O'Donnell v. McGann

• Citation: 310 Md. 342,529 A.2d 372
• Decision Date: 01 September 1986
• Docket Number: No. 161,161
• Parties: Vincent Lane O'DONNELL et al. v. Patrick John McGANN, Infant et al. ,
• Court: Court of Appeals of Maryland

Page 342

310 Md. 342

529 A.2d 372

Vincent Lane O'DONNELL et al. v. Patrick John McGANN, Infant et al.

No. 161, Sept. Term, 1986.

Court of Appeals of Maryland.

Aug. 6, 1987.

Francis J. Ford (Ford & O'Neill, Rockville, Md., on the brief), for appellant Vincent Lane O'Donnell.

Frank J. Vecella (Patricia M. O'Connor, Gregory L. Van Geison and Anderson, Coe & King, Baltimore, Md., on the brief), for appellant Medical Mut. Liability Ins. Society of Maryland.

Albert Brault, Rockville, Md., H. Thomas Howell and Robert Dale Klein, Baltimore, Md., amicus curiae for The Maryland Ass'n of Defense Trial Counsel on the brief.

Judith A. Wood of Baltimore, Md., amicus curiae for The Medical and Chirurgical Faculty of the State of Maryland on the brief.

Gilbert H. Robinette (Henry E. Dugan, Jr. and Robinette, Dugan, Seiden & Jakubowski, P.A., Baltimore, Md. and Walter H. Madden, Rockville, Md., on the brief), for appellees.

Argued before MURPHY, C.J., ELDRIDGE, COLE, RODOWSKY, COUCH, ^* McAULIFFE and ADKINS, JJ.

McAULIFFE, Judge.

This appeal involves the nature and extent of the discretionary authority of trial and appellate courts of this State to stay the execution of a money judgment, and more particularly the authority of those courts to approve a supersedeas bond in an amount less than the amount of the judgment.

We hold that the inherent power of trial and appellate courts to fix the terms and conditions for the stay of execution of judgments has not been circumscribed by rule or statute so as to limit the discretion of the court to modify the penalty of a supersedeas bond required for the stay of execution of a money judgment.

A Montgomery County jury returned a verdict of $5.4 million in favor of Patrick John McGann, a minor, and $100,000 in favor of Terrence and Patricia McGann, his parents, against Vincent Lane O'Donnell. Following hearing of post judgment motions filed by O'Donnell, Judge DeLawrence Beard ordered Patrick's judgment reduced to $2.75 million. O'Donnell appealed to the Court of Special Appeals and the McGanns filed a cross appeal. ¹ O'Donnell promptly filed in the circuit court a motion for approval of a supersedeas bond in the amount of $1.15 million, contending that he was unable to post greater security. He alleged that he had insurance coverage of $1 million and total assets in his own name of $14,000, and he filed affidavits and exhibits in support of those allegations. ² The McGanns opposed the motion arguing that the penalty for a supersedeas bond in a money judgment case was fixed by Maryland Rule 1018(b)(1) as the full amount of the judgment plus interest and costs and the trial court had no authority to modify it. After a hearing, Judge Beard approved a stay of execution of the entire judgment upon the posting of a supersedeas bond in the amount of $1,427,500. ³ To preserve the status quo, the trial judge also enjoined the transfer of assets by O'Donnell and granted the McGanns a continuing right of discovery relating to any possible transfers of property by O'Donnell subsequent to the date of his affidavit. The McGanns then filed a motion with the Court of Special Appeals asking that the bond be increased to the full amount of the judgment plus interest and costs and again arguing that the rules did not permit any exercise of discretion. Medical Mutual and O'Donnell opposed the motion, contending not only that the trial court had discretion to modify the penalty of the bond but also that the failure to do so under the circumstances of this case would violate their constitutional rights to due process and equal protection. Additionally, Medical Mutual asked that the intermediate appellate court further reduce the bond to $1.15 million based on its belief that the 15% factor should be added to the amount of its coverage rather than to the amount of the judgment. A panel of the Court of Special Appeals heard arguments on the motion and without opinion issued an order fixing the amount of the bond at $3,135,000. We granted the petitions for certiorari filed by Medical Mutual and O'Donnell, and stayed the effect of the order issued by the Court of Special Appeals.

Although our decision turns on an interpretation of the Maryland Rules of Procedure, and particularly the interaction of Chapter 400 of Title 1 with Rule 1018(b)(1), a brief overview of the problem and review of the history of the involved rules is in order.

