Voge v. Olin

BLOOM, Judge. In this expedited appeal, Bruce H. Voge, Jr., the appellant, raises a single issue: Does the doctrine of custodia legis preclude a circuit court from acting on a petition to foreclose a mortgage on certain real property when a petition to foreclose the equity of redemption had been filed previously in the same court by one who had purchased the property at a tax sale? For the reasons set forth below, we answer that question in the negative. Facts Pursuant to Md.Rule 1029, the parties have submitted an agreed statement of facts.

On January 16, 1973, appellee, Kenneth W. Olin and his wife, Mary, sold to appellant, Bruce H. Voge, Jr., and his wife, Eloise, fee simple property known as 2023 Russell Avenue, Baltimore County, Maryland. On that same date, the Voges gave to the Olins a purchase money mortgage in the amount of $49,000.00. Mary E. Olin subsequently died and appellee became the sole holder of the mortgage. Ap ⁵¹¹ pellant and Eloise C. Voge were divorced in 1976.

On May 18, 1977, Eloise C. Voge deeded all her interest in the property to appellant, but remained on the mortgage as a mortgagor. On May 23, 1983, the Baltimore County Office of Finance conducted a tax sale of the property in question because of non-payment of certain real estate taxes. Baltimore County, the successful bidder at the sale, received a Certificate of Tax Sale on June 3, 1983. On May 22, 1985, Baltimore County filed a complaint in the Circuit Court for Baltimore County to foreclose all rights of redemption in the property.

Appellant and appellee were named as defendants in this complaint. Neither appellant nor appellee has yet filed an answer in those proceedings; nevertheless, Baltimore County has not obtained a final decree. On August 8, 1985, appellee filed a petition in the Circuit Court for Baltimore County to foreclose the mortgage on the property, requesting that the property be sold. On August 9, 1985, the circuit court appointed a trustee and ordered the sale of the property.

The property was sold at public auction on September 17, 1985. On October 22, 1985, appellant filed exceptions to the report of sale in the mortgage foreclosure action, asserting that the filing by Baltimore County of a complaint to foreclose all rights of redemption had placed the property in custodia legis, so that the circuit court lacked the authority to order the sale of the property in the mortgage foreclosure action. After a hearing thereon, the circuit court dismissed appellant’s exceptions, ruling that the filing of the complaint to foreclose all rights of redemption from the tax sale did not place the property in custodia legis. The court reasoned that until the entry of final judgment foreclosing the rights of redemption from the tax sale, there is nothing to prevent the court from exercising its general equity jurisdiction in a mortgage foreclosure case. ⁵¹² On July 22, 1986, appellee filed a motion to ratify the foreclosure sale.

The sale was ratified by the court on July 22, 1986. This appeal followed. Law The phrase “custodia legis” means in the custody or control of the law. Buckey v. Snouffer, 10 Md. 149, 150 (1856).

The effect of placing given property in the custody of the court in one proceeding is to preclude action in another subsequent proceeding which would affect the property’s disposition. The proper course for complainants seeking to affect the disposition of property in custodia legis is to intervene in the initial action. The reason for the rule forbidding the interference of a third party with the possession of the court is that “when a court acquires jurisdiction of goods, chattels, or money, in one case, the orderly process of the court requires that it shall be permitted to determine the rights of the parties in that case without interference or interruption of a conflicting jurisdiction or of a separate and distinct action or proceeding.” Kluckhuhn v. Ivy Hill Association, 55 Md.App. 41, 45 , 461 A.2d 16 (1983), aff'd, 298 Md. 695 , 472 A.2d 77 (1984) (quoting Outerbridge Horsey Co. v. Martin, 142 Md. 52, 55 , 120 A. 235 (1923)). Appellant contends that at the moment Baltimore County, the tax sale purchaser, filed its petition to foreclose the equity of redemption rights in the property the property was placed in the custody of the circuit court.

Appellant thus argues that it was error for the circuit court to take any action affecting the property’s disposition in the mortgage foreclosure action filed by appellee. Appellant, however, has misconstrued the doctrine of custodia legis and has erroneously equated it with the court’s mere acquisition of jurisdiction over an action affecting property. An examination of the statute pertaining to circuit court jurisdiction over tax foreclosure proceedings does not reveal any legislative intention that such proceedings should take precedence over those involving mortgage fore ⁵¹³ closures. An action to foreclose the rights of redemption by the holder of a tax sale certificate is a statutory equity proceeding.

Dampman v. Litzau and Sonntag, 261 Md. 196, 202 , 274 A.2d 347 (1971). Section 14-834 of the Md.Tax Code Ann. provides in part that “[t]he circuit court, on the filing of a complaint to foreclose the right to redemption, has jurisdiction to give complete relief under this subtitle, in accordance with the general jurisdiction and practice of the court ... except as otherwise provided in this subtitle, to bar all rights of redemption____” Other sections of the statute governing tax foreclosure proceedings operate to place limits on the circuit court’s jurisdiction. The version of section 14-833 effective at the time of the proceedings involved herein 1 provided in pertinent part that: A holder of any certificate of sale ... at any time after 1 year and a day from the date of sale in any county ... may petition the circuit court to foreclose all rights of redemption of the property to which the certificate relates. The right to redeem shall continue until finally barred by decree of the circuit court in which the proceeding is filed.

