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    DOMINION NATIONAL BANK et al. v. SUNDOWNER JOINT VENTURE et al.
    [No. 285,
    September Term, 1981.]

      Decided November 5, 1981.

      The cause was argued before Morton, Mason and Wilner, JJ.

      Sally D. Adkins and Raymond S. Smethurst, Jr., with whom were Adkins, Potts & Smethurst on the brief, for appellants.

      William G. Duvall, with whom were David B. Douse and Webb, Burnett & Duvall on the brief, for appellees.
   Wilner, J.,

delivered the opinion of the Court.

On September 28,1977, two actions were filed in the Circuit Court for Worcester County, each seeking judgment on a promissory note executed on behalf of an entity known as Sundowner Joint Venture (SJV). The defendants in each case were the same — SJV, alleged to be a general partnership, and twenty individuals and one corporation alleged to be the partners in the joint venture. In one case (No. 7264), the sole plaintiff was Dominion National Bank (Dominion); in the other (No. 7265), Dominion had two co-plaintiffs — John T. Hazel, Jr. and M. Charlotte Garner.

After an avalanche of pleadings, the court entered summary judgments in favor of the plaintiffs on the two notes. As to SJV, the judgments were in the amounts requested ($340,554 plus collection fee in No. 7264 and $399,104 plus collection fee in No. 7265), but with respect to the twenty-one partners sued individually, the judgments were several rather than joint, and were limited in each instance to their respective percentage shares of the joint venture. In most cases, this was five percent, or $17,027 in No. 7264 and $19,955 in No. 7265. No one was happy with that result, and so we have cross-appeals.

The court reached its decision by finding, essentially, that (1) the notes were validly executed on behalf of the joint venture, (2) SJV was (and is) a general partnership, (3) the joint venture agreement, however, manifested an intent to limit the individual liability of the partners to their respective percentage shares, (4) on May 2, 1974, the parties entered into a novation, (5) at that time, the plaintiffs were aware of those provisions in the joint venture agreement serving to limit the individual liability of the partners, and (6) as a result, the plaintiffs were deemed to have consented to such limitations and are bound by them.

The plaintiffs — appellants here — concur with the court’s conclusions that the joint venture is a general partnership and that the two notes were validly issued on its behalf. They argue, however, that (1) the May, 1974, agreement did not constitute a novation, and (2) the joint venture-agreement does not and cannot serve to limit the individual liability of the partners for joint venture obligations to third parties. Cross-appellants — being SJV alone in No. 7264 and SJV and two of its partners (Charles Fulton and Murray’s Leasing Co.) in No. 7265 — contend that there was a genuine dispute of material fact as to whether the two notes were validly issued, and that the court erred in granting summary judgments in any amount. Beyond that, along with the other appellees, they argue that the court was correct in limiting the liability of the various partners.

The notes in question and the issues that they generate arise from a complex set of transactions involving the Sundowner Mobile Home Park, located in Ocean City.

It appears that in March, 1972, one Gerald Exten contracted to purchase the mobile home park from Kathleen Pokusa for $1.1 million. The actual conveyance, however, was made not to Exten but to a limited partnership known as Sundowner Limited Partnership (SLP), in which Exten was a general partner and in which William DiLoreta, M. Charlotte Garner, Phillip L. Green, and John T. Hazel, Jr. were limited partners. Settlement occurred in May, 1972.

Shortly thereafter, Exten interested a number of investors in purchasing the mobile home park on a leaseback arrangement. To that end, the following transactions occurred:

(1) On August 29, 1972, an Agreement of Sale was apparently executed in which SLP agreed to sell the property to Gene A. Murray and John M. Fitzgerald as trustees or agents for an entity to be formed. Unfortunately, the parties have not reproduced the Agreement in the record extract (and we are not disposed to search through a ten-volume record to look for it), and we are therefore not privy to all of its terms. On the same day, a lease was entered into between "Gene A. Murray and John M. Fitzgerald, and/or assigns, Lessor” and Exten Associates, Inc., Lessee, in which the corporate lessee leased the Sundowner Mobile Home Park for a period of twenty years, commencing January 15, 1973, at a rental of $150,000 a year plus annual escalations of 2% after the first year. Murray and Fitzgerald each signed the lease as "trustee.”

(2) On February 6,1973, SJV was created by means of the Sundowner Joint Venture Agreement. The agreement recited that the purpose of the joint venture was to acquire and own certain described land, upon which the mobile home park was located. It appointed Murray and Fitzgerald as trustees for the joint venture and its members and authorized them to enter into a contract with SLP to acquire the property "under the terms and conditions set forth in an Agreement of Sale, the terms and provisions of which the Venturers are familiar.” It further authorized the trustees to pay $1,800,000 for the property, as follows: $360,000 in cash; assumption of an existing first mortgage of $815,000 to Kathleen Pokusa; and execution of a second mortgage for the balance of $625,000 to SLP. In order to carry out their duties, the trustees were empowered to execute "such Contracts, Deeds, Mortgages, Bills Obligatory or other documents that may be required by law, and to do such acts and deeds which are necessary and proper to promote to [sic] the trust and the interest of the parties to the Joint Venture.”

Paragraph 4 of the joint venture agreement, captioned "CAPITAL,” listed the names and addresses of the twenty-one co-venturers and the percentage of interest held by each. It recited that each had contributed the percentage amount shown after his name, "which percentage shall represent his proportionate interest in the Joint Venture and its assets and his proportionate liability for the obligations of the Joint Venture.” (Emphasis supplied.) Paragraph 5 obligated the venturers, upon call, to contribute "pro rata” such additional capital as necessary to pay "all current or due obligations of the Joint Venture.. .”; and paragraph 6 provided that net profits shall be divided and net losses shall be borne by the venturers "in the percentages set forth in paragraph 4 hereof.”

(3) On February 1,1973, settlement took place. The property was conveyed by SLP to Murray and Fitzgerald as trustees for SJV, and, on behalf of SJV, they executed the two notes at issue here, each for $312,500, and a mortgage securing the same. In accordance with the joint venture agreement (and presumably the agreement of sale), the notes called for interest only for the first five years, with annual principal amortization to commence in the sixth year (1979) and continue until 1998 when the final installment would be due. Each note contained an "acceleration” clause, to the effect that a default in the payment of any installment of principal or interest would cause "the entire balance due hereunder to become immediately due and demandable....”

There is nothing in the record to show that the August, 1972, lease with Exten Associates was ever assigned to SJV, but we are told by appellants (without contradiction by appellees) that such an assignment was made. A more serious lapse was the fact that an existing mortgage on the property payable to the Hebron Savings Bank (Hebron) in an amount somewhere between $120,000 and $200,000 — the record is not clear on the matter — was not paid at settlement, as it should have been; and it thus remained as a first lien on the property. That, indeed, is one basis of cross-appellants’ claim that the trustees exceeded their authority in the transaction.

In March, 1973, SLP assigned one of the notes (that involved in No. 7264) to Exten who, in turn, endorsed and delivered it to Potomac Bank and Trust Co., the predecessor of appellant Dominion. At some point, not clear from the record, SLP assigned the other note to William DiLoreta as trustee for the four SLP limited partners — himself, Phillip Green, John T. Hazel, Jr., and M. Charlotte Garner. Eventually, Hazel and Garner became the sole beneficial owners of that note, and on December 10, 1976, they caused it to be endorsed by DiLoreta (as trustee) to Potomac Bank and Trust Co. as collateral security for certain obligations owing to the bank. The assignments of the notes to Exten and DiLoreta, respectively, were in distribution of the various partners’ shares in SLP. Dominion, as Potomac’s successor by merger, claims to be a holder in due course of both notes.

Some time in 1974, after the assignment of the first note to Potomac but before assignment to it of the second, Exten Associates became in default of its obligation under the lease, and suit was filed against it. Perhaps as a result of that default, SJV fell into default on both the Pokusa and SLP mortgages. In an effort to resolve the various difficulties, SJV, Exten Associates, SLP, Exten individually, and Potomac entered into a new agreement on May 2, 1974.

The agreement recited some of the above history and provided, in relevant part, for the following:

(1) The current arrearage due by Exten Associates on the lease was established as $140,267.

(2) Exten Associates agreed to discharge that arrearage by (1) servicing the Hebron mortgage, for which credit of $85,714 would be allowed, (ii) making a $50,000 interest payment on SJV’s behalf on the Pokusa mortgage, and (iii) delivering a promissory note in the amount of $4,613 to SJV’s attorney.

(3) SJV agreed to dismiss the pending action against Exten Associates, without prejudice to reinstitute it if Exten Associates defaulted on its obligations under the new agreement. However, said the agreement, "nothing herein contained shall be deemed a waiver by SJV of its underlying entitlements, rights and privileges under the Lease....”

(4) SJV, SLP, and Potomac agreed to four modifications in the SLP mortgage (and the two notes secured by it); namely: (i) the term was reduced by thirteen years — from 1998 to 1985; (ii) the date of annual payment was changed from February 1 to April 1; (iii) any "advances” made by Potomac, SLP, or SLP partners "to secure the obligations of SJV” would be considered as additional principal under the SLP mortgage; and (iv) SJV would be entitled to set off against the SLP mortgage any payments due under the agreement from Exten Associates if not paid.

(5) SJV agreed to assume the Hebron and Pokusa mortgages and to indemnify "them” against all loss and expense incurred by reason of SJV’s failure to "perform said mortgages,” provided that "all of the obligations of this Agreement are faithfully performed by them.” Exten Associates, on the other hand, agreed to indemnify SJV from any loss or expense arising from its failure to service the Hebron mortgage.

(6) SJV agreed to deliver all of its receipts not needed for "ordinary operating expenses” to SLP’s attorney, who would pay them over to Potomac until such time as all interest due on the SLP mortgage was paid current.

