Court Opinion

ID: 3484857
Source: CourtListenerOpinion
Date Created: 2016-07-05 21:10:16.700968+00
Date Added: 2024-06-11T13:52:43.010695
License: Public Domain

I cannot concur in the opinion of the majority of the Court filed in this case. It seems to me that the principles clearly announced in Nickel v. Brown, 75 Md. 184, are decisive of the questions involved in this case. That case sustained and reaffirmed the doctrine that seems to be well settled in this State and elsewhere, that an assignee of the term, is liable on the real covenants of the lease, until the legal title has passed from him, and that such title cannot pass except by deed duly executed and recorded. In Lester v. Hardesty, 29 Md. 54, in which the suit was brought to recover the rent from the assignee of a mortgage of the term by the assignor, when the assignee had failed to record the assignment, it was held that upon the case made there could be no recovery, *Page 703 
because the deed of assignment, not having been properly recorded, the legal title was not in the assignee and that therefore the covenants in the lease running with the land could not bind him, but only the party holding the legal estate. So inMayhew v. Hardesty, 8 Md. 495, it was held that unless the term had been assigned in the manner provided by our registry laws (and in no other way), could "Mason be regarded as the legal assignee of Hardesty's entire interest."
The case of Nickel  Brown already referred to maintains this position with great clearness, and moreover has many facts like those of the case at bar. Nickel by assignment, duly executed and recorded, became possessed of the leasehold in 1886, and paid the rents up to January, eighteen hundred and eighty-nine. Having died, his executrix sold his leasehold interest, under an order of the Orphans' Court and deeds for the same were executed in September, 1899, and delivered to the purchaser before the first day of January, 1890, but were not recorded until June, 1890. Suit was brought against the executrix in February, 1890, after the deeds were delivered, but before they were recorded; the leading question was "whether the executrix was liable for the rents and taxes that were in arrear when the suit was brought. It was held, the action would lie, although she had sold her entire interest to a third party; that when the periods arrived for the payment of the rent the party holding the legal title must pay them; and that when his title was by assignment, such "assignment continued in full force and effect until he put some one in his place possessed of the leasehold legal title." "There can be nohiatus in the tenancy; there can be no abeyance of the legal title to the leasehold." "The mode by which the legal title must be conveyed is distinctly provided in the 21st Article of the Code of Public General Laws." The facts of that case as I have said, were very similar in many respects to those now before us. The leasehold interest was sold by order of the Court, Mrs. Scott, the purchaser, paid the purchase money and received a deed on *Page 704 
or before the first day of January, 1890, which, however, was not recorded until July following; the rents sued for, accrued on the first day of July, 1889, and the first day of January, 1890; and suit was brought in February, 1890. Certainly this was as strong a case as the one at bar. But the Court held that the suit was properly brought upon the ground that at the time the rent accrued, Nickel was the holder of the legal estate, though before the action was brought the estate had been sold, the deed therefor, had been executed and delivered. It was held that by reason of the failure to record the deed the legal title had not passed. The Court, further along in its opinion said: "The deed to Mrs. Scott was recorded in June, 1890; at that time, and not earlier, the liability of the former assignee, her grantor, ceased to exist."
The liability of the assignee of the term to the lessor, is founded upon the privity of estate, and not upon any privity of contract. During the continuance of that privity, such assignee is liable upon all covenants that run with the land. It cannot be avoided, as long as such privity exists, by any outstanding equities between himself and third parties. Being a result attributable to his position as the holder of the legal estate, it is immaterial whether he is possessed of the premises or not, and it is clear, as a corollary of the proposition, that, he can be held for breaches of the real covenants occuring during the continuance of the privity, in an action at law, which is instituted before and not after, he has divested himself of the estate. Mayhew v. Hardesty, 8 Md. 494; Consumers' Ice Co. v. Bixler, 84 Md. 446; Reid v. Wiessner Brewing Co.,88 Md. 236; Com. Bldg. Assn. v. Robinson, 90 Md. 618.
