Perryman v. Suburban Development Corp.

Moore, J., delivered the opinion of the Court. The issue presented for decision is whether, as contended by appellant, the chancellor erroneously vacated and set aside decrees foreclosing rights of redemption in two parcels of real property in Charles County purchased by appellant at a public tax sale. The trial court acted pursuant to the provisions of Rule 625 a. of the Maryland Rules of Procedure pertaining to revisory power over judgments. It is our conclusion that the decrees were conclusive under Art. 81, § 113, Annotated Code of Maryland (1957, 1975 Repl.

Vol.), which provides that no final decree rendered pursuant to Art. 81, subtitle Foreclosure of Rights of Redemption by Equity Suits, may be reopened except for lack of jurisdiction or fraud in the conduct of the proceedings to foreclose; and that the statute does not permit the application of the revisory power conferred by Rule 625 a. Accordingly, we reverse. I On May 22,1973, the County Treasurer of Charles County sold to appellant, William D. Perryman, two parcels of land and improvements at a public sale instituted for nonpayment of taxes. The lots were located in a subdivision known as Clifton-on-the-Potomac and, in the certificates of sale, were described respectively as Lot 18, Block C and Lot 22, Block A. Lot 18 was sold for $1,600 and Lot 22 for $3,800.

The respective tax arrearages were $248.36 and $312.16. Almost two years later, on May 21, 1975, Mr. Perryman filed a bill of complaint in the Circuit Court for Charles ⁵⁹¹ County to foreclose the rights of redemption. 1 Annexed to the bill of complaint were certificates of sale and an Affidavit of Search. The named defendants were, in each instance, (a) the owners of record, (b) the original grantors as the secured parties under purchase money deeds of trust and as the payees of the deeds of trust notes, 2 and (c) the co-trustees named in the respective deeds of trust. With respect to each lot, the appellant also named as defendants “all persons having or claiming to have an interest” in the property.

The bill of complaint prayed, inter alia, the passage of a decree foreclosing the rights of redemption of the defendants. A motion was also filed for an Order of Publication, supported by an affidavit pursuant to Maryland Rule 105 executed by Thomas F. Mudd, Esq., appellant’s counsel. The affidavit recited the expectation that the persons named as defendants would be personally served or would receive service by certified mail, and that to the best of the affiant’s knowledge and belief there were no other persons having or claiming to have an interest in the respective properties, “but it is deemed advisable to include as parties defendant any and all persons who might conceivably have or claim an interest in the land .. . and for that reason it is necessary to notify any such persons by publication.” An Order of Publication was duly signed (Mitchell, J.) on May 28, 1975, which required publication once a week in each of three successive weeks warning all persons interested to appear by July 23,1975 and redeem the property described “or thereafter a final decree will be rendered foreclosing all rights of redemption in the property and vesting in the plaintiff a title free and clear of all liens and encumbrances.” (Emphasis added.) ⁵⁹² Personal service was obtained upon all named defendants with respect to Lot 22, Block A. Thereafter, on August 29, 1975, the court (Mitchell, J.) signed a final order foreclosing rights of redemption with respect to that property. As for Lot 18, Block C, however, subpoenas upon the record owners were twice returned non est and the court directed counsel for appellant to make further efforts to locate them.

Under date of September 16, 1975, attorney Mudd executed an affidavit detailing such efforts to locate the named owners, and concluding that they no longer resided in the State of Maryland. 3 Subsequently, appellant filed, on September 17, 1975, a motion for a final order foreclosing rights of redemption with respect to Lot 18, Block C, and a final order was entered as of September 24, 1975. The appellee, Suburban Development Corporation, did not appear upon the scene until five days later, on September 29, 1975, when a motion was filed on its behalf to set aside the decrees foreclosing the rights of redemption to both parcels of property. (This motion was filed on the thirtieth day following the final order with respect to Lot 22, Block A, which had been executed by Judge Mitchell on August 29, 1975.) The motion alleged that Suburban Development was an interested party as an assignee of the deed of trust on each of the properties. As the record here discloses, both deed of trust notes were assigned to appellee by the respective payees, without recourse, on January 11,1972.

On January 19, 1972, each note was assigned “for collateral security and for value received” to Suburban Trust Company. In February and August, 1973, the respective notes were reassigned, without recourse, to Suburban Development Corporation. None of these assignments was recorded. ⁵⁹³ Appellee’s motion to set aside the decrees also asserted that its relationship to the property was known both to the plaintiff and to his attorneys, “but that no attempt was made by the plaintiff directly to notify the purchaser of the pendency of this action.” The motion also made reference to a telephone conversation on August 26, 1975 between appellee’s counsel and John Mudd, Esq., a partner of appellant’s counsel of record, in which the former requested pay-off figures for redemption purposes; and of a subsequent telephone conversation with Thomas F. Mudd, Esq., at which time appellee’s counsel first learned of the entry of the decree on August 29, 1975. With respect to the latter, the motion alleged “the parties agreed to consider ways to resolve these matters and have entered into discussion.” 4 In a detailed answer to the motion to set aside these decrees it was asserted, inter alia, that Mr. Perryman was without knowledge as to whether or not Suburban Development Corporation was the assignee under the deeds of trust, and it was averred that there was no legal, moral or equitable requirement that Suburban Development Corporation be named as a defendant.

