Berger, Rubin, Ronald B. Filed: December 18, 2013

REPORTED

IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

No. 2025

September Term, 2011

PNC BANK, NATIONAL

ASSOCIATION, ET AL.

BRADDOCK PROPERTIES

Kehoe,

Berger,

Rubin, Ronald B.

(Specially Assigned)

JJ.

Opinion by Kehoe, J.

Filed: December 18, 2013

This is an appeal from a judgment of the Circuit Court for Frederick County

foreclosing the equity of redemption in a tax sale proceeding. The appellants are PNC Bank,

N.A. (“PNC”) and Sidney S. Friedman, Jeffrey M. Lippman, and William H. Thrush, Jr. (the

“Substitute Trustees”). PNC was the beneficiary of a deed of trust encumbering the property

in question and the Substitute Trustees, acting on behalf of PNC, were plaintiffs in an action

to foreclose the deed of trust. The appellee is Braddock Properties, LLC (“Braddock”), the

purchaser of the property at tax sale and the plaintiff in the redemption foreclosure action.

Appellants raise six questions for our review, which we have consolidated and

reworded:

I. Did the circuit court have jurisdiction over PNC when it issued the decree

foreclosing the equity of redemption on the property?

II. Was PNC a mortgagee of the tax sale property and thus entitled to be

identified as a named defendant pursuant to Md. Code (1985, 2012 Repl. Vol.)

§ 14-836(b) of the Tax - Property Article (“TP”)?

III. Did the circuit court err in denying the appellants’ post-judgment motions?

We conclude that the circuit court had jurisdiction over PNC. PNC was not a

mortgagee as that term is used in the tax sale statute. The post-judgment motions at issue are

(1) appellants’ motion to stay enforcement of the judgment pending appeal; (2) their motion

to require Braddock to permit them to redeem the property; and (3) their motion for what in

effect would have been a declaratory judgment as to their rights in the property. The circuit

court did not err when it denied these motions. We will affirm the judgment of the circuit

court.

BACKGROUND

The property at issue is a 14.3 acre tract located in Frederick County. In 2006, BBR

Properties, L.L.C. (“BBR Properties”) borrowed $395,000 from Farmers and Merchants

Bank (“F&M Bank”) to purchase the property. Repayment of the loan was secured by a deed

of trust on the property recorded in the land records of Frederick County. The deed of trust

recited that F&M Bank was the beneficiary of the instrument.

In 2007, PNC acquired F&M Bank by merger, thereby succeeding to F&M’s status

as beneficiary. Subsequently, BBR Properties went into default on the loan and stopped

paying taxes on the property. From this point, the record establishes the following sequence

of events:

• May 10, 2010: Frederick County sold the property to appellee Braddock

Properties L.L.C. (“Braddock”) at a tax sale, subject to the equity of

redemption.

• August 16, 2010: PNC filed in the Land Records of Frederick County a deed

of appointment appointing the Substitute Trustees for the purpose of

foreclosing the deed of trust.

• October 25, 2010: the Substitute Trustees filed a foreclosure action on behalf

of PNC against the property.

• At some point (the exact date cannot be determined by the material in the

Record Extract), PNC filed a collection action against BBR Properties and

obtained a judgment. This judgment was a lien against the property.

On June 3, 2011, Braddock filed an action to foreclose the equity of redemption. The

complaint named as defendants BBR Properties, Frederick County, and “all persons or

entities that have or claim to have any interest in the property . . . .” but did not name either

PNC or the Substitute Trustees. The complaint did, however, mention both PNC and F&M

Bank, stating, in pertinent part, that:

A complete search of the Land Records of Frederick County, and the

records of the Register of Wills for Frederick County, and of the Circuit Court

for Frederick County . . . discloses the following: title is vested in BBR

Properties LLC . . . by Deed dated June 6, 2006 . . . Deed of Trust among

BBR Properties, LLC and Farmer’s and Mechanic’s Bank recorded in the

Land Records of Frederick County . . . ; *** Judgment Lien in favor of PNC

Bank (Formerly Farmer’s and Mechanic’s Bank) as reflected in Frederick

County, Maryland Circuit Court Case Number 10-C-10-002364 CJ . . . .

The complaint made no reference to the pending foreclosure proceedings or to the

Substitute Trustees. No summons was issued to PNC, although it did receive a copy of the

complaint by certified mail. The Substitute Trustees were not named as defendants in the

complaint, nor was a summons or a copy of the complaint served on them.

On August 30, 2011, the circuit court entered a judgment foreclosing the equity of

redemption on the property and instructing the Treasurer of Frederick County to convey the

property to Braddock in fee simple.

On September 6, 2011, PNC and the Substitute Trustees filed a joint motion to

vacate, alter, or amend judgment, arguing that (formatting altered):

[Appellants] were deprived of their interest in the subject property

without due process of law; the Court never obtained jurisdiction over the

[Appellants]; defects in the Decree and Complaint are fraud in these

proceedings; pursuant to Maryland statute, [Appellants’] rights should not be

affected by these proceedings; if the decree, as entered, is allowed to stand,

then the rights of the [Appellants] will be irreparably prejudiced; [Appellants]

are ready, able and willing to pay the amounts due to redeem the property

from tax sale.

