Court Opinion

ID: 9754575
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:04:42.584268+00
Date Added: 2024-06-11T07:27:54.762343
License: Public Domain

Carter, J.,
filed the following dissenting opinion, in which Prescott, C. J., and Sybert, J., concurred.
The majority opinion reversing the orders of the Circuit Court of Baltimore City which disallowed the appellant’s claim is based on a well settled rule allowing amendments of defective claims which have been seasonably filed in insolvency proceedings after the time set for filing has expired, as well as the filing of an original claim after the time limited therefor, when no prejudice will result to others. I have no disagreement that such is the rule to be followed by an equity court in this state when dealing with that question in an insolvency proceeding. The point on which I do disagree is that such a question is presented here.
The conclusion of the majority that the attempted filing of the petition with the clerk on January 16, 1963, was, in effect, the attempted filing or refiling of a claim in an insolvency proceeding, and the later offer to file a duly executed petition on June 26, 1963, was, in effect, an offer to amend a claim previously filed, and dealing with the questions here presented on this basis, appears to be an erroneous interpretation of the na*209ture of the petition. On the contrary, it appears from provisions of the court’s orders that the petition was, in effect, the initial pleading, or paper, in a judicial proceeding, adversary in nature, which the court had established for the purpose of having the parties fully heard and the merits of the appellant’s claim finally determined. “Judicial proceeding” has been defined as “a proceeding wherein there are parties, who have opportunity to be heard, and wherein the tribunal proceeds either to a determination of facts upon evidence or of law upon proved or conceded facts.” Black’s Law Dictionary (4th ed.) p. 986. The same authority defines “adversary proceeding” at p. 73 as “one having opposing parties; contested, as distinguished from an ex parte application, * *
Under the authority of Code (Cum. Supp. 1964), Art. 23, § 161K, the court on July 17, 1961, appointed a conservator of the appellee savings and loan association, hereafter called “Phoenix.” Thereafter, the appellant filed its claim against the association in the amount of $5306.25. On October 29, 1962, the court passed an order confirming the approved plan of reorganization, discharging the conservator, turning the affairs of the old Phoenix over to an interim board of the new Phoenix and in paragraph 19, conditionally ratifying certain claims against Phoenix which had previously been approved by the conservator, including the appellant’s claim, but providing further “that the provisions of this paragraph [19] shall be without prejudice to the proper officers of Phoenix to refuse to honor such claims if good and sufficient cause can be shown.”
By order dated November 20, 1962, the court provided the procedure for referral of the denied claims to a special master, which required that a list of all claims rejected by the officers of Phoenix be filed with the court within thirty days; that notice by certified letter be sent to all listed creditors advising them that the conservator had been discharged; that the old Phoenix had been reorganized; that in accordance with the plan of reorganization the claim of the recipient of the notice had been denied by the proper officers of the new Phoenix and that the court had “ordered the matter referred to a Special Master for the taking of testimony and a final determination on the question of whether such claim * * * shall he recognised as a legal ohliga*210tion of Phoenix.” (Emphasis supplied.) A copy of the order, included with the notice, further required that any creditor who did not acquiesce in the denial of its claim “shall, within 60 days of the mailing of the certified letter, * * * petition this Court, contesting in whole or in part and placing at issue before the Special Master the denial of such claim * * And that if a creditor so notified “shall fail to petition this Court within the period specified * * * said creditor * * * shall be deemed to have acquiesced in the denial of such claim * * *”; that the special master give appropriate notice of the time and place of hearing, to be held not less than thirty days after the filing of the petition; and that in such proceeding “the creditor * * * shall be ‘plaintiff’ and Phoenix shall be ‘defendant.’ ” The time limitation set by the order for filing of the petition by the appellant expired on March 1, 1963. On January 16, 1963, the appellant presented its petition to the clerk asserting that its entire claim was valid and requesting the matter be placed at issue before the special master. The petition was not filed but returned to the appellant with a letter from Judge Oppenheimer pointing out that under the provisions of Rule 30 of the Supreme' Bench of Baltimore City, since the claimant was a corporation, it would be necessary to file the petition through legal counsel. Nothing further was heard from the appellant until June 26, 1963, on' which day it offered to refile its petition through counsel, which the court refused, on the basis it had not been seasonably filed in compliance with the order of court. On the same day the court passed an order disallowing the appellant’s claim.
