Elder v. Smith

BATTAGLIA, Judge. We are asked to consider whether a monetary award entered two years prior to the death of a decedent in connection with the division of marital property upon divorce, though not reduced to judgment and recorded as a lien against real estate until after his death, is afforded priority in the statutory scheme of the Estates and Trusts Article. Emma Elder and Colonel Percy Elder were married in 1976, but after twenty-six years of marriage and the birth of two children, they were divorced in the Baltimore City Circuit Court in 2002. The next year, Emma was awarded a total of $31,500 as a marital award and was to receive one-half of the proceeds of a sale of property located at 928 Beales Trail, Pasadena, Maryland, in Anne Arundel County, although the sale ultimately did not occur.

Emma Elder’s $31,500 marital award was not reduced to judgment and remained unsatisfied at the time of Mr. Elder’s death. Mr. Elder died on November 8, 2005 in Baltimore County, leaving a wife, Theresa, and a child by that marriage. Several months later, on May 1, 2006, Emma attempted to open an estate in Baltimore City, claiming that because she was the estate’s largest creditor as a result of the unpaid $31,500 award, she should be appointed Personal Representative. Cherry Elder Smith, the sister of the decedent, however, having been named as Personal Representative in Mr. Elder’s will, filed a “Small Estate Petition for Administration” in the Orphans’ Court for Baltimore County on May 12, 2006, claiming that the Estate’s only asset was decedent’s one-half interest in Beales Trail.

Subsequently, the Orphans’ Court for Baltimore City dismissed Emma’s petition for judicial probate, and estate administration in Baltimore County proceeded. The Orphans’ Court for Baltimore County subsequently approved a contract for the sale of the Beales Trail property ²⁹¹ for $86,000. Although settlement was scheduled to take place in 2007, the sale was never consummated, for reasons described in a Memorandum Opinion and Order issued by the Orphans’ Court, after the Personal Representative had asked for guidance regarding a lien filed by Emma against the Beales Trail property: Counsel for Emma Elder filed a claim against the Estate on May 9, 2006. On May 16, 2006, Emma Elder obtained a Judgment from the Circuit Court for Baltimore City reducing her various marital awards to a judgment against Colonel Percy Elder in the amount of $81,500 (“Judgment”).

On September 13, 2006, the Circuit Court for Baltimore City issued an Order of Substitution substituting Cherry Elder Smith, as the Personal Representative of the Estate of Colonel Percy Elder, as the Judgment Debtor in the place of Colonel Percy Elder. On December 29, 2006, Emma Elder recorded the Judgment in Anne Arundel County, intending to thereby attach a lien against the Beales Trail property. In 2007, the Personal Representative and Emma Elder accepted a contract for sale of the Beales Trail Property. The Orphans’ Court for Baltimore County approved the contract by Order dated July 7, 2007.

The settlement on the Beales Trail property was scheduled for November 11, 2007. At settlement, the Personal Representative anticipated distribution of one-half of the net proceeds to Emma Elder as the joint property owner with the second half of the net proceeds distributed to Mr. Elder’s Estate. Prior to settlement, the Personal Representative discovered Emma Elder’s lien against the property in the amount of $31,500. The title company handling the settlement indicated that it was bound, without further Court Order, to distribute $31,500 to Emma Elder from the Estate’s share of the proceeds.

Without Mr. Elder’s one-half share of the Beales Trail proceeds, the Estate will be insolvent. The Orphans’ Court ultimately ordered Emma to release her lien against Beales Trail, thereby enabling the retention of one-half of the proceeds from the sale in the Estate. The ²⁹² Orphans’ Court emphasized that, “[a] marital award does not carry with it a legal interest in another party’s property,” and therefore, the “marital awards granted to Emma Elder in 2003 did not constitute judgments,” citing Herget v. Herget, 319 Md. 466, 471 , 573 A.2d 798, 800 (1990). Because Emma’s monetary award was reduced to judgment and recorded as a lien after Mr. Elder’s death, the court reasoned, it was “not entitled to priority within the context of estate administration.” The Court of Special Appeals affirmed in a reported opinion, Elder v. Smith, 183 Md.App. 647 , 962 A.2d 1069 (2008), holding that the statutory scheme embodied in the Estates and Trusts Article governing creditors’ claims, does not permit “a creditor with a pre-death claim to enhance the priority of its claim after the debtor dies,” relying, in part, on a finding that a majority of states adhere to the rule that the priority of claims against a decedent’s estate “is determined as of the date of death.” Id. at 652-54 , 962 A.2d at 1072-73 .

