Placido v. Citizens Bank & Trust Co.

Menchine, J., delivered the opinion of the Court. Two general and six limited partners in Suitland Medical Arts Building, a Limited Partnership (Suitland), doubtless ³⁵ envisioned their proposed edifice as a joy in their youth and a support in old age. Unhappily, its completion brought only the “comfort of the miserable to have partners in their woes.” 1 Suitland in 1971 contracted for the construction of a building, the construction financing of which was to be supplied by Citizens Bank and Trust Company of Maryland (Citizens) in the maximum sum of $1,125,000.00. Upon completion of the building permanent financing was to be supplied by Monumental Life Insurance Company (Monumental) but with a contingency, the non-occurrence of which would lessen the amount of its total obligation.

Construction financing by Citizens required it to advance $1,125,000.00 without limitation. On the other hand, Monumental’s commitment for permanent financing in that amount was conditioned upon proof of certain leasing contingencies. Monumental’s absolute obligation for permanent financing, in the absence of fulfilled contingencies, was limited to the sum of $956,000.00. This circumstance created a condition whereby Citizens might be required to advance $169,000.00 more than the permanent financing by Monumental would return to it upon completion of the building.

Otherwise stated, Citizens undertook a risk that it may become a creditor secondary to Monumental to the extent of $169,000.00 if the leasing contingencies could not be met. For protection of its potentially greater obligation, Citizens demanded and received as additional security a demand note for $169,000.00 executed in behalf of the partnership, and endorsed by the general and limited partners as individuals. Such a note was made and endorsed on November 11,1971. At the time of its execution and endorsement all parties knew that it was not certain whether full use of Citizens obligated sum would be required or whether, upon completion of the building, the contingencies upon which full permanent financing by Monumental depended would have ³⁶ been met.

In due course, however, it became clear that: (a) the leasing contingencies would not be met; (b) Monumental’s permanent financing would be limited to $956,000.00; and (c) Citizens would be required to advance the $169,000.00 to complete the building. Thus it was that on March 27, 1973, John B. Stauch and Ronald B. Sellers, the two general partners, were called to the bank. After being apprised that Citizens was required to advance $169,000.00 for Suitland’s account, the face of the note was altered by striking out the date November 11, 1971 and inserting the date March 27, 1973 thereon. Stauch and Sellers placed their signatures at the top of the note near the changed date.

There was evidence showing that none of the appellants who had placed their endorsements on the reverse side of the note on November 11, 1971, were aware of and none consented to or ratified the alteration of the date of that note. On January 21,1974, Citizens filed suit against the general and limited partners in the Circuit Court for Prince George’s County. The declaration alleged that appellants had “on or about March 27, 1973 ... promised to pay the sum of . . . $169,000.00.” In due course judgment in favor of Citizens against all eight partners, both general and limited, were entered. Four limited partners, namely, Daniel J. Placido, Edmond R. Leach, John S. Bednarik and Andre Laz, have appealed from the judgment entered against them.

They have appealed as well from judgment entered against them in favor of John E. Stauch, one of the general partners under count I of Stauch’s cross-claim for contribution. The manner in which the judgments appealed from were entered against the appellants was quite unusual, i.e., by the grant of summary judgment after the plaintiff (Citizens) had offered testimony in seven days of trial and before any evidence had been presented by or on behalf of the defendants-appellants. Appellants contend that the grant of summary judgment under such circumstances was erroneous both procedurally and substantively and should ³⁷ be reversed, with the ease remanded for a new trial wherein the appellants would be accorded the right to offer evidence. The unusual posture of the case as it reaches this Court compels an extensive recitation of the circumstances preceding the grant of summary judgment.

Citizens filed a motion for summary judgment supported by affidavit along with its declaration. The appellants filed amended affidavits which opposed the granting of the motion. The facts recited in the amended affidavit of the appellant Placido were as follows:, “My name is Daniel J. Placido and I am competent to testify in the matters stated herein. I am a defendant in this action.

I am a limited partner in the Suitland Medical Arts Building Associates, a Maryland limited partnership. Based on my personal knowledge and information I did not know that the note upon which plaintiffs action is based was altered from a date of November 11, 1971 to March 27,1973.1 did not give my consent to such alteration by the plaintiff, Citizens Bank and Trust Company of Maryland, or by John E. Stauch or Ronald B. Sellers, general partners of the limited partnership. “I further state that this alteration of the promissory note from a date of November 11, 1971 to March 27, 1973, was not only totally unknown to me, but that I never acquiesced in this alteration nor did I ever at any time by any act or deed, ratify the action of the Bank, Stauch or Sellers in altering the note. “I further state that based on my personal knowledge and information no money or other consideration was advanced by the plaintiff after November 11, 1971 and prior to the alteration of said date to March 27, 1973; that between November 11, 1971 and March 27, 1973 I made ³⁸ substantial contributions in money to the Suitland Medical Arts Building Associates and that there had been material changes in the financial condition of the limited partnership during this period of more than sixteen months. Further, on March 27, 1973 I would not have signed as an endorser of the note upon which the plaintiff sues and would not have agreed to the advancement of any money to the partnership for which I would be personally liable.” The facts recited in the amended affidavit of the appellant Bednarik were identical with the above. The amended affidavits of the appellants Laz and Leach, although in slightly different form, were substantially the same as the above and presented no other suggested factual dispute.