The court procedure prescribed for final determination does not appear to establish a method of merely reasserting or refiling the claim which the appellant originally filed on June 21, 1962, but rather, gives the appellant notice that if it does not enter into a judicial proceeding, adversary in nature, before the special master, to finally determine the merits of its claim, according to the prescribed procedure, and thereby establish the claim, such claim will be disallowed. The notice further pointed out that in order to present the matter before the master it would be necessary that the appellant file a petition with the court within sixty days setting forth what part of the denied *211claim is being contested by it and asking the master to put the matter at issue. Such a proceeding clearly seems judicial in nature and therefore comes within the letter and spirit of Rule 30 of the Supreme Bench of Baltimore City. This rule prohibits any clerk from accepting “any pleading or other paper offered for filing in behalf of a corporation by anyone other than an attorney * * * in any suit or action at law or in equity * * * or to which such corporation is a party.” The rule was found not to be unconstitutional in Ashley-Cooper Sales Services v. Brentwood Mfg. Co., 168 F. Supp. 742 (D. Md. 1958), in an opinion by Judge Watkins who ruled it was a reasonable procedural regulation. In discussing the purposes of the rule, it is stated (at p. 745) that “it arises out of the necessity, in the proper administration of justice, of having legal proceedings carried on according to the rules of law and the practice of courts and by those charged with the responsibility of legal knowledge and professional duty.” The hearing to be conducted here appears to be a legal proceeding to be carried on and determined according to the rules of law and practice of courts wherein the legal knowledge and professional duty of a duly licensed member of the bar is as necessary and valuable to the orderly and effective presentation of the cause as would ever be the situation in any suit formally conducted before the circuit court. It seems, therefore, that this proceeding should be considered both a suit m equity within the meaning of that phrase as used in the rule and a legal proceeding in the sense in which such phrase is used in the opinion interpreting the purposes of the rule in the Brentwood case. Therefore, the provisions of the rule were properly applicable to the petition which the appellant attempted to file on January 16, 1963, and it was thereby made ineligible for filing in the form in which it was presented.
It is conceded that the Supreme Bench had the authority to adopt the rule involved in this case under the provisions of Maryland Rule 1 f. We have stated that rules which this Court has the power to adopt have the force of law and there is therefore “no reason why they are not controlled by the same principles applicable to legislative enactments.” Goldston v. Karukas, 180 Md. 232, 235, 23 A. 2d 691 (1942). In dealing with the *212statute of limitations this Court has held that the filing of a suit arrests the running of the statute, Lichtenberg v. Joyce, 183 Md. 689, 699, 39 A. 2d 789 (1944), Zier v. Chesapeake Ry. Co., 98 Md. 35, 40, 56 Atl. 385 (1903). The appellant urges that, by analogy, the offer to file the petition in this case tolls or arrests the running of limitations. The difficulty with this contention is that the petition was never in fact filed with the court or accepted for that purpose. However, the authorities in other jurisdictions indicate that even if it had been erroneously filed, it would not have operated as an arrest in the running of the time limitation. What constitutes an arrest by reason of the institution of a suit is discussed generally in 34 Am.Jur., Limitation of Actions, § 254, where it is said:
“Proceedings which are void do not suspend the operation of the statute * * *. Nor will the running of the statute of limitations be stopped by the institution of a suit by a foreign corporation which has not complied with the provisions of a local statute which require that it shall not prosecute a suit in the state until it has complied. In such a case, a subsequent compliance with the statute will not validate the action from its inception so as to avoid the limitation period which had expired between the time of commencing the suit and the compliance with the statute.”