A hearing on the motion was held on October 20, 2011. The circuit court then issued

a memorandum opinion and order on November 8, 2011 denying the motion as to PNC but

granting it as to the Substitute Trustees. In denying relief to PNC, the circuit court stated

(citations to the record omitted):

PNC Bank (“PNC”) was not specifically named in the Complaint.

BBR Properties and Frederick County were identified as specific defendants;

all other persons and entities were identified as “all persons or entities that

have or claim to have any interest...” On its face, this fails to comply with

[Tax Property Article (“TP”)] Section 14-836(b)(iii).

PNC was served with the Complaint pursuant to [TP] § 14-839(a)(4).

PNC Bank is specifically listed as a party in interest ... despite not being

named a defendant. An attorney representing PNC called Plaintiff regard[ing]

redeeming the property in July 2011, requesting the amount of money

necessary for redemption. The parties also exchanged at least one email about

the right of redemption.

Proper service of process provided actual notice to PNC of the ongoing

proceedings. Plaintiff provided a return receipt from the certified mail that

was sent to PNC as well as an affidavit of service .... However, PNC admits

that it did have actual notice of the proceedings and w[as] fully aware of its

interest in the matter.

The notice’s purpose is to assure that all parties with an interest in or

right to property are given the opportunity to redeem the property before that

right is foreclosed. In this case, although PNC was not named as a defendant

as required by the Rules, it was provided with actual notice. To place form

over substance in this case would not be equitable. Defendant PNC Bank’s

Motion is denied.

The circuit court vacated the judgment as to the Substitute Trustees because:

Unlike PNC, the Substitute Trustees were neither named as defendants

nor properly served with notice .... The Substitute Trustees were not served

the Complaint, named in the Complaint, or otherwise notified as required by

the Rules. The Court also notes that the Plaintiff was aware that a foreclosure

action was docketed against this property, but chose not to notify the

Substitute Trustee[s]. Because the Substitute Trustees were neither named

as defendants nor properly served with actual notice, their Motion is granted.

Accordingly, the circuit court vacated “the Decree foreclosing the Trustee’s Right to

Redemption.”

PNC and the Substitute Trustees filed a motion for reconsideration. In substance,

PNC asserted that it was a mortgagee and, as such, was entitled to be named as a defendant

pursuant to TP § 14-836 and that, because PNC was not served with a summons, the circuit

court had no jurisdiction over it. The Substitute Trustees faulted the circuit court for failing

to amend the judgment “to specify the rights of the [Substitute] Trustees,” noting that

“[Braddock] has refused to allow the [Substitute] Trustees to redeem the subject property,

despite proper tender of redemption payment.” This motion was denied without discussion

on December 16, 2011.

On November 21, 2011, the Substitute Trustees filed what they termed a “Motion

to Compel,” asserting that despite their proper tender of redemption payment and their

request for an (otherwise unspecified) “Letter of Release” from Braddock’s counsel,

Braddock had refused to accept payment and refused to provide the letter. The Substitute

Trustees further alleged that Braddock’s counsel had refused to provide the “Letter of

Release” because “he did not believe that the Substitute Trustees had standing to redeem

the property in light of this Court’s ruling.” The Substitute Trustees stated that

“[Braddock’s] refusal to provide a Valid Letter of Release, despite proper tender of

payment, is in contravention of this Court’s Opinion and Order, of Maryland statue [sic],

and of the Substitute Trustee’s rights in the property.” Two days later, the Substitute

Trustees filed a motion to stay enforcement of the judgment until the resolution of the

above-detailed issues. Braddock opposed the motion to stay on the basis that: “PNC . . .

no longer has rights to the subject property .... The Substitute Trustees cannot have a greater

interest in the property than the beneficiary, PNC.” Both of these motions were denied

without discussion on January 5, 2012.

This appeal followed.

DISCUSSION

We review de novo the circuit court’s application of the law to the undisputed facts

before it. Schisler v. State, 394 Md. 519, 535 (2006) (“[W]here an order involves an

interpretation and application of Maryland constitutional, statutory or case law, our Court

must determine whether the trial court’s conclusions are ‘legally correct’ under a de novo

standard of review.”). We will provide a brief overview of the pertinent aspects of the tax

sale process in Maryland in order to place the parties’ contentions in context.

I. The Statutory Overview

In Maryland, when an owner fails to pay ad valorem taxes levied upon real property,

the taxing authority for the political subdivision within which the property is located must

sell the property at auction. See TP § 14-808; St. George Antiochian Orthodox Christian

Church v. Aggarwal, 326 Md. 90, 91 (1992). After the sale, the owner of the property, and

any other person having an equitable interest in the property, has the right to “redeem” title

to the property by reimbursing the successful bidder (the “tax sale purchaser”) for the taxes

and other expenses paid. TP § 14-827; see Aggarwal, 326 Md. at 91; Voltolina, 198 Md.

