Tipton v. Partner's Management Co.

CATHELL, Judge. On June 24, 1999, Partner’s Management Company, respondent, filed a claim in the District Court of Maryland sitting in Baltimore City for rent arrears plus interest and attorney’s fees against Robert Tipton, petitioner. Respondent and petitioner had entered into a lease agreement for an apartment and respondent alleged that petitioner had violated the lease agreement. After denying petitioner’s Motion to Dismiss, the District Court entered a judgment for respondent.

Petitioner appealed to the Circuit Court for Baltimore City. The Circuit Court affirmed the decision of the District Court. Petitioner then filed a Petition for Writ of Certiorari with this Court. We granted the petition.

Petitioner has presented three questions: ⁴²² 1. Did the Circuit Court 1 err in ruling that the lease agreement was a contract under seal so as to create a specialty instrument, and thus make the applicable period of limitations twelve years, under § 5-102(a)(5) of the Courts and Judicial Proceedings Article of the Maryland Code, rather than the three-year period for simple contracts, under § 5-101 of that Article? 2. Did the Circuit Court err in failing to address whether the application of § 5 — 102(a)(5) of the Courts and Judicial Proceedings Article is repugnant to § 8-207 of the Real Property Article of the Maryland Annotated Code? 3. Did the Circuit Court err in failing to address whether the application of § 5-102(a)(5) of the Courts and Judicial Proceedings Article [is] repugnant to § 8-208 of the Real Property Article of the Maryland Annotated Code?

We answer yes to question one. We hold that a residential lease agreement, even if the lease agreement has the word seal affixed, is subject to the three-year limitation period enunciated in Maryland Code (1973,1998 Repl.Vol.), section 5-101 of the Courts and Judicial Proceedings Article. 2 , 3 Because we are answering yes to question one, we do not need to resolve questions two and three. I. Facts On December 12, 1991, petitioner entered into a lease agreement (hereinafter lease) with respondent 4 to rent an apartment in Highland Village Apartments. The lease was for ⁴²³ a period of one year and was to commence on January 1, 1992 and end on December 31, 1992.

Just above the signatures of the parties on the pre-printed form lease, it stated that: “IN WITNESS WHEREOF the parties hereto have set their hands and seals the day and year first above written.” Adjacent to the signatures at the end of the signature line was the word “SEAL” in parenthesis. There was no language in the lease in respect to statutes of limitation. On November 24, 1992, petitioner was evicted from the apartment for a failure to pay rent to respondent. 5 Respondent subsequently rented the apartment to other tenants and on August 12, 1993, respondent sent a letter to petitioner that referred to all of the expenses that respondent claimed it had incurred and the amount owed to respondent by petitioner. After not receiving a payment from petitioner, respondent turned petitioner’s account over to a collection agency.

On June 24, 1999, the collection agency, on behalf of respondent, filed a claim in the District Court of Maryland sitting in Baltimore City. Petitioner filed a Motion to Dismiss with the District Court, stating that respondent had violated section 5-101 6 because it had waited approximately seven years to file a Complaint in the District Court. Respondent stated that the three-year statute of limitations of section 5-101 did not apply because the lease was under seal, thus, according to respondent, it was a specialty that was controlled by section 5- ⁴²⁴ 102(a). 7 There was no allegation that the parties specifically agreed to a twelve-year period of limitations, nor was any evidence so indicating introduced. The claim of the longer limitation period relied exclusively on the affixátion to the lease of the word “Seal.” The District Court denied petitioner’s Motion to Dismiss, stating that: I believe that under the current law, I must rule in favor of the Plaintiff.

I personally do not think that’s fair or correct. And I’m surprised that the Legislature is allowing this to happen. Now, that’s this Court’s interpretation of the law. But at this point, I believe that the law in the State of Maryland is that if a contract is under seal — and of course my personal feelings cannot dictate what I do in a case, I took an oath to follow the law, and I will do that today — and I believe that the law states that if a contract is under seal, that there is a twelve year Statute of Limitations as opposed to a three year Statute of Limitations.

