Applegarth v. Wagner

Citations

• 86 Md. 468
• 38 A. 940
• 1897 Md. LEXIS 135

Syllabus

<p>Insolvency—Preferences—Fraudulent Conveyance—Equitable Lien— Agreement to Execute Mortgage—Laches.</p> <p>While a trustee in insolvency takes the property subject to all valid liens upon it, yet his right to contest the validity of claims is not limited to what the insolvent himself could do.</p> <p>When it is sought to enforce an oral agreement to execute a mortgage of property as security for debt, the contract must be proved with ' clearness and accuracy, and as against creditors of the debtor, the party asking for the establishment of such equitable lien must seek relief within a reasonable time.</p> <p>A man borrowed a sum of money from his sister, giving to her therefor a single bill payable three years after date. There was at the time an oral agreement that the borrower should execute a mortgage or some other instrument by which his interest in certain real estate would be transferred as security for the debt. No conveyance or mortgage was executed until four years afterwards, when a deed conveying the property absolutely to the grantor’s sister was made. The day after its execution the grantor made an assignment for the benefit of creditors. He was afterwards adjudicated an insolvent and the trustees in insolvency filed a bill in equity to vacate the transfer. Field,</p> <p>1st. That the agreement between the borrower and lender to treat the property in question as security for the debt cannot be recognized as creating an equitable lien, but is void as against the creditors of the grantor and the trustees in insolvency.</p> <p>2nd. That the execution of the deed was an attempt to secure a preexisting debt and void under Code, Art. 47, sec. 24.</p>