App. at 598-99.

After a period of six months, the tax sale purchaser has the right to acquire fee simple

title by filing a complaint in the circuit court to “foreclose all rights of redemption of the

property. . . .” TP § 14-833. This action not only gives the record owner and any other

interest holders in the property an opportunity to raise procedural or other challenges to the

taxes and the tax sale, see TP § 14-842, but also serves as a means to give those persons one

last opportunity to redeem the property. See Stewart v. Whitely, 182 Md. 455, 457 (1943)

(interpreting predecessor statute). The right to redeem is effective until the circuit court

For more detailed discussions of aspects of this process, see St. George Antiochian

Orthodox Christian Church v. Aggarwal, 326 Md. 90 (1992); Voltolina v. Property Homes,

LLC, 198 Md. App. 590, 598-99 (2011); Heartwood 88, Inc. v. Montgomery County, 156

Md. App. 333, 347-48 (2004); Slattery v. Friedman, 99 Md. App. 106, 112-114 (1994);

Scott v. Seek Lane Venture, Inc., 91 Md. App. 668, 680-81 (1992).

enters final judgment. TP §§ 14-827 and 833(b).

As a precondition to filing a complaint to foreclose the equity of redemption, a tax

sale purchaser is required to conduct a title search on the property. Based upon the results

of the title examination, the tax sale purchaser is required to identify the following parties

as defendants and include them in the caption of the complaint (emphasis added):

• the “record title holder,” TP § 14-836(b)(1)(i);

• the “record title holder” of any ground rents encumbering the property, TP

§ 14-836(b)(1)(ii);

• “any mortgagee [under a recorded and unreleased mortgage on] the property

or any assignee of the mortgage,” TP § 14-836(1)(iii) ;

• “the trustee under any deed of trust recorded against the property or

any holder of a beneficial interest in a deed of trust who files notice of

the interest, which notice shall include identification of the deed of trust, the

book and page where the deed of trust is recorded, and the address at which

the holder may be served with a summons,” TP § 14-836(1)(iv); and

• the county within which the property is located and, under some

circumstances, the State, TP § 14-836(1)(v) and (vi).

To be consistent with the terminology employed by the Court of Appeals in Royal

Plaza Cmty. Ass’n v. Bonds, 389 Md. 187, 199 (2005), we will refer to this category of

potential parties as “necessary defendants”.

Necessary defendants are to be served with a summons and a copy of the complaint

and other papers filed in the case in the same manner as in other civil actions, TP § 14-

839(a)(3), that is, by personal service or by certified mail, restricted delivery. See Md. Rule

2-121(a). Unless a necessary defendant is specifically identified in the complaint in the

manner required by § 14-836(b)(1), that party’s interest in the property is not affected by

the redemption foreclosure proceeding. TP § 14-836(b)(2).

There is a universe of other possible persons who may have interests in the property,

e.g., judgment creditors, other lien holders etc. These parties need not be specifically

identified in the complaint, nor mentioned in the caption. Instead, the complaint may refer

to them generically as “all persons that have or claim to have any interest in property ....”

TP § 14-836(b)(3). We will refer to this class of potential parties as “other interest holders.”

To the extent that other interest holders can be identified by reasonable investigation,

due process considerations require that they be given actual notice. See Dillow v. Magraw,

102 Md. App. 343, 359 n.9 (1994) (citing Aggarwal, 326 Md. at 92). This can be done by

certified mail. TP § 14-839(a)(4); Royal Plaza, 389 Md. at 199-200. Other interest holders

need not be served with a summons; rather, the tax sale purchaser must mail them a copy

of the order of publication issued by the circuit court. TP § 14-839(a)(4). To the extent that

these persons cannot be identified, they are given constructive notice through publication.

TP § 14-840. See also Voltolina, 198 Md. App. at 600-01.

The circuit court may enter final judgment after the expiration dates for answering

the complaint. TP § 14-844. The distinction between “necessary defendants,” as identified

in §14-836(b)(1), and other interest holders—the former entitled to be specifically

identified as defendants in the complaint and to be served with summons and the latter

entitled only to receive a copy of the notice of publication—is critical because, as we have

noted, a judgment foreclosing the equity of redemption does not apply to a necessary

defendant unless the party has been properly identified in the complaint and properly

served.

Returning to the facts before us, it is clear that PNC had two distinct interests in the

property that are protected in different ways by the tax sale statute.

First, PNC was a judgment creditor. A judgment creditor is an “other interest

holder.” All that is necessary to such a party to an action to foreclose the equity of

redemption is to include the generic reference to “all persons that have or claim to have any

interest in property. . . .” TP § 14-836(b)(3). Section 14-839(a)(4) provides that the plaintiff

may provide notice to such parties by mailing a copy of the order of publication to them by

certified mail. It is undisputed that Braddock mailed a copy of the order of publication and

the complaint to PNC and that one of PNC’s lawyers, asserting that she was representing

“PNC Bank, N.A., a mortgage lien holder on this property,” contacted Braddock’s counsel

regarding redeeming the property, although PNC ultimately did not do so.