Emma Elder then petitioned this Court for certiorari, which we granted, Elder v. Elder Smith, 408 Md. 148 , 968 A.2d 1064 (2009), to address the following questions, which we have rephrased and reordered: 1 ²⁹³ I. Whether a monetary award entered against a decedent during his lifetime, though reduced to judgment and recorded as a lien against real property pursuant to Section 11—402(c) of the Courts and Judicial Proceedings Article, Maryland Code (1974, 2006 Repl.Vol.), after the decedent’s death, entitles the claimant to priority under Sections 8-10S(d) and 8-114(b) of the Estates and Trusts Article, Maryland Code (1974, 2001 RephVol.)?

II

Whether an Orphans’ Court lacks jurisdiction to order the release of a lien recorded pursuant to a money judgment? We shall hold that a monetary award reduced to a judgment and recorded as a lien against real property after the decedent’s death is not entitled to priority under the statutory scheme for estate administration. We shall further hold that an Orphans’ Court cannot affect a lien recorded against real property either directly or by ordering a creditor to release such a lien. I. Introduction A personal representative has the authority to allow or disallow a claim filed against an estate.

Maryland Code (1974, 2001 RephVol.), Section 8-107 of the Estates and Trusts Article. 2 If a claim is allowed, Section 8-105(a) of the Estates ²⁹⁴ and Trusts Article provides the order of priority of payment, with the exception of secured claims: (1) Fees due to the register; (2) Costs and expenses of administration; (3) Funeral expenses as provided in § 8-106 of this subtitle; (4) Compensation of personal representatives as provided in § 7-601 of this article, for legal services as provided in § 7-602 of this article, and commissions of licensed real estate brokers; (5) Family allowance as provided in § 3-201 of this article; (6) Taxes due by the decedent; (7) Reasonable medical, hospital, and nursing expenses of the last illness of the decedent; (8) Rent payable by the decedent for not more than three months in arrears; - (9) Wages, salaries, or commission for services performed for the decedent within three months prior to death of the decedent; (10) Old age assistance claims under Article 88A, § 77 of the Code; and (11) All other claims. A secured creditor, nevertheless, may enforce a lien, to the exclusion of other creditors and without the necessity of notice of the claim to the personal representative. Sections 8-103 3 ²⁹⁵ and 8-114 4 of the Estates and Trusts Article. It is this status to which Emma Elder aspires, having reduced her marital award to judgment and purportedly perfected a lien on the Beales Trail property after the death of her former husband.

II

Discussion Emma Elder argues that the “plain meaning” of three statutory provisions controls the resolution of the present case. The first, Section ll-402(c) of the Courts and Judicial Proceedings Article, Maryland Code (1974, 2006 RepLVol.), 5 provides: (c) Judgment of another court—If indexed and recorded as prescribed by the Maryland Rules, a money judgment constitutes a lien on the judgment debtor’s interest in land located in a county other than the county in which the judgment was originally entered.... The second, Section 8-103 of the Estates and Trusts Article states in relevant part: (a) General.—Except as otherwise expressly provided by statute with respect to claims of the United States and the State, all claims against an estate of a decedent, whether due or to become due, absolute or contingent, liquidated or unliquidated, founded on contract, tort, or other legal basis, are forever barred against the estate, the personal representative, and the heirs and legatees, unless presented within the earlier of the following dates: ²⁹⁶ (d) Liens not affected.—Nothing in this section shall affect or prevent an action or proceeding to enforce a mortgage, pledge, judgment or other lien, or security interest upon property of the estate. The third, Section 8-114 of the Estates and Trusts Article provides: (a) General.—An execution or levy shall not issue nor be made against property of the estate under a judgment against a decedent or a personal representative.

(b) Exception.—The provisions of this section do not apply to the enforcement of mortgages, pledges, liens, or other security interests upon property in an appropriate proceeding. Emma asserts that these provisions clearly afford her claim priority, because she properly obtained a lien against the Beales Trail property by recording her judgment in the land records of Anne Arundel County, and subsequently substituted Cherry Elder Smith, the Personal Representative, as judgment debtor. We disagree with the Petitioner’s assessment of the plain meaning of the three statutory sections. Plain meaning refers to the “ordinary and commonly understood meaning” of the words of a statute.