The provisions of Rule 30 are mandatory and require compliance therewith as a condition precedent to the right of a corporation to institute suit or file papers or pleadings therein. Until there has been compliance any attempt to do so would appear void and of no legal consequence. Therefore, the attempt to file the petition on January 16, 1963, was not the institution, of a suit and did not arrest the running of the sixty day limitation period.
In respect to the contention that the court abused its discretion in refusing to suspend or modify its order so as to allow the appellant to file a belated petition after the time limited therefor, this Court has held that rules of court should not be arbitrarily suspended or modified to suit the convenience of litigants in any given case and that a court has no discretion to *213dispense with its own rules at its pleasure. See Quynn v. Carroll, 22 Md. 288, 295-297 (1864); Hughes v. Jackson, 12 Md. 450, 463 (1858); Gist v. Drakely, 2 Gill 330, 346 (1844); Wall v. Wall, 2 H & G 79 (1827). Although a court has inherent power to suspend or modify its rules where justice requires, in Carroll v. Barber, 7 H & J 454 (1826), where the Court was concerned with the surrender of bail on the sixth day after the term had convened when the rule required surrender within five days, it was said at p. 456:
“Courts will sometimes enlarge or suspend their rules when the ends of justice require it to be done. But there is nothing of that kind here. It appears to be the common case of a special bail neglecting to avail himself of the time allowed him to surrender his principal ; and there is nothing to find fault with, in the refusal of the court to receive the surrender after the expiration of the time. Rules of court are necessary to the due administration of justice; but the rule in question would be perfectly useless, if in such a case as this it is not to be enforced.”
And in Wall v. Wall, supra, the Court in determining that a plea of limitations must be filed within the time fixed by rule of court, said, at p. 81:
“But where a court has established rules for its government and that of suitors, fixing days for the filing of pleadings; and where the long established practice of the courts require special pleas to be drawn up and filed at length, there exists no discretion in the inferior court to dispense at pleasure with their own rules, or to innovate upon such established practice; * * *.”
According to these authorities, it appears that under ordinary circumstances, the court has no authority or discretion to suspend or modify its rules merely to accommodate the convenience of a litigant. By the same reasoning employed in the Carroll and Wall cases, the court order fixing the time within which creditors were required to file their petitions, in the interest of orderly procedure and the prompt administration of justice, *214would be made useless if it is to be suspended so as to give any creditor who neglected to comply with its provisions, permission to file his petition at any time after the time limit, as long as the matter is still before the court, no distribution of funds have been made, and no prejudice would thereby result to others. On the other hand, a ruling which would appear more in line with the prior decisions of this Court would require the person seeking suspension to show good cause, such as circumstances beyond his control which had prevented his compliance and that no prejudice would occur to others, in order to justify the court in considering modification or suspension in the interest of promoting justice. No, such situation is here presented as to authorize suspension or modification much less constitute an abuse of judicial discretion for failure to do so.
I would therefore hold that the petition presented on January 16, 1963, did not comply with the requirements of Rule 30; that the attempt to file such a petition on that date did not arrest the running of the sixty day limitation period set by the order, and that Judge Oppenheimer’s ruling refusing the appellant permission to file the amended petition after March 1, 1963, and disallowing the claim, was correct.
The majority opinion points out that some question exists concerning the right of the officers of Phoenix to have refused to honor the appellant’s claim since there is no evidence to establish that they had “good and sufficient cause” for such action. The court orders fail to disclose any requirement that the officers of Phoenix submit their determinations to the court or any other authority for approval. In the absence of evidence to establish an abuse of discretion by the officers in arriving at a decision to deny the claim for good cause, it appears proper to assume that there was no such abuse. Apparently no serious issue was raised below on this point.
In my opinion, the judgment below should be affirmed. Chief Judge Prescott and Judge Sybert have authorized me to state that they concur in this dissent.