Second, PNC was the holder of a promissory note whose performance was secured

The parties disagree as to why. PNC asserts, in effect, that Braddock’s lawyer

stonewalled PNC by refusing to respond to PNC’s requests for information. Braddock

disputes this. The record sheds little light on the controversy. To the extent that PNC wished

to assert that Braddock’s actions were wrongful, it was PNC’s responsibility to present

evidence to the circuit court, which it did not do.

by a deed of trust encumbering the property. PNC asserts that, as the beneficiary of a deed

of trust, it is a “mortgagee” of the property and therefore entitled to “necessary party” status.

See TP § 14-836(b)(1)(iii) (requiring “any mortgagee of the property or any assignee of the

mortgagee of record, named as such in any unreleased mortgage recorded in the land

records of the county” to be named as a defendant”). As we will later explain, PNC is

wrong on this score. This does not mean that its interest as a beneficiary of a deed of trust

is bereft of statutory protection. TP § 14-836(b)(1)(iv) requires that “the trustee under any

deed of trust recorded against the property” be identified as a defendant. As “necessary

defendants,” the Substitute Trustees were entitled to be served with a summons, together

with a copy of the complaint, any exhibits and other papers filed in the case. TP § 14-

839(a)(3); Md. Rule 2-112(a). Because Braddock did not include the Substitute Trustees

as defendants, their rights to the property were not affected by the proceedings. TP § 14-

836(b)(2). We now turn to the parties’ contentions.

II. Jurisdiction

PNC argues that, as the holder of the note secured by the deed of trust, it was a

mortgagee. It points out that TP § 14-836(b) requires mortgagees to be named as defendants

and to be served with a summons. Because no such service occurred, PNC argues that the

circuit court never acquired personal jurisdiction over it. As we will explain in Part III,

PNC’s premise, namely, that it is a mortgagee of the property, is incorrect. PNC’s argument

also conflates somewhat constitutional limitations upon the exercise of jurisdiction in in

personam and in rem actions, and the conceptually distinct restrictions imposed by statute

upon the authority of circuit court in tax sale proceedings. We will discuss this matter first.

“Traditionally, when a state court based its jurisdiction upon its authority over the

defendant’s person, personal service was considered essential for the court to bind

individuals who did not submit to its jurisdiction.” Mennonite Bd. of Missions v. Adams, 462

U.S. 791, 796 n.3 (1983) (citing Hamilton v. Brown, 161 U.S. 256, 275 (1896)); Arndt v.

Griggs, 134 U.S. 316, 320 (1890); Pennoyer v. Neff, 95 U.S. 714, 726, 733-734 (1878)).

In contrast,

in in rem or quasi in rem proceedings in which jurisdiction was based on the

court’s power over property within its territory, constructive notice to

nonresidents was traditionally understood to satisfy the requirements of due

process. In order to settle questions of title to property within its territory, a

state court was generally required to proceed by an in rem action since the

court could not otherwise bind nonresidents. At one time constructive service

was considered the only means of notifying nonresidents since it was believed

that “[process] from the tribunals of one State cannot run into another State.”

Pennoyer v. Neff, supra, at 727.

Mennonite Bd. of Missions, supra.

As the Supreme Court noted in Mennonite Bd., the distinction between due process

notice requirements in in personam and in rem actions was ended in Mullane v. Central

Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950), which “recognized that prior to an

action which will affect an interest in life, liberty, or property protected by the Due Process

Clause of the Fourteenth Amendment, a State must provide ‘notice reasonably calculated,

under all the circumstances, to apprise interested parties of the pendency of the action and

afford them an opportunity to present their objections.’” 462 U.S. at 795.

Maryland retains the concept that a summons is necessary in an in personam action

to bring a party under the jurisdiction of the court. See, e.g., Flanagan v. Dep’t of Human

Res. et al., 412 Md. 616, 623-24 (2010); Hagler v. Bennett, 367 Md. 556, 561 (2002) (“It

is true, of course, that, even if the other procedural rules are followed, a court may not enter

a valid judgment against a person unless it has acquired personal jurisdiction over that

person, which ordinarily is obtained by validly serving the defendant with process.”).

The instant case was not, however, an in personam proceeding. A court’s resolution

of questions of title and ownership to real property is a paradigmatic exercise of in rem

jurisdiction and it has long been the law of this State that redemption foreclosure actions are

in rem. See, e.g., Royal Plaza Cmty. Ass’n v. Bonds, 389 Md. 187, 199 (2005) (“‘The law

is established that tax foreclosure proceedings are in rem and not in personam.’” (quoting

Sanchez v. James, 209 Md. 266, 270 (1956)); Gathwright v. Baltimore, 181 Md. 362, 367

(1943) (“We regard this proceeding as one strictly against the property on which taxes are

due and in arrear.”). As long as a court has jurisdiction over the res in question—a question

not at issue in this case—the court’s exercise of jurisdiction in an in rem proceeding is

binding upon a party with an asserted interest in the res when the party has received “notice

reasonably calculated to apprise” it of the pending action. Mennonite Bd. of Missions, 462

U.S. at 798. This constitutional principle is reflected in TP § 14-839(a)(5) (“Notice to a

defendant may be made in any other manner that results in actual notice of the pendency of

the action to the defendant.”). Under certain circumstances, such notice may be constructive,

see Royal Plaza, 389 Md. at 206, but in this case, PNC indisputably had actual knowledge

and received a copy of the complaint to boot (albeit without the summons which it claims

was its due).

