Case Title: Imbesi v. Carpenter Realty

Citation: 357 Md. 375

Docket Number: 46/99

State: maryland

Court: Maryland Supreme Court

Date: 2000-01-19T00:00:00Z

Document:
Dennis Michael Imbesi, Personal Representative of the Estate of Thomas L. Imbesi v.
Carpenter Realty Corporation et al., No. 46, September Term, 1999.
[Decedents' Estates - Nonclaim statute.  Estate's debtor may not set off against estate's claim
debtor's claim against decedent that is based on a separate transaction and that was not
presented against estate within the time required by nonclaim statute.]
Circuit Court for Baltimore County
Case No. 94CV1961
IN THE COURT OF APPEALS OF MARYLAND
No. 46
September Term, 1999
_________________________________________
DENNIS MICHAEL IMBESI,
PERSONAL REPRESENTATIVE OF
THE ESTATE OF THOMAS L. IMBESI
v.
CARPENTER REALTY CORPORATION
et al.
_________________________________________
Bell, C.J.
Eldridge
Rodowsky
Raker
Wilner
Cathell
Harrell, 
JJ. 
_________________________________________
Opinion by Rodowsky, J.
________________________________________
Filed:   January 19, 2000
By Chapter 226 of the Acts of 1992, effective October 1, 1992, the nine month period
1
in § 8-103(a)(1) was reduced to six months.  
In this case we construe Maryland Code (1974, 1991 Repl. Vol.), § 8-103(a) of the
Estates and Trusts Article (ET).  At the time applicable to the instant matter, that statute in
relevant part read:
"[A]ll claims against an estate of a decedent, whether due or to become due,
absolute or contingent, liquidated or unliquidated, founded on contract, tort,
or other legal basis, are forever barred against the estate, the personal
representative, and the heirs and legatees, unless presented within the earlier
of the following dates:
"(1)
Nine months after the date of the decedent's death; or
"(2)
Two months after the personal representative mails or otherwise
delivers to the creditor a copy of a notice in the form required by § 7-103 or
other written notice, notifying the creditor that his claim will be barred unless
he presents the claim within 2 months from the mailing or other delivery of the
notice."1
Statutes such as ET § 8-103(a) are commonly referred to as "nonclaim statutes."  B.R.
O'Byrne, Annotation, Presentation of Claim to Executor or Administrator as Prerequisite
of Its Availability as Counterclaim or Setoff, 36 A.L.R.3d 693, 695 n.1 (1971) (O'Byrne). 
The issue presented is whether debtors of a decedent's estate may set off against the
estate's claim against them the indebtedness of the decedent to a third party which the third
party assigned to the estate's debtors and on which no timely claim had been made against
the estate. 
The petitioner is Dennis Michael Imbesi, as Personal Representative of the Estate of
Thomas L. Imbesi, who died March 10, 1992 (the Estate).  Prior to June 1, 1982, Thomas
L. Imbesi (Imbesi) owned stock in varying amounts in six corporations that were primarily
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engaged in the soft drink bottling business conducted by the extended Imbesi family in the
Middle Atlantic states.  Included among these corporations was 7-UP Bottling Company of
Baltimore, Inc. (7-UP Baltimore), 7-UP Bottling Company of Philadelphia, Inc. (7-UP
Philadelphia), and Carpenter Realty Corporation (CRC).  On June 1, 1982, Imbesi sold all
of the stock held by him to the six issuing corporations for a total price of $500,000 payable
in 120 monthly installments with interest at 5-1/4% per year.  Each of the purchasing
corporations was severally liable for the portion of the total purchase price attributable to the
shares being redeemed by it.
Three years earlier than the stock redemption transaction, Imbesi had borrowed
$80,000 from 7-UP Philadelphia.  That loan to Imbesi is evidenced by his promissory note,
under seal, dated October 23, 1979, with interest payable semi-annually at the annual rate
of six percent and with the $80,000 principal due as a lump sum on October 23, 1989.
Letters of administration of the Estate were granted by the Register of Wills for
Baltimore County on March 16, 1992, and a notice to creditors was published immediately
thereafter.  Under ET § 8-103(a)(1) the time within which 7-UP Philadelphia was to make
any claim against the Estate would expire on December 11, 1992.  7-UP Philadelphia never
made a claim against the Estate.  
