D & Y, Inc. v. Winston

• Decision Date: 11 September 1990
• Docket Number: No. 30,30
• Citation: 320 Md. 534,578 A.2d 1177
• Parties: D & Y, INC. v. Clyde R. WINSTON. Sept. Term 1988.
• Court: Maryland Court of Appeals

Page 534

320 Md. 534

578 A.2d 1177

D & Y, INC. v. Clyde R. WINSTON.

No. 30 Sept. Term 1988.

Court of Appeals of Maryland.

Sept. 11, 1990.

Arnold M. Zerwitz (Zerwitz, Kirk & Erlich, both on brief), Towson, for petitioner.

Jay Fred Cohen (Cohen & Liner, both on brief), Baltimore, for respondent.

Argued before MURPHY, C.J., and ELDRIDGE, COLE, RODOWSKY, McAULIFFE, ADKINS ^* and BLACKWELL,* JJ.

McAULIFFE, Judge.

This case involves the interpretation of § 10-102(f) of the Real Property Article, Maryland Code (1974, 1988 Repl.Vol.), which requires a vendor in a land installment sales transaction to record the contract within 15 days of its execution and provides a penalty for failure to do so. The vendor in this case was one day late in recording the contract. Nearly two years later, the purchaser, after occupying the property and making the payments required by the contract, demanded the return of all payments, contending that the statute prescribed that penalty for late recording. The vendor disagreed, arguing alternatively that the statute did not provide for a return of payments under these circumstances, or if it did, there should be a set-off for the reasonable rental value of the property during the period of occupancy. We hold that the vendor is correct in its first contention.

The facts are uncomplicated and were never in dispute. Clyde R. Winston entered into an agreement on 31 August 1984, to purchase a house in Baltimore City pursuant to a land installment contract. The vendor, D & Y, Inc., recorded the agreement among the land records of Baltimore City on 18 September 1984. Section 10-102(f), of the Real Property Article, which is a part of a comprehensive regulation of land installment contracts, provides:

Within 15 days after the contract is signed by both the vendor and purchaser, the vendor shall cause the contract to be recorded among the land records of the county where the property lies and shall mail the recorder's receipt to the purchaser. This duty of recordation and mailing of receipt shall be written clearly or printed on the contract. Failure to do so, or to record as required under this section within the time stipulated, gives the purchaser the unconditional right to cancel the contract and to receive immediate refund of all payments and deposits made on account of or in contemplation of the contract.

Nearly two years after Winston took occupancy under the contract, he brought an action in the Circuit Court for Baltimore City seeking rescission and a full refund of all payments made in contemplation of the contract. The trial judge granted Winston's Motion for Summary Judgment and ordered a refund of $9,531.04, the total of payments made to D & Y by Winston. On appeal, the Court of Special Appeals affirmed the trial court. D & Y, Inc. v. Winston, 74 Md.App. 157, 536 A.2d 1169 (1988). We granted D & Y's petition for certiorari.

The contract between the parties was in the form required by law, and a copy was delivered to the purchaser. The contract was duly executed by both parties on 31 August 1984. According to the statute, the vendor was then obliged to record the contract within 15 days. Computing that time in accordance with Maryland Code (1957 1985 Repl.Vol.) Art. 94, § 2, it is clear that the contract should have been recorded no later than 17 September 1984. ¹ It was in fact recorded at 9:30 a.m. on 18 September 1984, one day late.

Winston contends, and the courts below agreed, that § 10-102(f) is not ambiguous, and by its clear language mandates the return of all payments if the recording of the contract is late, whether it be a day or an hour. D & Y argues ² that § 10-102(f) does not mandate a return of payments for late recording when the claim for rescission is not made until after the recording is accomplished, or in the alternative, that it should be entitled to a set-off for the reasonable rental value of the premises during Winston's occupancy. Because we agree with D & Y's first argument, we do not reach its alternative contention.

We conclude that § 10-102(f) is ambiguous. It is not clear whether the right to rescind exists only if exercised before recording is accomplished, or is a right that may be exercised at any time following the vendor's failure to accomplish a timely recording. This ambiguity in the statute was noted in the Revisor's notes to this section found at Chapter 12 of the Laws of 1974:

Subsection (f) is unclear to the extent that it fails to indicate whether the purchaser has a perpetual right to cancel and receive a refund or whether this right expires at some time, e.g. when the vendor records the contract. The Commission recommends that the General Assembly consider enacting separate legislation to remedy this ambiguity.