The Due Process provisions of the United States and Maryland constitutions are not

the only limitations upon the authority of a court to bind parties to judgments entered in tax

sale cases. As we have noted, TP § 14-836(b)(1) requires a plaintiff in a tax sale action to

specifically name “necessary parties” (as the term is used in Royal Plaza) as defendants and

to serve them with a summons and a copy of the complaint. If a plaintiff fails to do so, the

court is without jurisdiction over such a party, Royal Plaza, 389 Md. at 193-94, and any tax

sale judgment does not affect its property interest. TP § 14-836(b)(2) (“The plaintiff may

choose not to include as a defendant any [necessary party]. However, the rights of any

person not included as a defendant are not affected by the proceedings.”). PNC asserts that

it was a mortgagee of the property because it was the holder of the note secured by the deed

of trust on the property. As a result, continues PNC, it was a necessary party and the circuit

court never obtained jurisdiction over it. We now turn to this contention.

There is another possible problem with PNC’s jurisdictional argument. PNC’s initial

motion before the circuit court was its Motion to Vacate, Alter or Amend Judgment. In that

motion and its supporting memorandum, PNC asserted that the circuit court had no

jurisdiction over it because it should have been a named party to the action. However, in

addition to this jurisdictional challenge, PNC contended that the complaint to foreclose the

(continued...)

III. PNC’s Asserted Status as a Mortgagee

Before both the circuit court and this Court, PNC has contended that it is a mortgagee

of the property and thus a necessary defendant to the complaint to foreclose the equity of

redemption pursuant to TP § 14-836(b)(1)(iii). To an extent, the circuit court agreed,

deciding, as an initial matter, that Braddock’s failure to name PNC as a defendant in the

complaint to foreclose the equity of redemption “[o]n its face” violated TP § 14-

836(b)(1)(iii).

(...continued)

equity of redemption was defective and a fraud on the court because the title report attached

to the complaint pursuant to TP § 14-838 and Md. Rule 14-502 was unsigned. As part of the

relief requested in the motion, PNC asked the court to declare the judgment void.

By joining a contention that went to the merits of the case to its jurisdictional

challenge, PNC may have waived its right to contest the circuit court’s jurisdiction over it.

See McCormick v. St. Francis de Sales Church, 219 Md. 422, 428 (1959) (“A person who

denies that a court has jurisdiction and asks relief on that ground cannot ask anything of the

court which is inconsistent with the want of such jurisdiction.”); LVI v. Academy of IRM, 106

Md. App. 699, 707 (1995) (“Once a party speaks to the merits of a case, the individual has

made a voluntary appearance, submitting himself to the jurisdiction of the court in all

subsequent proceedings.”).

Specifically, TP § 14-836(1)(b) states in pertinent part (emphasis added):

(1) Except as otherwise provided in this subsection, the defendants in any

action to foreclose the right of redemption shall be:

* * * *

(iii) any mortgagee of the property or any assignee of the mortgagee of

record, named as such in any unreleased mortgage recorded in the land

records of the county;

However, the circuit court excused Braddock’s failure to abide by the requirements

of TP § 14-836(b)(1) because PNC received a copy of the complaint by certified mail and

(continued...)

We disagree with the circuit court’s application of the statute. PNC was not a

mortgagee and Braddock was not required to name it as a defendant in the redemption

foreclosure action.

We begin with the Court of Appeals’ explanation of the two types of security

instruments in Fangani v. Fisher, 418 Md. 371, 382-83 (2011):

One who borrows money from a lender/creditor or mortgagee is

designated as a borrower/debtor or mortgagor. In order to ensure repayment,

a lender or creditor may require the debtor to convey property to the creditor

to be held as collateral to secure the debt. The conveyance ensures that the

creditor will either be repaid the loan or retain ownership of the collateral.

Where the legal relationship exists between only the debtor and the lender, it

is evidenced by a mortgage document; however, where the debtor conveys the

property to a third party trustee rather than the lender, it is evidenced by a

deed of trust.

(Citations omitted.)

While the beneficiary of a deed of trust and a mortgagee both have security interests

in property encumbered by the respective instruments, and the means for enforcement are

now largely identical, there remains at least one important distinction between the two types

of instruments.

(...continued)

had general knowledge of the proceedings.

See Anderson v. Burson, 424 Md. 232, 234 n.1 (2011) (noting that, while courts

sometimes use the terms “mortgage” and “deed of trust” interchangeably “when discussing

the repayment of their associated notes,” there are “recognized differences” between the two

types of instruments.); Simard v. Burson, 383 Md. 257-90 (2004) (discussing the historical

development of mortgages and deeds of trust in Maryland.).

