In Moran v. Hammersla, 188 Md. 378, 52 A.2d 727, we held that an option agreement providing that a ground rent of a certain amount per year, capitalized at what it should be fairly worth, was to be accepted by the vendors as part of the purchase price, was too indefinite to be specifically enforced in the absence of any stipulation as to the term for which the intended ground rent was to be made.Summary of this case from Barranco v. Kostens
[No. 109, October Term, 1946.]
Decided April 23, 1947.
Specific Performance — Contracts — Certainty — Option to Purchase Realty — Ground Rent as Part of Purchase Price — Meaning of "Ground Rent."
Specific performance of a contract will not be decreed unless its terms are so expressed that the Court can determine with reasonable certainty what is the duty of each party and the condition under which performance is due. p. 381
The terms of an option to purchase, like that of any other agreement, to be specifically enforceable, must be clear and definite, the price of the property being an essential term. p. 381
In a "ground rent lease," the estate of lessee, though considered as personalty, is in practical effect ownership of realty and improvements, subject to payment of annual rent and all taxes, and if payment of the rent is in default for a stipulated time, lessor may re-enter and avoid lease. p. 381
By statute since 1884, all rents reserved by subsequently made ground rent leases are redeemable by the lessee in accordance with the conditions provided in the statute, the lessee thus becoming owner of the realty in fee simple. Code, 1939, Art. 31, secs. 110, 111, 115. p. 382
The term of a ground rent lease is an essential part of it, and, in absence of any stipulation in that respect, a court of equity cannot decree specific performance of a lease. p. 382
The term "ground rent" does not imply that the rent is reserved under a lease for 99 years, renewable forever. p. 382
On appeal from an order overruling a demurrer to a bill to specifically enforce an option contained in a written lease to purchase the leased premises at any time during the term of the lease, and which option provides that a ground rent of $90 per year, capitalized at what it shall be then fairly worth, was to be accepted by the vendor as part of the specified purchase price, but is silent as to the term of the intended ground rent, held, the option agreement is unenforceable on account of indefiniteness. p. 382
Decided April 23, 1947.
Appeal from the Circuit Court No. 2 of Baltimore City (MANLEY, J.).
Suit by Albert L. Hammersla and Erma Ellen Hammersla, his wife, against William M. Moran and Catherine E. Moran, his wife, for specific performance of contract to convey to them land improved by a building.
From an order overruling defendants' demurrer to the amended bill of complaint, the defendants appeal.
Order reversed and amended bill dismissed.
The cause was argued before MARBURY, C.J., DELAPLAINE, COLLINS, GRASON, and HENDERSON, JJ.
Joseph Loeffler for the appellants.
Charles G. Page, with whom was J. Calvin Carney on the brief, for the appellees.
This suit for specific performance was brought by Albert L. Hammersla and wife to compel William M. Moran and wife to convey to them the land improved by a building containing a store room and two apartments at 4726 Frederick Avenue in the City of Baltimore.
The amended bill of complaint alleges that defendants, in a lease of the store room to Frank H. Drager and wife from October 16, 1939, to October 16, 1946, granted to the lessees, their personal representatives and assigns, the right to purchase the property at any time during the lease at the price "at which said property could then be sold to anyone else than said lessees, a ground rent of ninety dollars per year, capitalized at what it shall be then fairly worth, to be accepted by the sellers as part of said purchase price." The bill then alleges that in March, 1941, the lessees assigned the lease, including the option, to complainants; and in August, 1946, after Home Builders of America, Inc., had made a bona fide offer to purchase the property from defendants for the sum of $15,500, complainants exercised their option by agreeing to pay defendants $15,500 for the property in fee simple, or $13,863.64 if defendants should retain a ground rent of $90 per year capitalized at $1,636.36, or any other amount for which the property could be sold to any one else; but that defendants have nevertheless refused to convey the property to them. Defendants demurred to the amended bill, and they are appealing from an order overruling their demurrer.
It is a fundamental rule that a court of equity will not decree specific enforcement of any contract unless its terms are so expressed that the court can determine with reasonable certainty what is the duty of each party and the conditions under which performance is due. Gelston v. Sigmund, 27 Md. 334, 343; Texas Co. v. United States Asphalt Refining Co., 140 Md. 350, 117 A. 879; Anshe Sephard Congregation v. Weisblatt, 170 Md. 390, 185 A. 107; Trotter v. Lewis, 185 Md. 528, 45 A.2d 329; Smith v. Biddle, 188 Md. 315, 52 A.2d 473; 2 Restatement, Contracts, sec. 370. The terms of an option to purchase, like any other agreement, must be clear and definite, and the price of the property is an essential term. On this appeal it is unnecessary to consider the validity of the first provision of the option agreement that the lessees, their personal representatives and assigns, have the right to purchase the property at any time during the lease at the price "at which said property could then be sold to any one else than said lessees." For there have been positive decisions of this Court under which we must hold indefinite the second provision of the option agreement: "a ground rent of ninety dollars per year, capitalized at what it shall be then fairly worth, to be accepted by the sellers as part of said purchase price."
Ground rent leases, while not generally used in other States, have been used in Maryland since Colonial days, and their characteristics and legal incidents are well known in this State. In a ground rent lease the owner of the land leases it to the lessee for a certain period, with a covenant for renewal upon payment of a small renewal fine, upon the condition that a certain sum of money shall be paid, and that if the payment is in default for a stipulated time the lessor may re-enter and avoid the the lease. The estate of the lessee is considered as personal property, but in practical effect the relation of the lessee to the property is that of owner of the land and improvements thereon, subject to the payment of the annual rent and all taxes on the property. Banks v. Haskie, 45 Md. 207; Culbreth v. Smith, 69 Md. 450, 16 A. 112, 1 L.R.A. 538; Jones v. Magruder, D.C., Md., 42 F. Supp. 193. Prior to 1884 the rents reserved by ground rent leases were not redeemable by the lessee unless expressly so stipulated in the original lease; but in that year and by later statutes the Legislature provided for the conditions upon which the lessee, in subsequently made ground rent leases, should have the right to redeem and thus become the owner of the property in fee simple. Code, 1939, Art. 21, secs. 110, 111, 115.
In the instant case the option to purchase is entirely silent as to the term for which the intended ground rent is to be made. As stated by Judge Bartol in 1866 in Myers v. Forbes, 24 Md. 598, 611, the term of a lease is an essential part of it, and in the absence of any stipulation in that respect a court of equity cannot decree specific performance of a contract. That decision was cited with approval by this Court in 1891 in Thomson v. Gortner, 73 Md. 474, 482, 21 A. 371, where Judge Miller stated that, in order to constitute a valid agreement, the parties must express themselves in such terms that the court can ascertain to a reasonable degree of certainty what they mean. If an agreement is so indefinite that it is impossible to gather from it the full intention of the parties, it is void, for the court cannot make an agreement for the parties. Finally, in 1911 the Court, speaking through Judge Pearce, definitely held in Ward v. Newbold, 115 Md. 689, 693, 81 A. 793, Ann. Cas. 1913A, 919; 164 A.L.R. 811, that the term "ground rent" does not imply that the rent is to be reserved under a lease for 99 years, renewable forever.
In view of these decisions, we must conclude that the option agreement in this case is unenforceable on account of indefiniteness. We must, therefore, reverse the order of the chancellor overruling the demurrer.
Order reversed and amended bill of complaint dismissed, with costs to appellants.