On this state of the record Citizens’ motion for summary judgment came to hearing before Judge William B. Bowie. In the course of a written opinion dealing, inter alia, with the issue of summary judgment, Judge Bowie denied the same, saying in pertinent part: “As to the Motion for Summary Judgment itself, defendant guarantors [endorsers] maintain that the change of date on the face of the instrument constitutes a material alteration. The original note was dated November 11,1971, and was endorsed by the several defendants. The conflict arises over determining who, among all the endorsers, consented to the imposition of the new date of March 27,1973.

Defendants refer the Court to 4 Am Jur 2d, Alteration of Instruments, Section 40, where it is stated: ‘As a general rule of law ... a change in the date of an instrument of which a date is a necessary or usual part, made after its execution and delivery, whether from an earlier to a later date or vice versa, is a material alteration .... The date is ³⁹ material, because the time of payment and the bar of the statute of limitations depend thereon.’ Furthermore, it is stated in Article 95B, Section 3-407 of the Annotated Code of Maryland, Comment 1, that ‘. . . any change in the contract of a party, however slight, is a material alteration . . . .’ In Mason v. Henderson, 14 Md. App. 370 , the Court states: ‘Any alteration is material which changes the contract of any party thereto in any respect, including such change in writing as signed, by adding to it or by removing any part of it ... .’ In our matter, the change in date extends the obligation of the endorsers for an additional 16 months and we are unable to presume, with nothing further, that they still intended to borrow the money after such a substantial lapse of time. By changing this date, the effect is to change the date of issue, presumed or otherwise, and seems to constitute a material alteration. The simple problem left is to determine whether the endorsers under the original note consented to that change.

Otherwise, plaintiff can only sue on the note ‘in its original tenor’, Article 95B, Section 3-407(2)(b). The plaintiff has chosen to sue on the note with the later date. The alteration appears on the face of the instrument but the consent of the endorsers other than defendants Sellers and Stauch, do not so appear. This gives rise to a genuine dispute as to a material fact as to whether there was proper consent on behalf of the remaining endorsers and therefor summary judgment should be denied.” It was in this setting that the case came to trial before Judge James H. Taylor.

At the conclusion of plaintiff Citizens’ case counsel for defendants — appellants here — filed motions to dismiss. After hearing arguments of counsel, Judge Taylor denied appellants’ motion to dismiss. ⁴⁰ Citizens thereupon moved for summary judgment, urging that there was no genuine dispute as to any material fact. Judge Taylor granted Citizens’ motion for' summary judgment, saying in the course of his oral opinion: “I don’t believe that consent, ratification, or estoppel plays any part in these proceedings as far as this case is concerned. Although the addition is an alteration, it did not affect a change in the contract of the parties, and as a consequence, is not material under our case law.

The note speaks for itself in that it’s a promise to pay $169,000 with certain set forth interest on demand. Since there was not a fraudulent and/or material alteration then I don’t see how we can possibly conclude that these defendants were discharged. Thus, the plaintiffs would be entitled to judgment on the instrument. Oral testimony would not be admissible to vary the terms of the writing so we are left with the note, as the Court sees it, valid and viable as against the defendants, a note the terms of which cannot be altered by any oral testimony. “Inasmuch as there is no denial of the signature of these parties on this note, I’ve got to ask where is there a factual issue cognizable by the Court and material to the question of liability on this note.

I think my colleague saw the same thing that I see and the only thing that caused him to deny the summary judgment at that time was the question of consent. I don’t find that issue relevant because I don’t feel and do not find that we need to go that far. The alteration did not affect the agreement. I see no reason to deny the cross-plaintiff’s motion for summary judgment.

I will grant the motion for summary judgment... .” In short, Judge Taylor granted the summary judgment that previously had been denied by Judge William B. Bowie. ⁴¹ Although a separate brief by one of the appellants states the issues before us in somewhat different style, the following submitted issues cover the contentions of all appellants: “1. Whether a trial judge, consistent with due process, may grant a plaintiffs motion for summary judgment at the end of the plaintiffs case-in-chief, considering the plaintiffs evidence and denying the defendants a day in court for the presentation of their evidence. 2. Whether the law-of-the-case doctrine as it is applied in Maryland permits a trial judge to overrule and alter the law set forth at an earlier stage by a different trial judge in the same case. 3. Whether the law of Maryland discharges an endorser on a promissory note when there has been an alteration of the note, without the consent of the endorser, so as to change the date of issue of a demand note and thus to enlarge significantly the time in which the endorsers are vulnerable under their endorsements. 4.

Whether an endorser is liable for contribution to the maker of a promissory note where the maker is also an endorser.” Time of Entry of Judgment Under Maryland Rule 610 a. 1., a motion for summary judgment may be made at any time. Although we have been referred to no case and have found none wherein the motion for summary judgment was made during the actual course of a trial, we find nothing in Rule 610 prohibiting entry of summary judgment at such a point in time if it then appears that there is no genuine dispute as to any material fact. Unnecessary use of judicial time need not be continued merely because it had earlier been expended. Cf.