At the time of Imbesi's death there were unpaid balances due from 7-UP Baltimore
and CRC to Imbesi under the stock redemption agreement of June 1, 1982.  In March 1994
the Estate, in the Circuit Court for Baltimore County, sued CRC and 7-UP Baltimore
(collectively, the Respondents), for their respective overdue balances, with interest.  The day
- 3 -
before answering the complaint, the defendants, on April 7, 1994, took by assignment from
7-UP Philadelphia, for a recited consideration of one dollar, the $80,000 note that had been
executed by Imbesi on October 23, 1979.  In their joint answer and in a joint counterclaim
the Respondents asserted that the claim of the Estate based upon the stock redemption
agreement was offset by the amount due from the Estate on the $80,000 note then owned by
the Respondents.
This action was tried twice in the circuit court.  A bench trial in March 1995 resulted
in a judgment in favor of the Estate for $57,447.67 on the complaint and a judgment for the
Estate as counterclaim defendant.  On appeal to the Court of Special Appeals those
judgments were reversed, in an unreported opinion, on grounds relating to the burden of
proving the authenticity of the 1979 note.  Declining expressly to rule on the issue now
before us, the Court of Special Appeals remanded for further proceedings.  
On remand the circuit court held that the 1979 note could be used by the Respondents
as a setoff against the Estate's claims.  The Estate appealed to the Court of Special Appeals
which affirmed.  Imbesi v. Carpenter Realty Corp., 125 Md. App. 676, 726 A.2d 854 (1999).
That court held that ET § 8-103(a) barred affirmative use of the note, i.e., obtaining a
judgment against the Estate for the net unpaid balance between the parties running in favor
of the Respondents.  In the view of the Court of Special Appeals, however, that bar did not
extend to use of the note as a setoff against the claims of the Estate.  
The Court of Special Appeals reasoned that ET § 8-103, "a self-executing statute, bars
'claims against an estate of a decedent.'  The operative language of the nonclaim statute does
- 4 -
In Hamilton v. Caplan, 69 Md. App. 566, 588, 518 A.2d 1087, 1098 (1987), the
2
Court of Special Appeals, quoting 31 Am. Jur. 2d, Executors and Administrators § 276
(1967), used the following definition:
"'The word "claims," as used in non-claim statutes, has been construed to mean
debts or demands of a pecuniary nature that could have been enforced against
the deceased in his lifetime and could have been reduced to a simple money
judgment.'"
The Court of Special Appeals considered that the Estate, at oral argument in that
3
court, had "apparently concede[d]" that 7-UP Philadelphia could have used the note as a
setoff against a claim by the estate.  Imbesi, 125 Md. App. at 682, 726 A.2d at 857.  A court,
however, is not bound by an erroneous concession of law. 
not expressly prevent a defendant from using an unpresented claim as a defensive set-off to
a claim asserted affirmatively by an estate."  Imbesi, 125 Md. App. at 682, 726 A.2d at 857
(citation omitted).   Recognizing that the balance remaining unpaid by Imbesi to 7-UP
2
Philadelphia and the balance remaining unpaid by the Respondents to the Estate arose out
of separate transactions, the Court of Special Appeals adopted a rule that was not limited to
cases in which the claims arose out of the same transaction between the parties, was not
limited to claims arising out of any transactions between the same parties, and was applicable
where the setoff was based on a debt that had been assigned for the purpose of setoff.  Id.
at 683, 726 A.2d at 857 (citing Fusting v. Sullivan, 51 Md. 489 (1879)).   
3
We granted the Estate's petition for certiorari.  Imbesi v. Carpenter Realty Corp., 354
Md. 570, 731 A.2d 969 (1999).  It presents for review the following question:
"May a party acquire an enforceable note from a third party for the purpose of
set-off against an estate when the third party holder of the note failed to file
a claim against the estate within the statutory time period?"
- 5 -
For the reasons set forth below we shall reverse the judgment of the Court of Special
Appeals.