(7) SLP agreed to advance, on Exten Associates’ behalf, the $50,000 payment on the Pokusa mortgage (see paragraph (2) above). In the event of any default by Exten Associates of any of its obligations, SLP would be entitled to set off that $50,000 (or any unrepaid portion of it) against the SJV note for $312,500 that had been assigned to Gerald Exten (and reassigned by him to Potomac).

(8) Finally, under the caption "INTERPRETATION,” the agreement stated that it "shall be deemed to be the entire agreement of the parties on the subjects covered herein, supplanting upon its execution any and all inconsistent provisions of prior agreements oral or written....” (Emphasis supplied.)

The agreement recites that Potomac "joins herein for the sole purpose of and does hereby consent to the provisions hereof pertaining to Potomac and for no other purpose” — not one of the better examples of English rhetoric or syntax.

The 1974 agreement did not entirely resolve the financial difficulties. Two years later, in May, 1976, SJV entered into a new agreement with Hazel which made certain additional modifications pertaining to the second SJV note. At the time, the interest payments due on the note for February, 1975, and 1976, had not been paid. It was agreed that (1) the annual payment date would be switched to August 1; (2) upon payment of the interest due August 1,1976 ($21,875), Hazel agreed to waive a like amount of delinquent interest, leaving a net amount of delinquent interest of $10,937; (3) that $10,937 would be paid in three annual installments beginning August 1,1977; (4) any right of set-off accruing to SJV for payments on the Hebron mortgage would not apply with respect to the second note; and (5) any future advances made by Hazel on SJV’s behalf would be secured by the SLP mortgage.

The problems continued, the notes again fell into default, and eventually this litigation ensued.

Because some of the questions raised by appellants and cross-appellants overlap, we shall consider the issues before us in a somewhat different order than presented in the briefs.

(1) Cross-Appellants’ Affirmative Defenses Authority of Trustees and Fraud

Cross-appellants argue that the joint venture agreement authorized the trustees — Murray and Fitzgerald — to acquire the property for $1,800,000, and to pay for it with $360,000 in cash, the assumption of the $815,000 Pokusa mortgage, and execution of a second mortgage for $625,000. By accepting the property subject to the Hebron mortgage, the trustees "clearly acted beyond the scope of their authority,” we are told. Thus, say cross-appellants, "the notes given are not the obligations of the participants in the venture, other than the trustees who signed them....”

Appelants/cross-appellees respond with the assertion that that issue was not raised below and that we should therefore take no notice of it. Although the answer filed in response to appellants’ motion for summary judgment does not mention this argument specifically, we observe that in their answer to interrogatory No. 9, which formed part of the record on summary judgment, cross-appellants did make this very contention. It therefore was before the lower court and was implicitly decided in the granting of appellants’ motion, and it is therefore incumbent upon us to address it. Cross-appellants’ procedural victory is a hollow one, however, for we find no merit in their argument.

There is nothing in the record to indicate why the Hebron mortgage was not paid or released at the February, 1973, settlement. There is no evidence in the record, however, to show that SLP or its partners (much less Potomac or Dominion) were either aware that the mortgage was not released at that time or had anything to do with it not being paid or released. Nor is there any evidence to show that the trustees were aware that the Hebron mortgage (1) existed or (2) was not released. Cross-appellants have not included the settlement sheet, any title examination reports, the agreement of sale, or any other relevant evidence bearing on the matter in the record extract.

The joint venture agreement (which fifteen of the twenty-one venturers signed and acknowledged five days after the settlement) called for SLP to receive a note or notes totaling $625,000, and a mortgage securing the same; and the trustees clearly were authorized to execute those documents, which is what they did. Absent some evidence of knowledge or complicity by someone — SLP or the trustees — the failure of the trustees to ensure that the settlement officer obtained and recorded a release of the Hebron mortgage (which may have amounted to negligence, rendering them answerable to their co-venturers) would not suffice to make the notes ultra vires in derogation of the specific authority they had to sign them.

Cross-appellants’ claim of fraud is based on the assertion that the joint venturers intended that their liability was to be a limited and several one, as expressed in paragraph 4 of the joint venture agreement, and that if the notes are construed to create a joint and full liability, they were not the kind of obligations intended to be assumed. That may or may not be true, but, regardless, it does not amount to the type of fraud which will serve to vitiate the notes. There is nothing in the record to show that SLP, much less Potomac or Dominion, was even aware of the terms of the (proposed) joint venture agreement when the 1973 settlement occurred and the notes were issued, or that they did or said anything to defraud the SJV joint venturers.

(2) Appellants’ Contentions

The theory of appellants’ claims against the twenty-one co-venturers is simple. They argue that SJV is a general partnership and that the partners are therefore jointly liable on the partnership obligations in accordance with normal partnership law.

Relying primarily on a caveat to that proposition exponded in Union Trust Co. v. Poor & Alexander, Inc., 168 Md. 400 (1935), and Demas v. Convention Motor Inns, 232 S.E.2d 724 (S.C. 1977), appellees argue that, even if SJV is a general partnership (which they contest), it is permissible for the partners to limit their liability by contract, and if a creditor extends credit with knowledge of that limitation, he is bound by it. This, they claim (and the court below found), is what occurred here. SLP, Exten, Hazel, Garner, and Potomac had constructive notice of the joint venture agreement when the notes were assigned to Potomac in 1973 because the agreement had already been placed on record, and Potomac had actual knowledge of the joint venture agreement when it entered into the May, 1974, agreement which, appellees assert, was a novation.

What we have to determine here is whether the court below was correct in deciding, on summary judgment, that (1) SJV is a general partnership and not some other form of entity which might serve to limit the individual liability of the co-venturers, and (2) if SJV is a general partnership, the joint venture agreement nevertheless manifested a clear intent to limit individual liability and appellants or their predecessors extended credit with sufficient knowledge of that limitation to make applicable the principles enunciated in Union Trust Co. and Demás.

(a) Nature of SJV

Appellees contend that there was sufficient evidence in the record to create at least a genuine dispute as to whether SJV is a general partnership. The only evidence they point to in that regard, aside from the joint venture agreement itself, are the affidavits of three of the co-venturers stating that it was their "understanding and intent” that their liability was to be a limited one. We find that insufficient.

The joint venture agreement clearly creates a partnership. See Madison National Bank v. Newrath, 261 Md. 321 (1971); Geo. Bert. Cropper, Inc. v. Wisterco Investments, Inc., 284 Md. 601 (1979). At one point, the agreement itself refers to the venture as a "partnership business” (paragraph 14(a)). It does not comply with the statutory requirements for a limited partnership in that, among other things, it fails to designate and distinguish between general and limited partners (see Md. Code, Corp. and Assoc, article § 10-102), and thus cannot be said to have created a valid limited partnership. Moreover, the record shows that (1) in various documents and agreements prepared or entered into by SJV over the years, it is referred to as a "general partnership”; (2) the 1975 and 1976 Federal income tax returns — partnership returns — state that the partners are not limited partners; and (3) the attorney who drew the agreement, and who was also one of the co-venturers, stated in deposition testimony that the agreement was intended to create a general partnership. In light of all this, the "understanding and intent” of two or three venturers does not suffice to raise a genuine dispute of fact. As a matter of law, SJV is in the nature of a general partnership, to which general partnership law is, ordinarily, applicable.

(b) The Union Trust Co. - Demás Doctrine

In Union Trust Co., two corporations and seven individuals formed what they called an "investment trust” known as the Panda Company for the purpose of investing in securities. One of the venturers put up $5,000; the others each contributed $500. The agreement creating the "trust” provided that "[s]uch securities as are purchased from time to time will be hypothecated with some bank and loans made against said securities, it being expressly understood that no member will be obligated for any amount greater than the percentage of his investment bears to the total obligation to the bank.” Id. at 403. One of the investors — Hundertmark — was elected Secretary-Treasurer of the "trust” and was authorized "to negotiate with the bank in the matter of loans, to sign such notes and documents as are required by the bank, to execute substitutions.” Id. at 404.

Hundertmark apparently negotiated two loans from the Farmers’ & Merchants’ Bank on behalf of Panda, pledging securities as collateral. At the time the loans were made and the notes executed, Hundertmark furnished the bank with a copy of the agreement. At some point, the notes became in default, and the Union Trust Company — then the holder of the notes — sued the individual investors, who demurred to the declaration. The case reached the Court of Appeals on the bank’s appeal from the sustaining of the demurrer.

The bank, contending that the "trust” was really a general partnership, asserted joint and several liability against the partners under principles of partnership law; the defendants, on the other hand, claimed that the respective rights of the parties (including Hundertmark’s authority as agent to execute the notes) were fixed by the agreement. The Court accepted that argument, stating, at 168 Md. 405-06:

"Assuming that the parties to the agreement had the capacity to execute it ... and that the bank knew of it... and that the notes were executed for the Panda Company by an agent acting under a defined and limited authority, the extent of which was known to the bank when it accepted them, the relations between the bank and the defendants must be measured by the terms of the contract rather than by the general law of partnership.” (Emphasis supplied.)

More particularly, the Court considered the question in terms of Hundertmark’s authority as an agent. At page 406: "... [I]f the agent had no authority to bind the members of the partnership severally for the whole debt, and the lender knew he had no such authority, its want of power to make such a loan as was authorized by the agreement could not possibly have expanded the agent’s authority beyond the limits of the agreement creating it, or vest in him a power expressly denied to him.” (Emphasis supplied.) Thus, said the Court, it made no difference whether the entity — the Panda Company — was a general or a limited partnership; "the case turns upon the construction of the contract, to ascertain the limits of the agent’s authority.” Id. at 406.

The Court then examined the agreement and concluded that (1) the parties intended that their liability be several and not joint, and that it be limited to the proportion of their respective investments, and (2) Hundertmark’s agency authority was similarly limited — that he was authorized to do no more than pledge their credit "to the ratio which the amount set opposite their respective names bore to any loans which he might negotiate. . . .” Id. at 407-08. That then led to the crux of the Court’s decision: "if the authority of Hundertmark was expressly limited by the agreement, and the bank knew of that limitation when it made the loan, no citation of authority is needed to support the proposition that it is bound by it.” (Emphasis supplied.) Id. at 408.