Unless a proceeding to foreclose the right of redemption is filed within 2 years of the date of the certificate of sale, the certificate is void of any right, title and interest____ See also Simms v. Scheve, 298 Md. 1, 4 , 467 A.2d 499 (1983); Heill v. Staniewski, 265 Md. 722, 725 , 291 A.2d 449 (1972). ⁵¹⁴ The only authority related to the right of redemption that the statute confers upon the court is that which arises when the right to redeem is exercised after an action to foreclose is instituted. Cahn v. Prince George’s Homes, Inc., 38 Md.App. 280, 283 , 378 A.2d 157 (1977), aff'd, 283 Md. 76 , 389 A.2d 853 (1978). In such case, the court’s jurisdiction is expressly limited to “fix[ing] the amount necessary for redemption.” Md.Tax Code Ann., § 14-829 (1986). See also Cahn, supra, 38 Md.App. at 283 , 378 A.2d 157 .

The statute does not appear to grant the court the authority to deny a person having an interest in the property the right to redeem after the institution of tax foreclosure proceedings unless and until the court has issued a final decree of foreclosure. Id. Appellee, as a party having an interest in the subject property, was entitled to intervene in the proceedings brought by the county to foreclose all rights of redemption. Md.Tax Code Ann., § 14-827.

That is the only statutorily recognized procedure for redeeming the property after the institution of the foreclosure proceeding. Appellee, however, did not seek to redeem the property; instead, he sought foreclosure of the mortgage he held. The tax sale foreclosure statute confers only a special, limited jurisdiction on the circuit court; it does not contemplate or grant the circuit court the authority to exercise general equity jurisdiction in tax foreclosure proceedings. Dampman, supra, 261 Md. at 202 , 274 A.2d 347 (1971); Reth v. Levinson, 135 Md. 395, 397 , 109 A. 76 (1919); Cahn, supra, 33 Md.App. at 283, 378 A.2d 157 .

On the other hand, the circuit court has general equity jurisdiction over mortgage foreclosure proceedings and it may invoke all the equitable powers with which it is imbued under the common law. Ex parte Aurora Federal Savings & Loan Association, 223 Md. 135, 138-39 , 162 A.2d 739 (1960); Plaza Corp. v. Alban Tractor Co., Inc., 219 Md. 570, 577-78 , 151 A.2d 170 (1959); Warehime v. Carroll County Bldg. Association, 44 Md. 512, 516-17 (1879); ⁵¹⁵ Saunders v. Stradley, 25 Md.App. 85, 91 , 333 A.2d 604 (1974). See also E. Miller, Equity Procedure 535 (1897).

The tax sale foreclosure statute does not expressly or impliedly preclude the circuit court from exercising its general equity jurisdiction in mortgage foreclosure proceedings. If this were the case, the tax sale purchaser, by the mere institution of an action to foreclose the right of redemption, could disrupt the orderly exercise of the court’s general equitable powers in all other proceedings involving the same property, such as an action for partition. While the tax sale foreclosure statute is to be liberally construed so as to encourage the foreclosure of rights of redemption, Md.Ann.Tax Code, § 14-832 (1986), we do not believe it should be so broadly and imaginatively construed as to prevent the circuit court from exercising its general equity jurisdiction in other types of proceedings. The decisions interpreting the tax sale statute and the doctrine of custodia legis provide no support for appellant’s contention.

Appellant urges, on the authority of Dampman v. Litzau and Sonntag, supra, that the filing of a complaint requesting a foreclosure of the rights of redemption places the property which is the subject of the action in custodia legis. In Dampman , appellees filed a petition in the circuit court requesting the sale, in lieu of partition, of certain real property. Appellants, purchasers of the property at a tax sale, subsequently instituted an action to foreclose all rights of redemption in the property. In April, 1969, the court in the tax foreclosure matter ordered all rights of redemption foreclosed. 261 Md. at 198-99 , 274 A.2d 347 .

This order was, however, rescinded in August, 1969. Id. at 199 , 274 A.2d 347 . In October, 1969, the court, in the partition action, appointed a trustee to sell the property. Id. at 198 , 274 A.2d 347 .

Subsequent to the appointment of the trustee, appellants filed an amended bill to foreclose the equity of redemption rights in the property. Id. at 200 , 274 A.2d 347 . ⁵¹⁶ The Court of Appeals rejected Dampman’s contention that the subsequent filing of the amended bill to foreclose the equity of redemption in the property ousted the circuit court of jurisdiction over the partition suit. Id. at 202 , 274 A.2d 347 . It held that the subject property was placed in custodia legis “by virtue of the appointment of the trustee to make the sale of the property in the partition suit----” Id. at 202 , 274 A.2d 347 .

Thus, the property could not have been disturbed without the consent of the judge presiding over the partition suit. Id. at 202-03 , 274 A.2d 347 . The Court of Appeals additionally noted that in acting on the suit for partition/sale of the property, the circuit court was exercising its general equity jurisdiction. Id. at 202 , 274 A.2d 347 .

It found nothing in the tax foreclosure statute to indicate the Legislature intended to disrupt the orderly exercise of the circuit court’s equity jurisdiction over partition suits. Id. at 201-02 , 274 A.2d 347 . 2 Dampman does not, as appellant contends, stand for the proposition that the mere filing of a complaint in a tax foreclosure matter places the subject property in custodia legis. In Dampman , it was the appointment of the trustee in the partition suit that placed the property in custodia legis, not the mere filing of the petition in that action. Moreover, if appellant’s proposition were true, the Court in Dampman would have been compelled to reach a contrary result, for the initial bill to foreclose the equity of redemption in the property was filed before a trustee was appointed in the partition suit. 261 Md. at 198 , 274 A.2d 347 .

Appellant is not the first to construe the holding in Dampman too broadly. In Gordon on Maryland Foreclosures 177 (2d ed. 1985), the treatise author, discussing the custodia legis doctrine, cites Dampman for the proposition that “the property [in a mortgage foreclosure action] will be subject to the jurisdiction of the court where the ⁵¹⁷ purchaser at a tax sale has filed a petition in the circuit court to foreclose the equity of redemption of