Billingsley v. Lawson

Liss, J., delivered the opinion of the Court. Henry E. Billingsley and Ann Billingsley, his wife, appellants, applied to Jefferson Federal Savings and Loan Association of Washington, D. C. (hereinafter Jefferson) to obtain refinancing of an existing loan on their residence in Bethesda, Maryland for the purpose of paying certain business expenses and an existing second trust on their property. On October 25, 1974, the appellants executed a promissory note in the amount of $125,000.00 secured by a deed of trust on the residence to Suburban Trust Company, Trustee.

By the terms of the note, the appellants agreed to pay the principal sum plus interest at the rate of ten per cent per annum, the sums payable in monthly installments. The note provided that at the option of Jefferson in the event of a default the entire debt, plus interest, advances and charges would become due and payable. On November 17,1976, the appellants received a letter by registered mail which advised them that the note was then $4,328.74 in arrears; that payment of the overdue amount was requested by November 29, 1976; and that foreclosure was a possibility if the payment was not received. The appellants were again advised of their delinquency on February 8,1977.

When payment was not forthcoming Jefferson instructed Suburban Trust to proceed with a foreclosure proceeding which was filed in the Circuit Court for Montgomery County on April 7, 1977. Thomas S. Lawson and J. Edward White were appointed as substitute trustees on March 4,1977; and the foreclosure suit was captioned in their names. They appear in these proceedings as appellees. ⁷¹⁵ On the same date that the foreclosure suit was docketed, counsel mailed the appellants a copy of the foreclosure advertisement proposed to be published during the ensuing weeks. The advertisement was published in the “Suburban Record” on April 22, 29, and May 6, 1977.

Another copy of the advertisement was mailed to the appellants by counsel for the trustees on April 30, 1977. The record shows that the advertisement conformed to the requirements of law by describing the property and improvements, the terms of sale, and the location in the Montgomery County Land Records of the deed of trust containing a metes and bounds description. On May 9,1977, the day scheduled for sale, the appellants pro se moved the Circuit Court to enjoin the sale. A proffer was made that Mr. Billingsley had been led to believe on the Friday preceding the sale that the sale would be stopped if he tendered $5,000.00 prior to the sale.

Acting on this representation, appellants obtained a $5,000.00 cashier’s check and tendered it to the substitute trustees on the morning of the sale, but the substitute trustees refused to accept the check or stop the sale. The chancellor denied the motion for injunction to stop the sale without a formal hearing on the ground that the “mortgagor has not paid the remaining balance under the secured indebtedness but has only offered to make payments current.” The sale thereupon proceeded and the property was purchased by the second trust holder (Jefferson) for $140,000.00. Appellants filed exceptions to the sale and a hearing was set for November 29, 1977. That hearing was continued by the trial court when Mrs. Billingsley presented a physician’s certificate reciting that Mr. Billingsley was in critical condition completely paralyzed as a result of the Guillain-Barré Syndrome which had caused him to be confined to the National Naval Medical Center.

On February 2, 1978, the chancellor (Latham, J.) was presented with a consent order executed by Ann Billingsley for herself and as attorney in fact for Henry Billingsley to which was attached a general power of attorney appointing Mrs. Billingsley to act on Mr. Billingsley’s behalf. The order presented to the chancellor indicated that the Billingsleys had ⁷¹⁶ agreed to withdraw their exceptions to the sale and had consented to its final ratification. On June 26, 1978, Henry Billingsley filed a petition to set aside the February 2, 1978 consent order (Mrs. Billingsley was not a party in this petition). Also on June 26,1978, both appellants filed a new set of exceptions to the foreclosure sale that raised issues not in the original exceptions.

Additionally, they filed a motion to set aside the foreclosure sale and a petition to declare the deed of trust null and void. Trial was had on December 28 and 29, 1978 before Judge Mathias in the Circuit Court for Montgomery County. Appellants initially moved that Judge Mathias remove himself from the case contending that he had previously violated their constitutional rights and that the chancellor might be liable to the appellants if he ruled against them. The trial judge appropriately denied this frivolous motion and the hearing then proceeded.