A mortgage is transferred by recordation of an assignment in the land records of the

county in which the mortgage was originally recorded. See Md. Code (1974, 2010 Repl.

Vol.) § 3-106 of the Real Property Article (“RP”); Baltimore American Ins. Co. v. Ulman,

165 Md. 630, 642 (1934) (Until an assignment of a mortgage is recorded in the land records,

“the assignee assume[s] . . . the risk of the mortgage debt being conclusively presumed to

be in the person or corporation holding the title of record to such mortgage deed.”); Nussear

v. Hazard, 148 Md. 345, 350-351 (1925) (“[T]he title to any promissory note or other

evidence of debt secured by mortgage shall be conclusively presumed to be in the person

holding the record title under such a conveyance.”).

The beneficiary of a deed of trust is the entity that has the right to enforce the note

whose performance is secured by the deed of trust. See Anderson v. Burson, 424 Md. 232,

246 (2011) (“‘The deed of trust cannot be transferred like a mortgage; rather, the

corresponding note may be transferred, and carries with it the security provided by the deed

of trust.’”) (quoting Le Brun v. Prosise, 197 Md. 466, 474-75 (1951)). Deed of trust notes

are usually negotiable instruments and the right to enforce them is governed in Maryland

by the provisions of Title 3 of the Uniform Commercial Code, codified in Maryland as Md.

Code (1975, 2002 Repl. Vol.) § 3-101 et seq. of the Commercial Law Article (“CL”). As

a general rule, the right to enforce a negotiable instrument is transferred with possession of

the instrument. See CL § 3-301.

As a result, the identity of a mortgagee, as well as the identity of an assignee of a

mortgage, can readily be determined by an examination of the land records. In contrast, land

records typically do not disclose whether a deed of trust note has been transferred and, if so,

to whom. See Simard v. White, 383 Md. 257, 289 (2004) (“Multiple bond holders, multiple

creditors, the need for the identity of the ultimate beneficiaries to remain unknown, etc. are

all practical in a deed of trust format and impracticable, or impossible, under a mortgage

format.”); see also Anderson v. Burson, 196 Md. App. 457, 459 n.1 (2010), aff’d, 424 Md.

232, 252 (2011) (discussing the Mortgage Electronic Registration System (“MERS”) as a

means of avoiding recording assignments of mortgages).

The difference in the ways that beneficial interests in mortgages and deeds of trust

are transferred is reflected in the notice and pleading requirements for complaints to

CL § 3-301 provides:

Person entitled to enforce instrument.

“Person entitled to enforce” an instrument means (i) the holder of the

instrument, (ii) a nonholder in possession of the instrument who has the rights

of a holder, or (iii) a person not in possession of the instrument who is entitled

to enforce the instrument pursuant to § 3-309 [lost or destroyed instruments]

or § 3-418 (d) [instruments paid by mistake]. A person may be a person

entitled to enforce the instrument even though the person is not the owner of

the instrument or is in wrongful possession of the instrument.

foreclose the equity of redemption. As previously discussed, TP § 14-836(b) categorizes

potential defendants according to the significance of their interest in the tax sale property.

The necessary defendants are afforded the most protection and must be named as defendants

in the complaint and must be served with a summons. This class includes: the record owner

(§ 14-836(b)(1)(i)); any mortgagee of an unreleased mortgage, or the assignee of record of

such a mortgage (§ 14-836(b)(1)(iii)); and the trustees of an unreleased deed of trust against

the property or any beneficiary of a deed of trust “who files notice of the interest, which

notice shall include identification of the deed of trust, the book and page where the deed of

trust is recorded, and the address at which the holder may be served with a summons” (§ 14-

Section 14-836(b) provides in pertinent part (emphasis in bold added):

(b) Defendants; notice. —

(1) Except as otherwise provided in this subsection, the defendants in any

action to foreclose the right of redemption shall be:

(i) the record title holder of the property as disclosed by a search

performed in accordance with generally accepted standards of title

examination of the land records of the county ...;

(ii) * * * *

(iii) any mortgagee of the property or any assignee of the

mortgagee of record, named as such in any unreleased mortgage

recorded in the land records of the county;

(iv) the trustee under any deed of trust recorded against the

property or any holder of a beneficial interest in a deed of trust

who files notice of the interest, which notice shall include

identification of the deed of trust, the book and page where the deed of

trust is recorded, and the address at which the holder may be served

with a summons;

* * * *

836(b)(1)(iv)). These statutory distinctions reflect the fact that a title examination of a

property will disclose the property’s owner, whether there are any mortgages encumbering

the property, and, if so, who owns them, and whether there are any deeds of trust and, if so,

the identities of the trustees appointed by those instruments. On the other hand, a title

examination will not disclose the identity of the current beneficiary of a deed of trust unless

the beneficiary files notice of its status in the land records.

