author: Morton, J.,

text:
    ZONING ADMINISTRATOR OF CARROLL COUNTY v. LAWRENCE E. IRELAND, JR.
    [No. 685,
    September Term, 1980.]

      Decided September 4, 1980.

    The cause was argued before Gilbert, C. J., and Morton and Couch, JJ.

      John C. Murphy for appellant.

      Walter H. Madden for appellee.
   Morton, J.,

delivered the opinion of the Court.

The immediate issue in this appeal is whether the chancellor, sitting in the Circuit Court for Carroll County, committed an abuse of judicial discretion when he denied on July 11,1980, the motion of Zoning Administrator of Carroll County, appellant, for an interlocutory injunction against Lawrence E. Ireland, appellee. Through the interlocutory injunction the zoning administrator sought to prevent an alleged violation by Ireland "of the Zoning Ordinance of Carroll County by the holding of an arts and craft — folk festival on July 12 and July 13, 1980, on property in the Conservation Zoning District, such use not being permitted by the regulations for the Conservation Zoning District.”

The seminal action which ultimately brought the issue before this Court occurred when the Zoning Administrator for Carroll County refused, on February 11, 1980, to issue a zoning certificate to Ireland authorizing him to conduct an "Irish arts and craft — folk festival” on his 153 acre farm because such an activity was not permitted in the Conservation Zoning District in which the farm is located.

The zoning administrator’s refusal to issue the certificate was affirmed by the Carroll County Board of Zoning Appeals on March 18, 1980.

Ireland then appealed to the Circuit Court for Carroll County and that court, in Law No. 24226, affirmed the decision of the Board of Zoning Appeals on May 26, 1980. An appeal from that decision was taken by Ireland to this Court and is now pending.

On June 5,1980, the zoning administrator filed a petition in the Circuit Court for Carroll County praying that an injunction be issued enjoining Ireland from conducting the arts and craft — folk festival which he proposed to hold on his farm on July 12 and 13, 1980. An order was filed by the court on June 17, 1980, requiring Ireland to show cause by June 30, 1980, why the injunction should not be granted. Ireland filed an answer on June 25, 1980.

Under date of July 7, 1980, the presiding chancellor addressed a letter to counsel for the zoning administrator with copies to other counsel of record, in which he stated:

"In response to your telephone request of this date this will confirm that the Court will be unable to hold a hearing and consider your request for a permanent injunction prior to July 12, 1980.
It appears from the pleadings that the parties should be afforded a full and complete hearing before the Court decides the underlying issues, and as I have previously indicated, there is nothing in the pleadings which requests or establishes the basis for interlocutory relief.”

On the same date counsel for the zoning administrator filed an appeal to this Court from what he deemed to be a refusal by the chancellor "to issue an injunction enjoining the holding of a festival by Respondents [Ireland] on July 12 and July 13, 1980.” Under date of July 11, 1980, this Court granted the motion of counsel for the zoning administrator to advance argument and for the immediate transmittal of the record. Oral arguments by counsel for all parties were heard by this Court during the morning of July 11,1980. On the same date we issued an order on the basis of Maryland Rule 1035 b.l. (see Jones v. Wright, 35 Md. App. 313 (1977) and DiTommasi v. DiTommasi, 27 Md. App. 241 (1975)), dismissing the appeal "as not allowed by law.” Immediately thereafter counsel for the zoning administrator returned to the Circuit Court for Carroll County and filed therein a "Motion for Interlocutory Injunction,” seeking to stay the festival at the Ireland farm which was scheduled to begin the next day. Counsel for Ireland apparently made simultaneously an oral motion that the court defer hearing the zoning administrator’s motion for the docket entries reflect that the case was called and a hearing was held on Ireland’s motion. The motion was granted and "no action taken on Interlocutory Injunction.”

At 6 p.m. on July 11, 1980, the zoning administrator filed an appeal to this Court from the action of the chancellor. This Court convened the same evening and heard oral argument both on the merits of the appeal and the motion of Ireland to dismiss the appeal. Later that evening we passed a per curiam order denying Ireland’s motion to dismiss the appeal. We further ordered "that the non-action by the Circuit Court for Carroll County in declining to rule upon the Appellant’s motion for an interlocutory injunction be and is hereby interpreted and construed as a denial of that motion and hence immediately appealable. Md. Code Courts Article § 12-303 (c) (3) . . .”

And finally we ordered "that the denial of the motion for interlocutory injunction does not under the circumstances of this case, constitute an abuse of discretion .. . .”

We now set forth the basis for our per curiam order of July 11, 1980.

At the outset it should be observed that the course of conduct pursued by the counsel for the zoning administrator was not of a standard to serve as a model for lawyer-like efficiency. As we have already noted, it is difficult to comprehend why it would take some thirteen days to have a show cause order signed by the court when the festival sought to be enjoined was to be held only about a month hence. It would seem that this litigation would not have ended up in such an emergency-like fashion had counsel promptly importuned the court to sign the show cause order. At the time the original petition for an injunction was filed, there were at least eleven judges in the Fifth Judicial Circuit who were qualified to sign the accompanying show cause order. That the Carroll County resident judge may not have been immediately available, as was indicated at argument, is hardly an excuse for such dilatoriness.

It is not clear why the chancellor refused to take any action upon the motion of the zoning administrator for an interlocutory injunction. As the title of the office indicates, the function of a judge is to judge and it is beyond our understanding why the chancellor below refused to fulfill the role of judge. This Court had no choice but to treat his refusal to pass on the motion for an interlocutory injunction as a flat denial of the motion. It is for this reason that we entertained the zoning administrator’s appeal.

It is, of course, elementary that the denial or granting of an interlocutory injunction is within the sound judicial discretion of a chancellor. Anne Arundel County, Maryland, et al v. Whitehall Venture et al., 39 Md. App. 197 (1978). Here the chancellor was a resident of Carroll County and had the feel and flavor of the community. He was familiar with the course of the prior litigation between the parties and was in a position to assess the impact the festival would have upon the citizens of Carroll County. Sitting here in Annapolis, on the eve of the proposed festival, our knowledge or insight of the festival’s impact upon the county could not compare with that of the resident chancellor. After oral argument from all parties we simply were not persuaded that the chancellor had been guilty of an abuse of his discretion in refusing to issue the interlocutory injunction.

Judgment affirmed; costs to be paid by appellant.

      . Why it took almost two weeks to sign the show cause order does not appear from the record.


source: Caselaw Access Project

author: Melvin, J.,

license: Public Domain

text:
    BARTON B. SKEEN et al. v. WILLIAM J. McCARTHY et al.
    [No. 1215,
    September Term, 1979.]

      Decided September 4, 1980.

    The cause was argued before Gilbert, C. J., and Morton and Melvin, JJ.

      Howard G. Goldberg, with whom were William B.

      Somerville, Susan Z. Whitman, Lee N. Kohler and Smith, Somerville & Case on the brief, for appellants.

      Richard W. Emory, with whom were Thomas E. Lynch, III and Venable, Baetjer & Howard on the brief, for appellee William J. McCarthy. Richard A. Reid, with whom were Royston, Mueller, McLean & Reid on the brief, for appellees, Edward S. Buckler, Jr., and A. Benham Cecil.
   Melvin, J.,

delivered the opinion of the Court.

I

On May 26, 1948, McCarthy-Hicks, Inc., a Maryland corporation, created an express trust known as "Profit Sharing Trust of McCarthy-Hicks, Inc.” The trust was intended to meet the requirements of Section 165 of the federal Internal Revenue Code and amendments thereto so as to render non-taxable contributions to a trust fund thereby created. Under the profit sharing plan embodied in the trust instrument the Company was to contribute annually to the trust fund, subject to certain provisos, 10% of the Company’s annual net income; the employees contributed nothing. The Company could, however, unilaterally amend the 10% provision to provide for a different contribution by the Company or, presumably, no contribution at all. Pursuant to Section 165 of the Internal Revenue Code the trust was "for the exclusive benefit” of the Company’s eligible employees, the trust fund to be used for pensions for eligible employees or their designated beneficiaries upon the employees’ death or retirement.

The trustees named in the trust instrument were F. Jordan McCarthy, Edward S. Buckler, Jr. and A. Benham Cecil. F. Jordan McCarthy was the president and principal stockholder of McCarthy-Hicks, Inc. Buckler and Cecil were secretary and treasurer, respectively, of McCarthy-Hicks, Inc. The three men remained as the sole trustees of the profit sharing trust until 1971, at which time Mercantile-Safe Deposit & Trust Company became the sole trustee. F. Jordan McCarthy died in 1976.