If, therefore, this case, was one in which there was no question of an assignment by Mrs. Peat, and the city had paid the rent which accrued during the continuance of her tenancy, clearly she would be under an obligation to indemnify it for its outlay. This principle is established by the cases of Burnett v.Lynch, 5 B.  Cr. 589; Moule v. Garrett, L.R. 5 Exch. 132 — L.R. 7 Exch. 101; referred to in Brinkley v. Hambleton *Page 705  Co., 67 Md. 177. That Mrs. Peat was the holder of the legal title at the time the rent accrued and when this action was instituted, I think, is clear, under the rulings in the case ofNickel v. Brown (supra), and it seems to me impossible to affirm the judgment in this case without overruling the doctrine laid down in that. The opinion of the Court is based upon the idea that the sale by the trustee, the "substantial title to the term," was divested out of Mrs. Peat, the appellee, and vested in the purchasers as of the day of sale; and that thereby, the privity of estate between her and the lessor was destroyed. While it must be admitted, that the ratification of a trustee's sale retroacts, and the purchaser is regarded by relation as the owner from the period of the sale," as was said in Wagner v. Cohen,
6 Gill, 102, yet this statement of the law does not affirm, and I think the Court did not mean there to lay down the doctrine, that by the ratification of the sale the legal title was divested from the former owner and vested in the purchaser. As I shall attempt to show further on, none of the cases cited to maintain that position go so far. Certain it is that this Court has more than once laid down a different principle. For instance, inSaunders v. McDonald, 63 Md. 508, in referring to a case where the purchase-money had been paid and the sale finally ratified, but no deed was made by the trustee, the Court said, "the effect of the sale and the payment of the purchase-money would be only to invest the purchaser with the mere equitable estate in the premises sold and not the legal title." It may be questioned whether the Court has ever gone further in stating the character of the interest of a purchaser at a trustee's sale, before the execution of a deed, than to hold that such equitable title is available for defending his right of possession in cases where the right of possession is an essential fact in determining the rights of the parties to the action. This is the character of the cases cited in the opinion to sustain the position that there is in such circumstances a change in the legal title. Without citing from all the cases referred to in the opinion I think it sufficient to quote from the case of Lannay's Lessee v.Wilson, 30 Md. 550, *Page 706 
as showing most lucidly the correct doctrine on the subject. That was an action of ejectment and the defendants had received no deed from the trustee. It was claimed that because of the absence of a deed, the defendants had no title and therefore the plaintiff under other facts in the case could recover. The Court said: "A sale by a trustee, appointed by a decree for the purpose, is a judicial sale, and binds and concludes all the parties to the cause who may have the right or claim; and the Court passing the decree had ample power to make its jurisdiction effectual by putting the purchaser in possession of the premises sold by its authority. And though the decree does not operate as a conveyance of the legal title, the purchaser holding possession under it, does not hold wrongfully or unlawfully; and consequently, all right of possession of those bound by the decree and the proceedings under it, other than the purchaser is divested and taken away and of course with it the right to maintain ejectment. By such title the dry legal title and the right of possession often become completely severed at least for a time — the legal title remaining in some of the parties to the cause, while the equitable estate and right of possession become vested in the purchaser."
So that, even if it be conceded as it must be, that by the sale of the trustee the equitable title and the right of possession passed out of Mrs. Peat into the purchaser, yet the legal title remained in her and therefore the obligation of Mrs. Peat to indemnify the city still remained, until some one else was put in her "place possessed of the leasehold by legal title." Nickel
v. Brown (supra). It does not seem to me, decisive of the case, that, after the rent had accrued, and after this proceeding was instituted, and the liability of Mrs. Peat had become fixed, the trustees made and executed a deed to Brannan and Peat. The right of the city to collect the rents from Mrs. Peat was complete when the suit was brought. The rent had accrued and become due, during the period when the legal title was in her, and the suit was brought before she had been divested of the title. Why should the deed divest the *Page 707 
city of its right of action? Does the case in 4th Gill, Hatton
v. Hunter, warrant such a conclusion? That was an action of trespass q.c.f. in which the issue was as to the right of possession at the time of the commission of the acts complained of by the plaintiff. The plea of liberum tenementum was interposed, the effect of which was to admit a colorable possession in the plaintiff, but to deny a rightful possession, because the freehold was in the defendant with right of immediate possession. Thus was raised the issue which enabled the defendant to show that by operation of law the freehold was in the plaintiff. The deed of the trustee was therefore admissible because, upon the principle of relation it operated retrospectively. But it is obvious, as it seems to me, that the relation itself does not occur until the deed has been executed and delivered, and if in the meantime rights of third parties have intervened, it cannot destroy these rights. The deed will undoubtedly enable the grantee to protect his title to and interests in the property, and it does this by clothing him with a legal title from the day of sale. But how can it effect the rights of third persons, so as to take away a right of action? I cannot perceive, therefore, that the deed of the trustee can operate to divest any rights of the appellant, which was complete when the suit was brought.
Nor can the fact, that, under the circumstances of this case, the purchaser of the term ought to indemnify the appellee, for what she might have to pay on account of rents accruing after the sale, affect the case. Her obligation grows entirely out of the privity of estate. It is her position relatively to the property that raises her liability, and it is not founded upon equitable considerations. A person about to make sale of a term, may protect himself by seeing to it, that the deed conveying it shall be duly executed, delivered and recorded; but if she does not, she takes the risk of being liable for the rents, until the legal title is invested in the purchaser. The present action is an equitable action; but the defendant's equity is not to get rid of a legal liability. Whatever equity she has is not against the city, which has paid money for which she was liable, *Page 708 
but if she have any it is against the purchasers who have not paid the rents which accrued after their purchase.
Without discussing them, I will add that I think, there was no error in the rulings upon the other questions involved in the appeal. I am of the opinion that the judgment should have been reversed.
(Filed December 6th, 1901.)