That being the law, the motion to dismiss based on the Statute of Limitations is denied. After the hearing on the Motion to Dismiss, a trial was held. The District Court, after receiving evidence and hearing witness testimony, 8 entered a judgment in favor of respondent for $8,828.59 plus attorney’s fees of $574.29. ⁴²⁵ Petitioner filed an appeal with the Circuit Court for Baltimore City. On October 23, 2000, the Circuit Court issued a Memorandum Opinion and Order in which it affirmed the decision of the District Court.

The Circuit Court held that the lease was a contract under seal, thereby making the lease a specialty controlled by section 5-102, the twelve-year statute of limitation. Petitioner then filed in this Court a Petition for Writ of Certiorari.

II

Discussion We hold that actions for rent arrears under any kind of residential lease must be filed in compliance with section 5-101. 9 We are first going to examine the history of the use of the word seal in real property and other contract contexts. Then we will examine the legislative history of section 5-101 and analyze whether the legislative intent is for residential leases to which the word seal is affixed to be controlled by section 5-101, the three-year limitation period, or section 5-102, the twelve-year limitation period. A. Seal The use of the word seal on documents involving the conveyance of interests in real property (whether fee simple or lessor interests), has historically had a separate purpose from that involving contracts of a different nature. While the use of the word seal, in an appropriate context, could also create a specialty, historically its primary use in the conveyancing of property interests, even including leasehold interests, was to create a presumption of adequate consideration and a presumption of validity.

As long ago as 1863, we stated in Colvin v. Warford, 20 Md. 357, 395-96 (1863), a case involving the validity of a prior conveyance in a testamentary context, that: ⁴²⁶ It also appears that the testatrix, as only surviving child and legal representative of her father, having become entitled to, and taken possession of this property at his decease, afterwards, in 1823, purchased the reversion from Lloyd N. Rogers, the sole heir at law of Nicholas, and ceased to pay the rent reserved from that time, but the written paper purporting to be a deed and duly recorded as such, by which the conveyance of the reversion to the testatrix was sought to be made, was not sealed by the grantor. The appellant claiming this property as leasehold under the will of 1848, which by probate had become conclusive as to personal estate, objected to this prayer on the ground that these facts were sufficient to explain the possession of the testatrix, and bar the legal presumption of a grant in fee. ... In this case the testatrix entered into the possession of the property in question under a leasehold title, and although she afterwards became the purchaser of the reversion from Rogers, she appears not to have obtained an actual conveyance of it by a valid deed [the absence of a seal making it defective]. On the contrary, the instrument that was intended to effect the transfer was wholly inoperative for that purpose, and whatever effect it had in establishing an equitable claim to the property, it clearly shows the legal title to be still outstanding [because the deed of the reversion to her was defective because of the absence of a seal].

We must therefore assume, on the authority of the cases cited, that the possession of the testatrix was maintained, as it was taken, under her leasehold title, and that it was not adverse to the outstanding legal title to the reversion. [Emphasis added.] In other words, the absence of the use of the word seal in the deed of the reversion caused the conveyance of the reversion to fail, and legal title to the reversion still remained with the original owner. The Law of Contracts, John William Smith (Fourth American — Second London Edition — 1856), recognized that matters ⁴²⁷ relating to the conveyancing of title interests in real property, were not normally covered by the general law of contracts. The whole practice of our English Courts of Common Law, if we except their criminal jurisdiction and their administration of the law of real property, of which it is not my intention to speak, to which may possibly be added those cases which fall within the fiscal jurisdiction peculiar to the Court of Exchequer, if we except these, the whole of the remaining subjects with which the jurisdiction of a Court of Common Law is conversant may be distributed into two classes, Contracts and Torts. Id. at 49 (some emphasis added).

After excluding the law of real property from his discussion, he went on to discuss, generally, the differences between special and simple contracts, using language, i.e., “deeds,” that we have come to associate with conveyances of title to real property. Apparently, in those days, the use of the word “deed” did not have the strong, almost exclusive, association with matters of real property that it has today. Whether the use over the years by the treatise writers, of the term “deed” in a non-real property context, has caused the area of the conveyancing of title interests to be treated similarly to general contracts for limitations purposes, when in historical context conveyancing of real property interests was excluded from the discussion, is difficult, and may now be impossible, to discern. Smith, as indicated, supra, went on to distinguish the different types of contracts (after excluding the law of real property) by referring to contracts under seal as Contracts by Deed and those not under seal as simple contracts.