Annexed to the answer was a copy of a communication dated August 7,1975 to Suburban Development Corporation, attention Ronald W. Pickett, President, by counsel for the trustees under the respective deeds of trust. The letter disclosed the equity number of the proceedings below and stated it was written “for the purpose of directing your attention to an equity proceeding filed in the Circuit Court for this County for the purpose of foreclosing the rights of redemption to certain lots purchased by Mr. Perryman for nonpayment of taxes.” The writer also expressed his assumption that Suburban Development was aware of the proceedings because of the “order of publication that has appeared in the local newspaper.” 5 ⁵⁹⁴ A hearing on the motion to set aside the decrees was held in the Circuit Court for Charles County at LaPlata on December 19, 1975. Testimony was received from Mr. Pickett, President of Suburban Development, that in January of 1972 his company had purchased the deeds of trust notes from the original holders. (There was no public record of the assignments nor was one required.) Mr. Pickett also briefly testified that the company was willing and able to pay forthwith such sums as the court might deem necessary to pay the taxes, advertising costs and court costs.

He was not cross-examined and no other testimony was received. At the conclusion of the hearing, the court (Bowling, J.) announced from the bench: “. .. the Court is reluctant to set aside a decree which basically — well, which does in fact comply with the laws for the foreclosure of the right of redemption. Based on the circumstances in the case the Court feels upon the presentation of the document showing the assignment of the deed of trust to Mr. Pickett and based on the evidence that he was unaware of it until just before he consulted with his attorney about it, that the Court will grant the motion in accordance with Rule 625. The Court feels that 625 applies to all types of decrees, including a foreclosure of the rights of redemption.. .. the Court does have the power to, in the Court’s opinion, to set aside this decree, thirty days having not expired and the Court finding that the petitioner is a party in interest, being the assignee of the deed of trust, and that it would be serious, could result in serious harm or serious loss to the petitioner if the foreclosure was allowed to stand.” ⁵⁹⁵ Thereafter, under date of January 12, 1976, the court signed an order stating the amount necessary for redemption of the respective properties, declaring that the properties were redeemed in favor of the petitioner, Suburban Development Corporation, as assignee under the deeds of trust, and ordering that the bill for foreclosure be dismissed.

It is from that order that this appeal has been taken by Mr. Perryman. His sole contention, with which we agree upon the circumstances presented, is that: “A decree entered pursuant to § 112 of Art. 81 of the Annotated Code of Maryland (1957) is final and conclusive and cannot be set aside except upon a finding of lack of jurisdiction or fraud in the conduct of the foreclosure.” II First, we observe that there was no finding by the chancellor of fraud or lack of jurisdiction. Nor, upon our examination of the record, do we perceive any basis for a finding of fraud nor any irregularity in the conduct of the foreclosure proceedings. Indeed, there was careful adherence throughout to the procedural requirements set forth in Art. 81, § 97, et seq.

Second, the court’s decision was based solely upon Maryland Rule 625. This Rule pertains to revisory power over judgments, both generally (Rule 625 a.) and on grounds of newly discovered evidence (Rule 625 b.) The language of Rule 625 a., the first sentence of which was applied by the chancellor, 6 is as follows: “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 ⁵⁹⁶ expiration of such period the court shall have revisory power and control over such judgment, only in case of fraud, mistake or irregularity.” (Emphasis added.) Third, it is fundamental that the foreclosure of the right of redemption by a holder of a tax sale certificate is a statutory equity proceeding. Art. 81, § 100.

See Dampman v. Litzau, 261 Md. 196, 202 , 274 A. 2d 347 (1971). Furthermore, in making provision for this special type of equity proceeding, the Legislature enacted a declaration of policy in Art. 81, § 97: “The provisions of the following sections of this subtitle shall be liberally construed as remedial legislation to encourage the foreclosure of rights of redemption by suits in the equity courts and for the decreeing of marketable titles to property sold by the collector.” The Court of Appeals interpreted the above declaration in Thomas v. Kolker, 195 Md. 470, 475 , 73 A. 2d 886 (1950): “.. . [T]he legislature has declared that the public interest in marketable titles to property purchased at tax sales outweighs considerations of individual hardship in every case, except upon a showing of lack of jurisdiction or fraud in