In 1953 or 1954, McCarthy-Hicks, Inc. became interested in finding a new' location for its business offices as its then facilities in Baltimore City had become inadequate. A 62 acre tract of land, undeveloped and unimproved, was found in Baltimore County. The Company, however, needed only twelve to fifteen acres for its use. F. Jordan McCarthy suggested that his son, William J. McCarthy (then a law student at Harvard University), Buckler, and Cecil purchase the property. Apparently, F. Jordan McCarthy made this suggestion with three purposes in mind: 1) to obtain a new site for McCarthy-Hicks, Inc.; 2) to provide an investment opportunity for his son, William, and his trusted associates, Buckler and Cecil, whom he desired to reward for their long-time devotion to him and his company; and 3) to provide a good investment for the profit sharing trust. To accomplish these purposes he, with the advice and expert legal advice of attorney John Wright (who was then acting as counsel for the company, the Profit Sharing Trust and F. Jordan McCarthy personally) structured the following transactions: A corporation known as Planned Industrial Properties (hereafter referred to ¿s PIP) was formed with Buckler, Cecil and William McCarthy as sole officers and stockholders. PIP purchased the property for $155,000. To help finance the purchase the Profit Sharing Trust loaned to PIP $93,000 for five years at 6% interest. The loan was secured by a first mortgage on the property. The balance of the purchase price was obtained from a $45,000 loan to PIP from McCarthy-Hicks, Inc. at 4% interest, secured by a second mortgage on the property, and from loans and contributions from the three stockholders of PIP. As part of the consideration for the $45,000 loan from McCarthy-Hicks, Inc., PIP granted to McCarthy-Hicks, Inc. an option to purchase that portion of the property needed for its new business site.

In September 1960, PIP was dissolved as a corporation and the 62 acre tract placed in the individual names of William J. McCarthy, Edward S. Buckler, Jr. and A. Benham Cecil, subject to the $93,000 mortgage held by the Profit Sharing Trust and the $45,000 mortgage held by McCarthy-Hicks, Inc. Shortly thereafter, 18 acres of the property were sold to John Deere and Company for $225,000 and the $93,000 loan from the Profit Sharing Trust was paid in full. In 1966, McCarthy-Hicks, Inc. exercised its option and purchased 12 acres of the property for $388,000. By 1972, the remainder of the land had been sold for $850,000.

In 1977, the appellants, Barton G. Skeen, Joseph M. Braden and Alfred H. Erskine, three retired employees of McCarthy-Hicks, Inc., filed this equity action in the Circuit Court for Baltimore County against William J. McCarthy, individually and as personal representative of the estate of F. Jordan McCarthy, and Buckler and Cecil. They alleged that the 1954 transactions whereby the former trustees of the Profit Sharing Trust (F. Jordan McCarthy, Buckler and Cecil) loaned $93,000 to PIP, a corporation owned by two of the trustees (Buckler and Cecil) and the son of the other (F. Jordan McCarthy), constituted "self-dealing” and rendered them, along with William J. McCarthy, liable to the Profit Sharing Trust for all profits resulting from the sale of the 62 acres.

The chancellor ultimately dismissed the action against William J. McCarthy individually, but found the other three defendants liable and assessed damages. Both sides appealed, the plaintiffs’ chief complaint being that the damages awarded were inadequate and the defendants’ that the chancellor erred in rejecting their defense of laches and that in any event they are not liable for any damages.

II

After a careful review of the record before us we conclude that the chancellor erred in ruling that this action was not barred by laches. We shall therefore remand the case with directions to the circuit court to dismiss the bill of complaint.

There is no inflexible rule to be applied in determining the application of the equitable doctrine of laches. As said by the Court of Appeals in Parker v. Board of Election Supervisors, et al., 230 Md. 126, 186 A.2d 195 (1962): "This Court has had occasion to deal with the question of laches many times. It is a defense in equity against stale claims, and is based on grounds of sound public policy by discouraging fusty demands for the peace of society. There is no inflexible rule as to what constitutes, or what does not constitute, laches; hence its existence must be determined by the facts and circumstances of each case.” 230 Md. at 130. Quoting from Phelps, Juridical Equity (Abridged Ed.), the Court of Appeals in Akin v. Evans, Executor, 221 Md. 125, 156 A.2d 219 (1959), said:

" 'In equity, a presumption exists against every stale claim, because, as a general rule, persons who have a right, and know that they have it, are prompt to assert it. But they do not always do so, and therefore the circumstances of each particular case which may explain the delay, usually control the application of the rule as to laches. * * * We find the principle constantly reiterated that each case must necessarily be governed by its own circumstances, such as the situation of the parties, the extent of their means of information, great changes in values, the want of probable grounds for the imputation of intentional fraud, the loss of evidence, and the presence or absence of impediments to the assertion of the claim.’ Phelps, op. cit., 356, 357. Judge Phelps on page 358 goes on to say that the intervention of an important death is not an unusual characterization of a case of laches.” 221 Md. at 132, 133.

In Akin, the Court went on to say:

"In Rettaliata v. Sullivan, 208 Md. 617, in holding that laches applied, largely because of death, the Court quoted what had been said in Kaufman v. Plitt, 191 Md. 24, 29: 'Ordinarily the defense of laches must include not only lapse of time but also some prejudice to the defendant’ and added: 'The cases recognize that the death of a material witness may constitute prejudice.’ Weber v. Bien, 143 Md. 561, 567; Dorsey v. Stone, 197 Md. 220, 223; Hammond v. Hopkins, 143 U.S. 224, 250, 36 L. Ed. 134, 145.” 221 Md. at 133.

In the case before us, the chancellor found that the trustees had a duty to make a "full disclosure” "to all beneficiaries [of the trust]” of their use of trust funds to purchase the 62 acres and that they failed in that duty. On the issue of laches, he said: "Without disclosure there can be no knowledge, and without knowledge, there can be no laches.” (Emphasis added). The chancellor inferentially accepted the plaintiffs’ testimony that they had no knowledge of the $93,000 loan until shortly before they filed suit in July, 1977 — over 22V2 years after the loan was made and after the death of F. Jordan McCarthy and his attorney, the two persons who undoubtedly knew most about the circumstances under which the loan was made and about what information was or was not given or made available to the employees, including the plaintiffs, concerning it.

In Maryland it is well settled that in order to establish laches as a defense it is not necessary that a defendant show that the plaintiff had actual knowledge of his claim. As stated by Judge Levine for this Court in Brady v. Berke, 33 Md. App. 27, 34, 363 A.2d 537, 541 (1976); "In fact, it is well settled that time begins to run, for purposes of laches, from the time the party charged with it should have had knowledge or the means of knowledge of facts giving rise to his right or cause of action.” See also McCoy v. Poor, 56 Md. 197, 205 (1881) (suit alleging breach of trust dismissed for laches because "complainants failed to take the trouble to examine for themselves .... They did not exercise that reasonable diligence which a court of equity requires to appear before it will interfere to enforce a claim thus situated”); Hunter v. Baker, 154 Md. 307, 331-332, 141 A. 368, 377 (1928) ("Accepting as true his statement that he had no knowledge, nevertheless, under all the circumstances of this case, we think that he at least had positive knowledge of such facts as required him to make inquiry within a reasonable time and that he is bound by such knowledge as that inquiry would have disclosed.”)

In the case at bar, there are no allegations, and no proof, of any fraud, deceit or concealment on the part of the defendants in connection with the $93,000 loan to PIP. All documentation concerning the purchase of the 62 acres by PIP and the loan from the trust was duly recorded in 1954 among the Land Records of Baltimore County. The ownership of the PIP property by William J. McCarthy, Buckler and Cecil was always open and notorious with wide public exposure. One of the plaintiffs, Mr. Skeen, testified that a former fellow salesman, Mr. Bromwell, now deceased, told him several years before the instant suit that "they” had "made a lot of money” on the sale of the property.' He "thought” it was the Profit Sharing Trust acting through the trustees that owned the property. But the trust records showed that the trust held only a $93,000 mortgage from PIP. These records were open to the inspection of all employees, including the plaintiffs, who were encouraged to make any inquiries they wished concerning any details of the trust and its investments. The trust instrument itself contained a provision for a committee of employees who had full access to all details of the trust and its administration. The record shows that McCarthy-Hicks, Inc. was a relatively small informally run company. All the plaintiffs agreed that F. Jordan McCarthy, the dominant force in the company, as well as defendants Buckler and Cecil, were honest and fair in their dealings with the employees and "concerned” with their welfare. One of the plaintiffs characterized F. Jordan McCarthy as "very wide open.” There was strong evidence from the testimony of several witnesses that it was "common knowledge” among the employees that William M. McCarthy, Buckler and Cecil had incorporated as PIP to purchase the property and that the Profit Sharing Trust had loaned them money to help finance the purchase. There was direct testimony from ten of the employees that in the 1950’s and early 1966’s they knew of the trust loan to PIP, a corporation directly controlled by two of the trustees and the son of the third trustee. Two other employees were identified as having like knowledge. In addition, there was evidence that another employee and participant in the Profit Sharing Trust notarized many of the relevant documents that evidenced the entire transaction.