Analysis of the issue presented requires at the threshold a definition of terms.  In this
opinion "recoupment" means a diminution or a complete counterbalancing of the adversary's
claim based upon circumstances arising out of the same transaction on which the adversary's
claim is based; "setoff" means a diminution or a complete counterbalancing of the adversary's
claim based upon circumstances arising out of a transaction other than that on which the
adversary's claim is based; and "counterclaim" means the assertion of a right to have an
affirmative judgment against the adversary based upon a setoff or a recoupment.   See
Billman v. State of Maryland Deposit Ins. Fund Corp., 88 Md. App. 79, 92-93, 593 A.2d
684, 690-91, cert. denied, 325 Md. 94, 599 A.2d 447 (1991).  Here, the Respondents
acknowledge that they do not have any right to counterclaim based on the note.  That is the
majority rule.  See O'Byrne, 36 A.L.R.3d at 697 ("[T]he courts generally have held that the
unpresented claim can be used only in a defensive character, and not as the basis of an
affirmative or originating action by the claimant against the estate, and those cases generally
further establish that the plea is limited to the reduction or extinguishment of the plaintiff's
claim, and is not available to permit the recovery by the defendant of any excess over the
amount of that claim."). 
Respondent's contention, with which the Court of Special Appeals agreed, is that they
were entitled to a setoff.  In other words, the Court of Special Appeals held that ET
§ 8-103(a) operates only to bar a counterclaim against a decedent's estate.  Because the
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Respondents assert a setoff, our holding will be limited to whether ET § 8-103(a) bars setoff
as well as counterclaim. 
Whether "claims," as used in ET § 8-103(a), includes or excludes counterclaims,
setoffs, and recoupments is not directly addressed in the statutes relating to decedent's
estates, and it is not directly addressed in any Maryland appellate decisions.  Consequently,
we must apply the familiar rules of statutory construction.  
The text of ET § 8-103(a) makes clear that the General Assembly intended that
"claims" be given a broad meaning.  The statute applies to "all claims against an estate of a
decedent, whether due or to become due, absolute or contingent, liquidated or unliquidated,
founded on contract, tort, or other legal basis."  Claims falling within the quoted language
that are untimely "presented" are "forever barred."  
The manner in which claims are presented is set forth in ET § 8-104.  Claims,
excluding those for which the decedent was covered by liability insurance, must be presented
either by delivering a verified written statement of the claim to the personal representative
or to the Register of Wills, or by commencing a suit.  ET § 8-104(b), (c), (d).  Here, 7-UP
Philadelphia had a claim against the Estate which could have been, but was not, timely
presented in any of the three manners set forth in ET § 8-104.  From this the Estate
concludes that the claim on the note was barred in the hands of 7-UP Philadelphia and,
accordingly, is barred in the hands of the Respondents.  Respondents' counter argument is
that use of the note by 7-UP Philadelphia as a setoff against a claim by the Estate would not
be barred, inasmuch as it is a purely defensive use, and that the Respondents may make the
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ET § 8-113 provides that "[i]n allowing a claim the personal representative may
4
deduct a counterclaim which the estate has against the claimant."  Inasmuch as a nonclaim
statute does not apply to claims by an estate, ET § 8-113 likewise casts little light on the
issue before us.
same defensive use of the note as 7-UP Philadelphia could have made.  Thus, ET § 8-104
will produce different results depending upon the construction of § 8-103(a) that is assumed.4
The purpose of the nonclaim statute is to expedite the administration of decedents'
estates.  Greentree v. Fertitta, 338 Md. 621, 629, 659 A.2d 1325, 1329 (1995).  The
nonclaim statute not only benefits the legatees, but also protects the personal representative
from "'liability for claims not filed within the time and in the manner prescribed.'"  Burket
v. Aldridge, 241 Md. 423, 429, 216 A.2d 910, 912 (1966) (quoting Bertonazzi v. Hillman,
241 Md. 361, 367, 216 A.2d 723, 726 (1966)).  In the instant matter the Court of Special
Appeals concluded that permitting setoff is at least consistent with this policy, saying, "The
use of a set-off does not delay settlement of an estate any more than any other defense to an
[e]state's cause of action."  Imbesi, 125 Md. App. at 682, 726 A.2d at 857.  If we limit our
consideration to setoff, recoupment, and a complete bar against defensive use of the untimely
asserted claim held by an estate's debtor, setoff is most likely to complicate and prolong
resolution of an estate's claim against its debtor.  Resolution of a setoff defense will require
consideration of the facts and circumstances of a separate transaction and consideration of
any defenses that an estate might have against a finding of indebtedness by the estate arising
out of that separate transaction.  Neither recoupment nor a complete bar to defensive use
- 8 -
The Henderson Commission had recommended that the period of the running of the
5
nonclaim statute be reduced to four months, measured from the date of the first published
notice to creditors.  Henderson Commission, Second Report, at 121-22 (1968).  As
introduced in the 1969 session of the General Assembly, the bill that became Chapter 3 of
the Acts of 1969 would have reduced the period to four months from the first notice to
(continued...)