Returning to the facts of the case before us, when BBR borrowed money from F&M

Bank, it executed a deed of trust to secure repayment of the loan. PNC is the successor-in-

interest to F&M Bank. The loan is unpaid so PNC certainly has an interest in the tax sale

property but it is neither as a mortgagee nor as an assignee of a mortgage of record. As the

beneficiary of the deed of trust, PNC would obtain “necessary party” status as to the

property only if it filed the appropriate notice pursuant to subsection §14-836(b)(1)(iv).

However, it failed to take this precautionary step. Under § 14-836, PNC’s interest in the tax

sale property is adequately protected because the tax sale purchaser is required to join the

trustees—or the substitute trustees as the case may be—of the deed of trust as necessary

defendants.

In short, accepting PNC’s contention that it is a mortgagee would require us to

disregard settled Maryland law as to the differences between mortgages and deeds of trust.

We see no reason to do this, particularly as doing so would make the task of plaintiffs in tax

sale actions materially more difficult, a result at odds with Maryland’s public policy.

Finally, were we to agree with PNC, we would render meaningless §14-836(b)(1)(iv)’s

provision that a deed of trust beneficiary can entitle itself to named defendant status by

filing an appropriate notice in the land records. This we also decline to do. See, e.g., Ray v.

State, 410 Md. 384, 404 (2009) (courts “read[] the statute as a whole to ensure that no word,

clause, sentence or phrase is rendered surplusage, superfluous, meaningless or nugatory.”)

(internal quotation marks and citation omitted)).

IV. The Post Judgment Motions

Appellants argue that the circuit court erred in denying several motions they filed

after the circuit court’s entry of its order vacating its judgment as to the Substitute Trustees.

None of these contentions has any merit and only one deserves anything other than the most

cursory of discussions.

First, we see no error in the court’s denial of the motion to stay enforcement of the

As the Court recognized in Royal Plaza,

“Maryland has a significant interest in encouraging participation in its tax sale

program and in decreeing marketable title. Further, Maryland’s tax sale

mechanism is an effective means of collecting property taxes for the state, and

is critical to the state’s need to provide a source of revenue for a host of

governmental services provided to its citizens.”

389 Md. at 204-05 (quoting Sallie v. Tax Sale Investors, Inc., 998 F. Supp. 612, 618 (D. Md.

1998)).

judgment pending appeal because such a stay is normally granted upon the filing of a

supersedeas bond or similar security. See Md. Rule 8-422(a). Appellants’ motion to stay

enforcement was not accompanied by a supersedeas bond and stated that “a bond should not

be necessary” because the “Substitute Trustees tendered attorneys fees and costs to

Plainitff’s attorney in order to redeem the property, however, he has refused to provide a

Letter of Release” and “because there was no monetary judgment entered in this matter.”

These assertions ignore Rule 8-422(b)(2), which states that, in order to stay enforcement of

a judgment deciding title to, or possession of, property, including real property, “the bond

shall be the sum that will secure the amount recovered for the use and detention of the

property, interest, costs and damages for delay.”

Second, appellants assert that the circuit court erred in denying the Substitute

Trustees’ so-called “motion to compel” Braddock to accept their proffer of the amount

necessary to redeem the property. The motion recites that, after the court’s order vacating

the judgment as to the Substitute Trustees was filed, they proffered what—but for the fact

the court had entered a judgment foreclosing BBR’s right to redeem the property—would

have been the amount necessary to redeem the property to Braddock’s lawyer, who refused

to accept it. The Substitute Trustees asserted that, because the court had vacated its

judgment as to them, they “still have an interest and associated rights in the subject property,

and, as such, the right to . . . redeem the property from tax sale . . . .”

This argument is a bit puzzling. The court’s judgment (i) foreclosed the equity of

redemption and (ii) vested in Braddock “absolute and indefeasible title in fee simple in the

property,” see § 14-844(b), except for the interests of the Substitute Trustees. In other

words, Braddock’s failure to properly plead and serve the Substitute Trustees did not render

the foreclosure proceeding a nullity; rather, Braddock took title subject to the Substitute

Trustees’ interests. Because there was no longer any equity to redeem, payment of taxes and

expenses would not would not have restored title to BBR Properties. The circuit court did

not err in denying the motion.

This leaves us with the Substitute Trustees’ contention that the circuit court erred by

failing to “specify[] the rights of the Trustees” in the property, either by separate order or

by granting the motion discussed in the preceding paragraph. We see no error on the court’s

part. It was under no obligation to respond in detail to the fusillade of appellants’ post-

judgment motions. Nonetheless, we will address one issue because it is likely to rise again.

In its brief, Braddock contends that the circuit court denied the “motion to compel”

because it accepted Braddock’s contention that the Substitute Trustees had no right to

redeem because their interest in the property derived solely from PNC and PNC had

forfeited its right to redeem by failing to do so in a timely manner even though it had actual

knowledge of the foreclosure action. Braddock asserts that the court was correct. We are

extremely doubtful that this line of reasoning was the basis of the circuit court’s ruling. In

any event, application of the law to the facts of this case does not lead to Braddock’s desired

result.