There was uncontradicted testimony that McCarthy-Hicks, Inc. maintained a club or meeting room known as the "Crown Room” which had an open bar with free drinks after meetings. It was frequented in particular by salesmen of the company, including the plaintiffs, although plaintiff Skeen was not as regular in attendance as the others. Every Thursday afternoon there was a compulsory sales meeting in the Crown Room. Two of the employees testified positively that at one of the meetings in the Crown Room in 1956 or 1957 F. Jordan McCarthy announced the purchase of the PIP property by William J. McCarthy, Buckler and Cecil and the loan to them from the Profit Sharing Trust. Plaintiff Braden recalled the meeting and that McCarthy had announced the purchase but was uncertain whether he said that "we” or "they” had purchased the property. Plaintiff Erskine did not recall the meeting but said "no doubt it took place.”

While none of the plaintiffs would admit they had actual knowledge of the loan from the trust to PIP until 1977 when plaintiff Skeen examined the land records, the record shows that each of them had some awareness as early as the 1960’s of a connection between the 62 acres and persons directly related to McCarthy-Hicks, Inc. and the Profit Sharing Trust. As testified by plaintiff Skeen: "You could assume by common knowledge that it ["some land deal”] was connected with McCarthy-Hicks in some fashion, but what fashion I didn’t know.... I didn’t dig into it.” When he did "dig into it” in 1977, he found nothing that he could not have found earlier if he had made the inquiries and sought the information that was available to him from the beginning. Although he "assumed” from "rumors” that the land was connected with the Profit Sharing Trust investments and although he "was always interested in finding out,” he said he never made any inquiries of anyone concerning the matter until after his retirement in 1977.

Where, as in this case, no fraud or lack of good faith is shown, the doctrine of laches may be more readily applied than otherwise. In Hammond v. Hopkins, 143 U.S. 224 (1891), in an opinion that has been quoted frequently by the Maryland Court of Appeals, the Supreme Court of the United States said:

"In all cases where actual fraud is not made out, but the imputation rests upon conjecture, where the seal of death has closed the lips of those whose character is involved, and lapse of time has impaired the recollection of transactions and obscured their details, the welfare of society demands the rigid enforcement of the rule of diligence. The hour-glass must supply the ravages of the scythe, and those who have slept upon their rights must be remitted to the repose from which they should not have been aroused.” Id. at 274. (Emphasis added).

Under all the circumstances, we conclude that the chancellor erred in his implicit holding that the plaintiffs "exercise[d] that reasonable diligence which a court of equity requires to appear before it will interfere to enforce a claim thus situated.” McCoy v. Poor, supra.

Although the fact that the defendants may have stood in the fiduciary relationship to the plaintiffs is a factor to be considered, in this case we do not think that factor, when considered with the other circumstances of the case, constitutes a justifiable excuse for the long delay in bringing this action. As said by the Court of Appeals in Mitchell v. Cassedy, supra, at 200 Md. 345:

"In other words, the fact that a defendant stood in a fiduciary or confidential relationship to the complainant does not always constitute an excuse for delay. In Hammond v. Hopkins, 143 U.S. 224, 12 S. Ct. 418, 427, 36 L. Ed. 134, where it was alleged that trustees had entered into a fraudulent scheme to appropriate an estate, Chief Justice Fuller declared: 'Undoubtedly the doctrine is established that a trustee cannot purchase or deal in the trust property for his own benefit or on his own behalf, directly or indirectly. But such a purchase is not absolutely void. It is only voidable, and as it may be confirmed by the parties interested, directly, so it may be by long acquiescence or the absence of an election to avoid the conveyance within a reasonable time after the facts come to the knowledge of the cestui que trust.’ ”

III

The defense of laches involves not mere unreasonable delay in asserting one’s rights but also a showing of some prejudice to the defendants.

"Basic to the defense oflaches is the need to show some disadvantage or prejudice to the party asserting it. . . . There must be either prejudice or circumstances making it inequitable to grant the relief sought.” Arundel Supply Corp. v. Cason, 265 Md. 371, 376, 289 A.2d 585 (1972).

We think the record in this case clearly establishes not only that the defendants have been prejudiced by the long delay here involved but that, under the circumstances, it would be inequitable to grant the relief sought. The defendants are asked to turn back the clock to 1954 and return approximately a million dollars resulting from an investment that they in good faith considered perfectly proper. The transactions they entered into resulted in no harm, but a profit, to the Profit Sharing Trust. As stated in 30A C.J.S. Equity, § 118, pp. 67-68:

" Change in value. A marked appreciation or depreciation, according to the circumstances, in the value of the property involved, where the right might have been asserted before such change, and the granting of relief would in consequence of the change work inequity, is ordinarily fatal to plaintiffs case. A person may not withhold his claim, awaiting the outcome of an enterprise, and then, after a decided turn has taken place in his favor, assert his interest, especially where he has thus avoided the risks of the enterprise.”

In the final analysis, under all the facts and circumstances, we think the chancellor was clearly wrong and abused his discretion in not applying the equitable doctrine of laches in this case.

Judgment reversed; case remanded with direction to the Circuit Court for Baltimore County to dismiss the proceedings; costs to be paid by original appellants.

      . This was approximately twice the return the trust was receiving from its investments up to that time. By the terms of the trust instrument real estate was not a permitted investment. Accepting a real estate mortgage as security for a loan, however, was not prohibited.

      . See Reeder v. Lanahan, 111 Md. 372, 388, 74 A. 575, 580 (1909); Dorsey v. Stone, 197 Md. 220, 224, 78 A.2d 757, 759 (1951); Mitchell v. Cassedy, 200 Md. 339, 345, 89 A.2d 620, 622 (1952).

      . In view of this disposition of the case, it is not necessary to decide the other issues raised by the parties.


author: Figinski, J.,

text:
    PAS REALTY, INC. v. RONALD G. RAYNE, Assignee For Equitable Trust Company, Successor to Truckers & Savings Bank
    [No. 1388,
    September Term, 1979.]

      Decided September 5, 1980.

    The cause was argued before Thompson, J., and Clayton C. Carter, Associate Judge of the Second Judicial Circuit and M. Albert Figinski, Associate Judge of the Eighth Judicial Circuit, specially assigned.

      Henry M. Rutledge, with whom were Adkins, Potts & Smethurst on the brief, for appellant.

      Donald C. Davis, with whom were Perdue, Owrutsky, Rayne & Davis, P.A. on the brief, for appellee.
   Figinski, J.,

delivered the opinion of the Court.

This is an appeal from the Circuit Court for Wicomico County where, after a hearing, appellant’s exceptions to the foreclosure sale of two parcels of land were overruled and, thereafter, an order ratifying the foreclosure sale was entered. Appellant, PAS Realty, Inc., frames a single issue on appeal, i.e., whether the chancellor applied an improper test to determine whether the foreclosure sale should be ratified. Having framed that issue, however, appellant proceeded to challenge the ratification of the foreclosure sale on several distinct grounds, namely, (a) the method of advertising, (b) the alleged chilling impact of a statement distributed at the sale, and (c), at bottom, a claimed inadequacy of sales price because, it is argued, the sale was for a million dollars less than fair market value. Appellant argues that together these factors should have caused the chancellor to refuse to ratify the sale.

It is clear that the purchaser at foreclosure, Equitable Trust, is the successor in interest to the mortgagee. The presumption in favor of the validity of a judicial sale and the burden on the exceptant to establish to the contrary, see, e.g., Hardy v. Gibson, 213 Md. 493, 508 (1957), is tempered, therefore, by a clear judicial admonition that:

"When the purchaser at the foreclosure sale is the mortgagee or his assignee, the Courts will examine the sale closely to determine whether or not it was bona fide and proper. The Courts will set aside such a sale upon 'slight evidence of partiality, unfairness or want of the strictest good faith.’ ” So. Maryland Oil v. Kaminetz, 260 Md. 443, 450 (1971).

Consequently, courts "should exercise a greater degree of caution in passing upon the ratification” of a foreclosure sale to the secured party. Walton v. Hospital Association, 178 Md. 446, 451 (1940). See also, Walter E. Heller and Co. v. O/S Sonny V., 595 F.2d 968, 972, n.2 (5th Cir. 1979). A secured party, however, is not barred as a purchaser at a foreclosure sale; indeed, such party’s right to buy in is protected by statute. See § 7-105 (c), Real Property Article, Md. Code; Hersh v. Allnutt, 252 Md. 513, 518 (1969).