carry that potential for prolonging resolution of an estate's claim and, thereby, prolonging
completion of administration.
The legislative history of Maryland's nonclaim statutes evidences that the policy has
been to increase the scope of those protected by the nonclaim statute and to reduce the time
within which an estate's creditor can avoid the operation of the nonclaim statute.  From 1798
until January 1, 1970, the running of the nonclaim statute was triggered by an estate's
rejection of a claim that had been presented.  See Acts of 1798, ch. 101, subch. 8, § 18 and
Md. Code (1957, 1964 Repl. Vol.), Art. 93, § 119.  From 1798 to 1959 the period from
rejection of a claim to the imposition of the bar of the nonclaim statute was nine months.  See
Acts of 1798, ch. 101, subch. 8, § 18.  The nine month period was reduced to six months by
Chapter 12 of the Acts of 1959.  See Md. Code (1957, 1964 Repl. Vol.), Art. 93, § 119. 
The time at which the bar of the nonclaim statute operated was accelerated by Chapter
3 of the Acts of 1969, effective January 1, 1970, as a result of the reports of the Governor's
Commission to Review and Revise the Testamentary Law of Maryland (the Henderson
Commission).  The new nonclaim statute was codified as Md. Code (1957, 1969 Repl. Vol.),
Art. 93, § 8-103(a).  Under the new legislation, the statute's running period was reduced to
six months beginning on the date of the first published notice to creditors.   Article 93,
5
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(...continued)
5
creditors.  The bill was amended in the course of passage to six months.
§ 8-103, effective January 1, 1970, also enlarged the scope of protection of the nonclaim
statute by changing the rule of Zollickoffer v. Seth, 44 Md. 359 (1876), under which a
creditor who had failed to comply with the nonclaim statute, thus forever barring the claim
against the estate, nevertheless could claim against the heirs or legatees to whom distribution
had been made.  ET § 8-103 provides that the claim that is not timely filed is "forever barred
against the estate, the personal representative, and the heirs and legatees."  See Campbell v.
Welsh, 54 Md. App. 614, 625-30, 460 A.2d 76, 83-85 (reviewing the history of the nonclaim
statute), cert. denied, 297 Md. 108 (1983), and Comment of Henderson Commission
following Md. Code (1957, 1969 Repl. Vol.), Art. 93, § 8-103.  That comment in part
observes that "the present six month date is reasonable in that it gives creditors sufficient
time to file their claims and at the same time tends to encourage the prompt administration
and settlement of estates."
By emergency legislation effective May 19, 1989, the nonclaim statute was made self-
executing.  The decedent's death became the triggering event, the period before the bar was
imposed was made nine months, and the alternative procedure for shortening that period,
now found in ET § 8-103(a)(2), was enacted.  See Chapter 496 of the Acts of 1989.  The
purpose of the amendment was to avoid due process problems under the analysis in Tulsa
Professional Collection Services, Inc. v. Pope, 485 U.S. 478, 108 S. Ct. 1340, 99 L. Ed. 2d
565 (1988).  See Ohio Cas. Ins. Co. v. Hallowell, 94 Md. App. 444, 452, 617 A.2d 1134,
- 10 -
1138 (1993), and A.J. Gibber, Estate Administration § 6.21 (4th ed. 1999 Supp.).  The
nonclaim statute as amended in 1989 governs in the case before us.  By Chapter 226 of the
Acts of 1992, the nonclaim statute was again accelerated to shorten to six months the period
measured from death of the decedent.  See Md. Code (1974, 1991 Repl. Vol., 1999 Cum.
