Marine Midland Trust Co. v. State National Bank

⁵⁰⁴ McWilliams, J., delivered the opinion of the Court. This dustup began in May 1970 when James Barrier sued the appellant (Marine Midland) and the appellee (State National). Judge Smith, for the Court, has recounted the dreary details of that litigation in Barrier v. Marine Midland Trust Company of Southern New York, 263 Md. 596 , 284 A. 2d 418 (1971). We shall not repeat them here.

It is necessary, however, to examine State National’s cross-claim against Marine Midland for it is out of that cross-claim that this appeal arises. State National, in the first count of its cross-claim, filed on 26 February 1971, alleged, in substance, that: 1. On 18 May 1970 Marine Midland requested State National to assist in the collection of a claim against Barrier. 2. Marine Midland agreed to indemnify State National and save it harmless “from and against any and all claims, damages, losses and action resulting from or arising out of its efforts to collect the said claim.” 3.

As a result of its efforts Barrier sued State National, Marine Midland, and others. 4. Thereafter Marine Midland and State National agreed to pay Barrier $1,000 in full settlement and make a public apology. 5. State National agreed to contribute $250 and mailed a check for that amount to Marine Midland which cashed the check. Barrier signed a release running to both banks; it was delivered to counsel for Marine Midland. 6.

The apology was published in the newspapers ; it received wide publicity. 7. Thereafter, without the knowledge and consent of State National, Marine Midland refused to pay Barrier. ⁵⁰⁵ 8. In spite of State National’s repeated demands Marine Midland “willfully, wrongfully, and maliciously refused and continues to refuse” to complete the settlement agreement. 9. As a result Barrier moved to amend his declaration so as to charge conspiracy and breach of contract (Counts 4 and 5) against Marine Midland and State National. 10.

On 4 February 1971 his motion was granted. 11. As a consequence State National’s reputation has been damaged and it has been forced “to incur great expenses in connection therewith, including counsel fees.” (Emphasis added.) In the second count of the cross-claim State National, repeating paragraphs 1 through 10 of the first count, alleged that Barrier’s claims arose from its efforts to comply with Marine Midland’s request, that its acts in that regard have been neither negligent nor unauthorized, that it is entitled “to be indemnified and saved harmless” against “any and all claims, losses and actions” arising or resulting from its effort to collect from Barrier, that if Barrier recovers on counts 4 and 5 of his amended declaration it will be the fault of Marine Midland, not State National, that any damages sustained by Barrier under counts 4 and 5 “are embraced within the indemnification agreement . . . wherefore, it demands judgment . . . together with any counsel fees and other costs . . . .” (Emphasis added.) A copy of the cross-claim was served on counsel for Marine Midland at or about the time of its filing. Neither plea nor demurrer nor responsive pleading of any kind has ever been filed by Marine Midland. Two months later, on 26 April 1971, State National moved for the entry of a judgment by default on the cross-claim “which has never been answered.” As a part of its motion, it also asked the court to set a date for the ⁵⁰⁶ presentation of "its proof of damages.” A copy of the motion was served on counsel for Marine Midland at or about the time of filing.

On 29 April there was a hearing before Taylor, J., on Marine Midland’s motion for summary judgment against Barrier and State National’s motion for a judgment by default. Judge Taylor noted the pendency of both motions before the hearing began. Also he remarked, rather pointedly, that although “more than the time allowed by the rule [Maryland Rules 807 and 310 b] [had] expired” there was no plea or answer to the cross-claim. When counsel for Marine Midland objected to the entry of the judgment by default, the colloquy which follows took place: “The Court: Well, you had notice of it.

Weren’t you served with a notice of the cross-claim? “Mr. Miller: Yes, your Honor, and we did not plead, and also the motion for the default, and we didn’t answer that, because we knew that the motion for summary judgment was coming today. We didn’t know that the motion for default was coming up today, and we assume that today’s hearing will dispose of everything." “The Court: Did you assume it would dispose of everything? “Mr. Miller: I—let me say that I definitely assume that as confident as we are that the Court will grant our motion for summary judgment that once that was done everything else would fall into place. But we would like an opportunity to be heard on the motion for default judgment. And as far as I am concerned I am willing to do that at the time that—if a time comes that there is a necessity for proof to be offered to damages.” When Judge Taylor announced his intention to grant Marine Midland’s motion for summary judgment against ⁵⁰⁷ Barrier, his (Barrier’s) counsel indicated his intention to appeal to this Court.

The court then took up State National’s motion for a judgment by default. Counsel for State National made explicit reference during the colloquy to Marine Midland’s obligation to indemnify it “against any costs or losses . . . including attorney’s fees.” The colloquy went on: “Mr. Miller: He is asking for default judgment. “The Court: Which really doesn’t hurt you, does it, unless it comes back, and— “Mr. Miller: Maybe I should ask the Court for, first to deny default judgment on the basis of the argument I just made. “Second, to permit leave to file a plea to the cross-claim against us and for this reason, therefore, to say that I always took the position, and, therefore, never felt really the obligation to enter a plea, and it may have been a mis judgment, if this motion for summary judgment would just wrap the whole thing up. “The Court: How long ago did you file the motion cross-claim, Mr. —. “Mr. Frosh: February 23, your Honor. I don’t think there is a question they are obligated to us. We have an indemnification agreement which says we agree to indemnify and save you harmless from and against any and all claims, damages, losses, and actions resulting from or arising out of your efforts to collect the above claim. “The Court: I tell you what I’ll do.

I’ll deny your request for relief, Mr. Miller. I’ll grant motion for judgment by default. “If you are right, it doesn’t hurt you. If you are wrong, well, you have got to pay. “Mr. Miller: Thank you.” ⁵⁰⁸ On the same day, 29 April, Judge Taylor signed and filed [as of 11 May) the following order: “The Defendant State National Bank’s Motion for Default Judgment having been filed, read and considered by the Court; and after arguments in open court; it is by the Court this 29 day of April, 1971, “ORDERED that judgment be entered in favor of The State National Bank of Bethesda against Marine Midland Trust Company of Southern New York for all sums which the State National Bank shall have incurred, including attorney’s fees in connection with the within cause, all as set forth in the cross-claim of the Cross-Plaintiff State National Bank, and it is further “ORDERED that a hearing to determine such damages be set after the final conclusion of all proceedings in this cause.” A copy was sent to counsel for Marine Midland on 10 May. On 13 May Barrier noted his appeal from Marine Midland’s summary judgment for $2,152.22.

On 8 December 1971 we reversed the summary judgment and remanded the case for trial on counts 4 and 5 of