Addison v. Lochearn Nursing Home, LLC, 411 Md. 251, 276 , 983 A.2d 138, 153 (2009), quoting Sears v. Gussin, 350 Md. 552, 562 , 714 A.2d 188, 192 (1998). Despite Petitioner’s admonitions to “[r]ead the statute, read the statute, read the statute,” the provisions she relies upon contain no specific language either permitting 6 or prohibiting 7 liens secured after death to be enforced to the exclusion of all other ²⁹⁷ claims. In the absence of such, we turn to legislative history for guidance, but the history of Section ll-402(c) of the Courts and Judicial Proceedings Article, and Sections 8-103(d) and 8-114(b) of the Estates and Trusts Article, does not yield much to assist in our analysis. ²⁹⁸ A review of the legislative history of Section ll-402(c) of the Courts and Judicial Proceedings Article indicates that it was first enacted in 1890, when the General Assembly added the following language to then Section 19 of Article 26, Maryland Code (1888): 19. [A]nd a certified copy of the docket entries from the clerk of the court where any judgment is obtained, or magistrate judgment originally recorded, when recorded upon the judgment record of any other court in the counties of this State or the city of Baltimore, shall be and constitute a lien, from the date of its being so recorded, upon the property of the defendant in said county or city of Baltimore, to the same extent as in the county or city, where the said judgment was originally obtained or magistrates judgment originally recorded. 1890 Maryland Laws, Chapter 314. The provision was renumbered as Section 20 of Article 26, Maryland Code (1939), but otherwise remained essentially the same until 1973, when the General Assembly enacted the Courts and Judicial Proceedings Article, repealing and recodifying former Section 20 of Article 26, Maryland Code (1957, 1966 RepLVol.) as follows: (c) If indexed and recorded as prescribed by the Maryland Rules or the Maryland District Rules, a judgment constitutes a lien on the judgment debtor’s interest in land located in a county other than the county in which the judgment was originally entered, except a lease from year to year or for a term not more than five years and not renewable. 1973 Maryland Laws, Special Session, Chapter 2.

In 1989, the General Assembly repealed and re-enacted former Section 11-402(c) of the Courts and Judicial Proceedings Article (1974, 1984 RepLVol.), adding the language of “money judgment”: (c) If indexed and recorded as prescribed by the Maryland Rules, a money judgment constitutes a lien on the judgment debtor’s interest in land located in a county other than the county in which the judgment was originally entered, except a lease from year to year or for a term not more than five years and not renewable. ²⁹⁹ 1989 Maryland Laws, Chapter 114. At no time in this history was the validity of a lien recorded against real property after the debtor’s death discussed. We turn next to the legislative history of Sections 8—103(d) and 8—114(b) of the Estates and Trusts Article. The precursor to Section 8-103 was enacted in 1798 and provided: 5.