Both below and here, appellant relied primarily on Waters v. Prettyman, 165 Md. 70 (1933). At issue there was the foreclosure sale, and purchase by the secured party, of certain unimproved property in Montgomery County which consisted of "twenty-seven lots, forming the major portion of a town block ... with water, sewerage, and light connections ... in close proximity to the line of the District of Columbia . . . and which may be with accuracy termed a city block.” 165 Md. at 74-5. The original deed of trust secured payment of $30,000. The purchase price at foreclosure was $5,000. There was a conflict in testimony about the value of the property, but the Court of Appeals reversed the ratification of sale because the lots were offered, in advertisement and at sale, as an entirety and not separately. The Court wrote, 165 Md. at 76:

"Sound judgment and the protection of the interests of all parties concerned in this case, in our opinion, required that the twenty-seven lots here sold should have been offered separately, rather than as an entirety. It is clear that by so doing the number of potential purchasers would have been increased, for the simple reason that the ability to pay for a single lot would reside in a much larger number of persons interested in a section such as here described, being, as it is, devoted to and owned largely by individual home builders, than those who would be in a position to purchase the entire twenty-seven lots and comply with the terms of sale. The method of advertising and selling here employed is not conducive to the property producing the largest price, in which all of those having an interest were vitally concerned. This coupled with a conflict of testimony as to the market value, in which the testimony as to the sale price being grossly inadequate largely predominates, required the chancellor to sustain the exceptions and set the sale aside. There was error in his not so doing.”

It is clear, however, that the Court’s careful scrutiny of the secured party’s purchase was activated by the "predominate” testimony that the sales price was grossly inadequate. Indeed, the Court of Appeals prefaced its discussion of the method of advertisement and sale, thusly (165 Md. at 74):

"It is settled law of this state that inadequacy of price, standing alone, is no ground for the refusal to ratify a mortgage sale, unless the price be so grossly inadequate as to, in and by itself, indicate mistake, fraud, or unfairness in the conduct of the sale. [Citations omitted.]
It is equally well settled that, if inadequacy of price be coupled with any irregular or faulty advertisement or conduct in the making or manner of sale, such as indicates that the property has not been advertised or offered for sale, or sold, under conditions and circumstances that would most likely produce the largest revenue, the court will set it aside and order a resale. The test is: Was the property sold under such conditions and terms as to advertisement and otherwise, as a prudent and careful man would employ, seeking to obtain the best price for his own property?”

The threshold issue, therefore, is the adequacy of the sales price. If it is grossly inadequate, that alone may indicate partiality or unfairness. See So. Maryland Oil v. Kaminetz, supra. If, on the other hand, the price is inadequate and there is, additionally, faulty advertisement or conduct of the sale, the sale should be set aside.

We look, carefully, at the record here to scrutinize the price brought at the foreclosure sale. The effective sales price was $1,685,215.00, determined by the $52,000 produced at the sale, and a first mortgage of $889,371.00 and second mortgage of $743,844.00. Appellant presented the testimony of Grayson Winterbottom, a real estate appraiser for the State of Maryland, to establish the fair market value of the parcels. Winterbottom’s testimony, premised upon tax assessment records and a market approach, is the basis for appellant’s argument that the sale brought more than one million dollars less than fair market value. Mr. Winterbottom prefaced his testimony by acknowledging that there are three recognized methods of determining market value. On cross-examination, moreover, he admitted that the market approach he used requires comparable sales and that the one sale in Salisbury he reviewed was not typical to the shopping center parcel at issue here. Further, and critically, on cross-examination, he testified that the income approach to valuation of commercial property was the "preferable method” and, assuming a relevant cash flow of $180,000.00, the fair market value of the shopping center would be in "the range of $1.5 million.” Similarly, testimony produced by appellee placed a $1.5 million valuation on the shopping center parcel by use of the income approach. With respect to the vacant parcel, appellee’s expert valued it at $115,000, while Mr. Winterbottom placed a $134,000 valuation on it. Appellee argues that the $1.5 million income approach valuation of the shopping center parcel, when added to the highest valuation of the vacant land, established a fair value of $1,634,000.00. Appellee then argues that this value is $51,215.00 less than the sales price; in other words, appellee argues that the price was greater than one fair valuation of the property.

Guidance is found in Habib v. Mitchell, 257 Md. 29 (1970) where the secured party was the only bidder at a foreclosure sale. There, the Court of Appeals wrote (257 Md. at 35):

"Evidence revealed that the mortgagee had obtained two appraisals on the property. One was for $100,800; the other for $57,850. The mortgagee started the bidding at and obtained the property for the latter figure. Appellant contends that the disparity in appraisal figures and the fact that it was the mortgagee who purchased the property are factors which when combined should invalidate the sale.
In general a mere allegation that a purchase price is inadequate will not be enough to invalidate a foreclosure sale. [Citations omitted.] However, ' when a mortgagee purchases at such a sale the courts will pay special attention to see that he has acted in good faith. [Citation omitted.] The fact that the mortgagee is watched closely does not require him to act inimically to his own interests. There is no evidence that the sale was not properly advertised or that bidding was discouraged. There is no evidence that the sale was attended by any fraud. Good faith does not require him to pay the higher of the two appraisals. In our opinion the chancellor did not abuse his discretion in ratifying the sale.”

On the issue of price here, the record below amply supported the chancellor’s conclusion that the sales price was not grossly inadequate. See Rule 1086. This is certainly clear if Habib v. Mitchell is a guide, and we believe it is. The price here exceeded a valuation credited, on cross-examination, as preferable by appellant’s own expert. The existence of a higher valuation and the fact that a secured party was the purchaser causes us to go further and seek to determine if there was improper advertising or discouragement of bidding, two factors mentioned in Habib v. Mitchell, supra, as being absent there. Here, appellant argues that advertisement in the Salisbury Times was insufficient, asserting a wider media approach was necessary to stimulate response to the sale. Appellant ignores, first, that Rule W74a2 (b) requires publication only in a county newspaper; second, that the record reflects that steps were taken to contact personally at least three prospective buyers outside the immediate geographic area; third, that no mention of wider advertisement was made prior to sale so that other advertising could have been considered and placed; and, fourth, that the record is devoid of any proof that the method of advertisement discouraged potential purchasers. On the facts here, we cannot find that the advertisement was improper.

Appellant claims that bidding was discouraged because at sale there was distributed a "Statement to Prospective Purchasers” which stated as to a second mortgage that "the mortgage is in default and under the terms of the mortgage .. . the entire mortgage debt is due and demandable. The mortgage holder has not agreed to a reinstatement of the mortgage.” No evidence v/as presented to show either that the statement was untrue or that any purchaser’s interest in the property was chilled. We agree with the chancellor who opined, at the close of the case, that the distributed statement "was a statement of fact” and "that any prospective purchaser should have made arrangements” for refinancing. Indeed, it would be a curious type of investor who would attend a sale of property subject to more than $1.6 million of prior, open, defaulted mortgages who would not have been either in contact with the secured parties to work out refinancing or prepared to make other financial arrangements.

Here, we cannot hold that the sale price was grossly inadequate, that the advertisement was improper or that the conduct of sale showed partiality or unfairness. Having looked carefully at the record, we affirm.

Judgment affirmed.

Cost to be paid by appellant.

      . The parcels were denominated a parcel "A” and parcel "B” in the notice of sale, and throughout the proceedings below. Both parcels were located in Salisbury, Maryland. Parcel A was vacant land in close proximity to, but separated by Cypress Street from, parcel B which, for the most part, was improved by a shopping center which the testimony below demonstrated was in need of repair, e.g., roof and air conditioning work, as well as parking lot improvements and painting.

      . There can be no complaint here on this account because the two parcels were offered both separately and together, with the sale being made by the method which brought the highest price at the courthouse door.

      . The record reveals the following cross-examination of Mr. Winterbottom (E. 38-39):
      "Q. Would you agree with respect to this particular property |i.e., the shopping center parcel] that the income approach is a preferable method of determining fair market value, rather than the cost approach or the market approach?
      A. Yes.
      Q. Now, if you were to assume that the cash flow on this property prior to servicing any mortgage obligations was $180,000.00, using the capitalization rate that you just testified to, what would he the fair market value of this property based on the income approach?
      A. Dividing by .12 or .13. * * *
      Q. Would it sound about right if I told you it would come out to around $1.5 million?
      A. That would be the range of it, yes.”
      In its case below, appellee established, without contradiction in the record that the "net effective income” of the shopping center was "around $180,000.00.” (E. 67).

      . Appellant also contended that the cancellation, rescheduling and advertisement thereof was an inhibiting factor. It is apparent that the rescheduling was necessary to comply with the relevant Maryland Rules of Procedure. In fact, the assignee appeared, according to the record, at the time and place of the initially set sale and no potential purchasers appeared.

      . de Tamble v. Adkins, 210 Md. 414, 420, 425 (1956), by inference at least, does not require advertisement beyond that required in the Rules.


author: Thompson, J.,

text:
    ROBERT G. SMITH et al. v. THELMA T. EDWARDS et al.
    [No. 1425,
    September Term, 1979.]

