Andresen v. BAR ASS'N OF MONT. CTY.

Murphy, C. J., delivered the opinion of the Court. Maryland Code (1957, 1966 Repl. Vol., 1971 Cum. Supp.), Article 21, § 42 (recodified as Article 21, § 7-106 in the 1973 Repl.

Vol.), authorizes any duly organized bar association of this State to petition a court of equity “to order an audit to be made of the accounts maintained ... for funds received in connection with real estate closing transactions in this State” by persons responsible for disbursing funds in connection with the conveyancing of title to real estate where such persons fail to provide the buyer and seller, under certain circumstances and within a designated time, with specified documents evidencing the existence of recorded releases of mortgages or deeds of trust. 1 ³¹⁶ On November 6, 1972 the Bar Association of Montgomery County, pursuant to the provisions of § 42, filed a petition in the Circuit Court for Montgomery County to obtain an audit of the accounts maintained by Peter C. Andresen, a member of the Maryland Bar, “for funds received in connection with real estate closing transactions in the State of Maryland.” The petition alleged that the State’s Attorney of Montgomery County had charged Andresen on November 1, 1972, by a criminal information, with four counts of false pretenses (as shown by a copy of the information attached to the petition); that “additional facts” had been made available to the Bar Association by the State’s Attorney “which strongly suggest circumstances warranting the granting of a special audit upon . . . [Andresen’s] escrow fund accounts”; that the Bar Association had been informed by the State’s Attorney that releases of deeds of trust “appear to have been made tardily or not at all” by Andresen who acted as settlement attorney for the sale of properties from the Clark-King Construction Company (Clark-King) to enumerated homeowners in the Potomac Woods Subdivision (the Subdivision) of Montgomery County; that the transactions in question involving unreleased deeds of trust ³¹⁷ pertained to lots 12(T), 13(T), 14(S), 15(S) and 25(R) of the Subdivision; and that the State’s Attorney’s investigation disclosed that many of the purchasers of properties in the Subdivision “knew nothing of the named unreleased mortgages until the subject was revealed ... to them [by the State’s Attorney].” Responding to the court’s order to show cause why the audit should not be conducted, Andresen answered that he had not failed to comply with the requirements of § 42 because all the funds coming into his possession in connection with the transactions either “were disbursed within five days after settlement, the parties waived receipt of the releases, or that the parties were notified pursuant to § 42(b).” In addition, Andresen entered a general denial that sufficient ground existed to conduct a special audit under § 42. At the hearing on the petition, the Bar Association adduced evidence showing that on December 13, 1969, the F. O. Day Company (Day) took a deed of trust from Clark-King, developers of the Subdivision, as security for payment of a note; that the deed of trust, securing a $37,000 debt owed Day by Clark-King, covered sixteen or seventeen lots in the Subdivision and contained a clause authorizing the trustees, Andresen and William Wheeler (Day’s attorney) to release each lot upon payment to the noteholder of $2,000 per lot; that no payments on account of the note were made until October 7, 1970 when $9,000 obtained by Clark-King in connection with settlement upon one of its properties located outside the Subdivision was paid to Day. There was evidence showing that settlement was held on a number of properties purchased within the Subdivision between 1970 and 1972; that Andresen acted as settlement attorney in these transactions; that the outstanding deed of trust held by Day covering the lots in the Subdivision was not disclosed by Andresen at the time of settlement and no release of many of the properties covered by the deed of trust was recorded until many months after the deeds were delivered. Testimony given by the purchasers of lots 25(R) and 7(T) in the Subdivision was to the effect that deeds for ³¹⁸ these properties were recorded in July of 1970, but they were not furnished copies of recorded releases of the deed of trust covering their lots until two years later in July and August of 1972 when the lots were released- from the operation and effect of the deed of trust after demand was made upon Andresen that he provide each of them with a copy of the recorded release.

In neither case were the property owners notified of any reason for the delay in releasing the deeds of trust. Considerable evidence produced by the Bar Association to prove that Andresen, as settlement attorney, failed to comply with the requirements of § 42 (a) and (b) pertained to properties in the Subdivision which were not specifically alluded to in the petition. Andresen’s objections to the introduction of such evidence were summarily overruled by the trial court. There was evidence showing that at the time of settlement on lots 25(R) and 7(T), the property owners, after being advised by Andresen of the provisions of § 42, signed the following written waiver: “We hereby waive being furnished evidence of recorded releases; having been assured by said settlement attorney that all funds in this transaction will have been disbursed within 5 days from the date of delivery of the deed.” Andresen did not testify at the hearing and offered no evidence on his own behalf.

