Messall v. Merlands Club, Inc.

McWieeiams, J., delivered the opinion of the Court. In our narration of what has transpired between these parties we shall do our best to distill the essential facts out of the great broth of pleading and evidence which has boiled up to us from the court below. A number of questions have been presented but, as we see it, our decision will depend on whether a judgment of the Circuit Court for Caroline County (Carter, C. J.) is res judicata in respect of the decision of the trial court (Pugh, J.) in the case at bar. On 1 June 1956 appellants (Landlords) leased 23acres in Montgomery County to appellee (Tenant).

The land was improved by a clubhouse, a swimming pool, tennis courts, a riding ring, stables and a lake stocked with fish. Tenant’s option to purchase the property had to be exercised during the first three of the last six months of the seven year term. The right to exercise the option was contingent upon Tenant’s “compliance with all its obligations” under the lease. Tenant was required to “maintain at its own expense the demised premises in good repair” and “to comply at all times, at its own cost * * * with all rules, orders, ordinances and legal requirements” of public bodies “under whose supervision the demised premises may come.” The lease also contained a provision to the effect that the devolution of the lease, by operation of law, upon any person other than Tenant would constitute a default.

In 1961 a dispute arose over the computation of rent and the manner of paying it. This resulted in litigation which finally ²³ found its way to this Court. Messall v. Merlands Club, 233 Md. 29 , 194 A. 2d 793 (1963). The impact of our decision in Messall upon the case at bar will be discussed later.

Early in November 1962, Landlords fded a summary repossession action against Tenant in the Montgomery County People’s Court in which it was claimed that Tenant was in default as of 10 November 1962. Landlords were enjoined from proceeding with this action, however, by an ex parte order of the court in the then pending litigation. 1 On 16 November 1962, Landlords notified Tenant that the lease was in default for failure to pay the proper rent. A month later (18 December) a letter was sent to Landlords purporting to exercise the option to purchase. This was signed on behalf of the president of the Board of Trustees of Merlands Club, Inc., by counsel for Tenant.

Landlords replied that the attempt to exercise the option was a nullity and again demanded the surrender of the premises forthwith. On 1 April 1963, the day after the lease expired, Tenant filed its bill for the specific performance of the option agreement. On the same day the court, ex parte and without bond, ordered Landlords “to cease and desist from any action that would change the status quo of the position of the parties pending the resolution” of the specific performance proceeding. On 5 April, Landlords filed an action in ejectment against Tenant claiming that the lease had expired, by its own terms, on 31 March.

Landlords answered the bill for specific performance on 20 May and on the day following filed a cross-bill seeking a declaratory judgment that the lease was in default on 16 November and that the attempt to exercise the option was ineffective. The day before a scheduled hearing on Tenant’s motion to consolidate the two cases Landlords dismissed the cross-bill and filed a suggestion and affidavit of removal in the ejectment case. Judge Pugh designated Baltimore County as the new venue. Tenant succeeded in putting off the trial of the case in Baltimore County until 28 April 1964 when its last motion for a con ²⁴ tinuance was denied.

On 1 May, Tenant filed a suggestion and affidavit of removal and on the same day the court ordered the case sent to Caroline County. Landlords pressed for trial and, over Tenant’s objection, the case was assigned for trial on 22 June. When the case was called for trial the court granted Tenant’s motion to amend its pleas. As one might expect, this generated a minor uproar at the trial table but when the dust settled Tenant, by its amended pleas and the court’s rulings in respect thereof, had posited the following issues: 1.

The general issue by virtue of its plea of “not guilty.” 2. Does the People’s Court of Montgomery County have exclusive jurisdiction of Landlords’ suit? 3. Is Messall v. Merlands Club, supra, res judicata of the basic issues ? 4. As detailed in its plea on equitable grounds: (a) The equity case was filed four days prior to the ejection case and “will be determinative of the very issues in the ejectment suit * * * [and~\ they involve the same, parties and subject matter (Emphasis supplied.) (b) Tenant was not in default and the exercise of the option created the relationship of vendor and vendee, thereby vesting equitable title in the vendee.

The parties having agreed to try the case before Judge Carter without a jury and to exclude witnesses waiting to testify, the three day trial began in Denton, the county seat of Caroline County. After hearing argument and considering the briefs filed by counsel, Judge Carter, on 24 July, found Tenant guilty of “the trespass and ejectment mentioned * * * in the declaration.” On the same day “judgment nisi” was entered. On 27 July Tenant appealed. On 28 July judgment was made absolute.

The appeal to this Court was dismissed on 14 April 1965. (Re-argument denied 25 May 1965.) Merlands Club v. Messall, 238 Md. 359 , 208 A. 2d 687 (1965). Judge Carter filed his opinion on 30 September 1964. In disposing of the issue created by Tenant’s plea of res judicata he ²⁵ agreed that the parties and the property in Messall v. Merlands Club, 233 Md. 29 (1963) and the parties and the property in the case before him were identical.

