Employers' Liability Assurance Corp. v. Perkins

²⁷² Parke, J., delivered the opinion of the Court. On September 1st, 1931, Helen R. Perkins and Rody P. Perkins were traveling in an automobile on a public highway in Maryland. The automobile was driven by its owner, Helen R. Perkins, and a collision occurred with an automobile which was owned and operated by John P. Martin, a nonresident of Maryland. The occupants of the automobile which was operated by Mrs. Perkins were injured, and the automobile damaged.

At the time of the accident, Martin carried an operative insurance policy with the Employers’ Liability Assurance Corporation, Limited, under which, subject to the limitations and conditions of the policy, the assurer agreed: (a) To settle or to defend against claims resulting from the liability imposed upon the assured by law .for damages on account of either bodily injuries and death accidentally sustained by a third party or accidental injury, destruction, and loss of use of the property of another, (b) To pay the assured for loss or damage to his automobile that resulted from specified injuries which were recovered in an accidental collision or by an upset. (c) To pay and satisfy judgments rendered against the assured in legal proceedings which had been defended by the assurer, and to protect the assured against the levy of executions issued against the assured on such judgments, (d) To pay all the-expenses incurred by the assurer for investigation, negotiation, and defense of claims or proceedings; the expenses incurred by the assured for immediate and imperative medical or surgical relief; all premiums on attachment and appeal bonds; and the costs taxed against the assured in any such proceedings, and the interest accruing before or after the entry of judgment until the payment by the assurer of its share of the judgment, (e) To investigate injuries and to settle or defend any resulting claims or suits for damages that may be instituted against the assured for such injuries. It was further agreed that the insolvency or bankruptcy of the assured should not release the assurer from ²⁷³ the payment of the damages for injuries sustained or loss occasioned during the life of the policy, and, in case execution against the assured is returned unsatisfied in an action brought by the injured, because of such insolvency or bankruptcy, then an action may be brought by the injured person or his personal representative against the assurer under the terms of the policy for the amount of the judgment that is not in excess of the limits of the policy. The agreements thus summarized are subject to certain conditions, which cannot be waived or altered except by an indorsement which is attached to the policy, and is signed by a designated executive officer.

There was no such indorsement, and, so, full force and effect must be accorded to the conditions that, upon the occurrence of an accident covered by the policy, the assured shall give written notice of it to the assurer, and of the full particulars of any claim made because of the accident; and, if any suit be brought against the assured on account of the accident, the assured shall immediately forward to the corporation or its duly authorized agent every notice, summons, or other process served upon the assured. After the accident, the assured forthwith gave the required notice under the policy of the happening of the accident, and a representative of the assurer attended, on September 27th, in Maryland, a trial, before a justice of the peace, of the assured on criminal charges growing out of the accident. On November 3rd, 1931, separate actions on titling for personal injury and for injury to property, which were alike caused by the accident, were brought in Maryland by Helen R. Perkins and Rody P. Perkins against the assured, who was a resident of the District of Columbia, and who had no place of business or of residence within the State of Maryland. The collision of the two automobiles had, however, happened on a highway of the state, and the actions were accordingly brought pursuant to the terms of the Acts of 1931, ch. 70 (Code, art. 56, sec. 190A). ²⁷⁴ On the day the actions were begun, the attorney for the several plaintiffs wrote to the assured that he had instituted proceedings in the Superior Court of Baltimore City to recover damages for the injuries sustained by the plaintiffs through the negligent operation of the assured’s automobile, and requested the assured to advise him if the assured would accept service of process, and, if not, that the plaintiffs would proceed to file the suits in the District of' Columbia.

Upon the receipt by mail of this communication, the assured delivered the letter to the assurer by leaving it with the assurer’s agent in Washington. The defendant, however, never accepted service of process in connection with these actions, but no actions were ever filed in the District of Columbia. On November 18th, 1931, an attorney for the assurer wrote to the attorney for the plaintiffs, stating that the matter had been referred to 'him and that he would discuss the cases with the plaintiffs’ attorney. Some negotiations followed with respect to a settlement, and in April, 1932, a medical examination of Mrs. Perkins was made by a doctor of the assurer.