The lower court found that the evidence disclosed “many transactions where there was a deed recorded, and a release was not of record until in some instances more than two years thereafter.” The court concluded that “the presumption is . . . that the money was received but it was not disbursed.” Believing that the waivers signed by the owners of lots 25(R) and 7(T) did not constitute compliance with the requirements of § 42, and that the evidence otherwise showed that Andresen had not complied with the provisions of the statute, the court ordered that a special audit be conducted (by an independent auditor) “of the accounts ³¹⁹ maintained by . . . Andresen . . . for funds received in connection with real estate closing transactions in the State of Maryland.” The order directed that the audit be submitted to the court and that upon receipt, the court would notify counsel for the parties and thereafter would pass “a further order in these proceedings, particularly with reference to the use of said audit.” The court’s order enjoined Andresen from secreting or taking from Montgomery County any of the accounts to be audited, “or any of his account books, check book ledgers, statements of account, checks, stubs or files employed in connection therewith until further Order of this Court.” Andresen claims on appeal, as he did below, that his Fifth Amendment right against compulsory self-in crimination, applicable to the states through the Fourteenth Amendment, Malloy v. Hogan, 378 U. S. 1 , 84 S. Ct. 1489 , 12 L.Ed.2d 653 (1964), would be violated if he were compelled to submit his accounts to the special audit ordered by the court. Fie alleges that the information gleaned from the audit, if made, will be used in connection with the criminal proceedings pending against him instituted by the State’s Attorney, and the disbarment or disciplinary proceedings previously initiated against him by the Bar Association. Other allegations raised by Andresen on appeal are (1) that the lower court erred in admitting into evidence and considering testimony and exhibits regarding matters not included or referred to in the pleadings; (2) that prejudicial error was committed by the court when it considered the testimony of the Bar Association’s investigating attorney to be that of an expert in real estate transactions; (3) that the court was in error in disregarding the written waivers executed by the property owners of their right under § 42 to be furnished with evidence of recorded releases; (4) that the evidence was legally insufficient to support the court’s order, particularly since no evidence was offered by the Bar Association to show that funds coming into Andresen’s possession were not disbursed within five days from the date of delivery of the deeds, thus obviating the need to provide the buyer and seller with evidence of recorded releases; (5) ³²⁰ that § 42 was so vague and indefinite as to constitute a violation of the due process clause of the Fourteenth Amendment; (6) that a compulsory production of Andresen’s accounts would constitute an unreasonable seizure in violation of the Fourth Amendment to the federal constitution.

I As heretofore indicated, § 42 (a) and (b) impose a duty upon attorneys assuming responsibility for disbursing funds in connection with the conveyance of title to real estate to provide the seller and buyer, within thirty days from the delivery of the deed (unless an extension of that period is warranted and becomes operative by reason of notice given to the parties), with documentary evidence of recorded releases of mortgages or deeds of trust. Under the provisions of § 42 (c) failure to comply with these requirements may result in a petition being filed by the seller, buyer, or a bar association seeking an audit of the attorney’s “accounts maintained ... for funds received in connection with real estate closing transactions in this State.” Any such petition is required to “state concisely the facts showing such noncompliance and shall be verified.” § 42 (c). By the provisions of § 42 (e) a settlement attorney is not required to provide evidence of recorded releases to the seller and buyer if he “properly disburses all funds entrusted to him in the course of the closing transaction within five (5) days from the date of the delivery of the deed or deeds conveying title to the real property.” We think it readily evident that § 42 was designed to protect the parties in transactions involving the conveyance of title to real estate,from careless or fraudulent practices by persons having responsibility for disbursing the funds received in connection with the conveyance. The grant of authority to a duly organized bar association to petition the court for the audit permitted under § 42 (c) plainly reflects the Legislature’s recognition that members of the Bar frequently assume the responsibility of disbursing funds in such transactions, and that it is in the general public ³²¹ interest, and in the special interest of the legal profession, that a bar association be authorized to assert noncompliance with the provisions of § 42.

We are satisfied that the lower court could properly conclude, as it did, that an audit of Andresen’s real estate accounts was essential because of the evidence showing his failure to comply with the positive requirements of § 42 (a) and (b). The evidence adduced in connection with four of the five transactions specifically referred to in the Bar Association’s petition showed that Andresen did not provide the requisite evidence manifesting release of the Day deed of trust within thirty days of the delivery of the deeds to the properties. That he did not properly disburse the settlement proceeds coming into his hands in connection with these transactions within five days from the delivery of the deeds in accordance with § 42 (e) is evidenced by the fact that Day’s deed of trust was not released until months after the deeds had been delivered. But even if Andresen had disbursed within the five day period under § 42 (e), that fact alone would not necessarily insulate him from audit under § 42 (c); compliance with § 42 (e) grants relief only from the duty to provide evidence of recorded releases.

In the circumstances of this case, we do not think the admission of evidence involving transactions not mentioned in the Bar Association’s petition constituted error prejudicial to Andresen’s defense; the evidence — (except for one property) all relating to properties within the Subdivision — was essentially cumulative. Nor do we think that the waivers executed by the owners of lots 25(R) and 7(T) relieved Andresen of his obligation to provide them with evidence of the recorded releases; the waivers were plainly predicated upon disbursement being made by Andresen within five days from the date of delivery of the deeds, a condition not met. 2 And we find no error in the ³²² court’s treatment of the alleged expert witness; his testimony was basically limited to reciting the details of his investigation into the land records of Montgomery County. The only opinion testimony given by him was elicited by Andresen on cross-examination, and it does not clearly appear that the lower court considered it as the testimony of an expert witness. Since Andresen did not challenge the constitutionality of § 42 in the lower court on the ground that it was unconstitutionally vague and indefinite, nor there raise any question with respect to his Fourth Amendment right not to be subjected to illegal seizures, these constitutional issues have not been preserved for appellate review, and we do not pass upon them.