The practice of requiring security for a stay of execution of a judgment at law during the pendency of an appeal is deeply rooted, and no doubt evolved from the consideration of security as a condition for the granting of a discretionary writ of error or appeal. We are persuaded that the latitude afforded trial judges in fixing security in discretionary appeal cases carried over to the determination of the amount and terms of security required for a stay of execution when the right of appeal became absolute. The United States Supreme Court has referred to "the inherent power of the appellate court to stay or supersede proceedings on appeal." In re McKenzie, 180 U.S. 536, 551, 21 S.Ct. 468, 474, 45 L.Ed. 657 (1901). Judge Metzner of the United States District Court for the Southern District of New York opined that "the [trial] court has the inherent power in extraordinary circumstances to provide for the form and amount of security for a stay pending appeal, based on the condition it finds to exist in a particular case." Trans World Airlines, Inc. v. Hughes, 314 F.Supp. 94, 96 (1970) (approved in material part at 515 F.2d 173, 177-78 (2d Cir.1975), cert. denied, 424 U.S. 934, 96 S.Ct. 1147, 47 L.Ed.2d 341 (1976)). See also Fed. Presc. Serv. v. Am. Pharm. Ass'n, 636 F.2d 755, 759-60 (D.C.Cir.1980). In an early appeal from the Court of Chancery, our predecessors said:

[I]t is manifestly necessary, to the ends of justice, that there should be a power in special cases to suspend proceedings on the matter appealed from; therefore in adopting the rule, that an appeal does not stay proceedings, we adopt it with its necessary incidents, which are, that pending the appeal, proceedings may be stayed either by order of the Chancellor, on application made to him for that purpose, or by a special order of this Court, on such terms as the peculiar circumstances of each particular case may be found to require. Thompson v. M'Kim, 6 H. & J. 302, 333 (1825).

Initially by custom, but in any event by legislation in this State as early as the enactment of ch. 4 of the Acts of 1713, the practice of the common law courts was to require a supersedeas bond in double the amount of the judgment. Thompson, supra, 6 H. & J. at 332; Johnson v. Goldsborough, 1 H. & J. 499 (1804). This rather stringent legislative requirement of double bond was later made applicable to decrees in equity as well as judgments at law, and remained applicable to the courts of general jurisdiction until 1957, and to the courts of limited jurisdiction until 1972. ⁴ The legislative mandate of double bond was absolute until 1937 when ch. 36, § 1 of the Laws of that year was enacted, providing:

In any case where, pursuant to statute, rule of court, decree, or otherwise, a bond has heretofore been or shall hereafter be filed in any Court of this State, the Court (or any Judge presiding in said Court) may, in its discretion, reduce the penalty of such bond whenever it deems such reduction justified by all the circumstances of the case.

That law, initially codified at Art. 26, § 13, remained unchanged until 1957 when by § 14 of ch. 399 it was amended to specifically exclude its application to supersedeas bonds of the type involved in this case. The section, then codified at Art. 26, § 16, is set forth with the 1957 amendment shown in italics:

In any case where pursuant to statute, rule of court, decree, or otherwise, except pursuant to Rule 818(b) of the Rules of Practice and Procedure approved and adopted by the Court of Appeals of Maryland to take effect on January 1, 1957, a bond has heretofore been or shall hereafter be filed in any Court in this State, the Court (or any Judge presiding in said Court) may, in its discretion, reduce the penalty of such bond whenever it deems such reduction justified by all the circumstances of the case.

Rule 818 dealt with the form and penalty of supersedeas bonds. Rule 818(b)(1) provided then, as does Rule 1018(b)(1) now, that:

When the judgment is for the recovery of money not otherwise secured, the amount of the bond shall be for such sum as will cover the whole amount of the judgment remaining unsatisfied, interest, and costs.

Without question the 1957 amendment had the effect of precluding trial judges from reducing the penalty of the limited class of supersedeas bonds embraced by Rule 818(b). An important change occurred, however, when certain general provisions with respect to bonds were incorporated into the Maryland Rules of Procedure and deleted from the Maryland Code. The new bond rules were collected at Subtitle H of Chapter 1100 of the Rules, and Rule H4(a) became the immediate successor to § 16 of Art. 26. ⁵ Significant in the context of this case is the fact that in the metamorphosis from statute to rule the exception clause that had been added in 1957 was deleted, and the broad discretion of the earlier section reinstated. Rule H4(a) provided very simply that:

The court may at any time, for good cause shown, order the penalty of a bond to be increased or reduced.

Rule H4(a) was clearly applicable to supersedeas bonds. Rule H1 provided that "[r]ules H1 to H8 are applicable to a bond required to be filed in any action." Additionally, a cross reference incorporated at the time of the adoption of the H rules stated that "[t]he following rules contain other provisions applicable to judicial bonds" and specifically included Rule 818 and other rules dealing with supersedeas bonds. Furthermore, Rule H3(a), permitting a deposit of money in lieu of a bond, ...