      Decided September 5, 1980.

      The cause was argued before Thompson, J., and Clayton C. Carter, Associate Judge of the Second Judicial Circuit and M. Albert Figinski, Associate Judge of the Eighth Judicial Circuit, specially assigned.

      Albert D. Brault, with whom were Brault, Graham, Scott & Brault on the brief, for appellants Smith, Murphy, Shlefstein, Hendley, DeRocco, Tauben and Tavani. Edward L. Germ for appellants Friendship Heights and The Hills and Friendship Heights Village Council.

      James L. Thompson and Jody S. Kline, with whom were Miller, Miller & Canby on the brief, for appellees.
   Thompson, J.,

delivered the opinion of the Court.

Thelma T. Edwards, et al., as resident taxpayers of a "special tax area or district” now called The Village Council (formerly known as Friendship Heights, The Hills or as Friendship Heights Citizens Committee) (Committee) filed suit against members of the governing body of the Committee, as individuals, seeking to recover for the benefit of the special taxing district, funds which were alleged to have been expended without legal authority. The Committee was permitted to intervene in the suit as a party defendant and together with Robert G. Smith and the other individual defendants constitute the appellants. The Circuit Court for Montgomery County found in favor of the complainants below, the appellees here, gave declaratory relief, entered judgment against the individual appellants for the sum of $16,961.67 plus interest, and directed that $15,000 of the fund be paid to the appellees’ attorneys as fees in the instant suit.

The alleged ultra vires actions of which the appellees complained have been narrowed to four; all involve the expenditure of tax monies for litigation in which the Committee voluntarily became involved. The actions were:

(1) The first cases were known as Marina Apartments cases. In 1972 the Committee engaged counsel and sought unsuccessfully to intervene in this litigation which arose over the application of the Marina Apartments, Inc. to build a 353 unit highrise condominium within Friendship Heights, a project which the Committee opposed. The litigation terminated in Board of Appeals of Montgomery County v. The Marina Apartments, Inc., 272 Md. 691, 326 A.2d 734 (1974) with the builder as the successful litigant.

(2) The next group were known as the One Park North cases. This litigation involved an application by One Park North Associates (OPNA) to construct a two-level retail store and office complex in Friendship Heights, to which the Committee was opposed. The litigation arose over a decision of the Board of Review of the Department of Health and Mental Hygiene to allow sewers for the project despite a sewer moratorium. The Committee engaged counsel who represented it before the Board of Review and the Circuit Court for Montgomery County, and noted an appeal. The decision of the Court of Appeals in a related case, Montgomery County v. One Park North Associates, 275 Md. 193, 338 A.2d 892 (1975) rendered moot the Committee’s appeal. The office complex was, however, never constructed.

(3) The next cases were the appeals that arose out of the County’s sectional map amendment to the zoning ordinance, which in 1974 downzoned properties in Friendship Heights. The Committee favored this action by the Council and authorized the expenditure of tax monies to support the downzoning and to oppose the appeals. The appeals were consolidated and heard together. At its request, the Committee was allowed by the trial judge to intervene and participated as a party at the trial level and on appeal. The appellate decision, Montgomery County v. Woodward & Lothrop, Inc., 280 Md. 686, 376 A.2d 483 (1977), cert. denied, sub nom. Funger v. Montgomery County, 434 U.S. 1067, 98 S. Ct. 1245, 55 L. Ed. 2d 769 (1978), affirmed the downzoning.

(4) The final ultra vires act alleged by the appellees was the funding by the Committee of a study by a professional survey group known as the Public Interest Economic Foundation (PIEF). In the introduction to its report, the Foundation notes that, at its cost and that of the Committee, it had made "a broad study of the costs and benefits of alternative zoning proposals for the Friendship Heights area of Montgomery County.. . .” Essentially, the report advocates lower density zoning in Friendship Heights.

The evidence shows expenditures of $120.00 for attorneys’ fees in the Marina Apartment cases, $4,446.67 for litigation costs in the OPNA cases, $4,425.00 for attorneys’ fees in the zoning cases and $8,000.00 for the PIEF study. It is clear that the PIEF study was conceived and authorized for use at the County Council’s hearing on its downzoning proposal but that the study was also used for litigation purposes in the zoning appeal cases.

We shall discuss separately the issues raised in this appeal.

I. The Committee’s Actions were Ultra Vires.

The appellants first argue that the four complaints, set out previously, were within the corporate powers of the special tax district. We think this question was adequately disposed of by Barlow v. Friendship Heights Citizens’ Committee, 276 Md. 89, 344 A.2d 415 (1975), wherein the Court said:

"In Friendship Heights v. Funger, 265 Md. 339, 289 A.2d 329 (1972), we held that the Friendship Heights Citizens’ Committee (the Committee), an elected body which administers a special tax area or district consisting of Friendship Heights and The Hills, two subdivisions located in Montgomery County, lacked the power to bring an action for declaratory and injunctive relief challenging the validity of the rezoning of an 18-acre tract adjacent to Friendship Heights, but beyond the limits of the special tax area.
"Our reasoning was that the Committee was not expressly granted the power to sue and be sued, and was specifically excluded by Maryland Code (1957, 1973 Repl. Vol.) Art. 23A, § 9 (a) from the definition of a municipal corporation, which is expressly granted the power to sue and be sued by Art. 23A, § 1, and neither exercised any regulatory powers, nor was vested with any planning or zoning function.
"We reserved for another day, however, a consideration of the question whether the power to sue could be implied from a power expressly granted the Committee.” (footnote omitted).

The Court then disposed of the implied power question as follows:

"The threshold question in this case is whether the power of the present Committee to bring suit against the individuals who constituted its predecessor in office or against Suburban can be implied from any of the powers expressly granted. We think that it cannot because of the narrow scope of those powers. But this does not necessarily end the matter. Montgomery County Code (1972) § 66-4 prescribes that members of the Committee upon election must take an oath 'to diligently and faithfully discharge the duties of the office.’ From this can be implied a power to seek redress on behalf of the special tax area if it is believed that tax monies have been diverted to the benefit of individual members of the Committee or have been improperly expended with the concurrence of Suburban for illegal or ultra vires purposes. Even under the Dillon rule it has long been recognized that such powers as are necessary in the performance of a duty imposed or the accomplishment of a stated purpose may properly be implied. See Heiskell v. Baltimore, 65 Md. 125 at 148, 4 A. 116 at 118 (1886).” Id. at 90-91, 94-95.

In view of the very narrow construction the Court has put on the powers of the Committee, the appellants’ attempt to show that its actions in the instances noted was within its corporate powers is difficult to follow. The argument goes as follows:

The Committee’s powers are expressly set out in Section 66-2 and 66-9 of the Montgomery County Code (1972). Section 66-2 says in substance that the taxes which the law authorizes to be collected shall be paid over to the treasurer of the Committee for certain purposes:

"All of the funds shall be used directly by or through the village council exclusively for opening, improving, widening, maintaining, repairing and lighting the streets, roads, lanes, alleys, sidewalks, parking, drainage, sewerage, sanitation and other village improvements, and for furnishing police and fire protection, clerical and other public service, including the removal of ashes, garbage and other refuse and the disposal thereof. (Mont. Co. Code 1965, § 66-2; 1914, ch. 131, § 2; 1951, ch. 558, § 1; 1975, ch. 779). (emphasis added).

Section 66-9 provides the Committee is empowered as follows:

"(a) The 'Friendship Heights Village Council’ may grade, pave, macadamize or otherwise improve any existing dedicated street, road or lane, or any county road, street or lane, within the special taxing area which has been or which may be acquired and opened for public use and to lay sidewalks and curbs thereon, and, subject to the approval of the county council of Montgomery County and after due publication of cost thereof, to assess the cost of the grading, paving, macadamizing, laying sidewalks and curbs, or otherwise improving, against the property abutting on that portion of the street, road, lane or sidewalks so improved, in proportion to the frontage of the abutting property; provided, the consent to the proposed improvements of the owners of two-thirds of the abutting property shall first have been obtained.”

