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07/02/92 M.M. & G. INC. v. WILLIAM JACKSON

July 2, 1992


Appeal from the Superior Court of the District of Columbia; (Hon. George W. Mitchell, Trial Judge)

Before Farrell and King, Associate Judges, and Gallagher, Senior Judge. Opinion for the Court by Associate Judge Farrell. Concurring opinion by Senior Judge Gallagher.

The opinion of the court was delivered by: Farrell

FARRELL, Associate Judge : This appeal arises primarily from the denial of an equitable lien to purchasers of property at 310 Nicholson Street, N.W., property that was returned to the true owner after the discovery of a forgery in the chain of title. Although we reject most of appellants' arguments, we remand for a determination of the present value of permanent improvements made to the property by appellant Yvonne Kinney alone, who is entitled to the value of those improvements less any damages as defined by statute.


On March 23, 1984, Mary W. Brown, the original owner of the Nicholson Street property, was admitted to Rock Creek Manor Nursing Home by her grandson, William Jackson. Mrs. Brown was suffering from Alzheimer's disease and needed constant supervision and nursing care. On September 5, 1984, Carl E. Jackson, another of Mary Brown's grandsons, recorded a deed to 310 Nicholson Street purportedly giving him fee simple title to the property and purporting to be signed by Mary Brown. As the trial court found, and as appellants concede for purposes of this appeal, the signature of Mary Brown was a forgery.

Sometime at the end of December of 1984, Carl Jackson approached M.M. & G., Inc. (doing business as A-1 Realty) about purchasing the 310 Nicholson Street property. A contract for purchase was signed on December 31, 1984, and settlement took place on January 10, 1985. M.M. & G. purchased the property for $35,000 *fn1 and immediately began extensive renovation work.

Meanwhile, William Jackson filed a petition for conservatorship of Mary Brown's estate on October 5, 1984. Mary Brown was declared incompetent and William Jackson was appointed conservator on February 11, 1985. During these proceedings, William Jackson saw a "For Sale" sign on the Nicholson Street property and contacted the attorney for the estate. The attorney, Arthur Konopka, made two phone calls to M.M. & G. on January 18, 1985 and February 5, 1985. These phone calls were followed by a letter on February 15, 1985, which was sent to both M.M. & G. and its attorney. The letter expressed the estate attorney's "conviction that . . . Mrs. Brown[] lacked the mental capacity to acknowledge that deed and to convey that property at the time the document was executed." It continued: "This shall serve as notice that we regard the deed [between Mary Brown and Carl Jackson] as ineffective in its attempt to convey the property, and appropriate steps are now being taken to protect the interest of Mrs. Brown in her estate. Parties to any subsequent conveyance of the property should be advised as to the existence of this cloud on the title."

After receiving this letter, M.M. & G. continued to perform renovation work on the property. In its brief on appeal, M.M. & G. contends that it took this course of action after consulting with its attorney, who advised it that, at most, the letter asserted a claim of Mrs. Brown's incapacity to deed the property; and while District of Columbia law was unclear as to the effect of incapacity on a deed, under neighboring Maryland law the deed was voidable (as opposed to void) and so M.M. & G., as a bona fide purchaser, could prevail against any adverse claim based on the grantor's incapacity. *fn2 Altogether M.M. & G. spent over $12,000 on renovations.

On June 7, 1985, M.M. & G. conveyed the property to Yvonne Kinney for $62,000 dollars. *fn3 M.M. & G. did not inform Ms. Kinney of any adverse claims against the property. Ms. Kinney spent approximately $2,500 on further improvements to the property, which she lived in until early in 1988 when she began to rent it out. She also paid $2,714.77 in real estate taxes for the property between 1985 and 1988. William Jackson filed a complaint to set aside all of the deeds on August 7, 1985. Notice of this suit was provided to Yvonne Kinney at the end of October 1985.

Trial without a jury took place before Judge George W. Mitchell on March 2 and 3, 1989. Closing arguments were continued until March 28. During closing arguments, Judge Mitchell granted the estate's request for a continuance in order to file a motion to reopen the record. On April 21, 1989, the court granted the motion and continued the suit so that the estate could substitute the personal representative of Mary Brown's estate for the conservator of the estate, as Mary Brown had died during the trial. The court also granted appellants' motion to reopen discovery in order to assert the defense of after-acquired title, appellants contending that they "needed to ascertain who the heirs of Mary Brown are." The court allowed further discovery and stated, "Put all of this in writing and the Court will act on it. . . ."

On August 7, 1989, the estate filed, in open court, a motion to substitute parties and was allowed to present further testimony. Thereafter, appellants requested an additional continuance, stating that until the formal substitution of parties which had occurred that morning, they had been unable to serve discovery requests and hence unable to conduct discovery on their potential defense of after-acquired title. The court denied the continuance and proceeded to enter oral findings of fact and Conclusions of law. These were followed by written findings of fact and Conclusions of law on September 20, 1989.

The court found that the deed from Mary Brown to Carl Jackson was a forgery. It also found that laches did not bar the estate's attempt to retrieve its property as the suit was timely filed and M.M. & G. had been put on notice of the estate's claim soon after the claim was discovered. The court set aside all of the deeds conveying the property out of the estate of Mary Brown and denied a request for an equitable lien for Yvonne Kinney as restitution for the improvements made by M.M. & G. and Kinney herself.


Appellants contend that the court erred in not applying the doctrine of laches to bar the suit by the estate. We reject this contention. For laches to bar an equitable action, "the defendant must have been prejudiced by plaintiff's delay, and plaintiff's delay must have been unreasonable." Martin v. Carter, 400 A.2d 326, 329 (D.C. 1979). The trial Judge concluded that "upon discovery of a possible fraudulent conveyance[, plaintiff] initiated this action in a timely fashion." The Judge based this Conclusion on the letters sent by the estate to M.M. & G. four days after William Jackson had been appointed conservator, the conservator's report filed in April of 1985 stating that legal steps were ...

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