He noted also this Court’s comment in that case that “the record discloses that substantial repairs had been made in recent years, which, we think, would have been sufficient to support a finding that the lease was not in default for failure to keep the demised premises in good repair.” ( 233 Md. at 38 .) He observed that “no evidence was admitted [at the trial in 233 Md. 29 ] to establish any condition subsequent to the date” of filing of the original bill and the cross-bill. (16 June 1961 and 22 August 1961 respectively.) Judge Carter went on to say: “It, therefore, appears that the material issues that were determined in the suit previously adjudicated, which are also present in this suit, consist of: (1), the issue of whether the failure of the Lessee to make proper monthly payments under the lease amounted to defaults by the Lessee; and (2) was there a substantial failure of the Lessee to keep the premises in good repair prior to such suits or prior to August 22, 1961. The Court of Appeals determined both of these questions in favor of the Lessee in that suit. Taking cognizance of this fact and furthermore assuming, without deciding, that the acceptance of monthly payments by the Lessor up to November, 1962, constituted a waiver by the Lessors of their right to assert any defaults of the Lessee respecting proper payments or repairs up to that time; the issues here presented which it appears, were not determined in the former suit, are as follows:—(1) the default if any, of the Lessees in failing to properly maintain and repair the property during the period from November 1 to December 18, 1962; (2) the default, if any, of the Lessee because of a violation of paragraph 2(g) existing on December 18, 1962; that is, a failure on its part to comply with the health and fire regulations of Montgomery County; (3) whether the forfeiture of the Lessee’s charter on October 31, 1962, which continued until January 27, 1964, thereby vested ownership in the ²⁶ lease in persons other than the Lessee and therefore constituted a default by reason of a violation of paragraph 4(e) of the lease.

It appears from the record of the appeal and the opinions of the lower and appellate Courts that these questions were not determined in Merlands v. Messall, supra.” Judge Carter discussed, in considerable detail, each of the three issues above mentioned and stated: “It is, therefore, our opinion that at the time the option to purchase was attempted to be exercised on December 18, 1962, the Lessee was in default in its obligation under the lease in respect to at least the three matters mentioned above and therefore ineligible to exercise such an option.” Directly after the conclusion of the trial in Denton hostilities were renewed before Judge Pugh in Rockville and continued con brio for another year. A few days after the issuance of our mandate in the ejectment case (25 May 1965) Landlords renewed, for the last time, their oft-repeated motion to “Dismiss or Abate,” setting forth as grounds therefor the res judicata effect of the final judgment of the Circuit Court for Caroline County. On 7 September, Judge Pugh filed a lengthy (37 pages) opinion declaring Tenant to be entitled to a decree of specific performance, which he signed the following week. Since Judge Pugh devoted nearly all of his opinion to the development of his reasons for rejecting the res judicata effect of Judge Carter’s decision and since Tenant’s contentions virtually coincide with the rationale of Judge Pugh’s opinion, we shall consider the several facets thereof and state as concisely as possible why we are unable to agree with the learned Chancellor.

(a) The Injunction It will be recalled that simultaneously with the filing of the bill of complaint the court ordered Landlords to “cease and desist from any action that would change the status quo of the ²⁷ parties * * (Emphasis supplied.) In his opinion Judge Pugh charges that despite his ordering Landlords “not to take any action to evict or otherwise hinder * * * [Tenant] m the use of the property” they disobeyed the injunction and filed the ejectment suit. (Emphasis supplied.) It is intimated that in some unexplained manner their suit was thereby nullified. Entirely apart from the question whether Landlords were bound by an order which fails to measure up to the requirements of Maryland Rules BB 78 a and BB 72 b, it is clear that the order expired (as to Messall) on 12 April (Rule BB 72 b) and no later than 7 May as to Howe (a non-resident who was not personally served). An order extending the injunction was filed 20 May but since the original orders had expired no later than 7 May (Landlords did not consent, Rule BB 72 b) the extension was a nullity.

Neither the court nor Tenant ever sought to enforce the injunction by contempt proceedings. In fact, Tenant, shortly thereafter, recognized the legitimacy of the ejectment suit by declaring, in its petition for an order of consolidation, that “the subject matter of both actions is inherently intertwined and must be heard together to be appropriately adjudicated.” So also did Judge Pugh. On 27 July 1964, in open court, he said, “These cases could have been consolidated. It would have been the proper thing to do.” It will be observed that the court did not order the Landlords “not to take any action to evict or otherwise hinder” Tenant.

