Schwartz v. Merchants Mortg. Co.

• Decision Date: 29 July 1974
• Docket Number: No. 274,274
• Citation: 322 A.2d 544,272 Md. 305
• Parties: Reuben SCHWARTZ et al. v. MERCHANTS MORTGAGE COMPANY et al.
• Court: Maryland Court of Appeals

Page 305

272 Md. 305

322 A.2d 544

Reuben SCHWARTZ et al. v. MERCHANTS MORTGAGE COMPANY et al.

No. 274.

Court of Appeals of Maryland.

July 29, 1974.

Mark P. Friedlander, Washington, D. C. (William M. Canby, Rockville, on the brief) for appellants.

Lawrence F. Rodowsky, Baltimore (Frank, Bernstein, Conaway & Goldman, Baltimore, on the brief) for Merchants Mortgage Co. and others.

David Freishtat, Baltimore, for Ralph Lubow and Pacy Oletsky.

Leonard S. Jacobson, Baltimore, for Eugene J. Silverman.

J. Elmer Weisheit, Jr., and Barry M. Nudelman, Columbia, for J. Elmer Weisheit, Jr.

Argued before MURPHY, C. J., and SINGLEY, SMITH, DIGGES, LEVINE, ELDRIDGE and O'DONNELL, JJ.

DIGGES, Judge.

On May 13, 1968, the Circuit Court for Prince George's County (Bowie, J.), concluded that the charges made by Mr. and Mrs. Reuben Schwartz (appellants here) of fraud, collusion, misrepresentation, non-disclosure, conspiracy, and other wrongdoing allegedly committed against them by a number of individual and corporate defendants (appellees here) ¹ were unsupported by the evidence. After incorporating these determinations into its final decree, that court dismissed the appellants' bill of complaint to set aside certain mortgages and to obtain other associated relief. In Suitland Dev. v. Merchants Mort., 254 Md. 43, 254 A.2d 359 (1969), we dismissed their appeal, and, in accordance with Maryland Rule 671a, that decree became enrolled. ² After four years had passed, by an original bill in equity alleging fraud filed in the Circuit Court for Prince George's County, the appellants now attempt to vitate the 1968 decree. In reply to this bill, the respondents filed a demurrer which was sustained by Judge James F. Couch without leave to amend. Here, on appeal, the appellants allege, just as they did in their complaint, that the 1968 decree should be set aside since it was tainted by a conspiracy, entered into by the appellees prior to the trial and executed by them during the course of the proceedings through the commission of perjury and the suppression of material evidence, which brought about an erroneous result. The Schwartzes first discovered this alleged plot, they say, when their attention was directed to a dispute which arose among some of the appellees, and which has developed into a suit now being prosecuted in Baltimore City. The appellants have consistently claimed that the result of the original suit was inequitable and unjustified as it was based on erroneous findings by the court which were the consequence of this cabal. ³ However, despite the appeal to our sensibilities which this complaint, if true, invokes, we shall affirm the action of the chancellor for substantially the same reasons as those given by him in sustaining the appellees' demurrer.

As we have said so often that extensive citations are unnecessary, when we consider the propriety of an order sustaining a demurrer to a bill of complaint without leave to amend, we are required to assume, for the purposes of the ruling, the truth of all material and relevant facts that are well pleaded as well as all inferences which can be reasonably drawn from those well pleaded facts. Desser v. Woods, 266 Md. 696, 296 A.2d 586 (1972). Applying this standard to the Schwartzes' complaint, we are convinced that the demurrer was properly sustained since they have not set forth that type of intentionally deceptive artifice which this Court has consistently required in order to authorize the reopening of an enrolled decree. We base this conclusion on a firm foundation of Maryland cases which go back to at least the turn of the century. E. g., Fisher, Adm'x v. DeMarr, 226 Md. 509, 174 A.2d 345 (1961); Bachrach v. United Cooperative, 181 Md. 315, 29 A.2d 822 (1943); Tabeling v. Tabeling, 157 Md. 429, 146 A. 389 (1929); Wilmer v. Placide, 144 Md. 372, 125 A. 60 (1924); Pressler v. Pressler, 134 Md. 243, 106 A. 686 (1919); Maryland Steel Co. v. Marney,91 Md. 360, 46 A. 1077 (1900). At that time, we unequivocally and specifically adopted as the law of this State in Maryland Steel Co. v. Marney,supra, not only the holding, but also the reasoning and the language of both United States v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93 (1878) and Pico v. Cohn, 91 Cal. 129, 25 P. 970, 27 P. 537 (1891), and thereby settled beyond question that an enrolled decree will not be vacated even though obtained by the use of forged documents, perjured testimony, or any other frauds which are 'intrinsic' to the trial of the case itself. Underlying this long settled rule is the principle that, once parties have had the opportunity to present before a court a matter for investigation and determination, and once the decision has been rendered and the litigants, if they so choose, have exhausted every means of reviewing it, the public policy of this State demands that there be an end to that litigation. Or, as the United States Supreme Court opined in Throckmorton, supra, 'the mischief of retrying every case in which the judgment or decree rendered on false testimony, given by perjured witnesses . . . was in issue . . . would be greater, by reason of the endless nature of the strife, than any compensation arising from doing justice in individual cases.' Id., 98 U.S. at 68. This policy favoring finality and conclusiveness can be outweighed only by a showing 'that the jurisdiction of the court has been imposed upon, or that the prevailing party, by some extrinsic or collateral fraud, has prevented a fair submission of the controversy.' Pico v. Cohn, supra, 91 Cal. at 133, 25 P. [322 A.2d 547] at 971. Examples of what would be considered 'extrinsic' fraud were provided in Throckmorton:

'Where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells out his client's interest to the other side,-these, and similar cases which show that there has never been a real contest in the trial or hearing of the case, are reasons for which a new suit may be sustained to set aside and annul the former judgment or decree, and open the case for a new and a fair hearing.' 98 U.S. at 95.

This 'intrinsic-extrinsic' distinction, which is delineated for this State in Maryland Steel Co. v. Marney, supra, has been universally followed by the large number of Maryland cases which have considered whether an enrolled decree or judgment should be reopened when fraud is alleged. Fisher, Adm'x v. DeMarr; Bachrach v. United Cooperative; Tabeling v. Tabeling; Wilmer v. Placide; Pressler v. Pressler, all supra. These cases establish that fraud is extrinsic when it actually prevents an adversarial trial, but is intrinsic when it is employed during the course of the hearing which provides the forum for the truth to appear, albeit that truth was distorted by the complained of fraud. This is necessarily so, as the very object of the trial is to assess the truth or falsity of the often conflicting testimony and documents presented. And, the fact that the fraud is the product...