In their various exceptions and motions, the Billingsleys, in hunter’s parlance, shot mustard seed in an attempt to kill a stag. They contended that their grounds for vacating the February 2, 1978 consent order included the fact that the power of attorney was null and void; that Mr. Billingsley was mentally incompetent at the time he gave his wife the power of attorney upon which she based her authority to withdraw the exceptions to the sale and consent to the ratification; that the February 2,1978 order was entered without notice to him and without his consent and its entry denied him due process; that Mrs. Billingsley had signed while she was under a severe mental strain, believing her husband was dying; that her consent was not voluntary and that her actions were a nullity when she purported to act for Mr. Billingsley. In support of their exceptions to the sale and the motion to set it aside, they used the same tactics, alleging the advertisement of sale did not satisfy Maryland Rule W 74 2 (b) because it only ran for 17 days, not 21 days; that the Maryland foreclosure law is unconstitutional; that no settlement occurred within five days of final ratification; that the injunction was improperly denied; that the loan had not been properly accelerated; that the power of sale was ⁷¹⁷ improperly exercised because there had been no default; that the deed of trust was void because the affidavit of disbursement was irregular; and that the forfeiture of the appellants’ property violated the Soldiers and Sailors Civil Relief Act. Appellants also filed on the same date a Petition to Declare the Deed of Trust Null and Void on the basis that the affidavit of disbursement was irregular and usurious.

Appellees, in response to appellants’ motion to vacate the final order of ratification of the foreclosure sale, entered by the chancellor pursuant to the consent order of February 2, 1978, contended that the order was enrolled and as required by Rule 625 a could be vacated only by proof that the order of ratification was the product of fraud, mistake, or irregularity. After a two-day hearing that included extensive testimony and legal argument, Judge Mathias signed an order dated the 3rd day of January, 1979 in which he found “that the petitioners failed to produce sufficient evidence of fraud, irregularity or mistake under Maryland Rule 625 a to convince the court to vacate the enrolled consent order of February 2,1978.” He thereupon denied the petition to vacate the consent order; the petition to declare the deed of trust null and void; the exceptions to the foreclosure sale; and the motion to set aside the foreclosure sale. Appellants promptly noted an appeal from Judge Mathias’ order which in this Court became Case No. 273 of the September Term of 1979. While that appeal was pending, appellees sought and obtained a writ of possession of the property involved and an order requiring the appellants to post a supersedeas bond in the amount of $250,000.00 to preclude the execution of the writ of possession.

An appeal from that order to this Court was noted and that case became No. 459 of the September Term of 1979. The appeals in both cases have been consolidated. Mercifully, the questions to be decided by this appeal have been narrowed somewhat to the five issues raised in appellants’ brief. They are: 1.

Whether the appellants offered sufficient proof of fraud, mistake and irregularity to require the chancellor to ⁷¹⁸ vacate the February 2, 1978 consent order and to set aside the foreclosure sale? 2. Whether the trial court excluded relevant evidence at the hearing on the appellants’ motions? 3. Whether the Maryland foreclosure procedure is unconstitutional and thereby denied appellants due process upon the facts in this case? 4. Whether the trial judge erred by granting the writ of possession in this case? 5.

Whether the trial court erred when it ordered the appellants to file a supersedeas bond, and whether the failure of the appellants to file such a bond rendered the appeal as to the writ of possession moot? 1. and 2. Maryland Rule 625 a which governs this case states: For a period of thirty days after the entry of a judgment, or thereafter pursuant to motion filed within such period, the court shall have revisory power and control over such judgment. After the expiration of such period the court shall have revisory power and control over such judgment, only in case of fraud, mistake or irregularity. It is clear that this rule encompasses final orders of ratification in foreclosure cases.