Executors and administrators shall have full power and authority to commence and prosecute any personal action whatever, at law, or in equity, (as the case may require,) which the testator or intestate might have commenced and prosecuted, except actions of slander, and for injuries or torts done to the person; and they shall also be liable to be sued in any court of law or equity, (as the case may require,) in any action (except as aforesaid,) which might have been maintained against the deceased; and they shall be entitled to, or be answerable for costs, in the same manner as the deceased would have been, and they shall be allowed for the same in their accounts, provided the court awarding costs against them shall certify, that there were probable grounds for instituting, prosecuting or defending, the action on which a judgment or decree shall have been given against them. 1798 Maryland Laws, Chapter 101, Subchapter 8, Section 5. 8 In 1929, then Section 106 of Article 93, Maryland Code (1924), was amended to permit a lawsuit against an executor or administrator for personal injuries caused by the decedent, if brought within a specified time period: 106. Executors and administrators shall have full power to commence and prosecute any personal action whatever, at law or in equity, which the testator or intestate might have commenced and prosecuted, except actions of slander; and they shall be liable to be sued in any court of law or equity, in any action (except for slander) which might have been maintained against the deceased; and they shall be entitled ³⁰⁰ to and answerable for costs in the same manner as the deceased would have been, and shall be allowed for the same in their accounts, if the court awarding costs against them shall certify that there were probable grounds for instituting, prosecuting or defending the action on which a judgment or decree shall have been given against them; provided, however, that any such action for injuries to the person to be maintainable against an executor or administrator must be commenced within six calendar months after the death of the testator or intestate. 1929 Maryland Laws, Chapter 570, Section 2 (emphasis added). In 1937, the Legislature amended former Section 106 of Article 93, Maryland Code (1924, 1935 Supp.), authorizing executors and administrators to recover funeral expenses of the decedent under certain circumstances. 9 In 1949, Chapters 468 and 508 of the Maryland Laws amended then Section 109 of Article 93, which in 1951 was codified as Section 111 of Article 93. These two amendments in the same session created confusion, however, and the General Assembly then enacted Chapter 689 of the Maryland Laws of 1953, clarifying the prior amendments, increasing the cap on recoverable funeral expenses, and also extending the time period for bringing an action against the executor or administrator for personal injuries caused by the decedent. 10 And in 1966, the ³⁰¹ General Assembly amended then Section 112 of Article 93, Maryland Code (1957, 1964 RepLVol.), to extend the time period for filing suit against an executor or administrator for personal injuries caused by the decedent, “in the event the deceased was covered by an existing insurance policy at the time of the occurrence.” 1966 Maryland Laws, Chapter 642, Section 1; see also Greentree v. Fertitta, 338 Md. 621, 630 , 659 A.2d 1325, 1329-30 (1995) (reasoning that a claim against a decedent’s estate, covered by an insurance policy, is timely if filed within the ordinary statute of limitations).

Obviously, this history does not inform the current controversy. Further, Sections 8-103(d) and 8—114(b) of the Estates and Trusts Article were developed in the Second Report of the Governor’s Commission to Review and Revise the Testamentary Law of Maryland. 11 The Henderson Commission, as it was known, divided the testamentary law into 12 titles, with subtitle 8 prescribing “the procedures to be followed in handling ³⁰² creditors’ claims.” Present Section 8-103(d) first appeared as Section 8-103(c) of the proposed legislation: (c) Liens not affected. Nothing in this Section shall affect or prevent any action or proceeding to enforce any mortgage, pledge, lien, or security interest upon property of the estate. This language was altered by the addition of the word “judgment” 12 in the 1969 enactment: (b) Liens not affected.

Nothing in this Section shall affect or prevent any action or proceeding to enforce any mortgage, pledge, judgment or other lien, or security interest upon property of the estate. 1969 Maryland Laws, Chapter 3. The provision was codified as Section 8—103(b) of Article 93, Maryland Code (1957, 1969 Repl.Vol.), and was later re-codified as Section 8-103(e) of the Estates and Trusts Article (1974) by Chapter 11 of the Laws of 1974. The Section was eventually renumbered, without revision, as present Section 8-103(d) by Section 1 of Chapter 496 of the Maryland Laws of 1989. Again, the history of the statutory provisions does not support the priority of liens recorded after death.

Present Section 8-114 of the Estates and Trusts Article originated in the Henderson Commission’s proposal which provided: No execution shall issue upon nor shall any levy be made against any property of the estate under any judgment against a decedent or a personal representative, but the provisions of this Section shall not be construed to prevent the enforcement of mortgages, pledges, liens or other security interests upon property in an appropriate proceeding. ³⁰³ This Section was enacted without revision in Chapter 3 of the Maryland Laws of 1969. The provision was then repealed and re-codified by Chapter 11 of the Maryland Laws of 1974 as Section 8-114 of the Estates and Trusts Article, Maryland Code (1974), to provide: (a) General.—An execution or a levy shall not issue nor be made against property of the estate under a judgment against a decedent or a personal representative. (b) Exception.—The provisions of this section do not apply to the enforcement of mortgages, pledges, liens, or other security interests upon property in an appropriate proceeding. The Revisor’s Note indicates that the Section was substantively unchanged, but was divided “for organizational purposes.” Again, the absence of relevant mention in the legislative history suggests that the General Assembly did not address whether a pre-death claim, reduced to judgment and recorded as a lien after the debtor’s death, should be afforded priority under the statutory scheme.

Cherry Elder Smith, the Personal Representative, rather, asserts that after death, Mr. Elder had no actual interest in Beales Trail, when Emma purportedly created a lien, because real property passes immediately from a