Special Appeals held that former Md.R. 552 (now MD.R. 2-519) governing a motion for directed verdict left a trial judge without authority to grant a directed verdict in a civil case based on legal insufficiency in the content of an opening statement on behalf of the plaintiff. We hold simply that Plaintiffs’ original position before the trial court, that the priority issue was one of law only, was not a waiver of trial. When the “proffer” went into matters of fact relevant to the priority issue, the trial judge should have conducted a trial before entering final judgment. We shall review, infra, the relevancy of the “proffer” to the priority issue.

Although the defendants have devoted considerable attention to claimed inconsistencies between positions taken in various court filings and oral arguments on behalf of the Plaintiffs, those arguments are to be resolved by a trier of fact and there has never been a factual determination assessing credibility in this case. Consequently our review is concerned solely with whether there could exist a state of facts which the Plaintiffs are not legally precluded from attempting to show and under which the lien of Stacey’s judgment did not reach lot forty-two while it was held of public record solely in the name of Rufus. We begin our analysis with the rules at law. If the sole issue in the case were the effective date of the deed as a deed, and if that issue were to be determined, by concession, solely from the face of the deed, then the result reached by the trial court would have been correct.

Md. Code (1974, 1981 Repl.Vol.), § 3-201 of the Real Property Article (RP) provides: ⁵⁸ The effective date of a deed is the date of delivery, and the date of delivery is presumed to be the date of the last acknowledgment, if any, or the date stated on the deed, whichever is later. Every deed, when recorded, takes effect from its effective date as against the grantor, his personal representatives, every purchaser with notice of the deed, and every creditor of the grantor with or without notice. Absent any evidence bearing on the date of delivery, the statutory presumption is that the subject deed was delivered when acknowledged, namely, on January 12, 1981. When recorded on January 14, 1981, the statutory relation back to the presumed date of delivery spanned two days, to the date of acknowledgment, because that date was later than November 29, 1979, the date stated in the deed.

At law the judgment lien, effective upon filing with the circuit court on October 31, 1980, would have been prior to the effective date of the deed and the judgment lien would have reached Rufus’ legal title. See former Md.D.R. 621. The presumption arising under RP § 3-201 is one of fact only and may be rebutted by evidence. See Fike v. Harshbarger, 273 Md. 586 , 332 A.2d 27 (1975).

Thus, it was open to the Plaintiffs to undertake to prove that delivery of the deed took place before Stacey’s judgment was recorded so that, by the relation back of RP § 3-201, the deed would have priority at law over the judgment. Without implying that Plaintiffs are precluded from offering on remand evidence directed to the time of delivery, we choose to rest our decision on the theory argued by the Plaintiffs to the circuit court — that of an equitable transfer. Maryland law has long recognized, protected, and enforced certain equitable interests in land even though those interests were not recognized, protected, or enforced at law. Principal illustrations of these equitable interests include the equitable lien and equitable conversion by contract.

Price v. McDonald, supra, is an example of the former. ⁵⁹ Price was a contest between the beneficiary of a deed of trust in the nature of a mortgage and one who had later purchased the same property at a sheriffs sale. The parties conceded that the deed of trust, which had been recorded with a defective acknowledgment, was to be treated as unrecorded. The Court, however, rejected the purchaser’s argument that the deed of trust was invalid for failure to comply with the recordation statutes. It is very true that our registry laws would seem strongly to