Meanwhile nothing further seems to have been done in the pending actions until a lapse of six months, when, under the provisions of the Acts of 1931, ch. 70, process was issued and served on the secretary of state on May 8th, 1932, and notice of such service and copies of the declarations were forthwith sent by registered mail by the attorney for the plaintiffs to the defendant John P. Martin. The registered envelopes were delivered to the wife of John P. Martin, who signed the defendant’s return receipts, which were filed in the respective proceedings, with the affidavits of either the plaintiffs or their attorney that these provisions of the statute had been complied with. After the receipt of these envelopes, Mrs. Martin delivered the notices and the copies of the declarations to John P. Martin, her husband and the defendant, but John P. Martin never delivered these notices of the service of process upon the secretary of state and the copies of the declarations to the assurer, ²⁷⁵ which did not learn of the service in the cases and the receipt by the assured of the notices and declarations until after October 11th, 1932, when the judgments by default for want of pleas were extended, after inquisitions had, in favor of Helen R. Perkins for $3,750, and of Rody P. Perkins for $1,250. After the assurer was informed of the two judgments, its attorney wrote to the defendant that, although the notices and copies of the declarations had been sent to him by registered mail and had been received by him or by some one in his behalf on May 11th, 1932, he had made no appearance in either case and judgments had been entered.

The letter further stated that the defendant had been requested by the assurer immediately to refer to its representative in Washington all papers that he might receive, and that, because of his breach of the condition of the policy requiring him “to refer to us (the assurer) the declarations and the notices which were sent to you (the assured) by registered mail * * * you are hereby notified that we cannot relieve you of the payment of these judgments or accept any responsibility under our policy.” On November 11th, 1932, the attorney for the plaintiffs called by telephone the attorney for the assurer and notified him of the recovery of the two judgments against Martin, and was informed of the breach of the conditions of the policy by Martin. Four days later a letter was sent in behalf of the plaintiffs to the defendant advising him that steps would be taken to collect the judgments, if they were not paid by November 23rd. At the same time, the attorney for the plaintiffs inclosed a copy of this letter in one to the attorney for the insurance company, and stated that if the latter desired to plead on behalf of the defendant, and would so advise counsel for the plaintiffs before November 23rd, he would consent to strike out the judgments, but that if the offer were not accepted by the time limited, the plaintiffs would proceed without further notice. In reply to this communication, the assurer promptly replied and reiterated ²⁷⁶ its position that the breach of condition by the assured had relieved the company of any liability under the policy, and that, therefore, it had no right to object to any action contemplated by the plaintiffs.

The attorney who had represented the plaintiffs withdrew from the cases, and he was' succeeded by another, who requested the court to strike out the judgments of October 11-th, which was done on December 8th, 1982. On this date, the new attorney renewed the original proceedings under chapter 70 of the Acts of 1981, and the proceedings were, at first, similar, except that the registered letters were delivered to John P. Martin personally. From that point, the course of the litigation was different, because the ■ defendant promptly transmitted the notices and copies of the declarations to the corporation. The attorney for the plaintiffs did likewise, but on May 22nd, • 1933, dismissed both actions in the Superior Court.

On June 20th, 1933, the two actions were renewed in the Court of Common Pleas for Baltimore City and again service was sought pursuant to the provisions of the Acts of 1931, ch. 70. The return receipts were signed by the defendant, and the affidavits of compliance were made. The attorney for the defendant sent the papers received by registered letter to the corporation, and the attorney for the plaintiffs forwarded to the corporation copies of the new notices and. declarations. The corporation again denied its liability, and declined to defend the actions.

In the trial of the actions on March 16th, 1934, a verdict was rendered in favor of Helen R. Perkins for $2,500 and in favor of Rody P. Perkins for $1,000. Judgment was entered on the verdicts on March 19th, 1934. In behalf of Martin, his attorneys made a written demand on the company for the payment of these judgments, with interest and costs, and of a counsel fee of $300. The company again denied its liability.