In the language of the injunction Landlords were ordered to do nothing more than “cease and desist from any action that would change the status quo.” What Tenant or the court intended this language to mean is not clear but we think it most unlikely that the mere docketing of an action in ejectment could “change the status quo” of the parties. (b) Jurisdiction Judge Pugh held the Caroline County court to be utterly without jurisdiction in the ejectment suit because, he avowed. Code, Art. 53, § 1, vests in the Montgomery County People’s Court exclusive jurisdiction to try actions brought by a landlord against a tenant holding over. Neither the court nor Ten ²⁸ ant’s counsel (who put this contention in issue before Judge Carter) has directed our attention to, nor have we found, any authority in support of this somewhat startling proposition.

The statute (Art. 53, § 1) which has been in force for over a century, provides “a method for repossessing property by a summary proceeding before a justice of the peace.” Trotter v. Lewis, 185 Md. 528, 536 , 45 A. 2d 329 (1946); Darling Shops v. Balto. Center, 191 Md. 289, 297 , 60 A. 2d 669 (1948). In the language of the statute (§ 1) “the lessor * * * may make a complaint * * * to any justice of the peace * * * [in the county] wherein such real estate is situate.” (Emphasis supplied.) The comment of Chief Judge Allan W. Rhynhart of the People’s Court of Baltimore City, in his comprehensive article ón the Maryland Law of Landlord and Tenant, is of interest : “However, if the landlord desires to avail himself of the summary remedy provided by Article 53, Section 1, he must give three months’ written notice to the tenant before the expiration of the term. If the landlord fails to give the notice, * * * then being barred from the summary proceedings which are brought in the People’s Court, he must proceed in an action of ejectment in a court of higher jurisdiction.” Rhynhart, Notes on the Law of Landlord and Tenant, 20 Md. L. Rev. 1 , 29 (1960).

In Glorius v. Watkins, 203 Md. 546, 551 , 102 A. 2d 274 (1954), the owner of the land sought to eject the occupant by means of a bill in equity. The language of Chief Judge Sobeloff, who spoke for the Court, seems especially appropriate: “So here, fundamentally the appellee’s object is to recover possession of a piece of real estate. Anticipating that the appellants would interpose the contract as a defense, the appellee asserted that it was of no effect because of breaches by the appellants, and because it had been superseded by a new relationship, that of landlord and tenant instead of vendor and vendee. Yet the appellee’s main purpose was precisely what an action of ejectment could gratify—recovery of pos ²⁹ session, with the incidental aim, as in Crook v. Brown, supra, to declare the anticipated defense groundless.

Stinchcomb v. Realty Mortgage Co., 171 Md. 317, 322 , 188 A. 790, 792 ; Finglass v. George Frank Sons Co., supra, 172 Md. at 136, 190 A. at 752; Punte v. Taylor, 189 Md. 102, 111 , 53 A. 2d 773, 777 ; Diener v. Wheatley, 191 Md. 690, 698 , 62 A. 2d 783, 786 .” Maryland Rules T 40, T 41 and T 42 should dispel any lingering doubt that the landlord has a free choice to proceed against a tenant either before a justice of the peace as provided in Art. 53, § 1, or in the circuit court as provided in Rule T 40. One of the oddities in the case is the fact that Landlords, as earlier noted, did bring a summary repossession action in the People’s Court but were enjoined by Judge Pugh from pressing it. (c) Judicial Estoppel The trial judge asserts that Landlords are judicially estopped from contending the judgment in the ejectment suit is res judicata because of inconsistent statements made by Landlords in their pleadings. We shall consider these alleged inconsistent statements in the order in which they appear in the court’s opinion.

Paragraph 5 (e) of Tenant’s amended plea filed 22 June 1964 (just before the trial in Denton) reads as follows: “(e) that the exercise of an Option to purchase in a Lease extinguished said Lease and terminated the legal relationship of Landlord and Tenant and creates the legal relationship of Vendor and Vendee thereby vesting equitable title in the Vendee, the subject matter of which is an equitable matter and to be determined by equitable principles.” Landlords “demurred thereto * * * [and said it] is insufficient in law and of substance * * * and that equitable title is insufficient in law as a defense to an action of ejectment by the legal title holder, who can show both title and right to possession.” We see no inconsistency here. The demurrer merely ³⁰ questions whether it is correct, as a matter of law, to say that an equitable title is a defense to an action in ejectment by the holder of the legal title. Judge Carter overruled the demurrer, however, and Landlords amended their answer so as to “deny that the option was properly exercised.” We do not think this is the equivalent of saying that the issues in the equity case and the ejectment case were not identical. While the case was in the Baltimore County court, Landlords, answering one of Tenant’s motions to stay the proceedings, stated: “3.

That regardless of the outcome of said Equity action No. 26628, the plaintiffs are entitled to proceed in this ejectment suit and should be permitted to do so.” Landlords, answering another motion (for a continuance) stated: “1. That an action between these litigants now pending in the Circuit Court for Montgomery County, being Equity No. 26628, does not involve