Even then (with the law of real property excluded), the primary focus on the distinction related to the necessity to prove consideration. Secondly, it [a contract by deed] must be sealed and delivered. This is the main distinction between a deed and any other contract. The seal is an indispensable part of every [contract by] deed, and so is the delivery; (to) with regard to which you must, however, observe, that it is not absolutely necessary that the party executing should take the instrument into his hand and give it to the person for ⁴²⁸ whose benefit it is intended....

However, in practice, it is always safest and most advisable to follow the ordinary and regular course, which is, to cause the person who is to deliver the deed to place his finger on the seal, and acknowledge the seal to be his seal, and state that he delivers the instrument as his act and deed. Such, then, being the essentials of a deed — writing on paper or parchment, sealing and delivery, — it is right to add, that, for the sake of convenience, [contracts by Jdeeds are divided into two classes, Deeds Poll and Indentures.(y) The names indeed of Deed Poll and Indenture were ... derived from the circumstance that the former was shaved or polled, as the old expression was, smooth at the edges; whereas the latter was cut or indented with teeth like a saw; for, in the very old times, when deeds were short, it was the custom to write both parts on the same skin of parchment, and to write a word in large letters between the parts; and then, this word being cut through saw fashion, each party took away half of it; and, if it became necessary to establish the identity of the instrument at a future time, they could do so by fitting them together, whereupon the word became legible____ There are one or two peculiarities in the question of a contract made by deed, which, as they apply to all contracts by way of deed, this is the proper place to notice. In the first place, a contract by deed requires no consideration to support it; or perhaps it might be more correct to say [as a general proposition], that the law conclusively presumes that it is made upon a good and sufficient consideration.^) The importance of this arises from the strong line of distinction it creates between Contracts by Deed and Simple Contracts. For a simple contract, that is, a contract by words or by writing not under seal, requires, ... a consideration to support it, and give it validity.

For instance, suppose a written promise in these words — “I, A.B., promise C.D., that I will pay the debt he owes to E.F.” This promise would be absolutely void, unless it could be ⁴²⁹ shown to have been made in consideration of something given or granted to A.B. for making it; for it would be a promise by him to undertake a liability without any consideration or recompense whatever; and, if he neglected to perform it, no action would lie against him.... But, if to that very instrument, conceived in those very words, the additional solemnity of sealing and delivery were added, so as to make it a [contract by] deed, it would become a good and binding covenant on which an action might be supported:^) and this is on account of the greater formality and solemnity of such an instrument. Id. at 54-67 (some emphasis added) (some alterations in original) (footnotes omitted). The essence of the use of the word seal in the early law, even when it was affixed to a document identified as a “deed,” was that, it, along with delivery of the instrument, conferred a presumption of consideration and validity.

Accordingly, even when the contract did not involve the conveyance of property (and Smith had excluded real property matters from his discussion), the term seal previously related to matters of consideration and agreement validity. 10 Prior to the enactment of the current Real Property Article, conveyancing was governed, generally, by Article 21 of the Maryland Code. Maryland Code (1951), Article 21, sections 13 and 14 provided in relevant part: 13. All deeds conveying real estate ... shall be sufficient, if executed ... as herein required. ⁴³⁰ 14. Every deed conveying real estate shall be signed and sealed by the grantor or bargainor....

Even Bills of Sale conveying personal property were, in the past, required to be sealed. Maryland Code (1951), Article 21 section 50 provided: 50. Any bill of sale of personal property shall be sufficient in form if it ... [is] signed and sealed by the vendor, and dated. The “Forms of Conveyancing.” contained in Maryland Code (1951), Article 21, provided: 76.

The following forms shall be sufficient to convey real or personal property.... Form of Lease 87. This Lease.... [Seal.] [Seal.] 11 Subsequent to 1963 the Maryland Code was amended to eliminate the necessity of the use of the word seal to establish the validity of deeds of conveyance. Maryland Code (1974, 1996 RephVol.), section 4-101 of the Real Property Article, now provides: (a) What deeds sufficient; leases. — (1) Any deed containing the names of the grantor and grantee ... is sufficient, if executed, acknowledged, and ... recorded.