The argument then proceeds to emphasize the underlined portions. In making the argument appellants overlook that sewerage, in the taxing district at the time of the ultra vires acts, was within the exclusive jurisdiction of the Washington Suburban Sanitary Commission (WSSC). As the Court said in Board of Appeals of Montgomery County v. The Marina Apartments, supra, 272 Md. at 698-99:

"We now analyze, in the light of this local law-general law distinction, the authority of Montgomery County and that of the WSSC, in order to determine which one of these two has the superior power to make sewer availability decisions. It is abundantly clear that the WSSC, established for the purposes of coordinating and maintaining the entire public sewer system in the Sanitary District which is largely contiguous to the District of Columbia and operating pursuant to Chapter 122 Laws of Maryland (1918), as from time to time amended, is a creature of the general law as contemplated by the Maryland Constitution, because the Sanitary District encompasses portions of both Montgomery and Prince George’s counties. And '[a]ny law so drawn as to apply to two or more geographic subdivisions of this State shall not be decreed a Local Law.. ..’ Art. XI-A, § 4. See Bowie v. Wash. Sub. San. Comm’n, supra at 616; Neuenschwander v. Wash. San. Com., supra at 75. It follows from this that the WSSC’s jurisdiction, which it possesses under the Public General Law, to authorize sewer service cannot be countermanded by a board established under local law to enforce a local building code. Therefore, even though § 114.1 adopted by the Montgomery County Code may be interpreted on its face as granting broad power to the County in this sewer availability area, this authority may not be exercised so as to impinge upon the decisions made by the WSSC under its general law jurisdiction.”

In making their argument appellants also overlook that zoning is entirely outside the powers of the taxing district. Perry v. Board of Appeals, 211 Md. 294, 127 A.2d 507 (1956). The appellants nevertheless argue that the words in their charter authorizing the expenditures for "other public service” would cover the ultra vires acts. If that argument were sound the taxing district’s powers would be limited only by constitutional prohibitions against spending public funds for private purposes. The Court of Appeals by its language and by its holdings in the above cited cases permits no such enlargement of the powers of the taxing district. We think its powers under the "other public service” clause are limited to those which bear some relationship to the powers expressly granted.

We also agree with the chancellor that the Committee’s ownership of a small park was in no way involved in the ultra vires litigation, but is rather an afterthought to support otherwise blatant disregard of taxing district’s powers.

II. Liability of Individual Village Council Members for Funds Expended.

Appellants argue that as the defendants were public officials they are protected from this suit by governmental immunity. The argument is without substantial basis. The case of Gloyd v. Talbott, 221 Md. 179, 156 A.2d 665 (1959) affords authority for the award of money judgments against members of the governing body of a municipality for the use and benefit of the municipality in cases where the said members illegally authorize the expenditure of public funds. Governmental immunity was not even discussed. Appellants also allege that their actions were without malice and thus individual council members were entitled to qualified immunity. We are unable to follow the argument because qualified immunity applies to actions for tort and has no application to acts which are ultra vires. There is some limited authority that municipal officials might be held not personally liable where their ultra vires actions are not unreasonable. 2A Antieau, Municipal Corporation Law, § 22.69 (1976). We think the actions of the Committee here, however, were unreasonable when in case after case, beginning in 1956 with Perry v. Board of Appeals, supra, the Court pointed out that the taxing district was only a "quasi municipal corporation” with very limited powers.

III. The Demand for a Jury Trial and Transfer to the Law Side of the Court

Appellants argue that the chancellor in ruling on the two motions denied them a trial by jury as guaranteed under Art. 23 of the Maryland Declaration of Rights which in pertinent part provides as follows:

"The right of trial by Jury of all issues of fact in civil proceedings in the several Courts of Law in this State, where the amount in controversy exceeds the sum of five hundred dollars, shall be inviolably preserved.”

This language is identical with former Art. 15, § 6 of the Maryland Constitution. This latter provision has been construed to mean a right to a jury trial as that right existed when the Constitution was adopted. Knee v. Baltimore City Passenger Railway Co., 87 Md. 623, 40 A. 890 (1898). In Bringe v. Collins, 274 Md. 338, 346, 335 A.2d 670, application denied, 421 U.S. 983, 95 S. Ct. 1986, 44 L. Ed. 2d 475 (1975), the Court said:

"Article XV, § 6, of the Maryland Constitution, like the Seventh Amendment, guarantees a right to a jury trial in actions at law, where historically there was a right to a jury trial, as opposed to equitable action where there was no such right. Pernell v. Southall Realty, supra, 416 U.S. at 374-375; Curtis v. Loether, supra, 415 U.S. at 193-197; Knee v. City Pass. Ry. Co., 87 Md. 623, 624, 40 A. 890 (1898).”

As the bill of complaint here requested an injunction, the suit was properly brought in equity and a jury trial was not required. See, Automatic Retailers of America, Inc. v. Evans Cigarette Service Co., 269 Md. 101, 105, 304 A.2d 581 (1973), where the Court said:

"The continuation of these [equity] proceedings is proper, as once equity has obtained jurisdiction, it may continue to resolve the dispute between the parties though the equitable issues have dissipated and only legal issues survive.”

Appellants misplace reliance on Dairy Queen, Inc. v. Wood, 369 U.S. 469, 82 S. Ct. 894, 8 L. Ed. 2d 44 (1962), a decision of the United States Supreme Court premised upon the Seventh Amendment to the United States Constitution and federal practice. The Court of Appeals has refused to engraft the federal Seventh Amendment to our state court proceedings, see Bringe v. Collins, supra. See also, Thompson v. Giordano, 16 Md. App. 264, 270-1, 295 A.2d 881 (1972). If the Dairy Queen rule had been adopted, a decision such as Automatic Retailers of America, Inc. v. Evans Cigarette Service Co., supra, would not be in the books. See also, Kramer v. Kramer, 26 Md. App. 620, 634, 339 A.2d 328 (1975).

IV. Allowance of Attorneys Fees

Appellants assert that it was improper for the trial court to order the appellants to pay $15,000 of the $16,961.67 damages as attorney’s fees. Although the law is clear that attorney’s fees are not ordinarily awarded as part of the costs, Empire Realty Co. v. Fleisher, 269 Md. 278, 305 A.2d 144 (1973), courts have adopted a common fund doctrine under which counsel fees may be awarded where a taxpayer’s suit has resulted in the creation of a fund for the benefit of the taxpayers. See, e.g., Nance v. Town of Oyster Bay, 54 Misc. 2d 274, 282 N.Y.S.2d 324 (1967), aff'd, 30 App. Div. 2d 918, 293 N.Y.S.2d 704 (1968); Weiss v. Bruno, 83 Wash. 2d 911, 523 P.2d 915 (1974); Annot. 89 A.L.R.3d 690 (1979). The doctrine is based on the idea that, where a taxpayer has gone into court taking the risk of litigation upon himself, and has thereby conferred a benefit upon other taxpayers similarly situated, it is equitable to allow counsel fees out of the recovery. This doctrine has been recognized in Maryland in Terminal Freezing and Heating Co. v. Whitelock, 120 Md. 408, 87 A. 820 (1913) and Estate of Leiman, 32 Md. 225, 3 Am. Rep. 132 (1870), although these cases did not involve recovery by taxpayers.

City of New Carrollton v. Belsinger Signs, Inc., 266 Md. 229, 292 A.2d 648 (1972), cited by appellants for the proposition that attorney’s fees are not properly awarded in a taxpayer’s suit against a municipality, is distinguishable. In that case, the taxpayer sought a declaratory judgment and injunctive relief against the municipality. No damages were awarded. The common fund theory would not apply there where there was. no fund recovered from which attorney’s fees could be awarded.

Appellants also argue that damages, including attorney’s fees, may not be paid by a state agency in the absence of an appropriation for such a purpose, citing Board of Trustees v. John K. Ruff, Inc., 278 Md. 580, 366 A.2d 360 (1976) and University of Maryland v. Maas, 173 Md. 554, 197 A.2d 123 (1938). This principle has no application here because the funds with which to pay the counsel fees are the funds that the committee is recovering from the individual defendants and the order specifically directs that the fees be paid from that fund.

V. Other Issues

Although appellants suggest other grounds for reversal or modification of the decree, there are no arguments to support the suggestions so we decline to discuss them. Jacober v. High Hill Realty, Inc., 22 Md. App. 115, 321 A.2d 838, cert. denied, 272 Md. 743 (1974).

VI. Motions

All pending motions in this appeal are denied.

Decree affirmed.

Appellants to pay the costs.

      . Whitelock involved a common fund recovered for a committee of bondholders. Leiman involved a fund recovered for the benefit of creditors. It should be noted that in both of those cases the beneficiary of the suit had refused to bring the action. In the instant case the individual appellees were in control of the quasi corporation beneficiary at the time the suit was brought. Under these circumstances it is obvious that a demand that the taxing district sue its own governing body would have been futile.


author: Bowen, J.,

text:
    DULANEY TOWERS MAINTENANCE CORPORATION et al. v. JAMES M. O’BREY et ux.
    [No. 1527,
    September Term, 1979.]

      Decided September 5, 1980.

    The cause was argued before Liss and MacDaniel, JJ., and Miller Bowen, Associate Judge of the District Court of Maryland for District 12, specially assigned.

      Philip O. Foard, with whom were Robert J. Aumiller and White, Mindel, Clarke & Hill on the brief, for appellants.

      No brief or appearance by appellees.
   Bowen, J.,

delivered the opinion of the Court.

