Campen v. Talbot Bank of Easton

Digges, J., delivered the opinion of the Court. Sidney S. Campen, Jr., appellant and a member of the bar of this State who maintains his office in Easton, Maryland, appeals from the judgment in the Circuit Court for Talbot County (Clark, J.) which established that his claim to a portion of the fund held by an escrow agent was inferior to that of The Talbot Bank of Easton, Maryland, the appellee. The facts of this case are clear and not here in dispute. On December 4, 1970, Campen obtained for his client Anderson and Fleming, Inc., a judgment by confession in the amount of $15,011.70 against the Bay Corporation which, when recorded, created a lien upon the real estate owned by that latter company.

This judgment is based on a cognovit note and is the aggregate of a claim for $13,038.00 principal and interest, $1,955.70 attorney’s fee, and $18.00 court costs. Maryland Rules 620, 645. Almost one year later, on September 14, 1971, The Talbot Bank obtained a judgment against Anderson and Fleming in the total amount of $18,837.54, and subsequent to this caused an attachment on that judgment to be laid in the hands of the Bay Corporation on May 10, 1972. In the early spring of that same year, the Bay Corporation entered into a contract for the sale of its Talbot County waterfront real estate holdings, and, as a consequence of this, settlement was conducted on June 7 in the law offices of Ernest M. Thompson, Esquire, who acted as the closing attorney.

Present at this settlement were agents of the Internal Revenue Service claiming a lien on the proceeds for taxes owed by Anderson and Fleming; representatives of the Bay Corporation; appellee’s attorney; the purchasers; and an associate from Mr. Campen’s office who was there seeking payment of the Anderson and Fleming judgment. Because there were insufficient funds from the proceeds of sale paying that judgment in full to cover all of the claims being made against those moneys, there developed a dispute as to the priority among them. Consequently, it was agreed by all ⁶¹² those present that the funds would be paid to Mr. Thompson to be held by him in escrow until a determination could be made as to their proper disposition. With this arrangement, appellant’s associate executed a release of the land being sold from the effect of the Anderson and Fleming judgment lien so that clear title would vest in the purchasers.

Immediately following settlement, the bank, on the same day, caused a second attachment to issue on its judgment against Anderson and Fleming which was laid in the hands of the escrow agent as garnishee on June 9. In response to this action, Mr. Thompson filed a plea in the Circuit Court for Talbot County confessing possession of $17,283.33, proceeds arising from the Bay Corporation land sale, and asserted that conflicting claims to this fund were being made by the Internal Revenue Service, The Talbot Bank of Easton, and Anderson and Fleming. 1 When on September 22, 1972 the court granted the appellee a judgment of condemnation absolute on its attachment, the appellant became apprehensive of losing an opportunity to collect his attorney’s fee and filed a motion to quash that attachment. In support of this motion, Mr. Campen argued that the part of the escrow funds which represented the “attorney’s fees” portion of the judgment belonged to him, and, therefore, the court could not order that the entire escrow fund, after satisfying the government’s tax lien, be paid to The Talbot Bank. Following a hearing on this motion, Judge Clark ordered that the appellee’s claim to the escrow moneys was superior to any which appellant may have and directed that the funds which remained after satisfying the obligation due the Internal Revenue Service be remitted to the bank in partial payment of its claim.

It is from the judgment based on this decision that Campen appeals. Appellant’s argument here coincides with that which he urged in the trial court. He has consistently contended that the “attorney’s fees” portion of the moneys held by Mr. Thompson in escrow were insulated from attachment by the ⁶¹³ bank and should be paid to him for either one of two reasons. He first alleges, relying on well settled law (Northwestern N. Ins. v. Wetherall, 267 Md. 378, 384-85 , 298 A. 2d 1 (1972); Walsh v. Lewis Swim.

Pool Constr., 256 Md. 608 , 261 A. 2d 475 (1970); Rowan v. State, 172 Md. 190, 198 , 191 A. 244 (1937)), that since “appellee as attaching creditor can obtain only the rights which his debtor . . . had to the property at the time of attachment . . .” and since his (appellant’s) acquisition of complete title to $1,955.70 of the fund antedated any attachment, this amount could not be embraced by the bank’s levy. Alternatively, as Anderson and Fleming’s attorney, he claims a lien on the funds collected through his efforts for the value of his professional services. We deal with these contentions seriatim. (i) While it is true that the confessed judgment as entered against the Bay Corporation separately listed the principal debt, the attorney’s fee, and the court costs, it is clear in this State that they together constitute the’ components of but one judgment in favor of the creditor and, unless assigned, one which is owned by him alone.

This principle was made clear by Judge Sloan when, in Webster v. People’s Loan Etc. Bank, 160 Md. 57, 62-63 , 152 A. 815 (1931), speaking for this Court, he stated: “The judgments [on a cognovit note] for the principal debt and the fees or commissions are both payable by the defendant to the plaintiff, the latter by way of indemnity, to the extent stipulated, for the expense of employing an attorney to collect by suit at law the principal debt.” Accordingly, since appellant, prior to the bank’s attachment, did not acquire title to any portion of the Anderson and Fleming, judgment or the proceeds obtained in discharge of it, appellee had the right to attach the full amount of the fund which was in the hands of the escrow agent subject to the claim of the Internal Revenue