Marburg v. Mercantile Bldg. Co.

• Decision Date: 15 February 1928
• Docket Number: 98.
• Citation: 140 A. 836,154 Md. 438
• Parties: MARBURG ET AL. v. MERCANTILE BLDG. CO.
• Court: Maryland Court of Appeals

140 A. 836

154 Md. 438

MARBURG ET AL. v. MERCANTILE BLDG. CO.

No. 98.

Court of Appeals of Maryland

February 15, 1928

Appeal from Circuit Court No. 2 of Baltimore City; Robert F Stanton, Judge.

"To be officially reported."

Bill by the Mercantile Building Company against Theodore Marburg and others. Decree for plaintiff, and defendants appeal. Affirmed.

Argued before BOND, C.J., and PATTISON, URNER, ADKINS, OFFUTT DIGGES, and SLOAN, JJ.

Chester F. Morrow and Raphael Walter, both of Baltimore (Niles Barton, Morrow & Yost, and Sykes, Nyburg, Goldman & Walter, all of Baltimore, on the brief), for appellants.

Randolph Barton, Jr., of Baltimore (W. Edgar Byrd, of Baltimore, on the brief), for appellee.

SLOAN J.

This is an appeal from a decree of the circuit court of Baltimore city for the redemption of a lease of a lot and building in Baltimore.

The Mercantile Building Company, a corporation, appellee, is the assignee of a lease dated December 29, 1908, from Ernest J. Knabe, Jr., and William Knabe to the American Piano Company, for the term of 21 years beginning January 1, 1909, at the annual rental of $7,500 per year. By assignment dated December 31, 1918, the American Piano Company assigned the lease to James H. Williams, who, by assignment dated April 1, 1922, assigned to the appellee.

By deed dated December 30, 1908, Ernest J. Knabe, Jr., and William Knabe conveyed the leased premises to Theodore Marburg, one of the appellants, reciting in the deed that it was "the same land which by lease dated December 29, 1908, and intended to be recorded immediately prior hereto, was demised and leased by the said Ernest J. Knabe and wife and William Knabe and wife unto the American Piano Company, a corporation of the state of New Jersey, for the term of 21 years beginning January 1, 1909."

By agreement dated December 29, 1908, the date of the deed to Theodore Marburg, he agreed with the Knabes to pay to them $1,000 a year out of the rent reserved in the lease to the American Piano Company, the agreement providing, "that in case it should be necessary hereafter to re-enter upon the said property, all right in and to the sum of $1,000 to be paid as aforesaid by the party of the first part to the parties of the second part shall cease." This agreement was not acknowledged or recorded. On October 27, 1916, the Knabes assigned a one-third interest in the agreement to G. T. Clarkson, liquidator of the Farmers' Bank of Canada, who in turn, on the 16th day of January, 1920, assigned to James H. Williams by agreement duly recorded, and Williams, by "deed" dated June 23, 1922, assigned his third interest in the Knabe-Marburg agreement to William E. Tickner, who, on petition and order, was made a party defendant; he, however, not having appealed from the decree, declaring his interest foreclosed by the redemption of the lease.

It further appears from the evidence that by agreement dated November 27, 1923, Theodore Marburg and wife leased the property described in these proceedings to Samuel C. Applefeld for the term of 99 years beginning on the 2d day of January, 1929 (the day after the expiration of the appellee's lease), and by supplementary agreement, dated December 7, 1923, Louis Applefeld was made a joint lessee with Samuel C. Applefeld. On a bill filed by the appellee against Theodore Marburg and wife, the court below passed a decree declaring the appellee's lease redeemable under the Maryland statutes, the interest of William E. Tickner foreclosed by the redemption, the lease to the Applefelds canceled by the redemption, and required Theodore Marburg and wife to execute a deed for the feesimple interest in the property described in the lease, and it is from this decree the appeal is prayed.

The appellants contend: (1) That Acts 1900, c. 207, and all prior acts for the redemption of land leases, do not apply to leases for the use and occupation of buildings, because, if so applied, the said acts would be unconstitutional and void; (2) that Acts 1922, c. 384, are validly retroactive, and prevents the redemption of this lease; (3) that this lease has been so changed or modified since its execution that the appellee has not had a lease for a term of 15 years.

To concede the first contention would mean the reversal of this court's decisions in Brager v. Bigham, 127 Md. 148, 96 A. 277; Swan v. Kemp, 97 Md. 686, 55 A. 441, and Stewart v. Gorter, 70 Md. 242, 16 A. 644, 2 L. R. A. 711, as the facts in the present record show this case to be clearly within the provisions of the Acts 1900, c. 207 (section 95, art. 21, of the Code of 1924), which was approved in the cases named. This we decline to do.

For the first time in these redemption cases the point is made that the statute providing for the redemption of leases for a longer period than 15 years is in violation of the Fourteenth Amendment of the Federal Constitution.

The appellant's counsel has cited several cases in the Supreme Court of the United States wherein that court held that the statutes therein passed upon were restraints on the freedom of contract and forbidden by the Fourteenth Amendment, but we fail to find any of them dealing with a statute resembling ours, and none of them touching the subject of this case.

It has long been recognized as the right of the Legislature to change or limit the character of estates and tenures, provided the legislation did not affect rights which had become vested. Cooley's Constitutional Limitations (8th Ed.) 745 et seq.; Stanley v. Colt, 5 Wall. (72 U. S.) 119, 18 L.Ed. 502. There is nothing novel in legislation limiting the duration of leases of land, which is an interference with the natural right of the individual to contract with his own as he will. New York, Michigan, Iowa, Minnesota, and Wisconsin have limited the terms of leases of agricultural lands. Massachusetts, Alabama, California, North and South Dakota, and Nevada have placed limits on the periods of time for which any land and buildings may be leased. Freund, Police Power, § 371. The Maryland statute differs from those of other states limiting the duration of leases in one particular only. Our statute says leases can be made up to 15 years, but, when they extend beyond that time, the lease may be ended by redemption at a capitalization of the rent at not to exceed 6 per centum. Those who lease their property for a longer period than 15 years are on notice of the statute, and, if they assume the risk of redemption by the tenant, they can protect themselves by exacting a rent which shall not be less than 6 per centum of the fair value of the premises leased.

In Maryland there had been implanted in our system of land tenures the irredeemable ground rent, which had become of such general use as a form of investment, particularly in Baltimore, as to affect injuriously in the public mind, real estate values, and to interfere seriously with the public convenience and the prosperity of our people. Of such a situation it was said by this court in Stewart v. Gorter, supra:

"Sound public policy demanded that all leases hereafter made, if for more than fifteen years, might be ended at the option of the tenant or lessee, upon paying the capitalization of his ground rent at six per centum. It was the system of these long leases, irredeemable until the end of the term, that the Legislature wished to break up, rather than for any special consideration for the lessees, that caused the act." Act of 1884, c. 485. Swan v. Kemp, supra, page 689 (55 A. 441); Brager v.

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