The circumstances giving rise to this appeal are quite simple. The appellees purchased a unit in a condominium regime known as the Dulaney Towers Townhouse Condominium No. 2 (hereinafter called Dulaney) on or about May 10, 1976. When they moved in, they kept and maintained a poodle in their unit. On October 1, 1976, the board of directors of Dulaney adopted numerous rules and regulations, among them being Para. E-2 as follows:

One dog or one cat may be kept by the unit owner or occupant, but shall not be kept, bred, or used therein for any commercial purpose. The present pet population is exempt from this rule.

Proper notice of the adoption of the rules and regulations was given to the unit owners.

In August, 1977, the appellees purchased a second poodle and maintained both poodles in their unit. The appellants requested that one of the dogs be removed. The appellees refused and the appellants filed this suit in the Circuit Court for Baltimore County, requesting that the appellees be permanently enjoined from maintaining more than one dog in their unit. The Chancellor granted the appellees’ Motion for Summary Judgment on November 9,1979. The appellant filed this timely appeal raising the following issue:

Was the lower court correct in its determination that Sections 11-104 and 11-109 of the Real Property Article do not permit the council of unit owners of a condominium regime to delegate all of its regulatory authority to a board of directors, including the authority to promulgate and enforce rules and regulations restricting the use of common areas and individual units within that regime?

When a controversy arises as to a resident’s right as a unit owner in a condominium, the courts must examine the condominium enabling statutes for relevant provisions, consider the master deed or declaration, study the bylaws, and attempt to reconcile the three. See Sterling Village Condominium, Inc. v. Breitenbach, 251 So. 2d 685 (Fla. 1971.)

House rules, (sometimes called household regulations or rules of conduct), are rules and regulations of a condominium that generally deal with the use and occupancy by owners of units and common areas, patios and other exterior areas, parking, trash disposal, pets, etc. They frequently prohibit conduct that could constitute a nuisance. It has been said many times by many courts that if the house rules are reasonable, consistent with the law, and enacted in accordance with the bylaws, then they will be enforced. Hickok, Promulgation and Enforcement of House Rules, 48 St. Johns L. Rev. 1132,1135 (1974). The one rule of Dulaney under attack in these proceedings is that set forth above, relating to the limitation of one pet per unit.

Perhaps, because owners of dogs cannot understand why others do not love their dogs as they do, the house rules of cooperative housing communities dealing with the regulation of pets have been the subject of many cases. Invariably, the courts have adopted a hard-line approach and have upheld condominium board of directors’ regulations as to dogs, even to the exclusion of dogs, as being reasonable and enforceable. The courts stress that communal living requires that fair consideration must be given to the rights and privileges of all owners and occupants of the condominium so as to provide a harmonious residential atmosphere. The rationale for allowing the placing of restrictions in, or the barring of pets by way of, house rules is based on potentially offensive odors, noise, possible health hazards, clean-up and maintenance problems, and the fact that pets can and do defile hallways, elevators and other common areas. See Justice Court Mut. Housing Co-op v. Sandow, 270 N.Y.S. 2d 829, 832 (Sup. Ct. Queens County 1966); Kings View Homes, Inc. v. Jarvis, 369 N.Y.S. 2d 201 (1975); Riverbay Corporation v. Klinghoffer, 309 N.Y.S. 2d 472 (1970); Cf. Valentine Gardens Cooperative, Inc. v. Oberman, 237 N.Y.S. 2d 535 (1963). We join the other states in this view and hold that the specific house rule in question is reasonable.

The law controlling the controversy here is contained in Title 11 of the Real Property Article, commonly referred to as the "Horizontal Property Act.” Section 11-104 provides in part:

(a) Bylaws to govern administration — The administration of every condominium shall be governed by bylaws which shall be recorded with the declaration. If the council of unit owners is incorporated, these bylaws shall be the bylaws of that corporation.
(b) Required particulars — The bylaws shall express at least the following particulars
(1) The form of administration, indicating whether the council of unit owners shall be incorporated or unincorporated, and whether, and to what extent, the duties of the council of unit owners may be delegated to a board of directors, manager or otherwise, and specify the powers, manner of selection and removal of them: . ..
(c) Permissible additional provisions — The bylaws also may contain any other provision regarding the management and operation of the condominium including any restriction on or requirement respecting the use and maintenance of the units and the common elements.

In his memorandum opinion, the Chancellor stated:

There is no Maryland case dealing with this Statute. There is a very similar case in Massachusetts, Johnson v. Keith, 331 N.E.2d 879, that states: 'Where a person’s right to use his or her own property is involved, any ambiguity in an asserted restriction of this type should be construed in favor of the freedom of the property from that restriction.’ The Johnson case is not binding, but its reasoning is persuasive and its conclusion sound. A distinction may be drawn between Rules relating to the maintenance and control of the common elements, as opposed to Rules relating to conduct within an owner’s unit. If it was desired to place legal restrictions on the use of their property by unit owners, it could have been and should have been set forth in the bylaws. This Court construes the Statute as not only permitting, but requiring that any restrictions on the use of condominium units must be set forth in the By-Laws.

We think the Chancellor was in error in drawing a distinction between "Rules relating to the maintenance and control of the common elements, as opposed to Rules relating to conduct within an owner’s unit,” and in "requiring that any restrictions on the use of condominium units must be set forth in the bylaws.”

In Johnson v. Keith, supra, the Massachusetts court was interpreting its own State’s condominium statute concerning the right to restrict pets. The court summarized pertinent portions of that law at page 881 as follows:

If the condominium is to be managed by an unincorporated association, as here, the master deed must set forth the names of the managing board. Ibid. The by-laws of the organization of unit owners in turn must contain certain provisions. Sec. 11. They must provide '(t)he method of adopting and amending administrative rules and regulations governing the details of the operation and use of the common areas and facilities’ (emphasis supplied). Sec. 11 (d). In addition, the by-laws must contain any 'restrictions on and requirements respecting the use and maintenance of the units and the use of the common areas and facilities, not set forth in the master deed, as are designed to prevent unreasonable interference with the use of ... the owners’ respective units and of the common areas and facilities by the several unit owners’ (emphasis supplied). Sec. 11 (e).

Since the challenged rule "(n)o animal or reptiles of any kind shall be raised, bred, or kept in any unit or in the Common Area and Facilities” sought to regulate the maintenance of animals "in any unit,” the court concluded that the challenged regulation, in order to be effective, must have been enacted and recorded as a bylaw.

As pointed out by the appellee, this statute, regarding use restrictions and management, is virtually identical to Md. Sec. 11-111 (f) that was repealed when Maryland’s Horizontal Property Act was revised on July 1,1974. Section 11-104 was enacted in place of former section 11-111 (f) and was the law on October 1, 1976, the date of the enactment of Dulaney’s house rules. Unlike Sec. 11-111 (f) that made it "mandatory” that restrictions on use of the units and use of the common elements be contained in the bylaws, Section 11-104 (c) now provides that restrictions on use of the units and the common elements are "permissible” as bylaws. The new section cannot be discounted as meaningless. It clearly intends to eliminate the mandatory effect that was explicitly provided for in Sec. 11-111 (f). The new language, "also may contain,” drastically changed the import of the bylaws and their content. There is nothing now that, in any way, requires that a restriction affecting the use of an individual unit be enacted as a bylaw.

As a matter of fact, it is the exception rather than the rule that bylaws contain specific restrictions respecting use of units and common areas. Common statutory schemes provide that bylaws entrust the responsibility for administration of a condominium to a board of directors. 15A Am. Jur. 2d, Condominiums and Cooperative Apartments, § 16, states this accepted practice of putting restrictions on the use of such condominium units as follows:

Occasionally the bylaws also contain regulations concerning the use of the condominium by its owners, but usually such regulations are contained in a separate instrument listing a number of rules designed to promote the communal comfort of those living in the condominium, such as restrictions on the parking of automobiles, against the keeping of pets, etc.

The Massachusetts statute, with respect to form of administration or management, is also quite similar to former section 11-111 (a) which provided that the "bylaws must necessarily provide for at least” a "form of administration, indicating whether this shall be in charge of a manager, or a board of directors, or otherwise and specify the powers,” etc. Compare current sections 11-109 (a) & (b) which provide that "the affairs of the condominium shall be governed by a council of unit owners” and that "the bylaws may authorize or provide for the delegation of any power of the council of unit owners to a board of directors, ...”

This clear and unmistakable language represents a significant change in the law that existed prior to July 1,1974. Under the revised act, within the authority contained in sections 11-104 and 11-109, house rules containing restrictions as to use may be enacted through rules and regulations adopted by a board of directors, so long as the enactment is within the scope of the powers delegated to the board, as set forth in the Master Deed and Declaration and the bylaws.