Schiller v. Lefkowitz, 242 Md. 461 , 219 A. 2d 378 (1966); Hewitt v. State, 242 Md. 111 , 218 A. 2d 19 (1966); Maryland Rule 885.

II

The key issue on appeal, and one which was preserved in the lower court, is the relationship of the constitutional protection against compulsory self-incrimination to the ordered audit of Andresen’s real estate accounts. Andresen claims protection under the Fifth Amendment of the United States Constitution, made applicable to the states through the Fourteenth Amendment by Malloy v. Hogan, supra, and under Article 22 of the Maryland Declaration of Rights, which we have construed to be in pari materia with the Fifth Amendment, Blum v. State, 94 Md. 375 , 51 A. 26 (1902), and subject to a like construction, State v. Panagoulis, 253 Md. 699 , 253 A. 2d 877 (1969). It is well established that these constitutional provisions are available in civil as well as criminal proceedings, United States v. Kordel, 397 U. S. 1, 7-8 , 90 S. Ct. 763, 767 , 25 L. Ed. 2d 1, 8 (1970) and cases cited therein at n. 10, to protect both oral testimony and private documentary evidence of a testimonial nature, United States v. White, 322 U. S. 694 , 64 S. Ct. 1248 , 88 L. Ed. 1542 (1944), Boyd v. United States, 116 U. S. 616 , 6 S. Ct. 524 , 29 L. Ed. 746 (1886), Archer v. State, 145 Md. 128 , 125 A. 744 (1924), Blum v. State, supra, which present the claimant with ³²³ substantial hazards of self-incrimination, California v. Byers, 402 U. S. 424 , 91 S. Ct. 1535 , 29 L. Ed. 2d 9 (1971), Malloy v. Hogan, supra, Midgett v. State, 223 Md. 282 , 164 A. 2d 526 (1960). Andresen relies on the Supreme Court’s holding in Boyd, supra, a vintage case of continued vitality (see Couch v. United States, 409 U. S. 322 , 93 S. Ct. 611 , 34 L. Ed. 2d 548 (1973)); that case held that the private records and books of an individual are protected by the privilege against self-incrimination.

The Bar Association claims that Shapiro v. United States, 335 U. S. 1 , 68 S. Ct. 1375 , 92 L. Ed. 1787 (1948), and not Boyd , is the controlling authority; Shapi.ro held that records required to be kept by law are “public records” outside the scope of the Fifth Amendment protection. Both parties cite Spevack v. Klein, 385 U. S. 511 , 87 S. Ct. 625 , 17 L. Ed. 2d 574 (1967), which held that a lawyer could not be disbarred for refusal, on Fifth Amendment grounds, to produce his financial records subpoenaed to a judicial inquiry into professional misconduct. Spevack is not dispositive of the present controversy, however, for the Supreme Court there expressly refused to consider the applicability of Shapiro as the doctrine espoused in that case had not been timely raised below; nor has any subsequent case squarely answered the question. 3 In Shapiro the court concluded that records and documents — sales invoices, sales books, ledgers, inventory records, contracts and sales records — required to be kept by valid regulations of the Office of Price Administration could be subpoenaed by the Price Administrator without violating Shapiro’s right against self-incrimination. The Court reasoned, consistent with the principle announced in Wilson v. United States, 221 U. S. 361 , 31 S. Ct. 538 , 55 L. Ed. 771 (1911), and followed in Davis v. United States, 328 U. S. 582 , 66 S. Ct. 1256 , 90 L. Ed. 1453 (1946), and numerous state ³²⁴ court decisions which it cited in n. 25, 335 U. S. at 18 , 68 S. Ct. at 1385 , 92 L. Ed. at 1799, that “ ‘ records required by law to be kept in order that there may be suitable information of transactions which are the appropriate subjects of governmental regulation and the enforcement of restrictions validly established....”’ 335 U. S. at 17 , 68 S. Ct. at 1392 , 92 L. Ed. at 1799 (emphasis in original.) are analogous to public documents in public offices to which the privilege against self-incrimination does not attach.

The Court distinguished Boyd, supra, as extending the protection only to private papers voluntarily maintained, 335 U. S. at 33 , 68 S. Ct. at 1392 , 92 L. Ed. at 1807-08 n. 42. Recognizing that “. . .there are limits which the government cannot constitutionally exceed in requiring the keeping of records which may be inspected by an administrative agency and may be used in prosecuting statutory violations committed by the record-keeper himself. . ..” 335 U. S. at 32 , 68 S. Ct. at 1391-92 , 92 L. Ed. at 1807 the Court found