Messall v. Merlands Club, Inc.

Citation222 A.2d 627,244 Md. 18
Decision Date13 September 1966
Docket NumberNo. 477,477
PartiesVictor R. MESSALL and Robert E. Howe v. MERLANDS CLUB, INC.
CourtCourt of Appeals of Maryland

Robert V. Smith, Washington, D. C., (Smith, Ristig & Smith, Washington, D. C., and Thomas A. Lohm, Wheaton, on the brief), for appellants.

William F. Hickey and Joseph Zitomer, Silver Spring, for appellee.



In our narration of what has transpired between these parties we shall do our best to distill the essential facts out of the great broth of pleading and evidence which has boiled up to us from the court below. A number of equestions have been presented but, as we see it, our decision will depend on whether a judgment of the Circuit Court for Caroline County (Carter, C. J.) is res judicata in respect of the decision of the trial court (Pugh, J.) in the case at bar.

On 1 June 1956 appellants (Landlords) leased 23 1/2 acres in Montgomery County to appellee (Tenant). The land was improved by a clubhouse, a swimming pool, tennis courts, a riding ring, stables and a lake stocked with fish. Tenant's option to purchase the property had to be exercised during the first three of the last six months of the seven year term. The right to exercise the option was contingent upon Tenant's 'compliance with all its obligations' under the lease. Tenant was required to 'maintain at its own expense the demised premises in good repair' and 'to comply at all times, at its own cost * * * with all rules, orders, ordinances and legal requirements' of public bodies 'under whose supervision the demised premises may come.' The lease also contained a provision to the effect that the devolution of the lease, by operation of law, upon any person other than Tenant would constitute a default. In 1961 a dispute arose over the computation of rent and the manner of paying it. This resulted in litigation which finally found its way to this Court. Messall v. Merlands Club, 233 Md. 29, 194 A.2d 793 (1963). The impact of our decision in Messall upon the case at bar will be discussed later.

Early in November 1962, Landlords filed a summary repossession action against Tenant in the Montgomery County People's Court in which it was claimed that Tenant was in default as of 10 November 1962. Landlords were enjoined from proceeding with this action, however, by an ex parte order of the court in the then pending litigation 1. On 16 November 1962, Landlords notified Tenant that the lease was in default for failure to pay the proper rent. A month later (18 December) a letter was sent to Landlords purporting to exercise the option to purchase. This was signed on behalf of the president of the Board of Trustees of Merlands Club, Inc., by counsel for Tenant. Landlords replied that the attempt to exercise the option was a nulity and again demanded the surrender of the premises forthwith.

On 1 April 1963, the day after the lease expired, Tenant filed its bill for the specific performance of the option agreement. On the same day the court, ex parte and without bond, ordered Landlords 'to cease and desist from any action that would change the status quo of the position of the parties pending the resolution' of the specific performance proceeding. On 5 April, Landlords filed an action in ejectment against Tenant claiming that the lease had expired, by its own terms, on 31 March.

Landlords answered the bill for specific performance on 20 May and on the day following filed a cross-bill seeking a declaratory judgment that the lease was in default on 16 November and that the attempt to exercise the option was ineffective. The day before a scheduled hearing on Tenant's motion to consolidate the two cases Landlords dismissed the cross-bill and filed a suggestion and affidavit of removal in the ejectment case. Judge Pugh designated Baltimore County as the new venue. Tenant succeeded in putting off the trial of the case in Baltimore County until 28 April 1964 when its last motion for a continuance was denied. On 1 May, Tenant filed a suggestion and affidavit of removal and on the same day the court ordered the case sent to Caroline County. Landlords pressed for trial and, over Tenant's objection, the case was assigned for trial on 22 June.

When the case was called for trial the court granted Tenant's motion to amend its pleas. As one might expect, this generated a minor uproar at the trial table but when the dust settled Tenant, by its amended pleas and the court's rulings in respect thereof, had posited the following issues:

1. The general issue by virtue of its plea of 'not guilty.'

2. Does the People's Court of Montgomery County have exclusive jurisdiction of Landlords' suit?

3. Is Messall v. Merlands Club, supra, res judicata of the basic issues?

4. As detailed in its plea on equitable grounds:

(a) The equity case was filed four days prior to the ejection case and 'will be determinative of the very issues in the ejectment suit * * * (and) they involve the same parties and subject matter.' (Emphasis supplied.)