Demas v. Convention Motor Inns involved a construction mortgage given by a general partnership. The partnership agreement provided that the construction loan "shall create a personal liability upon each partner, jointly and severally, for the repayment of the entire amount of said loan or loans, except for the following partners [who were then named] who shall be only liable for their percentage shares.” Id. at 726. At the time it extended credit, the mortgagee had knowledge of the limitation pertaining to the six named partners and, in accordance therewith, "required personal endorsement of the note only by the four partners not named in the above exception.” 232 S.E.2d at 726-27.

Although unwilling to regard the six named partners as "limited partners” in the sense of restricting their liability to the amount of their respective investments, the Court concluded that they would be liable on a deficiency judgment "only to the extent of their respective percentage shares in the partnership.” (Emphasis in the original.) Id. at 727. That determination was based on the premise that a creditor may, if he chooses, accept the several rather than the joint and several obligation of partners.

Under partnership law, general partners are jointly liable for the contractual debts and obligations of the partnership (Md. Code, Corp. and Assoc. article, § 9-307; Southland Corporation v. Shulman, 331 F.Supp. 1024 (D. Md. 1971)); and, ordinarily, agreements among partners (other than in a limited partnership) to limit their liability are not binding on third parties dealing with the partnership. See, for example, Shier v. Price, 263 S.E.2d 466 (Ga.App. 1979); Gardiner v. Gaither, 329 P.2d 22 (Cal.App. 1958); Filesi v. United States, 352 F.2d 339 (4th Cir. 1965).

The point made in Union Trust Co. and Demas (and see also Weaver v. Oliver, 40 S.W.2d 984 (Tex.Civ.App. 1931)) is that where the third party knows of the limitation and consents to it, he has made a special type of contract. He has agreed, in effect, that he will not look to the joint liability of the partners for the full obligation, as the partnership law would otherwise entitle him to do, but to accept something less than that. In such a circumstance, his rights and remedies arise from and are limited by the special contract he has made; he is not entitled to the more favorable remedies flowing from the law of general partnership, which he has agreed to forsake.

Union Trust Co., and the principles enunciated in it, though never cited since 1935, have never been overruled, and thus apparently remain the law in Maryland. We therefore must consider whether the case is applicable — whether the requisite notice and consent existed here.

(c) The Proper Interpretation of Paragraph 4

As a preliminary matter, appellants argue that paragraph 4 of the joint venture agreement does not manifest an intent to limit the liability of the co-venturers with respect to joint venture obligations to their parties, and that it should not be given that effect. If that is true, of course, the Union Trust Co. doctrine never comes into play.

Appellants view paragraph 4 as being nothing more than an inter sese agreement respecting the contributions to be made by the co-venturers. In particular, they point to the testimony of the draftsman of the agreement — Mr. Kerbin — that he did not intend to limit the liability of the investors, and urge that they should not be held to any different interpretation.

We disagree. Paragraph 4 very clearly purports to limit the "proportionate liability [of each co-venturer] for the obligations of the Joint Venture” to "the percentage amount shown after his name....” (Emphasis supplied.) That most certainly extends beyond the matter of annual contributions to the capital of the entity or the division of profits and losses (which is covered in paragraph 6). Under the "objective” theory of contract — see Bernstein v. Kapneck, 290 Md. 452 (1981) — where the language of the contract is clear, as this part of the joint venture agreement seems to us to be, the subjective intent of the parties is irrelevant. Thus, the fact that Mr. Kerbin may have intended to provide for joint and full liability would not suffice to change the meaning of the language actually used.

(d) Notice to Obligees

Concluding, as we have, that paragraph 4 does purport to limit the liability of the co-venturers on joint venture obligations, in much the same way as the Panda Company agreement construed in Union Trust Co., we then must consider the second aspect of that case: Keeping in mind the strict test to be applied in granting summary judgment, what does the record show was the state of knowledge and intent of the obligees and their assigns concerning the purported limitation of liability expressed in paragraph 4?

In the maze of transactions touching upon the two notes, only three have particular relevance in this regard: the settlement on February 1, 1973, when the notes were first issued; the assignment of the notes to Potomac in or about March, 1973; and the agreement of May, 1974 — the alleged novation. We shall consider these in order.

(i) The February, 1973, Settlement

As we have already noted, there is nothing in the record to indicate that, at the time of settlement, SLP or any of its partners or assigns had any actual knowledge of the SJV joint venture agreement or, in particular, the provisions of paragraph 4 thereof. The only evidence bearing on that is the deposition testimony of Hazel, who specifically denied having any such knowledge at that time. Moreover, the joint venture agreement, as we have also already observed, did not even become effective until February 6,1973, and it was not recorded until February 13. Obviously, there could be no constructive notice of it as of the date of settlement, which is when credit was extended to SJV.

(ii) Assignment to Appellants

There is nothing in the record to indicate any actual knowledge on the part of Potomac of the terms of the joint venture agreement at the time it took, as collateral, the notes from Exten and DiLoreta. The bank officer who handied the transactions, Marshall Groom, testified on deposition that, although he assumed that there was some sort of agreement creating SJV, he had not seen it and was not aware of its terms at or before the time the bank took an assignment of the notes. This was confirmed in part by Hazel’s testimony that he did not recall discussing either with SLP or its partners or Mr. Groom the provisions of the joint venture agreement.

Appellees argue, however, that the agreement had been recorded by then and that the bank therefore had constructive notice of its terms. This constructive notice, they claim, arises not only from the recording of the agreement but also from the duty to inquire as to the authority of the two trustees — Murray and Fitzgerald — to execute the notes. Having actual knowledge that the notes were executed by trustees, say appellees, the bank had a duty to inquire as to their authority, and had it done so, it would have discovered the joint venture agreement and become cognizant of paragraph 4.

We agree with appellees that the joint venture agreement was properly recorded under Real Property article, § 3-102 (and possibly § 14-112), and that, as a result, the Potomac bank had constructive notice of it. We do not agree, however, with their analysis of the effect of such constructive notice.

Constructive notice (or knowledge) is a legal fiction; it is a useful and perhaps a necessary fiction, but it is a fiction nevertheless. It presumes as fact that which is not fact, and it therefore has its limits.

In Union Trust Co. and Demás, the creditor had actual knowledge of the limitations on individual partner liability at the time it extended credit. That actual knowledge formed the basis of the Courts’ ultimate conclusion that the creditor had assented to those limitations. Over and over again in Union Trust Co. the Court of Appeals stressed that its decision was based on the fact, or the hypothesis, that the extent of the agent’s authority "was known to the bank” when it accepted the notes (id. at 405), that the lender "knew” the agent had no authority to bind the partners jointly (id. at 406), and that "the bank knew of that limitation when it made the loan....” Id. at 408. (Emphasis supplied.)

The Opinion in Union Trust Co. was precise and well-crafted, generally devoid of loose language and mixed terminology. We assume, therefore, that in using, throughout, the various tenses of the verb "know,” the Court had in mind actual knowledge or "cognitive notice” — an actual awareness of the pertinent facts, and not a fictional or imputed notice. See 1 Merrill on Notice §§ 3, 4 (1952).

As we have pointed out, ordinarily a creditor dealing with a general partnership can safely assume that the partnership debt is backed by the joint liability of all the partners. The theory behind restricting him to something less than that by reason of a special contract is that he is a party to that special contract — that he has, in fact, knowingly and voluntarily agreed to its disadvantageous terms. That assent, and its volition, can readily be inferred when the creditor is actually aware of those terms and proceeds in accordance with them; but we will not infer that assent (and do not believe that Union Trust Co. requires us to do so) based upon an imputed notice when the facts demonstrate the absence of a real awareness. This is particularly true, we think, when, as here, the creditor merely takes the obligation from a third party as collateral for an existing debt, and does not extend new (or any) credit to the maker of the obligation.

We are not impressed with appellees’ argument about the bank’s duty to inquire as to the trustees’ authority. Had the bank been extending credit directly to SJV, it may have had a greater interest in SJV’s legal status and the authority of the trustees to execute the notes. The record shows, however, that its dealings were entirely with SLP and its partners, not with SJV. To impute the requisite cognitive notice based on a duty to inquire under that circumstance is simply not reasonable.

(iii) The May, 1974, Agreement

Appellees’ principal contention here is that Potomac was a party to the 1974 agreement and that, at that time, it had actual knowledge of the joint venture agreement. The new agreement, they contend, amounted to a novation, and thus to a new extension of credit. This, they say, brings them squarely within Union Trust Co. - Demas. Once again, we disagree.

The parties argue at great length over whether the new agreement did or did not satisfy all the tests for a novation, the heart of the controversy being whether the record shows "an agreement among the parties to extinguish the old obligation[s] and substitute a new one for it” See I. W. Berman Properties v. Porter Brothers, Inc., 276 Md. 1, 7-8 (1975). Appellees place undue emphasis on that issue. Whether the May, 1974 agreement does or does not rise to the status of a novation is not dispositive of the ultimate issue before us, for when we view that agreement in a proper perspective, it becomes clear that, whatever its nature or status, there simply was not the type of knowing consent on the part of Potomac, Hazel, or Garner to the limitations expressed in paragraph 4 of the joint venture agreement required by the doctrine of Union Trust Co.; and the trial court erred in concluding otherwise.

The situation antecedent to the May, 1974, agreement was this: the two notes were in default; they were secured by a third mortgage, behind two other mortgages totaling at least $935,000 and possibly $1,015,000 plus accrued interest, which were also in default; one of those mortgages — the first mortgage to Hebron — had not been anticipated by SJV; and the lease to Exten, which was the principal security for all of the SJV’s undertakings and the sole source of its cash flow, was also in substantial default, nearly a full year’s rent being past due. The primary thrust of the new agreement was directed at those problems. It looked to revitalize the Exten lease — the linchpin of the whole venture, cure the default on the mortgages, and provide for the servicing of the Hebron mortgage.

