Housing Equity Corp. v. Joyce

354 A.2d 445, 31 Md. App. 18, 1976 Md. App. LEXIS 469
CourtCourt of Special Appeals of Maryland
DecidedMarch 30, 1976
DocketNo. 722
StatusPublished
Cited by1 cases

This text of 354 A.2d 445 (Housing Equity Corp. v. Joyce) is published on Counsel Stack Legal Research, covering Court of Special Appeals of Maryland primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Housing Equity Corp. v. Joyce, 354 A.2d 445, 31 Md. App. 18, 1976 Md. App. LEXIS 469 (Md. Ct. App. 1976).

Opinion

Gilbert, J.,

delivered the opinion of the Court.

William T. Joyce, Margaret Joyce, Stephen Jones, Ann Jones and Alma Burns brought suit against Housing Equity Corp., appellant, on a series of notes,1 in the Circuit Court for Montgomery County. The case was removed to Caroline County, and further removed to Kent County where it was tried before a jury, presided over by Judge George B. Rasin, Jr. The jury, on October 16, 1973, handed down a verdict in favor of William T. Joyce and Margaret Joyce in the amount of $361,786.15. An identical verdict was rendered for Stephen N. Jones and Ann Jones. Alma M. Burns was also awarded a verdict for a like amount. Judgments absolute were entered on the verdicts on November 1,1972.2

The judgments not having been paid, all the judgment creditors, except Alma M. Burns, filed, in the Circuit Court for Montgomery County, a “Petition for Supplementary Proceedings and Appointment of Receiver.” The petition alleged that the judgments were more than sixty days old [20]*20and that no payment had been made thereon. The petition further asserted:

“Defendant, Housing Equity Corporation is insolvent, in that its debts far exceed its current assets, since its officers, directors and shareholders have disbursed all assets to themselves or to entities which are wholly-owned or wholly-controlled by them for their personal gain.”

The petition pointed out that it was improbable that Housing Equity Corp., owned or controlled by the recipients of the disbursed assets, would proceed to recover those assets. The rights of appellees to undertake supplementary proceedings was uncontested, but the appointment of a receiver was vigorously opposed by appellant.

The petition was heard before Judge Joseph M. Mathias in open court. Md. Rule 628 a 2. An officer of appellant admitted, in the course of his testimony, that Housing Equity Corp. had distributed monies to its officers, without consideration therefor. The appellant was possessed of little or no assets and, in any event, was insolvent and unable to pay the judgments held by appellees. At the conclusion of the hearing, Judge Mathias appointed a receiver for the appellant corporation and Housing Equity Corp. noted an immediate appeal from this interlocutory order. Md. Ann. Code, Courts and Judicial Proceedings Article § 12-303 (c) (4).

In this Court, appellant posits to us the following question:

“Whether sellers of land to a corporate nominee (without personal liability on the part of its shareholders) holding a deficiency judgment against the corporation for the unpaid balance due on the deferred purchase price may have a receiver appointed to bring suit against the shareholders for money the corporation transferred to them without consideration from the proceeds of the resale of a part of the property which the corporation resold [21]*21with the original sellers’ knowledge and permission? ”

When we peel away the rhetorical facade, we perceive that we are confronted by the single issue of whether the hearing judge abused his discretion in appointing a receiver for the appellant corporation.3

The General Assembly, by Laws 1890, ch. 558,4 authorized judgment creditors . .to require the [judgment] debtor to submit to an examination in regard to his financial condition and ownership of property.” 2 J. Poe, Pleading and Practice § 707B (5th ed. H. Tiffany 1925). The practice of permitting such examination of the judgment debtor by judgment creditors, styled “Supplementary Proceedings,” continues today, but now it is permitted by a rule of procedure rather than statute. Md. Rule 628 provides in pertinent part:

“a. When, Where and How Brought.
1. When Examination May Be Had.
At any time within which an attachment or execution might issue upon judgment, or a recorded lien of the State of Maryland or the United States of America, upon satisfactory proof being made to the court by affidavit or otherwise by the creditor that it is probable that the debtor has property or credits which would be liable to said attachment or execution and that the said debtor is concealing or has concealed or disposed of the same with intent to evade the effect of said judgment, or recorded lien, or at any time after the expiration of sixty (60) days from the entry of any final judgment or recorded [22]*22lien where said judgment has not been paid or satisfied, the court wherein such judgment was rendered or wherein said lien was recorded shall issue an order requiring said debtor to attend and be examined concerning said property or credits at a time and place specified in said order.
d. Special Relief for Judgment Creditor.
Under sections a, b and c of this Rule the court shall grant relief unto said judgment creditor by an order in the nature of injunction, decree for specific performance, writ of mandamus, or for the appointment of a receiver, and shall pass such order as will subject the property or credits of judgment debtor either in his own hands or in the hands of any person to the operation of the judgment provided that a copy of such order or decree shall be served upon judgment debtor, or other person giving him proper opportunity to be heard by the court passing such order or decree. In the event that the judgment debtor, or other person having been duly served, fails to answer or appear by the date provided in such order or decree, or if said judgment debtor, or other person shall be twice returned non est, such order or decree shall become final.”

Judge Smith, for the Court, in Clinton Petroleum Services, Inc. v. Norris, 271 Md. 665, 672, 319 A. 2d 304, 308 (1974), observed that, “Our rule today reads almost exactly as the statute read when Mr. Poe wrote almost 50 years ago.” Judge Smith further noted the breadth of the scope of Supplementary Proceedings by commenting:

“. . . [t]hat [the] rule is intended to provide aid to a judgment creditor in collecting a judgment by permitting a searching examination as to the assets of the debtor. In other words, it provides, in aid of [23]*23execution, for what was labeled in the trial court as a ‘fishing expedition.’ ” 271 Md. at 671.5

The Court of Appeals, in Wolcott v. Quick, 253 Md. 543, 546, 253 A. 2d 521, 522 (1969), speaking through Judge Finan, stated:

“It is sufficiently clear as to scarcely brook discussion that one of the remedies the Rule [628] makes available to the judgment creditor is the appointment of a receiver for the assets of the judgment debtor.”

Judge Finan added that, 253 Md. at 546:

“The lower court’s further holding, that the receivership proceedings prayed for by the judgment creditor could only be initiated in the equity side of the court, was likewise in error. Rule 628 d confers jurisdiction on a court of law to grant to the judgment creditor the special relief enumerated, even though it be in the nature of equitable relief.” 6

Much of appellant’s argument in this Court is directed toward the right vel non

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Bluebook (online)
354 A.2d 445, 31 Md. App. 18, 1976 Md. App. LEXIS 469, Counsel Stack Legal Research, https://law.counselstack.com/opinion/housing-equity-corp-v-joyce-mdctspecapp-1976.