Schlosser v. Creamer - 263 Md. 583, 284 A.2d 220 (1971)

Rule:

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. 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. Also, the mere fact that someone challenges that marketability because of a supposed defect is not sufficient to render the title unmarketable.

Facts:

Appellant seller Henry W. Schlosser Sr. contracted to sell a home to appellees John and Frances Creamer. The land in question was a corner lot. The deed to appellant in 1925, in addition to restrictions against saloons and the keeping of swine and specifications to the distance from any street for the erection of any stable, contained a restriction 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. Thus, appellees’ counsel advised appellant that the title was not marketable because of restrictions contained in his deed. Appellant’s counsel replied prior to the settlement date set in the contract that the title to the property was good and merchantable and there were two different title companies willing to issue their certificate insuring title to the property, and that the restrictions were no longer valid and binding. Appellant’s counsel went on to state that suit would be entered against appellees for damages if settlement were not made in accordance with the contract. The parties did not reach a settlement. Appellant presented evidence relative to the damage he suffered when he ultimately sold the property. The trial court, however, ruled that appellees had no liability for the damage. Appellant seller sought review. 

Issue:

Were appellee purchasers liable for the damage suffered by the appellant seller when they decline to proceed on the contract to purchase because of an alleged title defect?

Answer:

Yes.

Conclusion:

The court reversed the judgment for costs entered in appellees’ favor. The court held that 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 was the same, whether a marketable title can be conveyed. Therefore, it only follows that the same test should be applied in determining whether a purchaser who reneged on his contract to buy real estate was liable to the seller for damages. The court further ruled that a mere fact that someone challenged that marketability because of a supposed defect was not sufficient to render the title unmarketable. In this case, the court found that appellant was in continuous possession of the land from the time he brought the same in 1925. Also, the house in question had been in its same location from the time it was then built. Additionally, there had been no litigation relative to the setback lines. Thus, in reversing and remanding, the court concluded that other property owners in the area would be barred from enforcement of the covenants by the running of the prescriptive period as well as by acquiescence in the violations of the restriction. The court then directed entry of judgment in favor of appellant against appellees as to liability, and since there has been no determination of the damages suffered by appellant, the court remanded the case for a determination of damages. Accordingly, the court ruled that appellee purchasers had to pay the costs.