Insofar as the two notes (and the SLP mortgage) were concerned, only two direct changes were made: the maturity was reduced to 1985 — still eleven years in the future — and the annual payment date was moved from February to April. The parties agreed to the possibility of an increase or a decrease in the principal balance secured by the SLP mortgage if additional sums were advanced on behalf of SJV or if Exten Associates defaulted on certain of its obligations; but it does not appear that the principal amounts were, in fact, ever actually changed.

Neither Potomac nor Hazel or Garner extended any new credit to anyone in connection with that agreement. Their relationships with SJV, SLP, and each other remained the same. By virtue of the acceleration clause in the notes, which was undisturbed, and the subsequent default in the payment of interest, even the changes in ultimate maturity and annual payment date became irrelevant. The obligation sought to be enforced is precisely that initially undertaken by SJV, and not any modifications made by the May, 1974 agreement. Neither the existence nor the nature or amount of the underlying obligation depends in any way upon that later agreement. Its only asserted effect is to transmute, through a fiction of presumptive or imputed consent, what was a full and joint individual liability into a limited and several one. Compare Baltimore Academy of the Visitation v. Schapiro, 169 Md. 332 (1935); Cole, Administratrix v. Wilbanks, 226 Md. 34 (1961); Swift v. Allan, 211 Md. 588 (1957); Harford Bank v. Estate of Hopper, 169 Md. 314 (1935); Leisner v. Finnerty, 252 Md. 558 (1969).

Looking at the 1974 agreement in that context, what evidence is there of a knowing intent on the part of Potomac, Hazel, or Garner to give up the only real security behind the notes — the joint liability of the partners — and to substitute for that the general credit of a virtually worthless entity and a five percent several liability of the partners? We find none, and will not infer it merely from the fact that they knew or had possession of the joint venture agreement. To do so would require us to make a double-level assumption for which no evidence exists in the record: (1) we would have to assume cognitive notice — actual awareness — of a limited several liability implicit from an eleven-word clause buried in a fifteen-page agreement under the caption "CAPITAL”; and (2) we would then have to infer from that assumptive cognitive notice an actual knowing consent to a most disadvantageous change in the contract that is in no way reflected or even hinted at in the new agreement. That, we think, stretches fiction beyond the point of reason.

For these reasons, we find that the court was correct in granting judgment in favor of appellants, but in error in limiting the judgments against the SJV partners. Those partners (or such of them that have not been released) are jointly liable for the full amount of the obligation.

Judgment as to Sundowner Joint Venture affirmed;judgments as to joint venturers not otherwise released affirmed as to liability and reversed as to amounts; case remanded to Circuit Court for Worcester County for modification of judgments in accordance with this opinion; appellees to pay the costs.

      . Nineteen of the partners had a five percent interest; two had a two and one-half percent interest.

      . These findings, we are told, were orally announced by the court at the conclusion of a hearing on the various motions; but unfortunately the reporter destroyed her notes of that hearing, and so there is no written evidence of those findings in the record. Although requested, the court declined to prepare a memorandum of its findings. As there does not appear to be any dispute that the findings were made, we shall assume that they were made and that they formed the basis of the court’s ultimate decision.

      . During the course of the litigation and the pendency of the appeal, settlements were reached with some of the partners.

      . The Joint Venture Agreement is dated November 6, 1972, but, in paragraph 3, it provides that the term of the joint venture shall commence "immediately after all the Parties hereto shall have signed this document.” The document reflects that the last parties signed it on February 6, 1973.

      . One of the many professional lapses revealed by this record is the fact that settlement occurred before SJV was legally in existence. As noted, the joint venture did not become effective until February 6, 1973. No one has raised the question — either in the trial court or on appeal — of the effect of that lapse and we shall not further complicate this already complicated case by considering it. Maryland Rules 1031 and 1085.

      . There seems to be a $60 discrepancy in these figures that is not explained in the agreement or the record: $85,714 plus $50,000 plus $4,613 equals $140,327.

      . The agreement does not make clear who is meant by "them” — Hebron and Pokusa or SLP and its partners.

      . Interrogatory No. 9 asked, "[i]f you contend that John M. Fitzgerald and Gene A. Murray, as trustees for the Sundowner Joint Venture, exceeded their authority in executing the Sundowner Note, state in detail all facts and specify all provisions of the Sundowner Joint Venture Agreement which you rely upon to support this contention.” Cross-appellants’ answer in relevant part, was:
      "... Additionally, the Sundowner Joint Venture Agreement specifically limited the authority of the Trustees to create or assume debt; the settlement of the sale of the mobile home part [sic] from Sundowner Limited Partnership to Sundowner Joint Venture was conducted and consummated without paying off a mortgage to Hebron Bank, and the act of said Trustees in consummating or permitting the consummation of the transaction without retiring the debt was beyond the authority of such Trustees.”

      . In one sentence in their brief, cross-appellants also contend that, if the notes are effective to create a joint liability among the partners, the trustees exceeded their authority in signing them in light of paragraph 4 of the joint venture agreement. That issue, couched in terms of the trustees’ authority and the underlying validity of the notes, was not raised below, and we shall therefore not consider it in this appeal. Maryland Rule 1085. See, however, infra.

      . Cross-appellants point to an affidavit of one of the co-venturers, David Blakeman, as evidencing "that the entire transaction, from its inception, was imbued with fraud.” We see no such evidence in that affidavit.

      . No claim is made by appellees that the 1976 modifications had any effect on the validity of the notes or their respective liabilities thereon, and we shall therefore not consider that question.

      . Hazel stated that he did not review the joint venture agreement "until long after the sale was consummated to the joint venture.”

      . Appellants contend that those statutes do not authorize the recording of the joint venture agreement and thus afford no constructive notice of it. We disagree.

      . The most recent comprehensive restatement of the law on novations is contained in the I.W. Berman case. The essence of it, taken from I.W. Berman, 276 Md. 7, et seq., is as follows:
      "A 'novation’ is a new contractual relation made with intent to extinguish a contract already in existence. It 'contains four essential requisites: (1) a previous valid obligation; (2) the agreement of all the parties to the new contracts; (3) the validity of such new contract, and (4) the extinguishment of the old contract, by the substitution of the new one.’ ....
      " 'For a novation to exist, there must be [evidence of] an agreement among the parties to extinguish the old obligationfs] and substitute a new one for it.’ ....
      "A novation is never presumed; the party asserting it must establish clearly and satisfactorily that there was an intention, concurred in by all the parties, that the existing obligation be discharged by the new obligation. ... As was stated in [District National Bank of Washington v. Mordecai, 133 Md. 419, 427 (1919)], '[I]t does not result from the substitution of one paper writing for another, or one evidence of debt for another, or one contract for another, unless such substitution is made with the intention of all the parties concerned to extinguish the old one,’
      "The intention to substitute a new agreement for a previous contract need not be expressed however, since facts and circumstances surrounding the transaction, as well as the subsequent conduct by the parties, may show such an acceptance as clearly as an express agreement; but such facts and circumstances, when shown, must be such to establish that the intention to work a novation is clearly implied.
      "Where the evidence is in conflict, the issue of whether or not there was a novation is one of fact for the jury, or the court sitting as a jury.” (Citations omitted.)


source: Caselaw Access Project

author: Gilbert, C. J.,

license: Public Domain

text:
    ALLEGHENY MUTUAL INSURANCE COMPANY v. STATE OF MARYLAND
    [No. 294,
    September Term, 1981.]

      Decided November 5, 1981.

    The cause was submitted on briefs to Gilbert, C. J., and Lowe and Weant, JJ.
    Submitted by Ronald I. Kurland and Gerald A. Kroop, P.A. for appellant.
    Submitted by Stephen H. Sachs, Attorney General, Michael A. Anselmi, Assistant Attorney General, and Richard D. Warren, State’s Attorney for Wicomico County, for appellee.
   Gilbert, C. J.,

delivered the opinion of the Court.

The appellant, Allegheny Mutual Insurance Company, posted a bail bond in the amount of five thousand dollars ($5,000) on behalf of Robert Alan Garris. The bond was to be forfeited if Garris, who was charged with forgery and uttering (Md. Ann. Code art. 27, § 44), failed to appear for trial in the Circuit Court for Wicomico County when the case was called.

On May 2,1978, the date scheduled for the trial of Garris on the alleged offenses, he did not appear in court because he had removed himself to San Diego, California. The trial court forfeited the bail on August 2, 1978, and it was paid in full to the clerk of the court the next day.

According to the record in this case, Garris, during his California sojourn, was "shot in the face and suffered serious injury and the loss of an eye. That on his hospital admission form ... [he] stated his name and as a result of police investigation, it was determined that ... [he] was wanted in Maryland for failing to appear for trial [in Wicomico County].”

Garris waived extradition and voluntarily returned to Maryland. Neither California nor this State incurred any transportation costs as a result of Garris’s return to Maryland.

When the forgery and uttering cases were called to trial on October 6, 1980, the prosecution entered a nolle prosequi, with the result that Garris has never had to stand trial on the merits of the charges.

The record further discloses that Garris’s parents agreed to indemnify Allegheny Mutual to the full extent of the bail bond. Thus, it is Garris’s parents that have sustained or are suffering the loss occasioned by his wilful failure to appear for trial in May 1978.

In February 1981, Allegheny petitioned the circuit court to strike the bail forfeiture and order a remission of the $5,000 to Allegheny. The trial court, relying upon Md. Rule 722 i 2, apparently found no "reasonable grounds for the defendant’s [Garris’s] failure to appear” at trial. The court denied Allegheny’s petition.

