Maas v. Lucas

• Decision Date: 31 December 1975
• Docket Number: No. 307,307
• Citation: 29 Md.App. 521,349 A.2d 655
• Parties: George J. MAAS v. Diane Maas LUCAS et al.
• Court: Court of Special Appeals of Maryland

Page 521

29 Md.App. 521

349 A.2d 655

George J. MAAS v. Diane Maas LUCAS et al.

No. 307.

Court of Special Appeals of Maryland.

Dec. 31, 1975.

Nelson R. Kerr, Jr., Towson, with whom were Kerr, Kerr & Howe, Towson, on the brief, for appellant-cross/appellee.

Richard C. Murray, Towson, for appellees-cross/appellants.

Argued before ORTH, C. J., and DAVIDSON and LOWE, JJ.

LOWE, Judge.

A proverb, much used in a part of England where estates do not long stay in one family, declares:

'The father buys, the son builds, the grandchild sells and his son begs.'

When the father buys, the father builds, the father sells and the children benefit well beyond that which the father intended, a continued pressing of legal advantage must indeed sharpen the 'serpent's tooth' alluded to by King Lear. ¹ The father, appellant here, bought and also built upon property, one-half interest in which he (and his former wife) had conveyed to his two children as tenants in common pursuant to a marriage dissolution in 1943. Sometime after the conveyance he improved a garage on the back lot of the property by building two apartments over it.

The father instituted a suit in the Circuit Court for Baltimore County for sale in lieu of partition. In addition to the value of his one-half interest he sought reimbursement for the improvements and contribution from the children for the mortgage he had paid off after they had become half owners.

All issues on appeal relate to the distribution of the funds received from a sale of the property. When the sale was first held under court order, the children's bid of $80,000 was accepted as the highest. However, even though time extensions were obtained to permit compliance with the contract of sale, they were forced to default. The trustees again offered the parcels for sale at public auction under order of the court '. . . to resell the property described in this proceeding at the risk and expense of the Defendants (the children).' The resale brought a purchase price of $95,500, which was $15,500 higher than the original purchase price bid at the first sale by the children.

The questions having to do with the distribution of proceeds from that sale, here raised by appeal and cross-appeal, are:

1. Should the father be compensated for the improvements he had constructed (two apartments)?

2. Should the children be awarded one-half half of the apartment rentals during their co-tenancy (and between the first and second sale)?

3. Who is entitled to the $15,500 increase in the purchase price after the children defaulted?

4. Is the father entitled to contribution for discharging the prior mortgage?

The chancellor did not compensate the father for the value of the apartments, finding that the father had not met his burden of proof. However, he sought to balance the equities somewhat by denying the children an allowance for rentals therefrom during the co-tenancy. The children were awarded the amount of money by which the final purchase price exceeded the price at the initial sale upon which they had defaulted, and were also allowed the rental payments for the apartments between the dates of the two sales. The chancellor also compelled contribution from the children for one-half of the cost of discharging a mortgage which was paid off by the father soon after the creation of the co-tenancy.

-the law-

'A circuit court may decree a partition of any property . . . on the . . . petition of any . . . tenant in common . . .. If it appears that the property cannot be divided without loss or injury to the parties interested, the court may decree its sale and divide the money resulting from the sale among the parties according to their respective rights. . . .' Real Property Art., § 14-107. ²

Such an action is equitable in nature so that the chancellor is accorded broad discretionary authority. In Dugan and Lyman, Trustees v. Mayor, etc., of Baltimore, 70 Md. 1, 8, 16 A. 501, 504, the Court of Appeals quoted Justice Story:

"In matters of partition' says Judge STORY, 'a Court founds itself upon its general jurisdiction as a Court of equity, and administers its relief, ex oequo (sic) et bono according to its own notions of general justice and equity between the parties.' 1 Story's Equity Juris., sec. 656 b.'

Recently, the Court of Appeals has again described the latitude allowed an equity court in distributing the proceeds of a partition sale. Judge Horney wrote for the Court in Bowers v. Balto. G. & E. Co., 228 Md. 624, 629, 180 A.2d 878, 881:

'With respect to a sale (in lieu of partition) . . ., we repeat what was probably first said in Story v Johnson, 1 Y. & C.Ex. 538 (1835), 2 Y. & C.Ex. 586 (1837), that the 'Court, in decreeing a partition, does not act ministerially and in obedience to the call of those parties who have right to partition, but founds itself upon its general equitable jurisdiction,' and will 'adjust the equitable rights of all the parties interested in the estate.' . . . And see Meyers v. East End Loan & Sav. Ass'n, 139 Md. 607, 613, 116 A. 453 . . ., holding that courts of equity do not hesitate to adapt their methods to the exigencies of justice or to protect the equitable rights of those concerned . . ..'