Supp.), ET § 8-103(a)(1).  
In 1920 a closely related statute was enacted by Chapter 674 of the Acts of that year
(the 1920 Act).  Initially codified as Md. Code (1924), Art. 93, § 110, it read: 
 
"If a claim shall be asserted against or exhibited to an administrator or
executor in any form, whether sworn to or passed by the Orphans' Court or
not, and he shall refuse payment thereof in writing, such claim shall be forever
barred unless the creditor shall bring suit upon the same within nine months
after such rejection."  
By Chapter 554 of the Acts of 1957 the time period in the 1920 Act was reduced to six
months from rejection.  Last codified as Md. Code (1957, 1964 Repl. Vol.), Art. 93, § 120,
the 1920 Act was repealed in the revision of the testamentary laws, effective January 1,
1970, and its bar is now included in ET § 8-103.  A number of this Court's cases discussing
untimeliness of a claim against an estate have involved both the nonclaim statute and the
1920 Act.  
In Nowell v. Larrimore, 205 Md. 613, 109 A.2d 747 (1954), we said:
"It has been repeatedly held by this Court that [the nonclaim statute and
the 1920 Act] create a statutory bar as distinguished from a mere period of
limitations which may be waived.  It extinguishes the right to sue, not merely
the remedy.  The purpose of these sections is to prevent a creditor with a
controverted claim from unduly prolonging the settlement of the decedent's
estate."
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Id. at 624, 109 A.2d at 752 (citations omitted).  See also Donnally v. Montgomery County
Welfare Bd., 200 Md. 534, 540-41, 92 A.2d 354, 357 (1952) (same).  In Frank v. Wareheim,
177 Md. 43, 50, 7 A.2d 186, 189 (1939), we stated that the 1920 Act "is not the usual statute
of limitations whose operation as a bar to the remedy may be variously obviated or
abandoned, but a statutory bar which prevents the collection of the claim, unless the creditor
shall bring suit on the claim within nine months of its rejection." 
An enactment analogous to the nonclaim statute and to the 1920 Act was involved in
Chandlee v. Shockley, 219 Md. 493, 150 A.2d  438 (1959).  Maryland Code (1957), Art. 93,
§ 112 provided in essence that an action for personal injuries tortiously caused by the
decedent could be maintained against the personal representative, but such an action "must
be commenced within six calendar months after the date of the qualification of the [personal
representative]."  The Chandlee Court characterized § 112, the nonclaim statute, the 1920
Act, and the wrongful death statute as establishing conditions precedent, 219 Md. at 497, 150
A.2d at 441, and as the type of statutes "in which the time proviso is part of the right and not
merely a limitation of the remedy."  Id. at 498, 150 A.2d at 441.
Given the "forever barred" language of ET § 8-103(a), coupled with the recognition
in our cases, reviewed above, that it creates a substantive time limit that is part of the right
conferred, one could be led to conclude that the owner of a claim against a decedent's estate,
who has failed timely to assert it under ET § 8-103(a) could not use the obligation for any
purpose.  But our cases have not gone so far as to hold that such a  time bar extinguishes the
claim under all circumstances.  Thus, in Chandlee, this Court held that the personal
- 12 -
representative was estopped to assert the bar of the statute because of representations made
on behalf of the estate that the injured plaintiff's claim would be paid.  Id. at 502, 150 A.2d
at 443.  Similarly, in Frank, 177 Md. 43, 7 A.2d 186, a claim was presented to the estate
valuing at $3,150 personal services rendered to the decedent.  That claim was rejected, but
the parties continued to negotiate and ultimately compromised the claim at $1,000.  Certain
legatees objected to the payment of the settlement amount because the claimant had not sued
within nine months from the rejection of the claim as submitted.  This Court held that
acknowledgment by the personal representatives of the validity of the claim, as reduced, had
the effect of rescinding the prior notice of rejection.  Id. at 51, 7 A.2d at 190.  See also Geisz
v. Greater Baltimore Med. Ctr., 313 Md. 301, 325, 545 A.2d 658, 669 (1988) ("[E]stoppel
based on fraud or fraudulent concealment of a cause of action operates to toll the substantive
limitations period in the wrongful death statute."); Lampton v. LaHood, 94 Md. App. 461,
475-80, 617 A.2d 1142, 1151 (1993) (creditor's reliance on estate's representation that claim
had been perfected was justified and estoppel arose).