The plaintiffs had writs of fieri facias issued out of the Court of Common Pleas on the judgments on March 28th, 1934, and the ²⁷⁷ returns were nulla bona. The judgments remain unpaid, and no proceedings of any kind have been had in the District of Columbia against John P. Martin in connection with these judgments. The questions at bar arise on attachments on the two judgments, issued out of the Court of Common Pleas on April 19th, 1934, and laid in the hands of the Employers’ Liability Assurance Corporation, Limited.' The garnishee has denied that it has any of the goods, chattels, and credits of either of the defendants. On the issues joined on the replication to the pleas of nulla bona, the verdicts were against the garnishee for $2,644.90 in the attachment of Helen R, Perkins and for $1,069.90 in the attachment of Rody P. Perkins.

Judgments were entered on these verdicts, and appeals wer.e severally taken; but, as the two cases present the same questions on substantially similar facts, the two appeals have been consolidated and have been brought upon one record. The plaintiffs or attaching creditors offered no prayers, but the garnishee submitted twelve. The third and fourth prayers were conceded, and the other ten were rejected by the court, and the single exception in each case is to the ruling on the prayers. The facts are not in controversy, and the questions raised are whether or not the agreed facts entitled the creditors to the judgments of condemnation obtained. 1.

It is an elementary principle of justice that, in an action to establish a personal liability, a court cannot acquire jurisdiction over the person of one who has no residence within its territorial jurisdiction, except by actual service of notice upon him or upon some one authorized to accept service in his behalf, or by his waiver of the lack of due service by his general appearance in the action or by otherwise submitting to the jurisdiction of the court. Wilmer v. Epstein, 116 Md. 140, 143 , 81 A. 379 ; Wilmer v. Picka, 118 Md. 543, 549, 550 , 85 A. 778 ; Piedmont Mt. Airy Guano Co. v. Merritt, 154 Md. 226, 228 , 140 A. 62 . However, it is established that the state, in the exercise of its police power, may de ²⁷⁸ clare that the use of the highway by a nonresident is equivalent to an appointment by the nonresident of an official of the state to be his agent on whom process may be served in any action growing out of an accident in which the nonresident may be involved, while operating a motor vehicle on a highway of the state, if the legislation enacted for this purpose contain provisions for personal notice to the defendant, which are reasonably adequate to inform him of the aption brought against him, and his alleged responsibility for the accident and liability for its consequences.

Furthermore, it is held that if the terms of the act prescribe a valid notification, the defendant must be notified in the statutory method. The fact that the defendant had, in any other than the specified manner, acquired actual knowledge of the bringing of the action and its nature, would not confer a jurisdiction which arises only upon the fulfillment of the definite and uniform conditions erected by a constitutional enactment. These principles were declared and applied in Grote v. Rogers, 158 Md. 685, 687 , 149 A. 547 , Id., 158 Md. 695, 696 , 149 A. 551 , which held chapter 254 of the Acts of 1929 unconstitutional because the provisions of that statute did not make it reasonably probable that from a compliance with them the nonresident defendant would receive actual notice of the action and its significance. Wuchter v. Pizzuti, 276 U. S. 13 , 48 S. Ct. 259 , 72 L. Ed. 446 .

As a result of this decision, chapter 70 of the Acts of 1931 was passed and corrected the defects of the former legislation, so that the new statute was unobjectionable on constitutional grounds. Code, art. 56, sec. 190A, with amendments by chapter 70 of Acts of 1931, and chapter 288 of Acts of 1933. Supra; Huddy, Cyclopedia of Automobile Law (9th Ed.) vols. 15, 16, secs 82, 89; Hess v. Pawloski, 274 U. S. 352 , 47 S. Ct. 632 , 71 L. Ed. 1091 ; Kane v. New Jersey, 242 U.