This Court has said repeatedly that construction of a statute which is unreasonable, illogical, unjust, or inconsistent with common sense should be avoided. See, e.g., Kindley v. Governor of Maryland, 289 Md. 620, 625, 426 A.2d 908 (1981); State v. Berry, 287 Md. 491, 496, 413 A.2d 557 (1980); Comptroller v. John C. Louis Co., 285 Md. 527, 539, 404 A.2d 1045 (1979); Pan Am. Sulphur v. State Dep't, 251 Md. 620, 627, 248 A.2d 354 (1968). In 2A Sutherland Statutory Construction § 45.12 (4th ed.1984), the author states:

It has been called a golden rule of statutory interpretation that unreasonableness of the result produced by one among alternative possible interpretations of a statute is reason for rejecting that interpretation in favor of another which would produce a reasonable result.

If Winston's view of the statute is correct, a purchaser with knowledge that the contract was recorded late may occupy the property for an indefinite period of time, secure in the knowledge that there is an absolute right to rescind the contract at any time, and recoup all monies paid. This interpretation produces an absurd and unjust result.

We conclude that the legislature intended to give the purchaser the right to cancel the contract and recover all payments if recording is not accomplished within the specified 15 days, provided that the election is made and communicated before recording is actually accomplished. The legislature did not want to give the purchaser the unilateral right to rescind at any time before recording, i.e., during the 15-day period allowed the vendor to record. It is only after that time has expired that the purchaser's right arises, which explains the General Assembly's use of the language "[f]ailure ... to record as required under this section within the time stipulated ..." as a condition to the right of the purchaser to cancel. The statute is silent on the question of whether that right extends beyond the actual recording, and it is into this breach that the Court must step with a reasonable interpretation.

This interpretation is also consistent with the earlier provisions of the statute. Subsections (a) and (b) of § 10-102 require that every land installment contract be signed by the parties, and that the purchaser be given a copy of the contract at the time he signs it. The purchaser must be given a copy signed by the vendor within 15 days after the vendor receives notice that the purchaser has signed. Subsection (d) provides the sanction for failure to comply with these requirements:

Until the purchaser signs a land installment contract and receives a copy signed by the vendor, the purchaser has an unconditional right to cancel the contract and to receive immediate refund of all payments and deposits made on account of or in contemplation of the contract. A request for a refund operates to cancel the contract. (emphasis supplied).

It seems clear that the legislature intended that the purchaser possess the extraordinary right of cancellation only until compliance by the vendor. Should a vendor miss the 15-day time limit for forwarding a copy of the agreement signed by him, but comply on the 20th day, before any notice of cancellation had been given by the purchaser, the purchaser could not thereafter cancel. In Spruell v. Blythe, 215 Md. 117, 120, 137 A.2d 183 (1957), relied upon by Winston, the vendor never complied with the requirements of the law.

Subsection (f) was added to the statute after its original enactment. It is reasonable to assume, in the absence of the specific language to the contrary, that the legislature intended the additional sanction to follow the scheme already established.

The trial judge should not have entered summary judgment in favor of Winston. Because Winston has made other claims that have not been considered, we reverse and remand for further proceedings.

JUDGMENT OF THE COURT OF SPECIAL APPEALS REVERSED; CASE REMANDED TO THAT COURT WITH INSTRUCTIONS TO REVERSE THE JUDGMENT OF THE CIRCUIT COURT FOR BALTIMORE CITY AND TO REMAND THE CASE TO THAT COURT FOR FURTHER PROCEEDINGS; COSTS IN THIS COURT AND IN THE COURT OF SPECIAL APPEALS TO BE PAID BY THE RESPONDENT.

ELDRIDGE, COLE and ADKINS, JJ., dissent.

COLE, Judge, dissenting.

The Court today holds that subsection (f) of § 10-102 of the Real Property Article of the Maryland Code (1974, 1988 Repl.Vol.), provides that the purchaser's unconditional right to cancel a land installment contract terminates when the vendor records the contract. I think this holding is incongruous and defeats the purpose for which this statute was enacted. I, therefore, respectfully dissent.

The state of affairs for vendees (purchasers) buying real property under land installment contracts, at the time legislation for this type of transaction was contemplated, was most disheartening. As the Legislative Council pointed out in its report to the General Assembly:

In many instances such an agreement has been made between landlord and tenant, as an attempt to circumvent rent control regulations by substituting the relationship of seller and buyer. One result has been that the buyer-tenant could build up a considerable equity in the...