As we have previously explained, TP § 14-836(b)(1)(iv) provides that, in order to

foreclose the equity of redemption of a beneficiary under a deed of trust, a plaintiff in an

equity redemption action must join either the trustees of the deed of trust or the beneficiary

of the deed of trust if the beneficiary files the notice required by subsection (b)(1)(iv). No

such notice was filed, so it was clearly incumbent upon Braddock to name the Substitute

Trustees and serve them with summons. Braddock failed to do so.

Section 14-836(b)(2) sets out the consequences of the failure to join one or more of

the subsection (b)(1) “necessary defendants”:

The plaintiff may choose not to include as a defendant any of the persons

enumerated in paragraph (1) of this subsection. However, the rights of any

person not included as a defendant are not affected by the proceedings.

In Smith v. Lawler, 93 Md. App. 540, 552 (1992), we construed § 14-836(b)(2) in a

factual context similar—in most but not all respects—to the case before us. In Lawler, the

title examination of the property in question failed to disclose that it was subject to a deed

of trust. As a result, the complaint to foreclose the equity of redemption failed to designate

either the trustees or the beneficiary of the deed of trust as a defendant. Id. at 543. In holding

that the judgment foreclosing the equity of redemption did not affect the rights of the

beneficiary under the deed of trust, we stated:

Appellants in the case sub judice were persons entitled to be named as

defendants under the provisions of section 14-836(b)(1). When the appellees

in the instant case failed to name appellants as defendants in the tax sale

redemption case, they ultimately took the Property subject to the rights of

appellants. Appellants retained the rights they had under the instrument of

indebtedness. These rights are not limited to the right to intervene in the tax

foreclosure cases but include all rights of holders of the instrument of

indebtedness.

Id. at 551-52.

What distinguishes the case before us from Lawler is that PNC had actual notice of

the redemption foreclosure proceeding while the necessary defendant in Lawler did not. 93

Md. App. at 551. Braddock argues, in effect, that the deficiency in the complaint was cured

because PNC, in its status as a judgment creditor, received actual notice of the redemption

foreclosure action and made an attempt to redeem the property. It is true that, in this case,

the party secured by the deed of trust note also happened to be a judgment creditor but we

are not persuaded that this coincidental happenstance should relieve Braddock of its

obligation to frame its complaint, identify the necessary parties, and serve them as required

by law.

This Court considered a very close variation on the facts presented in the present case

The Court of Appeals reached a similar result in Brashears v. Collison, 207 Md.

339, 347 (1955), holding that, where necessary defendants were not named in the

proceeding, the “decree of foreclosure as to them was null and void.” It is significant that

the tax sale statute in effect at the time Brashears was decided did not contain a provision

substantively equivalent to the current TP § 14-836(b)(2). See 207 Md. at 346-47 (setting

out Md. Code Art. 81 § 101 verbatim).

in Bailey v. Stouter, 66 Md. App. 180, 192 (1986). In Bailey, the property sold at tax sale

was owned by a trust. The beneficiaries of a trust were given constructive notice of the

redemption action and at least one of the beneficiaries had actual notice. Although the

trustees, who had legal title to the property, were properly identified in the complaint, they

were never served. Id. at 184. After engaging in an analysis similar to that in Smith v.

Lawler, this Court concluded that the foreclosure proceeding did not affect the trustees’

interest in the property “by reason of appellee’s failure to comply with [the applicable

statute] as to [the trustees], the court had neither the right nor the power to proceed against

their interest in the property.” Id. at 192 (internal quotation marks removed).

We believe that much the same analysis is applicable here—that PNC, the beneficiary

of the deed of trust, had actual notice, does not obviate the failure to plead and serve the

Substitute Trustees. To hold otherwise, in our view, would not be consistent with the plain

meaning of § 14-836(b)(2), which states:

The plaintiff may choose not to include as a defendant any of the persons

enumerated in paragraph (1) of this subsection. However, the rights of any

person not included as a defendant are not affected by the proceedings.

When a statute is clear and unambiguous, “ours is an ephemeral enterprise. We need

investigate no further but simply apply the statute as it reads.” Stanley v. State, 390 Md.

174, 185 (2005) (citations omitted). There is nothing in the statute that suggests that a

beneficiary’s actual notice trumps the clear mandates of § 14-836(b)(1) and (2), and our

analysis in Bailey v. Stouter, albeit based on a prior version of the current statute, is to the

contrary. Moreover, were we to adopt Braddock’s position, we would, in effect, write out

of the statute the explicit distinction between “necessary defendants,” as defined in § 14-

836(b)(1), and persons having or claiming an interest in the property. This we will not do.

See Fisher v. Eastern Corr. Inst., 425 Md. 699, 709-10 (2012) (stating that “various

statutory provisions covering the same subject matter are to be construed, if at all possible,

so that together the sections harmonize with one another and no section is rendered

nonsensical or nugatory.”).

We conclude in the present case, as we did in Smith v. Lawler, that § 14-836(b)(2)

means exactly what it says and that Braddock’s title to the property is subject to the deed of

trust.

THE JUDGMENT OF THE CIRCUIT COURT FOR FREDERICK

COUNTY IS AFFIRMED. APPELLANTS TO PAY COSTS.