In the instant matter the Respondents have never suggested that collection of the
Estate's debt, evidenced by the 1979 note, avoids the bar of ET § 8-103(a) because of
estoppel, waiver, or fraud.  The Respondents do cite Frank as Maryland precedent
"permitting a personal representative to reduce the distribution of an estate's beneficiary by
the amount of the beneficiary's promissory note held by the estate--despite expiration of the
applicable statute of limitations for enforcing the note."  Brief of Appellees at 10.  The aspect
of Frank to which the Respondents refer, however, addressed an ordinary statute of
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limitations.  Indeed, this Court's holding on that aspect of Frank states that "[t]he rule that
the statute of limitations is ineffective against the retainer of the debt rests upon the sound
principle that the statute only bars the remedy and, so, the debt is not extinguished."  Id. at
59, 7 A.2d at 193.  Here, the nonclaim statute is not an ordinary statute of limitations.
Viewing the issue before us from a pleading standpoint strongly suggests that a setoff
should be considered as a claim within the meaning of the nonclaim statute.  Chief Judge
Brune, writing for the Court in District Agency Co. v. Suburban Delivery Service, Inc., 224
Md. 364, 167 A.2d 874 (1961), explained the historic difference by quoting 1 J.P. Poe,
Pleading and Practice in the Courts of Common Law § 615, at 643 (5th Tiffany ed. 1925)
(Poe), as follows:
"'When the abatement claimed by the defendant on the amount of the plaintiff's
demand grows out of and forms part of the contract in which the claim of the
plaintiff originated, the plea of set-off is not necessary, but the defense is open
to the defendant under the general issue [plea].  *** But wherever the defense
is a counterclaim, arising out of an independent transaction, and constituting,
of itself, a separate cause of action, for which the defendant might maintain a
cross action at law against the plaintiff, it must be pleaded as a set-off.'"  
District Agency Co., 224 Md. at 369-70, 167 A.2d at 876-77.
Under a special plea of setoff, an affirmative judgment could be entered in favor of
the party pleading setoff.  Authorization for an affirmative judgment was statutorily based
beginning with the Act of 1785, Chapter 46, § 7 and continuing to the time when the
Maryland Rules of Procedure, effective January 1, 1957, were operative.  See 9 Annotated
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The statutes tracing to 1785 were repealed by Chapter 399 of the Acts of 1957,
6
effective June 1, 1957.  In the Code of 1951 the provisions of the Act of 1785, Chapter 46,
§ 7 were Article 75, §§ 16 and 17, which in relevant part read:
"16.
In any suit ex contractu or upon any judgment, if the defendant
shall have any demand or claim arising ex contractu or upon judgment against
the plaintiff, the defendant may plead such claim specially, whether such claim
of the defendant be for liquidated or unliquidated damages, and whether it be
of such nature as may be availed of by way of recoupment without such
special plea or not.
"17.
In every case where a special plea is filed as authorized by the
preceding Section, judgment for the excess of the one claim over the other, as
each is proved, with costs of suit, shall be given in favor of the plaintiff or the
defendant, according as such excess is found in favor of the one or other of the
parties, if such excess be sufficient to support a judgment in the court where
the cause is tried according to its established jurisdiction ...."
The revision of the Maryland Rules of Procedure in 1984 does not substantially alter
7
(continued...)
