Camp v. Boyd

Mr. Justice Kobb

delivered the opinion of the Court:

First, appellant here insists that no case is presented “which calls for the intervention of an equity court.” To sustain this contention it must appear that appellees have a full and complete remedy at law. As to the Daugherty and Frethey leases, under one view of the case it will be readily seen that complainants would be without adequate remedy in a court of law. If the first proposition contended for by complainants should be sustained, namely, that the sale of the Daugherty and Frethey ground rents extinguished all of Blodgett’s interest in the parcels of land covered thereby, complainants’ remedy in a court of law would probably be adequate. If, on the other hand, it should be held that such sale did not extinguish Blodgett’s reversionary interest in said parcels, it is apparent, the ninety-nine-year terms having ended without renewal, that it would require the intervention of a court of equity to afford relief. Banks v. Haskie, 45 Md. 207; Kilbourn v. Sunderland, 130 U. S. 514, 32 L. ed. 1008, 9 Sup. Ct. Rep. 594. As to the Fennell tract, while the remedy at law would appear to be adequate, there is no apparent reason why a court of equity, having assumed jurisdiction as to the other two tracts mentioned in defendant’s action of ejectment, all three tracts having been included in said action, should not dispose of the whole case and thus end the litigation.

Coming to the merits of the case, the interesting question is presented as to the meaning of the term “ground rents” as employed in said decree and the conveyances by the trustee thereunder, it being contended on the one hand that “ground rents,” as thus employed, conveyed to the grantees Blodgett’s right in perpetuity to receive rent under said leases, and hence that such conveyances really extinguished all of Blodgett’s interest in said parcels of land, and, on the other hand, that all that was sold and conveyed was Blodgett’s right to receive rents during the ninety-nine-year terms, and that the privilege of renewal not having been exercised within those terms, Camp, as the grantee of the heirs of Blodgett, is entitled to possession.

Leases of this character were very common in Maryland in colonial times. We therefore, in the absence of authority in our own jurisdiction, resort to the adjudged cases in that jurisdiction in our effort to find a solution of the question in issue. In Banks v. Haskie, supra, the question was whether the owner of the leasehold interest, not having exercised the right of renewal within the ninety-nine years, was entitled, as against the owner of the fee, to enforce specific execution of the renewal covenant. Decree for complainant. The court found that the intention of the lessor in the execution of such a conveyance was to secure prompt payment in perpetuity of the interest on a sum of money equal to the value of the property in fee at the time of the execution of the lease, and that the intention of the lessee was to acquire a perpetual interest in the premises which would justify him in making improvements on the property, and treating it in other respects as his own. In that lease, as in the Daugherty and Erethey leases, there was a covenant requiring the lessee to improve the premises by erecting a building thereon. This the court found to be evidence of the permanent character of the tenure. After stating that courts should so treat and construe such a lease as most effectually to carry out the intent of the parties, the court said: “This character of tenure is, so far as we know, among the States, peculiar to Maryland. It lias not been generally adopted, so far as we are informed, in any other State. It was introduced here in colonial times, and has been a favorite system of tenure from a very early period. A large city has been built, and improved, and a vast majority of the real estate in Baltimore is now held under it. It is not open to any of the objections against perpetuities. Property is not thereby placed extra commercium. On the contrary, these leasehold interests devolve upon the personal representatives of the owner, are in terms made assignable, and they, as well as the ownerships in fee under the denomination of ‘ground rents’ are subjects of daily transfer, and are constantly sought for as safe investments of capital. It is a peculiar description of tenure which has been sustained by our courts, and approved and fostered by our people. While the ground rents from their nature are usually of a fixed value, the leasehold interests are more or less fluctuating.”

In Ogle v. Reynolds, 75 Md. 145, 23 Atl. 137, the testatrix bequeathed “four several ground rents,” payable out of a certain lot, to defray her funeral expenses and to erect monuments to her parents, her husband, and herself. All her other property, both real and personal, passed under her will. The court ruled that the reversion or fee passed under the will, and in the course of the opinion said: “Primarily, ‘ground rents’ mean, it is true, the rent payable to the lessor, but at the same time it must be conceded that the reversionary interest in the lots thus leased is generally designated and known as ‘ground rents.’ ”