(2) Any lease is sufficient even though it is not acknowledged if it otherwise complies with subsection (a)(1). (b) Seal ... not required. — If a deed is signed by the grantor in accordance with the requirements of Title 5 of this article, the absence of a seal ... does not affect the validity of the deed. Maryland Code (1974, 1996 Repl.Vol.), section 4-103 of the Real Property Article, provides: ⁴³¹ (a) In general. — If a deed is executed, acknowledged, and, if required, recorded, the validity of the deed ... is presumed. (b) Applicability. — Subsection (a) applies to a lease even though it is not acknowledged.

Leases are considered to be types of deeds. Maryland Code (1974, 1996 Repl.Vol.), section 1-101 of the Real Property Article, titled “Definitions,” provides: (c) Deed. — “Deed” includes any deed, grant, ... lease, ... pertaining to land or property or any interest therein or appurtenant thereto, including an interest in rents and profits from rents. (h) Lease. — “Lease” means any oral or written agreement, express or implied, creating a landlord and tenant relationship.... Looking at the relevant case law and the older statutes, it is clear that the use of the word seal affixed to leases related primarily to their sufficiency and validity.

There are cases in which sealed instruments such as leases have been construed as specialties. We are, however, unaware of any cases specifically raising the question here discussed. The practices of conveyancing, out of which the use of the term seal arose in deeds and leases, raises a question: Whether, without more information in the document itself, or evidence presented, the affixation of the word seal alone, would elevate a deed or lease to a specialty, when in fact, its ancient, and historical use, was primarily to create presumptions of consideration and validity. While, as we have said, there are cases, and old cases as well, where sealed conveyances have been held to be specialties, we are unaware of any cases where the issue has been squarely and completely presented, i.e., does affixation of the word seal to establish the validity of an instrument of conveyance, also create a specialty contract for limitation purposes where no such intention is evident, except for the affixing of the word seal.

There is another area of law, other than in the law of real property, where the courts have recognized that in some ⁴³² instances when the use of the word seal has some other primary purpose, its affixation to an instrument does not necessarily create a speciality. In Mayor and Council of Federalsburg v. Allied Contractors, Inc., 275 Md. 151, 156 , 338 A.2d 275, 279 (1975), we quoted, approvingly from General Petroleum Corp. v. Seaboard Terminals Corp., 23 F.Supp. 137, 140-141 (D.Md.1938), where the federal court was applying the Maryland law on specialties in the context of the affixation of a corporate seal on a construction contract. That court said: But with respect to a contract executed by a corporation, the mere presence of its seal on the paper without any other reference therein to the seal, does not necessarily make the contract a specialty, because it is possible the corporate seal was impressed merely as prima facie evidence of corporate authority for the execution of the paper; and in that case extrinsic evidence is admissible to show whether the use of the seal was intended to make the paper a specialty or merely as evidence of its authorized execution, or that it was in fact used without authority. [Bold added.] The rule as explained in General Petroleum is the general rule that applies in instances where a corporate seal is affixed to a document. Because there is a separate and distinct purpose for the affixing of a corporate seal to a document, i.e., it may be evidence of corporate authority for the execution of the document, then there must be other evidence establishing that the corporation intended for the document to be a specialty in order for the twelve-year limitation period to apply.

The mere affixing of the corporate seal may not be enough. Although the word seal is no longer necessary to validate most, if not all, title instruments, historically the use of the word seal in conveyancing documents was necessary to validate the document. As in the use of corporate seals, there was an additional reason, other than to establish a specialty, for the affixing of seals to many real property conveyancing documents, i.e., those documents that actually transfer title interests as opposed to contracts of sale to, in the future, ⁴³³ convey interests in property. The latter generally have been treated as any other contracts.

See Scher v. Altomare, 278 Md. 440, 442 , 365 A.2d 41, 42 (1976). As far as we can discern, the Court has not heretofore been presented with a case in which arguments were presented that because the use of a seal on conveyancing documents had other purposes, its affixation on such documents, like the use of the corporate seal in corporate instruments, should be treated similarly, instead of an automatic assumption that a specialty was intended. As stated, supra, there are cases in which this Court has presumed that the use of the word seal in conveyancing documents created a specialty. See Earnshaw v. Stewart, 64 Md. 513, 516-17 , 2 A. 734, 736 (1886) where as dicta the Court said, “This much, however, we may say, that although limitations may be a bar to an action at law on a promissory note, referred to in a mortgage, after the lapse of three years, yet if the mortgage contains a covenant to pay the debt, an action will lie on the covenant at any time within twelve years from the default.” See also Jones v. Burgess, 176 Md. 270 , 4 A.2d 473 (1939), where the Court presumed that the proper period of limitations in equity, followed the twelve-year period applicable at law for specialties, when covenants running with the land were concerned, but did not explore the issue further, because the Court found that it made no difference in the particular case whether the three-year or the twelve-year period was applicable.

