Household Finance Corp. v. Taylor

Smith, J., delivered the opinion of the Court. We are here concerned with interpretation of “mistake” as the term is used in Maryland Rule 625 a. We shall reverse the action of the trial court. Appellant, Household Finance Corporation (Household) , filed suit against appellee, Millard D. Taylor (Taylor), in the Circuit Court for Prince George’s County based on the overdue promissory note of Taylor.

Appended to the declaration in accordance with Maryland Rule 610 was a motion for summary judgment together with notice to the defendant and an affidavit in support of the motion for summary judgment. Suit was filed March 14. Taylor was served March 20. On May 9 judgment was entered in favor of Household against Taylor.

On August 21 Taylor appeared for the first time in the proceeding and filed a motion under Rule 625 to set aside the judgment, claiming that a default judgment was taken against the defendant “through inadvertence” and that defendant believed “the judgment was entered by mistake and * * * gained by fraud.” Taylor stated in his motion that he addressed a letter ³⁵¹ to his attorney prior to the time that an answer was due requesting his attorney to file an answer so that a default judgment would not be entered, that his attorney said the letter was not received and for that reason no plea was filed, and that Taylor’s- first knowledge that a default judgment had been entered against him came when his wages were attached in a District of Columbia proceeding brought on j udgment in this case. The money was borrowed May 14,1962. The note shows a principal amount of $1003.50 to which “precomputed charges” were added to make a face amount of $1248.00 payable in 24 installments of $52.00 each. Taylor said that although he executed the note it was the debt of his estranged wife, from whom he had since been divorced, that he finally had agreed with Household to repay the note at the rate of $25.00 per month and that Household had agreed to waive interest because he was about to go into bankruptcy.

He attached copies of cancelled checks totaling $950.00 covering payments from July 23, 1964, through October 31, 1967, on many of which, interestingly enough, he had entered a declining balance, the last such check showing a balance due of $28.50. Taylor claimed in his affidavit that he had made payments amounting to $1194.50 and that there was a small balance due of approximately $60.00. The judgment was in the amount of $630.08, being principal of $611.13 plus interest of $18.95 from November 2,1967. The matter came on for hearing before Judge Ralph W. Powers.

In the process of the hearing the trial judge first said: “When you have a judgment entered you have got a very heavy burden of showing that that was by mistake or fraud. We are leaving out mistake; it wasn’t any mistake because the man wasn’t even in court. It leaves it to the question of fraud.” Later, after counsel had pointed out that Household agreed to waive interest because Taylor was on the verge ³⁵² of bankruptcy, that the original interest was included in the note of $1248.00, that the debt sued on was $611.13 based on a balance due and owing on the note and that Taylor had paid something in excess of $1170.00, the trial judge said: “I think we could short-cut the whole thing, because the rule [Maryland Rule 610 b] requires a full statement of account, and all there is here is a note and there is no supporting data in the original pleadings showing how the amount claimed of $611.13 was reached. So I would say that the judgment was entered by mistake, because it should not have been, in the absence of that information.” The court thereupon gave counsel for Household an opportunity to answer.

He stated that they had in court ledger cards showing the computations upon which the figure of $611.13 was based. The trial judge held that since there was no showing in the case of the basis upon which the debt of $611.13 on a $1248.00 note was arrived at, “* * * the defendant is clearly entitled to have the judgment set aside. It will be reopened and you will be given, each side, ample opportunity to be heard.” The authorities relative to striking out judgment were fully reviewed by Judge Singley for this Court in Grantham v. Prince George’s County, 251 Md. 28 , 246 A. 2d 548 (1968) and by Judge Horney for this Court in Berwyn Fuel & Feed Co. v. Kolb, 249 Md. 475 , 240 A. 2d 239 (1968). In Berwyn, supra, the trial court set aside a judgment on motion entered 43 days after the entry of the judgment.

There was a contention that the judgment entered was irregular and fraudulent because the debt sued on was a corporate debt and not an individual debt of the defendant. The trial court found merit in the claim of irregularity and fraud in obtaining the default judgment, since all the vouchers were not in the defendant’s name. Judge Horney said for this Court in reversing the action of the trial court: ³⁵³ “As was pointed out in Tasea Investment Corp. v. Dale, 222 Md. 474 , 160 A. 2d 920 (1960) and in Murray v. Fishman Construction Co., 241 Md. 538 , 217 A. 2d 357 (1966), the trial court, besides requiring the party, who moves to set aside an enrolled judgment, to prove that he is acting in good faith and with diligence and that he has a meritorious defense, should also require a showing of such facts and circumstances as will establish the fraud, mistake or irregularity allegedly used to obtain the judgment sought to be vacated. “The finding of the lower court that some of the vouchers were in the