Jones v. Rose, 96 Md. 483, 54 Atl. 69, is the latest decision of the Maryland court of appeals upon this subject. In that case the owner of land which was subject to an old ground rent joined in a deed of partition charging the rent upon one part, and exonerating the remainder of the land therefrom. Subsequently one of the parties to this deed acquired the outstanding ground rent, and conveyed the same to certain of the other parties to the deed of partition. These grantees thereupon executed a deed conveying the rent to the owners of the lot upon which it had been charged in said deed of partition. Thereafter the owner of one of the lots which had been exonerated from the rent, not having received a grant of the reversion, sold said lot as fee simple. The purchaser objected to taking the title as being technically leasehold, whereupon the vendor filed a bill specifically to enforce the contract. It was held that the parties to the deed of partition and those claiming under them were estopped to deny that the rent had been apportioned, and that, since the same parties afterwards acquired the ground rent, they and their privies were likewise estopped to claim that the rent was collectible from that part of the land which had been exonerated therefrom; and that, moreover, the execution of the deed conveying the ground rent extinguished the rent. In closing its opinion the court said: “AH the property, except lots 19, 20, and 21, had already been exonerated from the burden of the ground rent by virtue of the estoppel above adverted to, and therefore it became necessary only to release the owner of these three lots, if the rent was intended to bo wholly extinguished. When the owner of those lots was released by the deed of 1857, the original rent was completely destroyed, and lot No. 4 was then, if not before, held in fee.” In that case, it will be observed, the court found the title to the lot which had been exonerated from the rent to be in fee simple, notwithstanding that the naked reversion had never become vested in the holder of the title. In other words, it sustained the proposition that the extinguishment of the ground rent likewise destroys the reversion, if, of course, such intent is manifest from the surrounding circumstances.

It is apparent from an examination of the preceding cases that the term “ground rents” in Maryland has, since colonial times, possessed a peculiar and comprehensive significance. This fact ought to be controlling in this case, because the property affected by this decision was, just prior to the conveyance of the “groimd rents” herein involved, a part of the State of Maryland, and said demises were undoubtedly made with reference to the then signification of the above term. In the light of these observations let us briefly review the conditions exist-' ing when the sale of the Frethey and Daugherty ground rents took place. Blodgett, as the holder of the equitable fee-simple title, had conveyed the lot composing the Frethey, Fennell, and Daugherty parcels by deed in trust for the express purpose of securing the United States commissioners from loss by reason of said Hotel Lottery. In apparent conflict with this deed of trust, he executed the three leases to Frethey, Fennell, and Daugherty, respectively. A default occurred in the payment of a prize to which Biekley was entitled as the holder of a successful ticket in said lottery, and Blodgett’s property, or so much of it as could then be found, was sold to satisfy the judgment obtained by Biekley. It is manifest that the court had jurisdiction to decree a sale of all of Blodgett’s interest in the two parcels involved in the'first sale. Is it to be presumed that the court, having jurisdiction to decree the sale of all of Blodgett’s interest in said parcels, decreed the sale of only a part of said interest, notwithstanding that there still remained a substantial amount due from Blodgett to Biekley? Is it not more reasonable to assume that the court, in decreeing the sale of these “ground rents,” intended to encompass the sale of Blodgett’s entire interest in the parcels ? In other words, are we not justified in the assumption that the court was cognizant of the significance of the term “ground rents” in this jurisdiction, and, in using the term, intended to extinguish Blodgett’s entire interest in the Daugherty and Frethey parcels ? To be sure,, when the supplemental bill was filed, the reversionary interest of Blodgett in the Fennell parcel was expressly mentioned, but this addition is probably to be attributed to the caution of the solicitor who prepared that bill. The court in its decree was dealing with leases renewable forever. Such leases in Maryland have been regarded as being practically in perpetuity. Banks v. Haskie, 45 Md. 207. Is it strange, therefore, that in a jurisdiction where so many leases of this character existed, the term “ground rents” should have come to include, in cases where the surrounding circumstances indicated such an intent, the reversion? No effort was made to disturb either Daugherty or Frethey in the possession and enjoyment of their leasehold interests. Neither did the court decree an assignment of the leases by Blodgett to the purchasers under the trustee’s sale. It apparently intended to do more than that, and used the term “ground rents” in its accepted signification, for the purpose of extinguishing Blodgett’s interest.

We therefore agree with the learned trial justice that the extinguishment of, the ground rents exhausted the rights of the reversioner, and that, when the ground rents and the leasehold interests became merged, the merger carried with it the fee. We more readily adopt the reasoning and conclusion of the Maryland authorities on this question because of the extreme technicality of appellant’s contention. When these rents were sold and conveyed, it was undoubtedly intended to lay hold of and extinguish all of Blodgett’s interest in the property mentioned. Appellant’s claim is therefore based upon an alleged omission, rather than upon any just or equitable foundation.

The decree is affirmed, with costs. Affirmed.

On application of the appellant an appeal to the Supreme Court of the United States was allowed May 13, 1910.