Hughes v. Beltway Homes, Inc., 276 Md. 382 , 347 A.2d 837 (1975). As the consent order of ratification was signed on February 2, 1978 and the motion to vacate on June 26, 1978, the appellants must show “clear and convincing proof” of fraud, mistake or irregularity in order to be entitled to relief under Rule 625 a. See Accrocco v. Splawn, 264 Md. 527, 532 , 287 A.2d 275 (1972). Furthermore, “[T]he power of the court to revise and control an enrolled judgment is no longer discretionary.” Ventresca v. Weaver Bros., 266 Md. 398, 403-04 , 292 A.2d 656 (1972).

The Court of Appeals has said that a litigant seeking to set aside an enrolled decree must prove extrinsic fraud and not ⁷¹⁹ intrinsic fraud. The Court explained the distinction between these two types of fraud in Schwartz v. Merchants Mortgage Co., 272 Md. 305, 308-09 , 322 A.2d 544 (1974) when it said: [A]n enrolled decree will not be vacated even though obtained by the use of forged documents, perjured testimony, or any other frauds which are “intrinsic” to the trial of the case itself. Underlying this long settled rule is the principle that, once parties have had the opportunity to present before a court a matter for investigation and determination, and once the decision has been rendered and the litigants, if they so choose, have exhausted every means of reviewing it, the public policy of this State demands that there be an end to that litigation ... This policy favoring finality and conclusiveness can be outweighed only by a showing “that the jurisdiction of the court has been imposed upon, or that the prevailing party, by some extrinsic or collateral fraud, has prevented a fair submission of the controversy.” [Citation omitted.] Fraud is extrinsic when it actually prevents an adversarial trial but it is intrinsic when it is employed during the course of the hearing which provides the forum for the truth to appear, albeit, that truth was distorted by the complained of fraud.

Maryland Steel Co. v. Marney, 91 Md. 360 , 46 A. 1077 (1900). Appellants argue that the fraud in this case included the alleged promise by the agent of the bank that if $5,000.00 were paid prior to the date of sale, the foreclosure sale would be cancelled. This testimony was denied under oath by the bank’s representative. The allegation, even if true, is not an act of extrinsic fraud, and when viewed in the proper time context, i.e., that the alleged false promise was made on May 5, 1977 and the consent decree entered almost a year later, then the complained of conduct clearly does not justify vacating of the enrolled decree.

Nor would the alleged failure of the purchaser at the sale to comply strictly with the terms of sale amount to such a fraudulent act as would require the ⁷²⁰ ratification order to be vacated. We find nothing in the record which establishes either intrinsic or extrinsic fraud. The appellants next contend that there were five “irregularities” in the foreclosure proceedings which require reversal of the lower court’s order. They are: the sufficiency of the advertisement; the acknowledgment on the power of attorney; the fact that the deed to the property was not conveyed within five (5) days after ratification of the sale; Mr. Billingsley’s alleged lack of mental capacity when the power of attorney was granted, and the duress which Mrs. Billingsley was under when she consented to the February 2, 1978 decree.

None of these circumstances amounts to the type of irregularity contemplated by Maryland Rule 625 a. The Court of Appeals in Weitz v. MacKenzie, 273 Md. 628, 630-31 , 331 A.2d 291 (1975) defined an “irregularity” as follows: Under our cases, an irregularity which will permit a court to exercise revisory powers over an enrolled judgment has been consistently defined as the doing or not doing of that, in the conduct of a suit at law, which, conformable to the practice of the court, ought or ought not be done [citations omitted.] As a consequence, irregularity in the contemplation of the Rule, usually means irregularity of process or procedure [citations omitted], and not an error, which in legal parlance, generally connotes a departure from truth or accuracy of which a defendant had notice and could have challenged, [citations omitted.] It has been held that the dismissal of a case without giving notice as required by the Maryland Rules, Mutual Benefit Society