(b) Tenant was not in default and the exercise of the option created the relationship of vendor and vendee, thereby vesting equitable title in the vendee.

The parties having agreed to try the case before Judge Carter without a jury and to exclude witnesses waiting to testify, the three day trial began in Denton, the county seat of Caroline County. After hearing argument and considering the briefs filed by counsel, Judge Carter, on 24 July, found Tenant guilty of 'the trespass and ejectment mentioned * * * in the declaration.' On the same day 'judgment nisi' was entered. On 27 July Tenant appealed. On 28 July judgment was made absolute. The appeal to this Court was dismissed on 14 April 1965. (Reargument denied 25 May 1965.) Merlands Club, Inc. v. Messall, 238 Md. 359, 208 A.2d 687 (1965).

Judge Carter filed his opinion on 30 September 1964. In disposing of the issue created by Tenant's plea of res judicata he agreed that the parties and the property in Messall v. Merlands Club, 233 Md. 29, 194 A.2d 793 (1963) and the parties and the property in the case before him were identical. He noted also this Court's comment in that case that 'the record discloses that substantial repairs had been made in recent years, which, we think, would have been sufficient to support a finding that the lease was not in default for failure to keep the demised premises in good repair.' (233 Md. at 38, 194 A.2d at 799.) He observed that 'no evidence was admitted (at the trial in 233 Md. 29, 194 A.2d 793) to establish any condition subsequent to the date' of filing of the original bill and the cross-bill. (16 June 1961 and 22 August 1961 respectively.) Judge Carter went on to say:

'It, therefore, appears that the material issues that were determined in the suit previously adjudicated, which are also present in this suit, consist of: (1), the issue of whether the failure of the Lessee to make proper monthly payments under the lease amounted to defaults by the Lessee; and (2) was there a substantial failure of the Lessee to keep the premises in good repair prior to such suits or prior to August 22, 1961. The Court of Appeals determined both of these questions in favor of the Lessee in that suit. Taking cognizance of this fact and furthermore assuming, without deciding, that the acceptance of monthly payments by the Lessor up to November, 1962, constituted a waiver by the Lessors of their right to assert any defaults of the Lessee respecting proper payments or repairs up to that time; the issues here presented which it appears, were not determined in the former suit, are as follows:-(1) the default if any, of the Lessees in failing to properly maintain and repair the property during the period from November 1 to December 18, 1962; (2) the default, if any, of the Lessee because of a violation of paragrah 2(g) existing on December 18, 1962; that is, a failure on its part to comply with the health and fire regulations of Montgomery County; (3) whether the forfeiture of the Lessee's charter on October 31, 1962, which continued until January 27, 1964, thereby vested ownership in the lease in persons other than the Lessee and therefore constituted a default by reason of a violation of paragraph 4(e) of the lease. It appears from the record of the appeal and the opinions of the lower and appellate Courts that these questions were not determined in Merlands (Club. Inc.) v. Messall, supra.'

Judge Carter discussed, in considerable detail, each of the three issues above mentioned and stated:

'It is, therefore, our opinion that at the time the option to purchase was attempted to be exercised on December 18, 1962, the Lessee was in default in its obligation under the lease in respect to at least the three matters mentioned above and therefore ineligible to exercise such an option.'

Directly after the conclusion of the trial in Denton hostilities were renewed before Judge Pugh in Rockvill and continued con brio for another year. A few days after the issuance of our mandate in the ejectment case (25 May 1965) Landlords renewed, for the last time, their oft-repeated motion to 'Dismiss or Abate,' setting forth as grounds therefor the res judicata effect of the final judgment of the Circuit Court for Caroline County. On 7 September, Judge Pugh filed a lengthy (37 pages) opinion declaring Tenant to be entitled to a decree of specific performance, which he signed the following week.

Since Judge Pugh devoted nearly all of his opinion to the development of his reasons for rejecting the res judicata effect of Judge Carter's decision and since Tenant's contentions virtually coincide with the rationale of Judge Pugh's opinion, we shall consider the reveral facets thereof and state as concisely as possible why we are unable to agree with the learned Chancellor.

(a) The Injunction

It will be recalled that simultaneously with the filing of the bill...

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