While the affixation of the word seal to real property conveying documents is no longer required for validation purposes, its use remains widespread, we suspect, because of its use and the requirements of its use, historically. Because we are holding that the provisions of the Courts and Judicial Proceedings Article do not apply to establish a twelve-year limitations period in this case, primarily because of the legislative history of the limitation’s statute, i.e., its recodification, it is unnecessary at this time to answer this interesting question ⁴³⁴ discussed briefly at oral argument and expanded upon in this opinion. 12 B. Legislative History We commence our analysis of the applicability of section 5-101 or section 5-102 by attempting to ascertain the intent of the legislature. As we said in State v. Bell, 351 Md. 709 , 720 A.2d 311 (1998): We have said that “[t]he cardinal rule of statutory interpretation is to ascertain and effectuate the intention of the legislature.” Oaks v. Connors, 339 Md. 24, 35 , 660 A.2d 423, 429 (1995). Legislative intent must be sought first in the actual language of the statute.

Marriott Employees Fed. Credit Union v. Motor Vehicle Admin., 346 Md. 437, 444-45 , 697 A.2d 455, 458 (1997); Stanford v. Maryland Police Training & Correctional Comm’n, 346 Md. 374, 380 , 697 A.2d 424, 427 (1997) (quoting Tidewater v. Mayor of Havre de Grace, 337 Md. 338, 344 , 653 A.2d 468, 472 (1995)); Coburn v. Coburn, 342 Md. 244, 256 , 674 A.2d 951, 957 (1996); Romm v. Flax, 340 Md. 690, 693 , 668 A.2d 1, 2 (1995); Oaks, 339 Md. at 35 , 660 A.2d at 429 ; Mauzy v. Hornbeck, 285 Md. 84, 92 , 400 A.2d 1091, 1096 (1979); Board of Supervisors v. Weiss, 217 Md. 133, 136 , 141 A.2d 734, 736 (1958). Where the statutory language is plain and free from ambiguity, and expresses a definite and simple meaning, courts normally do not look beyond the words of the statute to determine legislative intent. Marriott Employees, 346 Md. at 445 , 697 A.2d at 458 ; Kaczorowski v. Mayor of Baltimore, 309 Md. 505, 515 , 525 A.2d 628 , 633 ⁴³⁵ (1987); Hunt v. Montgomery County, 248 Md. 403, 414 , 237 A.2d 35, 41 (1968). This Court recently stated that “statutory language is not read in isolation, but ‘in light of the full context in which [it] appear[s], and in light of external manifestations of intent or general purpose available through other evidence.’ ” Stanford v. Maryland Police Training & Correctional Comm’n, 346 Md. 374, 380 , 697 A.2d 424, 427 (1997) (alterations in original) (quoting Cunningham v. State, 318 Md. 182, 185 , 567 A.2d 126, 127 (1989)).

To this end, [w]hen we pursue the context of statutory language, we are not limited to the words of the statute as they are printed.... We may and often must consider other “external manifestations” or “persuasive evidence,” including a bill’s title and function paragraphs, amendments that occurred as it passed through the legislature, its relationship to earlier and subsequent legislation, and other material that fairly bears on the fundamental issue of legislative purpose or goal, which becomes the context within which we read the particular language before us in a given case. ... [I]n State v. One 1983 Chevrolet Van, 309 Md. 327 , 524 A.2d 51 (1987), ... [although we did not describe any of the statutes involved in that case as ambiguous or uncertain, we did search for legislative purpose or meaning' — what Judge Orth, writing for the Court, described as “the legislative scheme.” [Id. at] 344-45, 524 A.2d at 59 . We identified that scheme or purpose after an extensive review of the context of Ch. 549, Acts of 1984, which had effected major changes in Art. 27, § 297. That context included, among other things, a bill request form, prior legislation, a legislative