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Cramer v. Wildwood Development Co.

Decided: December 5, 1961.

CRAMER ET AL., TRUSTEES ET AL.
v.
WILDWOOD DEVELOPMENT COMPANY, LTD. ET AL.



Appeal from the Circuit Court for Montgomery County; Pugh, J.

Brune, C. J., and Henderson, Hammond, Prescott and Sybert, JJ. Henderson, J., delivered the opinion of the Court.

Henderson

This appeal is from a decree declaring a deed of trust to be null and void and ordering the clerk of the court to release it of record. Each of the appellees contend that the appeal should be dismissed because it was not taken in time. To understand the contention it is necessary to state the facts in some detail.

In June, 1957, all of the then existing creditors of Wildwood, a Maryland corporation, by written agreement between Wildwood and a committee representing such creditors, post-poned their claims, and some of them released liens, in exchange for a note of Wildwood for $40,000.00, secured by a deed of trust, duly recorded, upon eighteen undeveloped lots owned by the corporation. The note was made payable to individual trustees for the benefit of all the creditors. In accordance with the terms of the agreement, the corporation, under a manager named by the creditors' committee, proceeded to construct and sell certain houses on other lots owned by the corporation. But the operation was not very successful, and there were various defaults in the corporate undertakings.

On December 11, 1958, some of the appellants filed a bill seeking an involuntary dissolution of the corporation, on the grounds of mismanagement and insolvency, and praying the appointment of a receiver. On April 6, 1959, the trustee appellants named in the deed of trust instituted a proceeding to foreclose, on the ground that it was in default. Wildwood sought to restrain the foreclosure and the appellees claim that the cases were consolidated by agreement, although no order for consolidation was filed until February 19, 1960, and then upon the court's own motion. After a hearing, the chancellor filed an opinion on September 11, 1959, in which he found that the corporation was insolvent as of December 11, 1958, and had been since the spring of 1957. He further found that the filing of the bill for dissolution and the appointment of a receiver amounted to an election of remedies by the plaintiffs, and that "they cannot proceed in the foreclosure case and in this case at the same time." He announced that he would permanently enjoin the foreclosure proceeding, dissolve the corporation, and appoint receivers to liquidate its assets. He signed such a decree on September 30, 1959, and an amended decree on October 30, 1959. No appeals were taken from those decrees.

On February 3, 1960, the receiver, who had duly qualified and taken steps to liquidate the assets, filed a petition to require the trustees to release their deed of trust. This was opposed by the trustees. However, the chancellor filed an opinion stating that the matter had been finally adjudicated when he decided on September 30, 1959, that the foreclosure be enjoined. On February 25, 1960, he signed a decree declaring the deed of trust to be null and void. On February 29, 1960, the trustees filed a petition for a rehearing, alleging that the opinion and order of February 25, 1960, had been filed without notice or an opportunity to be heard on the matter at issue. On March 30, 1960, they entered an appeal to this Court. On April 13, 1960, the chancellor signed an order granting a rehearing but providing that "such rehearing shall not prejudice the rights of any party who has acted on the faith of the decree of this Court dated February 25, 1960." On April 18, 1960, the trustees dismissed their appeal.

On September 22, 1960, the chancellor, after the rehearing, adhered to the views he had previously expressed, and signed a decree affirming his prior decree of February 25, 1960. The present appeal was noted on October 18, 1960. Meanwhile, on February 29, 1960, the receiver had filed a report of sale of the property secured by the deed of trust, which was duly ratified, authorizing a conveyance by the receiver to the purchaser free and clear of the trust.

The appeal of March 30, 1960, from the order of February 25, 1960, was not filed in time, and in any event it was dismissed before the hearing on the motion to reconsider the decree of February 25, 1960. Thus the court had jurisdiction to entertain the motion. Tiller v. Elfenbein, 205 Md. 14, 21. But the mere filing of such a motion could not operate to rescind the decree or to suspend its operation. See Lancaster v. Gardiner, 225 Md. 260, 266, and cases cited. Nor could it extend the time for appeal. The order of September 22, 1960, now appealed from, insofar as it declined to disturb the earlier decree, would appear to be a discretionary order, and the only basis upon which an appeal from such an order will lie is for an abuse of discretion. Lancaster v. Gardiner, supra, 268. On the other hand, it has been held that in an equity case the chancellor has power to suspend the operation of a decree, pending final disposition of a motion to vacate a decree, by special order passed before the decree has become enrolled. See Monumental Eng. v. Simon, 221 Md. 548, 550, and cases cited.

In Hancock v. Stull, 199 Md. 434, 437, we held that an order which in terms declared that the decree should not be enrolled had the effect of suspending its operation. In Hanley v. Stulman, 216 Md. 461, 467, we held that an order, passed within the thirty day period, likewise had the effect of suspending the decree. In both those cases, unlike the present case, the orders which we held to have the effect of suspending the prior decrees, were passed within thirty days from the date of the decrees. However, in Briley v. Pinkston, 215 Md. 417, where the granting of a rehearing occurred after the lapse of thirty days from the date of the decree, but it appeared that there had been no hearing prior to its passage,

we held that the appeal should not be dismissed under the circumstances. We said (p. 421): "While in form the decree [appealed from] * * * merely confirmed the [earlier] decree * * *, we think the earlier decree was treated as mistakenly entered, and reopened and reconsidered, so that the only final decree was the one appealed from. In fact, Judge Fletcher in his ...


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