Code of Maryland (1957) at 216.   Under the 1957 Rules "Rule 342 c1(c) require[d] a
6
counterclaim to be specially pleaded if it seeks relief exceeding in amount the relief sought
by the plaintiff or arises out of an independent transaction."  District Agency Co., 224 Md.
at 370, 167 A.2d at 877.  At common law, see Poe § 615, and under the 1957 Rules,
recoupment could be shown under the general issue plea, but no affirmative judgment could
be obtained.  See E.J. Smith Constr. Co. v. Burton, 262 Md. 62, 67-69, 277 A.2d 84, 86-87
(1971) (counterclaim by owner for alleged damage due to faulty construction not required
in order to recoup against contractor's claim for services because general issue plea was
sufficient).  Thus, the pleading background against which the General Assembly enacted ET
§ 8-103(a) treated setoff as permitting an affirmative judgment.7
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(...continued)
7
the treatment of setoff for pleading purposes.  Setoff is not listed in the twenty-one item
laundry list of affirmative defenses in Maryland Rule 2-323(g) that are to be raised in the
answer, and, necessarily, must be asserted by counterclaim under Rule 2-331(a).  
It is unnecessary in the instant matter to determine whether recoupment today may be
shown under the general denial permitted by Rule 2-323(d).
 
Courts of our sister states have reached a variety of results on whether a claim barred
under a nonclaim statute may be used to set off a claim asserted by a decedent's estate.  See
O'Byrne, 36 A.L.R.3d 693.  The rationale that we find to be most helpful is found in those
cases which permit the claim barred by the nonclaim statute to be used for recoupment.  For
example, in Katskee v. Nevada Bob's Golf of Nebraska, Inc., 472 N.W.2d 372 (Neb. 1991),
the estate sought back rent under a lease conferring a right of first refusal on the tenant which
the tenant claimed had been breached by the decedent landlord but on which no claim timely
had been filed.  Referring to the Nebraska nonclaim statute as a statute of limitations, the
court cited, inter alia, C. Wright, The Law of Federal Courts 534-35 (4th ed. 1983), where
the author states:
"'The usual doctrine, with respectable common law origins, is that an unrelated
counterclaim is barred by the statute of limitations.  A counterclaim that arises
out of the transaction or occurrence on which the action is founded may be
asserted for purposes of recoupment to prevent or reduce a judgment for
plaintiff but affirmative relief will not be given on such a counterclaim.'"
Katskee, 472 N.W.2d at 378.  See also In re Estate of Massie, 353 N.W.2d 735, 740-41
(Neb. 1984) (in defense of estate's claim for the gross proceeds from the sale of cattle,
estate's debtor allowed recoupment for cost of caring for and feeding the cattle).  
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Minex Resources, Inc. v. Morland, 467 N.W.2d 691 (N.D. 1991), involved multiple
claims concerning oil and gas rights.  Among them was the estate's impleader of an
indemnitor against claims of unpaid contributions to operating expenses.  The alleged
indemnitor was permitted to seek recoupment of amounts that the indemnitor allegedly
overpaid to cover operating expenses for the benefit of the decedent during her lifetime.  The
court said:  "We agree with the weight of authority that a claim in the nature of a recoupment
defense survives as long as the plaintiff's cause of action exists, even if affirmative legal
action upon the subject of recoupment is barred by a statute of limitations."  Id. at 699.  As
the term was used by the Minex Resources court, "[r]ecoupment is an equitable doctrine with
its own unique characteristics:  it must arise out of the same transaction that is the subject
matter of the plaintiff's action and it can only be used to reduce or avoid the plaintiff's
recovery."  Id.
Using the terminology, "setoff," other courts have allowed recoupment based on
claims that had not been filed under a nonclaim statute.  See Dash v. Rubey, 357 P.2d 81, 83
(Colo. 1960) (surviving partner, sued by deceased partner's estate for contribution to
partnership losses, allowed recoupment based on deceased partner's overdraws); In re Estate
of MacDonald, 417 P.2d 728, 732-33 (Ariz. App. 1966) (tenant, sued for unpaid rent by
deceased landlord's estate, allowed recoupment based upon alleged subsequent oral
modification of lease by landlord to reimburse tenant for tenant's expenditures for repairs to
premises); Bakke v. Buck, 587 P.2d 575, 578 (Wash. App. 1978) (borrower, sued by
deceased lender's estate for unpaid balance on usurious loan, allowed recoupment based on
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The statute involved in Berrigan provided that the estate's creditor "'shall be debarred
8
of his claim against said estate.'"  46 Conn. at 276.  The statute involved in Goldfarb read
that the estate's creditor "'shall be barred of his demand against such estate.'"  278 A. at 820
(continued...)
penalties provided by usury statute).  But see Harper v. Coad, 191 N.W.2d 682, 689 (Iowa
1971) (legatee, sued by estate for amount paid by decedent as surety on obligations due by
legatee to third party, allowed setoff based on the value of services allegedly rendered to
decedent during lifetime); Stiles v. Smith, 55 Mo. 363, 366-67 (1874) (setoff, based on debts
separate from estate's claim for work done and materials provided by decedent, allowed by
statute).  
