Grease a 13x9x2-inch baking pan. Set aside.
In a large bowl, beat sugar, butter, eggs, and vanilla with an electric mixer on medium speed until well mixed. Add flour, baking powder, and salt. Beat until just combined.
Spread half of the batter into prepared pan.
In another bowl, stir together the apples, brown sugar, cinnamon, and nutmeg. Spread mixture over cake batter in pan. Dollop remaining batter over the apples.
Bake in a 350 degree F oven about 1 hour or until a toothpick inserted in the center comes out clean. Cool in pan for 30 minutes.
Serve warm squares of cake topped with warm Lemon Sauce. Makes 12 servings.
In a medium saucepan, combine sugar, cornstarch, nutmeg, and salt. Stir in water. Cook and stir until mixture is thickened and bubbly. Cook and stir for 2 minutes more. Stir in butter or margarine, lemon peel, and lemon juice. Makes 3-1/2 cups sauce.