Notwithstanding the broad discretion allowed the chancellor, there are certain general principles and guidelines to which he must adhere.

1. improvements

One such principle relates to the compensation to which a co-owner may be entitled for the value of any improvement he has put upon the property. The chancellor below observed that:

'Although there is no Maryland case directly in point the general rule of law seems to be that a co-tenant who makes a substantial improvement to the property, such as the apartments constructed by George Maas, is entitled to be compensated, but only to the extent to which the improvements are shown to have enhanced the value of the property at the time of sale. . . . the burden is on the tenant who makes the improvements to show that they enhanced the value of the property, and it is in this respect that the plaintiff has failed to support his claim. . . . The plaintiff here relies on the testimony of Mr. Harry Riepe, an experienced and well known appraiser, but this court has read his testimony carefully and at no time did the witness ever state that at the time of sale the property was more valuable because of the construction of the apartments over the garage on the rear portion of the tract. . . .'

Appellant agrees in his brief that:

'If this assertion by the Trial Court is factually correct, Appellant may not prevail on this point of his appeal.'

We find the court's assertion to be correct both legally and factually. While it may be true that there is 'no Maryland case directly in point . . .' there is certainly Maryland authority espousing the principle as being the law of Maryland. In Williams v. Harlan, 88 Md. 1, 5, 41 A. 51, 52 the Court said:

'There can be no question that as between Wm. H. Greenway, and his co-tenants he would be entitled to a lien for the amount expended by him on improvements and repairs made upon the joint property with their knowledge or at their request or in good faith for the benefit of all. This doctrine is fully settled by all the authorities. Mr. Pomeroy in his Equity Jurisprudence, section 1239 says: 'When two or more persons are joint-owners of real or other property, and one of them in good faith, for the joint benefit, makes repairs and improvements upon the property which are permanent, and add a permanent value to the entire estate, equity may not only give him a claim for contribution against the other joint-owners with respect to their proportional shares of the amount thus expended, but may also create a lien as security for such demand upon the undivided shares of the other proprietors.' To the same effect 13 Am. and Eng. Encyl. of Law, p. 602; Green v. Putman, 1 Barbour 500, Hall v. Piddock, 21 N.J.Eq. 311; Gavin v. Carling, 55 Md. 530.' ³

In an annotation entitled 'Adjustment on partition of improvements made by tenant in common,' 1 A.L.R. 1189, the rule for 'Compensation out of proceeds of sale' concludes:

'. . . if the improvements made by one co-tenant add to the amount which the property will bring on the partition sale ordered, the amount so added is to be paid to him out of the proceeds of the sale, in addition to his pro rata share of the proceeds. . . .'

The author of the annotation lists Maryland as being in accord with this proposition, citing Hogan v. McMahon, 115 Md. 195, 202-3, 80 A. 695, and invites comparison with Gittings v. Worthington, 67 Md. 139, 9 A. 228.

However, as Judge Raine pointed out, the extent of a co-tenant's right to compensation for improvements is the extent to which his improvements enhance the value of the property at the time of sale. 59 Ma.Jur.2d, § 53. Thus, compensation based upon the original cost of the improvement or even the replacement cost is not allowed 'because it might result in the other owners being improved out of their property by an extravagant or unbusinesslike co-tenant, and the improvement may have depreciated at the time of the sale.' Anno. 1 A.L.R. 1189, 1210.

A review of the testimony of appellant's expert witness affirms Judge Raine's observation. The testimony elicited was based upon replacement cost rather than on the amount by which the property was enhanced by virtue of the improvements at the time of sale. We certainly find no abuse of discretion in rejecting the testimony as failing to establish a foundation for compensation. Cf. Trainer v. Lipchin, 269 Md. 667, 309 A.2d 471; Stratakis v. Beauchamp, 268 Md. 643, 304 A.2d 244. Nor do we find the chancellor's conclusion that the tenant's improvements had not been shown to have enhanced the value of the property to be 'clearly erroneous.'

2. rent

Although a co-tenant is normally entitled to an accounting for rent for three years prior to suit, Colburn v. Colburn, 265 Md. 468,...