At oral argument in this Court, the Respondents emphasized Berrigan v. Pearsall, 46
Conn. 274 (1878), which holds that the nonclaim statute did not bar defensive use of a $300
loan balance owed by the decedent at his death against the claim of the estate's assignee of
$118.09 owed by the lender to the decedent on "an account on book."  Id. at 275.  The court
described the nonclaim statute as "simply a statute of limitations" which bars the right to
recover, but not the debt which "is not paid by lapse of time."  Id. at 276.  The Supreme
Court of Connecticut, however, in State v. Goldfarb, 278 A.2d 818 (Conn. 1971), described
the then nonclaim statute, in dicta, saying:
"It is settled law that [the nonclaim statute] is not a statute of limitation
but, instead, imposes a condition precedent to a legal recovery against a
solvent estate.  In an action on a claim, the due presentation of the claim is a
necessary allegation in the complaint, and, lacking such allegation, the
complaint is demurrable."  
Id. at 821 (citation omitted).8
- 18 -
(...continued)
8
n.1.
Faced with the foregoing conflict, the Appellate Court of Connecticut in Genovese
v. J.N. Clapp Co., 495 A.2d 1079 (Conn. App. 1985), considered the nonclaim statute to be
a statute of limitations.  Under that analysis "recoupment" was available defensively.  The
court defined "recoupment" as we have defined it, supra, namely, a defense that "arises out
of the transaction constituting the plaintiff's cause of action" and that is used purely
defensively.  Id. at 1081.  Inasmuch as Connecticut law on the issue before us is somewhat
unclear, and inasmuch as the Connecticut decision most favorable to Respondents, i.e.,
Berrigan, considers that state's former nonclaim statute to be a statute of limitations, unlike
the Maryland rule, we are not persuaded to follow Berrigan.
Based on all of the foregoing considerations, we construe ET § 8-103(a) to bar a claim
that has not been timely presented and that arises out of a transaction separate from that on
which the estate claims.  In sum, our construction of the nonclaim statute is dictated by the
following factors:  (1) the language of the statute; (2) its purpose of expediting the settlement
of estates; (3) its history of enactments progressively restrictive of the time within which to
present claims; (4) the longstanding construction by this Court of the nonclaim statute as a
condition precedent to asserting a claim; (5) Maryland's longstanding treatment of setoff,
from a pleading and practice standpoint, as a defense on which an affirmative judgment
could be entered in favor of the defendant; and (6) the fact that a number of decisions in
other states that permit defensive use of "setoff" actually involve recoupment. 
- 19 -
It is sufficient for present purposes to hold that the nonclaim statute does not permit
a setoff based on a claim barred by ET § 8-103(a), even if the estate's debtor voluntarily
seeks to limit the setoff to the amount of the estate's claim.  Whether the result is the same
if the estate's debtor raises recoupment is an issue that need not presently be decided.  
JUDGMENT OF THE COURT OF SPECIAL
APPEALS REVERSED.  CASE REMANDED
TO THAT COURT FOR THE ENTRY OF A
JUDGMENT REVERSING THE JUDGMENT
OF THE CIRCUIT COURT FOR BALTIMORE
COUNTY AND REMANDING THIS CASE TO
THAT 
COURT 
FOR 
FURTHER
PROCEEDINGS CONSISTENT WITH THIS
OPINION. 
COSTS IN THIS COURT AND IN THE COURT
OF SPECIAL APPEALS TO BE PAID BY THE
RESPONDENTS, 
CARPENTER 
REALTY
CORPORATION AND 7-UP BOTTLING
COMPANY OF BALTIMORE, INC.