The State concedes that Md. Rule 722 i 2, which provides:

"2. Striking Out Forfeiture.
The court shall strike out a forfeiture in whole or in part where the defendant or surety can show reasonable grounds for the defendant’s failure to appear; and notwithstanding Rule 625 a (Revisory Power of Court Over Judgment-Generally), it also shall set aside any judgment entered thereon pursuant to subsection 4 (b) of this section; if the penalty sum has been paid pursuant to subsection 3 of this section, the court shall order the remission of the penalty sum, in whole, or in part.” and

Md. Ann. Code art. 27, § 616 V2 (d) (1), which reads:

"(d) Striking out forfeiture of bail; refund of collateral and discharge of security when case stetted.
— (1) Any court exercising criminal jurisdiction shall strike out a forfeiture of bail or collateral where the defendant can show reasonable grounds for his nonappearance. However the court shall allow a surety 90 days, or for good cause shown, 180 days from the date of failure to appear to produce the defendant in court before requiring the payment of any forfeiture of bail or collateral. The court shall strike out a forfeiture of bail or collateral deducting only the actual expense incurred for the defendant’s arrest, apprehension, or surrender if the defendant is produced in court and if the arrest, apprehension, or surrender occurs more than 90 days after the defendant’s failure to appear, or at the termination of the period allowed by the court to produce the defendant.” (Emphasis supplied.),

must be read together. Indeed, in light of Allegheny Mutual Casualty Co. v. State, 234 Md. 278, 199 A.2d 201 (1964) and Irwin v. State, 17 Md. App. 518, 302 A.2d 688 (1973), the State is hard put not to make that concession. We held, in Irwin, that former Md. Ann. Code art. 26, §§ 5A, 33 (b), and Allegheny complement one another. Of course, the italicized portion of Md. Ann. Code art. 27, § 616 Vz (d) (1) was not then in esse.

Irwin states:

"[T]he discretionary power of the court to strike out a forfeiture is to be liberally construed. It is a sound discretion, not an arbitrary or absolute one, and it is not restricted in its exercise only to instances in which there was no wilful default. 'Reasonable grounds’ for the nonappearance of an accused are something less stringent than an absolutely compelling reason.” 17 Md. App. at 524.

Were it not for the italicized portions of Art. 27, § 616 Vz (d) (1), as above quoted, it would appear that the trial judge properly exercised his discretion. The difficulty is that the italicized portions do exist and serve to take away with one sentence what was given by the other.

A reading of section 616 Vz (d) (1) manifests that the first sentence thereof confers upon the judge the discretion to determine what are "reasonable grounds for his nonappearance” at trial of the case. If the judge finds "reasonable grounds” he must "strike out” the "forfeiture.”

The second sentence of the statute directs the judge to allow a surety 90 days in which to surrender the defendant after forfeiture before requiring payment of bail. Should the surety show "good cause” to the judge, the 90 day period will be extended for another 90 days or a total of 180 days before payment of the forfeiture is due.

The third sentence of the statute, however, contains the legislative mandate that the court shall strike forfeiture if a defendant is produced in court more than 90 days after his initial "failure to appear.”

Thus, the way the statute is phrased, if the surrender to the court of the defendant occurs within 90 days of forfeiture, the court may, for good cause shown, strike the forfeiture. On the other hand, if the surrender takes place after the 90 day period, the court has no discretion to exercise, and it must strike the forfeiture.

The statute is hardly a model for unambiguous legislation. Why it is phrased as it is is not for us to answer.

Whatever defect exists in the legislation, it, at least, spurs a surety on to find any defendant who defaulted on his appearance at trial. The surety is placed, by the statute, in the position of knowing that once he finds a defendant who has fled, the surety may recover his loss by surrendering the defendant in court. Certainly, in the sense of encouraging sureties to seek and find defendants who fail to appear for trial, the statute serves a useful purpose. Nevertheless, it also seems to encourage sureties not to surrender a defendant, if a forfeiture has occurred, until after the expiration of 90 days following forfeiture. In that manner, the surety avoids the risk of the judge’s failing to find "reasonable grounds” for nonappearance and assures the striking out of the forfeiture by virtue of the clear legislative directive.

We must, in the light of the statutory direction, reverse the order of the circuit court and remand the matter with instructions to the trial court to strike the forfeiture and order the remission of any monies paid thereunder.

Order reversed.

Case remanded for further proceedings not inconsistent with this opinion.

Costs to be paid by Wicomico County.

      . Md. Rule 722 i 3 provides:
      "Within 90 days from the date the defendant fails to appear, which time the court may extend to 180 days upon good cause shown, a surety shall satisfy any forfeiture, either hy producing the defendant in court, or by paying the'penalty sum of the bond.”

      . The docket entries indicate the nol pros to all charges, but the appellant’s brief states that the appellant pled guilty to the fourth count of the indictment. The trial judge’s opinion, which is gratuitously and improperly printed in the appellee’s appendix, verifies the statement in the appellant’s brief. For some reason, the trial judge’s opinion is not part of the record received in this Court.


author: Morton, J.,

text:
    MORTON BENDER v. PENELOPE BENDER
    [No. 23,
    September Term, 1981.]

      Decided November 6, 1981.

      The cause was argued before Morton, Liss and MacDaniel, JJ.

      Robert A. DiCicco for appellant.

      Walter W. Johnson, Jr., for appellee.
   Morton, J.,

delivered the opinion of the Court.

We have before us cross appeals from a decree entered on

December 2, 1980, in the Circuit Court for Montgomery County (McAuliffe, John F., J.), sitting in equity, awarding the plaintiff, Penelope Bender, the sum of $14,935, representing her share of the reasonable value of the use of the then family home during the period she had been ousted by her husband, Morton Bender.

Appellant and cross-appellee, Morton Bender, appeals therefrom on the grounds that the court of equity was without jurisdiction to award damages; the court was erroneous in denying him any contribution from Mrs. Bender for expenses incurred by him; the court was erroneous in not setting off the entire amount of pendente lite payments made by Mr. Bender; and the judge’s finding as to the fair rental value of the property was totally without evidentiary basis.

Penelope Bender, appellee and cross-appellant, appeals on the ground that the credit for alimony pendente lite payments made by appellant was computed on the basis of 13 months when payments had been made for only 10 months.

Mr. Bender filed a bill of complaint for a divorce a vinculo matrimonii on July 22, 1976, citing Mrs. Bender’s adultery as grounds. On August 21, 1976, Mr. Bender, with the help often of his employees, physically removed Mrs. Bender and her belongings from the marital home. On January 11,1977, Mrs. Bender was awarded alimony pendente lite in the amount of $2,500 per month, commencing October 1, 1976. On August 23, 1977, Mr. Bender was awarded a divorce. Alimony was denied Mrs. Bender on the basis of fault. The Court of Appeals, in the first of a series of appeals, affirmed the action of the chancellor, but remanded the case to determine Mrs. Bender’s interest in furnishings in the marital home.

At some point in these proceedings it was brought to Mrs. Bender’s attention that she had, unwittingly, executed a deed on May 15,1972, conveying her interest in the marital home to Mr. Bender. Mrs. Bender filed a bill of complaint in equity on October 29,1976, to set aside the deed and impress a trust upon Mr. Bender’s interest in the property, asking, in addition, damages for her wrongful ouster. By decree dated November 21, 1977, the deed was declared void ab initio and of no effect; and the court retained jurisdiction as to damages, compensatory and exemplary, as claimed by Mrs. Bender. That decree was affirmed by this Court in a per curiam opinion, Bender v. Bender, No. 167, September Term, 1978, filed December 8, 1978.

At the final hearing on November 28,1980, upon the issue of damages, expert witnesses for both parties testified as to the fair rental value of the marital home. On December 2, 1980, the opinion and order from which both parties have appealed was entered. Mrs. Bender was awarded $14,935 for ouster damages computed as follows: she was to receive as her fifty percent share of the rental value of the home $750 per month from the date of ouster (August 21, 1976) to the date of appointment of the trustee in a separate partition proceeding, totalling $22,280, minus that portion of the pendente lite payments made by Mr. Bender to Mrs. Bender, which represented the allocation for housing expenses of $7,345 ($56.5 per month x 13 payments). The chancellor concluded that contribution by Mrs. Bender for expenses incurred by Mr. Bender while in sole possession of the property, in the form of taxes, maintenance and utilities, was inappropriate.

I. Jurisdiction

Mr. Bender first argues that "[a] court of equity is without jurisdiction to award damages cognizable at law for the use and occupation of property held by tenants in common, in an unrelated controversy to set aside a deed.”

It is well settled that a court of equity "will not retain jurisdiction to grant a purely legal remedy . . .,” Pomeroy, Equity Jurisprudence § 233, p. 419 (5th ed. 1941), see also Paradise Amusement Company v. Hollyday, 190 Md. 48 (1948). On the other hand, in order to avoid a multiplicity of suits a court of equity will, once it has jurisdiction, "retain jurisdiction to the end, in order to give complete relief, even as to matters over which it would not have had jurisdiction originally.” Paradise Amusement Company, supra, at 51.

Mrs. Bender requested the Court to (1) set aside the deed conveying her interest in the marital property because her signature was fraudulently induced, and (2) award her damages for the lost use and enjoyment of the marital home from which she was wrongfully and physically ousted by Mr. Bender. Unlike the unrelated controversies which the Court faced in Paradise Amusement Company, supra, and on which Mr. Bender relies, the two issues here were sufficiently related in subject matter for the court to settle both. As the chancellor stated in his opinion of December 2,1980:

"It might . . . have been preferable to have these various claims considered by the auditor in the pending partition action, and to dismiss the remaining claims for relief in this case. I decline to do so, however, for several reasons — testimony has been taken; the matter has been briefed and argued by counsel;... it appears to be in the best interests of the parties as well as the administration of justice to attempt to bring to a swift conclusion the several cases existing between these parties. The Bill of Complaint in this case includes a claim for general relief, as well as a claim for damages, and this Court has jurisdiction to render an accounting and to declare the rights of the parties as to the areas of concern. Both parties have been fully advised concerning the subject matter to be considered and determined, and due process is not offended by my decision to conclude this aspect of the litigation in this case.”