An examination of the Master Deed and Declaration reveals that Section XI provides:

All present and future owners, tenants and occupants of Units shall be subject to, and shall comply with, the provisions of this Master Deed and Declaration, the By-Laws and the Rules and Regulations, as they may be amended from time to time. The acceptance of a deed or conveyance or the entering into of a lease or the entering into occupancy of any Unit shall constitute an agreement that the provisions of this Master Deed and Declaration, The By-Laws and the Rules and Regulations as they may be amended from time to time, are accepted and ratified by such owner, .. . and shall bind any person having at any time any interest or estate in such Unit, as though such provisions were recited and stipulated at length in each and every deed or conveyance or lease thereof . . .” (emphasis supplied).

We note that the rule in question was enacted in accordance with the bylaws of Dulaney, filed with the Master Deed on January 22, 1974, that provides as follows:

ARTICLE V. OBLIGATION OF OWNERS
Section 7: Rules of Conduct
(e) The Board of Directors may make such other reasonable rules as they may deem appropriate.

The Chancellor below drew a distinction between the rules relating to the maintenance and control of the common elements, and the rules relating to conduct within an owner’s unit. Johnson v. Keith, supra, was cited as authority. As stated previously, the statute analyzed in Johnson is not the same as the statute in effect in Maryland on October 1,1976. We find nothing in the current Maryland law (Sec. 11-104) that creates such a distinction. All rules and regulations properly adopted by a council of unit owners or its designee that apply to an owner’s unit are as binding on the residents of a condominium as those that apply to the common areas.

The sum and substance of what we have stated is that under the current Maryland Horizontal Property Act, a council of unit owners in a condominium may delegate its powers of administration or management to a board of directors which may in turn make reasonable rules and regulations concerning conduct, not inconsistent with the Master Deed and Declaration and bylaws, including the regulation or prohibition of pets. The rule in question is reasonable and was adopted properly.

Judgment reversed.

Costs to be paid by appellees.

      . Laws 1974, Ch. 641, was made to apply to "existing condominiums.” See also Real Property Article § 11-128 (a).


text:
    ALAN SPENCER McLEE a/k/a Alan Spencer Jackson v. STATE OF MARYLAND
    [No. 1548,
    September Term, 1979.]

      Decided September 5, 1980.

    The cause was argued before Melvin, Wilner and MacDaniel, JJ.

      Martha Weisheit, Assistant Public Defender, with whom was Alan H. Murrell, Public Defender, on the brief, for appellant.

      Stephen Rosenbaum, Assistant Attorney General, with whom were Stephen H. Sachs, Attorney General, Arthur A. Marshall, Jr., State’s Attorney for Prince George’s County, and Joseph A. Dugan, Assistant State’s Attorney for Prince George’s County, on the brief, for appellee.
   Melvin, J.,

delivered the opinion of the Court.

On September 24, 1979, pursuant to his guilty plea to robbery, Alan Spencer McLee, a/k/a Alan Spencer Jackson, the appellant, was convicted in the Circuit Court for Prince George’s County (Melbourne, J.) of that offense. On December 7, 1979, he was committed, under the provisions of Md. Ann. Code, Article 27, Section 643B (c), to the custody of the Division of Correction for a period of twenty-five years. The sentence is to be served concurrent to the sentences he was already serving. On appeal he contends the court erred:

1. By not determining whether he understood the nature of the offense to which he pled guilty;
2. In imposing sentence.

The record before us shows that at about 1:30 A.M. on Wednesday, November 29, 1978, when two employees of a restaurant walked out to their car after closing the restaurant for the night, they were confronted by a man, subsequently identified as the appellant, with a gun who directed them to return to the building. As they were walking back into the building, one of the employees pressed the police alarm. They explained to the appellant that the flashing red light meant that the alarm was turned off. Accepting this explanation, the appellant instructed them to open the safe. They told him that there was a fifteen minute time delay on the safe lock and they would have to wait.

During this fifteen minute period of time, the police arrived and surrounded the building. When the time was up, the employees opened the safe and gave the appellant the money. Appellant, then aware of the police, locked one of the employees in an office and proceeded outside the restaurant with the other employee. The police asked what was going on. The employee ran back into the building and the appellant bolted across the darkened lot where he fell down as he bumped into a chain link fence. The police apprehended the appellant and recovered the money.

I

On appeal the appellant first contends that the court failed to comply with Maryland Rule 731 c. which requires that the court make an inquiry on the record as to whether the accused understands the "nature of the charge” to which he has pled guilty before such a plea is accepted. In the instant case, at the beginning of the voir dire, the following colloquy occurred:

"THE COURT:... Now, at this time I want to ask you if you can tell me who is sitting next to you.
THE DEFENDANT: My attorney, Mr. Salmon.
THE COURT: And what are the charges against you in this case?
THE DEFENDANT: I am charged with armed robbery with a deadly weapon, two counts of false imprisonment, and storehouse breaking.
THE COURT: Have you told Mr. Salmon your theory and your version of the defense in this case?
THE DEFENDANT: Yes, ma’am, I have.”

Thereafter the court advised the appellant of the sentences that could be imposed, and commented:

"I am sure you have discussed all of the elements of the crime of armed robbery and false imprisonment and carrying a concealed weapon charge with Mr. Salmon.”

After the State presented its statement of a factual basis for the plea, the appellant disagreed with certain inconsequential representations that had been made. After discussing these with the appellant, the court commented:

"... would the State have a case of armed robbery? The Court is satisfied they would, because all the elements of armed robbery have been presented through testimony of Saunders and Cunningham. They were there. They identified you. They were put in fear. You took the money away. You have got the elements of armed robbery.”

The court then ascertained from the appellant the voluntariness of the plea and that he was pleading guilty because he was "in fact guilty and for no other reason.” The court again explained the consequences of the plea and ascertained from the appellant that "in light of that advice” it was "still [his] desire to enter a voluntary plea of guilty to robbery.”

We think the record reflects that the appellant fully understood the "nature of the charge” to which he offered his plea of guilty and that the plea was properly accepted by the court.

II

The appellant secondly contends that the court erred in imposing a sentence of twenty-five years under the provisions of Art. 27, § 643B (c) (1957 Md. Ann. Code, 1976 repl. vol., 1979 cum. supp.):

"Any person who (1) has been convicted on two separate occasions of a crime of violence where the convictions do not arise from a single incident, and (2) has served at least one term of confinement in a correctional institution as a result of a conviction of a crime of violence, shall be sentenced, on being convicted a third time of a crime of violence, to imprisonment for the term allowed by law, but, in any event, not less than 25 years. Neither the sentence nor any part of it may be suspended, and the person shall not be eligible for parole except in accordance with the provisions of Article 31B, § 11.”

Appellant concedes that prior to the instant case he had been convicted on two separate occasions of a crime of violence that did not arise from a single incident. He argues, however, that he has not served "at least one term of confinement in a correctional institution” as a result of either of those prior convictions and thus does not meet the statutory criteria for the mandatory twenty-five year sentence. The two prior convictions occurred in 1970. They were for two separate armed robberies. He received a sentence of fifteen years for each conviction, the second sentence to be consecutive to the first. The record indicates that after serving approximately seven years the appellant was released on parole in January 1978. The instant offense occurred on November 29, 1978 — less than a year after his parole. As a result, his parole was rescinded and he was returned to Patuxent Institution, where he had been confined in 1971 following a determination that he was a defective delinquent and from which he had been paroled in January, 1978.

We think the appellant meets the statutory criteria for the mandatory twenty-five year sentence provided by the statute. He concedes that he meets the first requirement, i.e., that he has previously been convicted on two separate occasions of a crime of violence not arising from a single incident. He concedes also that his instant conviction is for a crime of violence. He argues, however, that because he is still serving a term of confinement in a correctional institution for his prior convictions, he has not "served at least one term of confinement” and thus is not eligible for the mandatory increased sentence. While we recognize a certain surface logic to this argument, we reject it. At the time appellant was convicted in 1979 of his third crime of violence he had served "at least one term of confinement” for the 1970 offenses for which he was on parole, which would have been the entire prison term had he not violated his parole. In such a situation we do not interpret the statute so as to immunize third offenders from its effects. Cf. Leuschner v. State, 45 Md. App. 323, 354-355 (1980). To do so "would be to place a premium on the violation of a parole, a result entirely foreign to the purpose of the act.” See People v. Martin, 177 P.2d 813, 815 (Calif. 1947), where the statute involved provided that every person convicted of certain specified felonies "who shall have been previously twice convicted [of certain felonies] upon charges separately brought and tried, and who shall have served separate [prison] terms therefor ... shall be adjudged a habitual criminal and shall be punished by imprisonment in the state prison for life.” (Emphasis added.) California Penal Code, § 644. The California court rejected, as we do, the argument that to invoke the statute it is necessary that the defendant have served the complete term of imprisonment imposed for the prior convictions.

Judgment affirmed.

Costs to be paid by appellant.