We hold that the chancellor exercised proper residual jurisdiction in disposing of the ouster damages claim.

II. Offset Against the Damages Award

Mr. Bender next argues that it was not proper to deny him any contribution from Mrs. Bender for expenses incurred by him prior to the decree of November 21, 1977, in which the deed of 1972 was declared to be void ab initio. He bases his contention on the general rule that "a tenant in common who is in possession of the property is entitled to contribution for those expenditures necessary for the maintenance, benefit and preservation of the property. Tiffany, Law of Real Property, § 459.” See also 51 A.L.R.2d 388, 464; 20 Am.Jur.2d Cotenancy and Joint Ownership, § 58 (1965). Although he concedes that this Court has denied such contribution where one co-tenant has ousted the other, Young v. Young, 37 Md. App. 211 (1977), he would have us believe that the "indiscriminate” application of Young to this case would "run counter to the efforts of equity” in that he "acted under color of title, in the absence of any challenge to his bona fide belief in the legitimacy of his title and upon the advice of his former counsel.” According to Mr. Bender, unless we were to award contribution for the expenses incurred by him, we would be enriching Mrs. Bender "at the expense of an innocent, bona fide possessor who has expended his money in the honest belief that he is the absolute owner of the premises.”

Mr. Bender compares himself to the appellant in McLaughlin v. Barnum, 31 Md. 425 (1869), who, with no knowledge of any defect in his title to certain property, expended substantial sums of money on improvements. However, we agree with Mrs. Bender that "[Mr. Bender’s] comparison of himself with an innocent bona fide [possessor] is absurd.” She testified that on many occasions during their married life, Mr. Bender would give her a batch of papers, asking her to sign them for the business without explaining to her their contents. The deed was apparently one such paper. In his decree dated November 21,1977, the chancellor below found:

"There [was] clear and convincing evidence that this transaction was manifestly unfair, that there was no consideration for her transfer to him of this extremely valuable interest in this property, and that it . . . would be unjust and [Unequitable to allow such a transfer to stand.
I think all that he said was 'sign here, this is for business,’ without indicating that it was a deed . . . and without telling her what it was for.”

Certainly, Mr. Bender cannot seriously suggest that he thought, in good faith, that after this very questionable transaction he was the sole owner of the property. Mr. Bender then argues that to restore to Mrs. Bender the benefits of the property during the ouster period and yet deny him her share of the financial burdens during that same period creates an inequitable result. Mrs. Bender responds with what she terms the "dispositive” case on this issue, Young, supra.

The wife in Young sought the sale and one-half of the proceeds thereof of property she held with her husband by the entireties. After finding that there had been an ouster of the wife, this Court said that "[s]ince the appellant ousted the appellee from the jointly owned property, thereby denying her the right to its use and enjoyment, we agree with the trial judge that the appellant is not entitled to contribution. See Colburn v. Colburn, [265 Md. 468] at 475-76; Hogan v. McMahon, [115 Md. 195].”

Young, however, is not determinative. Unlike the case here, the ousted spouse in Young did not demand or recover compensation for the lost possession and enjoyment of the property during the ouster period. It is, we think, a significant difference.

Our research discloses few cases where both the lost benefit is demanded by the ousted spouse and contribution for appropriate payments made is demanded by the spouse who continues to pay the bills.

The Supreme Court of New Jersey, in Newman v. Chase, 70 N.J. 254 (1976), dealt with the issue when the plaintiff (Newman), who succeeded to the husband’s interest in certain marital property, requested an accounting from his co-tenant, the wife (Chase), who continued to occupy the property after refusing to give the plaintiff access, thus amounting to an ouster. After finding that Mrs. Chase was accountable to Mr. Newman for one-half the value of her use and occupation of the property, the Court went on to say, at 267-268:

"This conclusion does not end the calculation; however, for the property is encumbered by a mortgage .... Mrs. Chase asserts that . . . she has been making mortgage, tax, and insurance payments and undertaking necessary repairs to the house .... When, as here, there has been an ouster but the ousted cotenant receives an accounting based on the value of the use and occupation by the cotenant in possession, equity requires that appropriate payments made by the cotenant in possession be credited in calculating what is due the cotenant out of possession. ” (Emphasis supplied).

In Sirianni v. Sirianni, 14 A.D.2d 432, 221 N.Y.S.2d 693 (1961), the wife was in sole possession of the premises for 18 months after she ousted the husband, while the husband made the mortgage payments. The court, concluding that the expenditures on the marital home prior to the final divorce decree were not made as a gift to the wife, granted the excluded husband a recovery of the value of the property denied him measured by one-half of the expenditures on the property he made while excluded from the property. Although it is not clear that the Sirianni court was allowing recovery for contributions, see Doyle v. Hamm, 84 Misc. 2d 683, 377 N.Y.S.2d 349, 355 (1975), rev’d, 383 N.Y.S.2d 373 (1976), it did do so in Miraldi v. Miraldi, 50 A.D.2d 538, 377 N.Y.S.2d 635, 636 (1976). The court, citing Sirianni, held that the wrongfully ousted wife "was entitled to one-half of the rental value from [the date of ouster] to the date of sale pursuant to the partition decree, after due credit to plaintiff for the expenditures made by him in connection with maintenance, mortgage, taxes, insurance, etc.”

We believe it would be imprudent to attempt the formulation of an iron-clad rule concerning the obligations of an ousted spouse to contribute funds to the spouse in possession as reimbursement for monies expended by him or her during the period of ouster upon the property formerly occupied by both spouses as the marital home. Nor will we follow New York’s lead in making determinative the factual issue of whether the continued payments by one spouse were meant as a gift to the other. Rather, we think that whether contribution should be awarded in such circumstances should be adjudged on a case by case basis. The question should be answered in light of whether equity or fairness requires that appropriate expense payments made by the spouse in possession should be credited in calculating what is due the ousted spouse for loss of use and enjoyment of the property.

The chancellor concluded that Mr. Bender "is not entitled to any contribution from [Mrs. Bender] for payments made on account of said property during the period [of the ouster].” We have carefully reviewed the record and without attempting to delineate in detail the rather egregious circumstances under which Mr. Bender expelled Mrs. Bender, suffice it to say that Mr. Bender with the aid of ten individuals employed by him literally threw Mrs. Bender and her personal belongings out into the street; and he utilized every available legal tool to prevent her regaining her use and enjoyment of the marital home. In our opinion, equity and fairness not only supported but compelled the conclusions of the chancellor that Mrs. Bender was not required to contribute to the expenses Mr. Bender incurred while the sole occupant of the marital home.

Mr. Bender further contends that the chancellor, in arriving at the final damages award, should have credited him with the total sum of alimony pendente lite payments made by him ($2,500 per month) rather than merely that portion representing Mrs. Bender’s housing allowance ($565 per month). He argues that her fault and the circumstances of the dissolution of the marriage compel a full credit.

This argument, however, ignores the fact that alimony pendente lite is awarded independently of factors such as fault which are considered in determination of a permanent alimony award. "As the nomenclature indicates, an award of alimony pendente lite is a monetary payment pending the outcome of litigation which has been instituted but which has not been concluded.” Maynard v. Maynard, 42 Md. App. 47, 49 (1979). We see no error in the action of the chancellor.

III. Finding As To Fair Rental Value

Mr. Bender next argues that "[i]t was clearly erroneous for the trial court to determine that the present fair rental value of the property was $1,500.00 per month where there was no credible evidence to support such an inflated valuation.” We think that there was sufficient evidence for the chancellor to so conclude.

Mr. Bender produced two expert witnesses, one of whom testified that the parties’ home had a fair rental value between $900 and $1,100 per month; the other testifying that the rental value was $1,250 per month. Mrs. Bender’s expert witness was of the opinion that the house would rent for $2,000 per month. None of the estimates was supported by figures for comparable residences in the same subdivision. Mrs. Bender’s witness compared the house to what he considered equally fine houses in another, more exclusive neighborhood. Mr. Bender’s witnesses compared the Benders’ home to smaller, less extravagant homes in the same subdivision. Taking these factors into consideration, the chancellor stated:

"With respect to the fair market rental value of the property, I found this to be a somewhat difficult determination, because the property is unique. The home is much larger and more extravagant than other homes in the neighborhood, and it is difficult to make comparisons. Comparing this home with a home of similar size in Kenwood without interposing a substantial correction factor would be inappropriate. I have determined from all the evidence that the current fair market rental of the property is $1,500.00 per month, and I have determined fair market rental value of the preceding years by assuming an 8% increase each year due to inflation.”

IV. Cross-Appeal

Mrs. Bender, also dissatisfied with the award entered in her favor, argues that the chancellor erred when he found that Mr. Bender made alimony pendente lite payments for 13 months, from October 1, 1976, to November 1, 1977. She contends that the payments were only made from October 1, 1976, to August 1, 1977, and that she should receive an additional $1,695 ($565 x 3 months). At oral argument counsel for Mr. Bender indicated that there might well be merit in her contention. There is nothing in the record, however, that reflects the period of time such payments were made.

Accordingly, we remand this matter to the trial court in order to determine whether there has been an accurate accounting.

Judgment affirmed in part and reversed in part; case remanded for accurate determination of number of pendente lite alimony payments made; costs to be paid by appellant-cross-appellee.


author: Weant, J.,

text:
    MARION A. RUSSELL v. JAMES T. RUSSELL, SR.
    [No. 96,
    September Term, 1981.]

      Decided November 6, 1981.

    The cause was argued before Lowe, Couch and Weant, JJ.

      Theodore P. Weiner, with whom were Weiner, Weiner & Weiner, P.A. on the brief, for appellant.

      David F. Jenny, with whom was Walter B. Dorsey on the brief, for appellee.
   Weant, J.,

delivered the opinion of the Court.

By decree dated 26 August 1980 the appellant Marion A. Russell was granted a divorce a vinculo matrimonii from the appellee James T. Russell, Sr., reserving "the issue of monetary award of the marital property.” On 24 November 1980 the Circuit Court for St. Mary’s County held a hearing to set a monetary award concerning marital property, specifically Mr. Russell’s pension rights. By decree dated 29 December 1980 the court declared that Mr. Russell’s pension rights were not marital property and hence not subject to award and disposition under section 3-6A-05 of the Courts and Judicial Proceedings Article of the Maryland Annotated Code. The court further ordered the sum of $50.00 per week alimony as permanent alimony. Mrs. Russell appeals from the award of alimony and the determination that Mr. Russell’s pension is not marital property.

The marital property issue is discussed in the case of Ohm v. Ohm, 49 Md. App. 392, 431 A.2d 1371 (1980). In that case, Judge Thompson, writing for this Court, held that "thé right to receive retirement benefits under a private or public employees[’] pension plan, whether or not vested, matured, or contributory, is property and that, if acquired during the marriage, it constitutes marital property within the meaning of § 3-6A-01 (e).” Id. at 399, 431 A.2d at 1375. Accordingly, we would ordinarily hold that Mr. Russell’s pension is marital property.

However, in spite of his prior acquiescence, the appellee raises the argument that the parties improperly attempted to confer subject matter jurisdiction on the circuit court by agreeing that the time in which the court would determine which property was marital property would be extended beyond 90 days after the divorce decree. At issue is the following language of section 3-6A-05 (a):

In granting an absolute divorce or annulment, or at any time within 90 days thereafter, if in its decree granting the divorce or annulment, the court has expressly reserved the power to do so, the court shall determine which property is marital property if the division of property is at issue. [Emphasis added].

The question then arises as to whether or not the court had jurisdiction to make any determination concerning marital property. It is perfectly obvious that had the trial judge made this determination at the time he granted the divorce his action would have been binding. Instead, the judge reserved the issue of marital property extending his jurisdiction for the ninety day period allowed in section 3-6A-05 (a). However, having failed to designate the marital property within this time, the court lost jurisdiction and any determination thereafter concerning the appellee’s pension rights were nugatory. The parties could not confer jurisdiction by consent where the jurisdiction did not exist under the appropriate law; this deficiency may be raised at any time. Stewart v. State, 287 Md. 524, 527, 413 A.2d 1337, 1339 (1980).

This leaves us with the complaint of the appellant that the chancellor erred in awarding her $50.00 per week permanent alimony. In the Opinion and Order of the trial court the court addressed the question of alimony as follows:

After considering the facts surrounding the divorce, such as the Defendant’s alcoholic behavior which caused the Plaintiff to have domestic help, including a cook through the developing years of the children, and the Plaintiffs adultery which, while not the cause of the dissolution of the marriage, must still be considered by the court in award of alimony, it is the opinion of this Court that the $50 per week previously ordered to be paid by the Plaintiff to the Defendant shall be continued and be permanent alimony.

It is clear that the trial court failed to take into consideration the facts controlling an award of alimony such as

the husband’s wealth and earning capacity, the station in life of the parties, the assets and income of the wife, their ages, physical conditions and ability to work, the length of time the parties lived together and circumstances leading to the divorce and the fault that destroyed the marital relationship.

Sody v. Sody, 32 Md. App. 644, 658, 363 A.2d 568, 577 (1976). See also Waters v. Waters, 191 Md. 436, 62 A.2d 250 (1948); Quinn v. Quinn, 11 Md. App. 638, 276 A.2d 425 (1971). We are constrained to conclude that the trial judge failed to give proper consideration to the award of alimony. Therefore, we shall remand this matter for further consideration of that question.

Judgment reversed.

Case remanded for further proceedings.

Costs to be divided equally between appellant and appellee.


author: Liss, J.,

text:
    DANIEL MOSES EICHBERG v. MARYLAND BOARD OF PHARMACY
    [No. 295,
    September Term, 1981.]

      Decided November 6, 1981.

      The cause was argued before Mason, Liss and Bishop, JJ.

      Mark Woodard, with whom were Allen D. Greif and Greif, Cohen & Alpert on the brief, for appellant.

      Ronald S. Gass, Assistant Attorney General, with whom was Stephen H. Sachs, Attorney General, on the brief, for appellee.
   Liss, J.,

delivered the opinion of the Court.

Appellant, Daniel Moses Eichberg, filed this appeal from an order of the Circuit Court for Baltimore County affirming the action of the Maryland Board of Pharmacy in revoking the appellant’s license to practice pharmacy.

Appellant was charged by indictment in the Circuit Court for Baltimore County with violations of various provisions of the Maryland drug abuse statutes. The case resulted in a mistrial because a newspaper, which included an article about Eichberg’s trial, was found in the jury room. Appellant subsequently entered an Alford plea of guilty to the charge of unlawfully dispensing a controlled dangerous substance without a prescription.

At the conclusion of the criminal proceedings against appellant, the Maryland Board of Pharmacy, the appellee herein (hereinafter the "Board”) charged the appellant with violating various provisions of the Maryland pharmacy statute, Maryland Code (1957, 1980 Repl. Vol.), Article 43, § 266 A, et seq. A hearing was held before the Board on October 17 and 22,1979. On November 21, 1979, the Board, by unanimous vote, issued an order revoking appellant’s license to practice pharmacy in Maryland after finding him guilty of all charges.

Appellant then appealed this order to the Circuit Court for Baltimore County. A hearing was held on January 22, 1981 and on March 10,1981 the court issued an opinion and order affirming the decision of the Board. Appellant now asks us to review that order. He raises the following issues to be determined by this Court:

I. Whether the trial court erred in holding that the previously recorded testimony of an adverse witness in the criminal proceedings against appellant were admissible at the revocation hearing before the Board of Pharmacy?
II. Whether hearsay evidence is admissible at administrative hearings which appellant contends are quasi-criminal?
III. Whether an Assistant Attorney General’s letter to the Board prior to its rendering a decision on the merits, outlining past unfavorable incidents by appellant and recommending revocation of his license and whether the Board’s having a file on appellant’s prior history from the inception of the case amounts to sufficient evidence to rebut the presumption of proper conduct by public officials?
IV. Whether the composition of the Board of Pharmacy, which is composed of practicing pharmacists that have an economic interest in having fewer pharmacists and reducing their competition, constitutes an inherent bias and resulting conflict of interest, such that the appellant was denied a fair and impartial hearing?

I. & II.

At the appellant’s criminal trial, Joyce Ann Buckley, a police informant, appeared as a witness for the State. At the subsequent hearing before the Board, the Assistant Attorney General and administrative prosecutor for the Board offered into evidence as a State’s exhibit a certified copy of Ms. Buckley’s testimony at the criminal trial. The transcript included the direct examination by the State’s Attorney and the cross-examination by appellant’s counsel who represented the appellant at both the criminal trial and at the administrative hearing below.

Appellant initially complains that the admission by the Board of the transcribed testimony of Ms. Buckley was an abuse of discretion in that the testimony as given in the criminal trial was hearsay, biased and self-serving. He cites in support of this contention the rule adopted by the Board to regulate formal hearings in contested cases. The rule is stated as follows:

In contested cases:
(a) Agencies may admit and give probative effect to evidence which possesses probative value commonly accepted by reasonable and prudent men in the conduct of their affairs.... They may exclude incompetent, irrelevant, immaterial and unduly repetitious evidence.

As appellant concedes, it is well settled in Maryland that hearsay evidence is admissible into evidence at administrative hearings. In Montgomery County v. National Capital Realty Corp., 267 Md. 364, 297 A.2d 675 (1972), the Court of Appeals stated:

[Administrative agencies are not generally bound by the technical common-law rules of evidence, although they must observe the basic rules of fairness as to parties appearing before them. Thus, even hearsay evidence may be admitted in contested administrative proceedings. Maryland Fire UW v. Insurance Comm’r, 260 Md. 258, 267, 272 A.2d 24 (1971); Neuman v. City of Baltimore, 251 Md. 92, 97, 246 A.2d 583 (1968); Dal Maso v. Board of County Comm’rs of Prince George’s County, 238 Md. 333, 209 A.2d 62 (1965). [267 Md. at 376.]

In Redding v. Board of County Commissioners for Prince George’s County, 263 Md. 94, 282 A.2d 136 (1971), cert. denied, 406 U.S. 923, 92 S.Ct. 1791, 32 L.Ed.2d 124 (1972), the same Court noted:

[W]e have held that [hearsay] evidence is admissible before an administrative body in contested cases and, indeed, if credible and of sufficient probative force, may be the sole basis for the decision of the administrative body. See Tauber v. County Board of Appeals, 257 Md. 202, 213, 262 A.2d 513, 518 (1970) and prior cases therein cited. [263 Md. at 110-11.]

The provisions of the Administrative Procedure Act (APA) are consistent with the case law hereinbefore cited. It is important to distinguish that the test of admissibility under the Maryland APA is the probative value of the evidence, not its credibility. Appellant attempts to attack Ms. Buckley’s testimony not only on the basis of hearsay, but also that the testimony was biased and self-serving. This line of reasoning clearly confuses probative value with credibility. See generally McCormick, Evidence § 350 (2d ed. 1972). Probative value relates to the degree by which the evidence advances the inquiry; whereas credibility relates to the weight to be given to the evidence by the trier of fact. Appellant does not object to the admissibility of the testimony on the grounds that it lacks probative value or relevancy; rather, he asserts that the testimony lacks the requisite credibility, which in turn goes to the weight that the Board should have accorded her testimony, not as to whether the testimony should have been excluded.

The transcribed testimony of Ms. Buckley at the previous criminal trial was admissible because it was taken under oath, she was subject to cross-examination and the witness was unavailable to testify in person. The record clearly demonstrates that Ms. Buckley did not appear at the hearing before the Board because she was beyond the jurisdiction of the Board and the State’s effort to produce her was unsuccessful. The Board’s charges were essentially the same as those tried in the criminal case. Ms. Buckley testified under oath at a public trial. The appellant, as the defendant in the criminal trial and the respondent in the action before the Board, was afforded an opportunity to cross-examine Ms. Buckley at the criminal trial and from the record it is apparent that he extensively availed himself of that opportunity.

Two cases from other jurisdictions are factually similar to the case at bar: Zimmerman v. Board of Regents, 31 App. Div. 2d 560, 294 N.Y.S.2d 435 (1968) and Davis v. Board of Medical Examiners, 108 Cal. App. 2d 346, 239 P.2d 78 (1951). In Zimmerman, supra, the Board of Regents of the state University of New York suspended a physician’s license to practice medicine for one year. At the hearing the transcribed testimony of two witnesses at the criminal trial was introduced to substantiate the charges against Zimmerman. On appeal, the physician challenged the admissibility of the testimony of the witnesses on the ground that they did not appear at the administrative hearing and as a result the doctor was deprived of his right to cross-examine. The court found the testimony was admissible for basically the same reasons hereinbefore stated. In Davis, supra, a transcript of a prior criminal action was admitted into evidence in a disciplinary hearing against a physician before the California Board of Medical Examiners. The doctor challenged the evidence on the ground that the criminal action had been dismissed because of a hung jury. The court held the transcript was admissible.

Appellant next argues on this issue that the administrative proceedings in this case are "quasi-criminal.” We know of no such mutation in Maryland law. Appeals of disciplinary actions by administrative agencies are civil actions. See Unnamed Physician v. Commission on Medical Discipline, 285 Md. 1, 400 A.2d 396, cert. denied, 444 U.S. 868, 100 S.Ct. 142, 62 L.Ed.2d 92 (1979). Appellant, however, cites three cases from other jurisdictions to support his contention that the disciplinary hearing was "quasi-criminal” and that the hearsay evidence should therefore be excluded. After reviewing those cases we find them to be distinguishable on the facts and we decline to extend any of the rules enunciated in those cases to our jurisdiction.

Finally on this issue, appellant complains that the prior recorded testimony of Sidney Pats, another of the State’s witnesses in the criminal trial, was inadmissible. The short answer to this objection is that Pats’ testimony was never offered into evidence. Pats appeared and testified at both the criminal trial and the administrative hearing. Apparently appellant’s counsel initially objected to the administrative prosecutor’s use of Pats’ transcribed testimony to refresh his recollection. After discussion he withdrew his objection. We have carefully read his testimony at the administrative hearing and find nothing in that testimony that is even slightly objectionable.

III.

At the October 22, 1979 hearing before the Board, Ms. Gauvey stated that by agreement of counsel, she would not offer any recommendation regarding sanctions against Mr. Eichberg during her closing argument, but would put those recommendations in writing. The condition precedent to the Board’s consideration of Ms. Gauvey’s recommendation as to sanctions was that the Board first reach a decision on the merits by adjudicating the appellant’s guilt or innocence of the charges made against him in the administrative hearing. In her letter to the Board, dated November 14, 1979, Ms. Gauvey reiterated that the Board was to consider her recommendations only after a finding of guilt or innocence. The letter reviewed the appellant’s prior criminal and disciplinary history and recommended that his license to practice pharmacy be revoked. Appellant suggests that the letter created bias and prejudice against him which effectively resulted in his being denied a fair and impartial hearing. Appellant offered no evidence either by way of proffer or by testimony to indicate that the Board knew of Ms. Gauvey’s recommendations prior to their substantive rulings on the appellant’s guilt or innocence. The law in Maryland is clear that the proper performance of a public official’s duty is presumed in the absence of proof to the contrary. See Dal Maso v. Board of County Commissioners of Prince George’s County, 238 Md. 333, 209 A.2d 62 (1965); Gregg v. Laird, 121 Md. 1, 87 A. 1111 (1913). The record is clear that appellant did not offer evidence sufficient to rebut the presumption of proper performance of a public official’s duty.

Appellant further contends that the mere existence and general availability of the Board’s records of its past disciplinary action against the appellant impermissibly biased the Board. However, there is no evidence that the Board, prior to reaching a decision on the merits of the case, ever consulted its records on Mr. Eichberg or that the Board was even aware of the appellant’s prior criminal or disciplinary history. Moreover, one of the Board’s functions is to act in an investigatory capacity. Under these circumstances, the Board was entitled to review the evidence available to it in deciding whether to take disciplinary action. Such investigation on its part would not result in the Board being disqualified to continue to perform its prosecutorial function.

The United States Supreme Court, in Winthrow v. Larkin, 421 U.S. 35, 95 S.Ct. 1456, 43 L.Ed.2d 712 (1975), discussed the due process problems arising when a single agency is vested with the dual functions of investigation and prosecution:

The mere exposure to evidence presented in nonadversary investigative procedures is insufficient in itself to impugn the fairness of the Board members at a later adversary hearing. Without a showing to the contrary, state administrators "are assumed to be men of conscience and intellectual discipline, capable of judging a particular controversy fairly on the basis of its own circumstances.” United States v. Morgan, 313 U.S. 409, 421, 61 S.Ct. 999, 1004, 85 L.Ed. 1429 (1949). [421 U.S. at 55.]

In the absence of proof to the contrary, we must assume the members of the Board acted in good conscience in reaching what they considered a fair resolution of the controversy in this case. Appellant again failed to offer any proof that the Board acted in bad faith.

IV.

Appellant lastly contends that because the Board of Pharmacy which heard and decided this case was made up of practicing pharmacists, they have an economic interest in reducing the number of their competitors and he was therefore denied a fair and impartial hearing.

We find no Maryland cases supporting this contention. Appellant quotes in his brief several cases from other jurisdictions in which the question of bias is discussed generally. See In re Heirich, 10 Ill.2d 357, 140 N.E.2d 825 (1956); State v. Madry, 8 Wash. App. 61, 504 P.2d 1156 (1972). The case most factually similar, however, is Kachian v. Optometry Examining Board, 44 Wis.2d 1, 170 N.W.2d 743 (1969). In Kachian, an optometrist challenged a state statute requiring members of the Wisconsin Optometry Examining Board to be residents of the state and engaged in active practice. He did not claim actual bias nor did he offer any proof of misconduct or prejudice by any Board member. He contended, as does the appellant herein, that "there is an inbuilt, inescapable, even if indirect, financial interest involved when an optometrist board member sits in judgment on a fellow optometrist.” 44 Wis.2d at 10. The court held:

[W]e would follow the general rule on members of a professional or occupational group serving on an administrative agency regulating such profession or occupation, which has been stated as follows:
"* * * it appears to be a general rule that membership in or connection with the same profession or occupation as that of the accused licensee does not alone indicate a disqualifying bias or interest on the part of the questioned tribunal member sufficient to violate due process.” [Footnote omitted.] [Id. at 11.]

Since the Kachian decision, other jurisdictions have rejected challenges similar to appellant’s. E.g., Rite Aid Corp. v. Board of Pharmacy of N.J., 421 F. Supp. 1161, (D.N.J. 1976), appeal dismissed, 430 U.S. 951, 97 S.Ct. 1594, 51 L.Ed.2d 801 (1977); Blanchard v. Michigan St. Bd. of Examiners in Optometry, 40 Mich. App. 320, 198 N.W.2d 804 (1972); Brown v. State Bd. of Examiners in Optometry, 263 N.W.2d 490 (S.D. 1978); Apoian v. State, 89 S.D. 539, 235 N.W.2d 641 (1975); Strykowski v. Wilkie, 81 Wis.2d 491, 261 N.W.2d 434 (1978). SeeAnnot., 97 A.L.R.2d 1210 (1964).

In light of this overwhelming authority, appellant’s contention that the pharmacist members of the Board must be disqualified because of an indirect and speculative financial benefit must fail. The record is devoid of any evidence of an actual, direct or substantial pecuniary interest on the part of any of the pharmacists which would require their disqualification.

Judgment affirmed, costs to be paid by appellant.

      . See North Carolina v. Alford, 400 U.S. 25, 91 S.Ct. 160, 27 L.Ed.2d 162 (1970). An Alford plea is one which states that the defendant, while not admitting guilt, is entering a guilty plea on a minor charge to avoid prosecution on a more serious charge.

      . Appellant was charged with, and found guilty of, violating the following provisions of § 266 A (c) (1) of the Maryland pharmacy statute:
      (i) Conviction of a crime involving moral turpitude;

        (ii) Conviction of a crime involving professional misconduct respecting the pharmacy laws of this or any other state;
      (vii) Dispensing or sale of any drug for which a prescription is required without first having received from an authorized prescriber a written or oral prescription for the drug;
      (xiv) Wilful making or filing of any false report or record in his practice as a pharmacist;
      (xv) Wilful omission to file or record, wilful impediment or obstruction or a filing or recording, or inducement of another person to omit to file or record any report required by law; or
      (xvi) Professional, physical, or mental incompetence.
      The entire Maryland pharmacy statute was recently recodified by the General Assembly pursuant to House Bill 1, 1981 Md. Laws ch. 8. See Maryland Health Occupations Code Annotated § 12-101 et seq. The provisions analogous to those which the Board found Mr. Eichberg guilty of violating are now recodified at Maryland Health Occupations Code Annotated § 12-311 (6), (7), (8), (9), (14), (20), (21), (22) 1981.

      . Md. Code Art. 41 § 252. See COMAR 10.34.01.03 G (1) [Board of Pharmacy regulation adopting the Administrative Practices Act].

      . The cases cited are: Walker v. Unemployment Compensation Board of Review, 27 Pa. Commw. Ct. 522, 367 A.2d 366 (1976); State v. Morris, 221 S.W.2d 206 (Mo. 1949); Jeffers v. Screen Extras Guild, Inc., 134 Cal. App. 2d 622, 286 P.2d 30 (1955).