Murray v. Fishman Construction Co.

McWilliams, J., delivered the opinion of the Court. On 3 July 1963 the appellee (Fishman) agreed in writing (A.I.A. short form) to build for the appellants (Murray) a house, according to plans and specifications attached to the agreement (contract), and Murray agreed to pay therefor $25,-400. On 27 November, Murray was advised by his bank, Suburban Trust Company, that the agreed disbursements to Fish-man had been suspended because “the building * * * [was] ⁵⁴⁰ not being constructed according to [the] plans and specifications.” Shortly thereafter Murray engaged as his attorney, Mr. John P. Moore of the Montgomery County bar. Efforts on the part of Murray and Mr. Moore to arrive at a satisfactory adjustment of the ensuing dispute having come to naught, by a letter dated 25 February 1964 Murray availed himself of the provisions of Article 10 of the agreement giving him the right to terminate.

Fishman thereupon employed Mr. Charles W. Bell of the Montgomery County bar, who, on 16 March, advised Mr. Moore that he had docketed a mechanic’s lien on behalf of his client. (The details of the lien are not in the record.) Mr. Bell expressed the hope that the matter could be “worked out short of litigation.” His concluding paragraph is set forth in full: “I intend to follow the matter of the lien up with a law suit against Mr. and Mrs. Murray but will withhold the filing of same until you have had a chance to receive an answer to this letter. I realize that you are probably ‘up to your neck’ and would like you to know that I do not intend to push you as far as time is concerned. “Best of luck.” (Emphasis supplied.) The phrase “up to your neck” is a recognition. of the fact that Mr. Moore was campaigning for a seat in the 89th Congress and election day (19 May) was not far off. Responding to the letter, Mr. Moore telephoned Mr. Bell and suggested that the matter of compromise might better be explored upon completion of the house, as the total cost to Murray could not sooner be ascertained.

We are under the impression this was agreeable to Mr. Bell. Mr. Bell filed the law suit on 29 April. The declaration is a printed form on which inappropriate matter has been crossed out and which, as completed, is as follows: “For work completed and materials incorporated into job located on Lot 28, Block 5, North Glenhills, Cleveland Drive, Montgomery County, Maryland, as of January 15, 1964. ⁵⁴¹ “And for money payable by the Defendants to the Plaintiff: “* * *[F]or work done and materials provided by the Plaintiff for the Defendants at their request: “And for money found to be due from the Defendants to the Plaintiff on accounts stated between them: “And the Plaintiff claims therefor the sum of $6815.37.” Attached to the declaration was one of Fishman’s billheads on which was written: “Work completed and materials incorporated into job located on Lot 28, Block 5, North Glenhills, Cleveland Drive, Montgomery County, Maryland, as of January 15, 1964. Actual direct cost $11,197.92 15% overhead 1,679.69 $12,877.61 10% anticipated profit 1,287.76 $14,165.37 Less payments on account 7,350.00 Balance Due $ 6,815.37” Filed with the declaration was a motion for summary judgment.

The accompanying affidavit (which is undated), made by Sydney Fishman, president, recites that Murray is indebted in the full sum of $6815.37 “over and above all discounts, being the amount due as shown on the Bill of Particulars annexed hereto [the billhead] * * * and that there are no set-offs, counter claims or just grounds of defense * * *.” Service on Murray was accomplished on 27 May and early in June the papers were delivered to Mr. Moore. He entered his appearance on 17 June. He said he intended to “file a plea, set-off and a counter claim” later on after the house was finished and Murray could give him the details of the final cost. On 22 July an amended military affidavit was filed by Mr. Bell and on the same day Judge Shook passed an order (sub ⁵⁴² mitted by Mr. Bell) reciting that the defendants had “failed to plead or otherwise enter their appearance herei/m by counsel,” granting the motion, and entering judgment for $6815.37.

(Emphasis supplied.) Mr. Moore had no knowledge of the entry of the judgment until 14 September when he saw a letter from Mr. Bell, which reads as follows: “Dear John: “With regard to the above entitled matter, this is to inform you that it was not discovered by this office that your appearance was in the case for the Defendants until yesterday. Default judgment in this matter was entered in mid July, and this is to inform you that I have written directly to the Murrays requesting payment of the judgment. “I don’t know whether the Murrays are your clients or will come to you upon receipt of this letter, but thought that I had better put you on notice of the above.” It was indicated at argument that, after the receipt of the letter, Mr. Moore suggested to Mr. Bell that he consent to the vacation of the judgment but that, although Mr. Bell was agreeable, Fishman would not allow it. Mr. Bell thereupon withdrew from the case. On the following day the motion to vacate was filed citing the irregularity of the affidavit and its inherent fraudulence.

The motion was supported by the affidavit of Mr. Moore to-which was attached copies of correspondance between Murray and Fishman and between Mr. Moore and Mr. Bell. The order to show cause was answered by Fishman’s new attorney. Just prior to the hearing before Judge Shook on 16 October, Mr. Moore filed the affidavit of Murray to which was attached as an exhibit a copy of the agreement between Fishman and Murray. This hearing never rose above the level of an extended colloquy between the court and counsel at the conclusion of which the court said: “I think this is a case that perhaps should be set down for hearing to see, on testimony of the parties to determine, whether or not it should be vacated.

I think ⁵⁴³ that I will ask the Assignment Office to set it down, and you will have to come in with your clients.” Winter had given place to spring before the parties and their attorneys again appeared before Judge Shook. Also present, in response to subpoenas, were John T. Sherwood of Suburban Trust Company and Mr. Bell. It is unnecessary to recount the colloquy which took place on this occasion (10 May) except to note that it was much longer. Judge Shook refused to allow the production of any testimony or other evidence.

Her concluding remark was: “* * * I must find as a matter of law that they [Murray] have not alleged and proved the matters that are required to be alleged and proven to substantiate the granting of your [Murray’s] motion to vacate the judgment.” (Emphasis added.) An order to the same effect was filed a week later and from that order this appeal was taken. Fishman argued before us, as he argued before Judge Shook, that the “fraud necessary to set aside an enrolled judgment must be such a fraud that it prevented the other party from responding to the action.” He says, in effect, even if the affidavit did contain deliberate and material falsehoods, even if it did deceive the court, even if it did recite a cause of action which he knew did not exist, Murray was not prevented thereby from filing an appropriate and timely defense. In support of this proposition he cited, both to us and to Judge Shook, Toledo Scale Co. v. Computing Scale Co., 261 U. S. 399, 421 , 43 Sup. Ct. 458, 67 L. Ed. 719 (1923), wherein Chief Justice Taft said: “* * * [T]o justify setting aside a decree for fraud whether extrinsic or intrinsic, it must appear that the fraud charged really prevented the party complaining from making a full and fair defense.” The decree sought to be reopened (in Toledo) had been entered by the District Court in 1913 (10 years earlier) after litigation which had begun in 1907 and which had been conducted by a number of able and well-known lawyers.

Whether the language of Chief Justice Taft has any applicability to the quite ⁵⁴⁴ different situation before us is something with which, in the case at bar, we need not concern ourselves. Maryland Rule 625 a 1 controls the instant case and although it has been mentioned, discussed or construed in many of our decisions we have never narrowed its scope to the extent claimed by Fishman. 2 Even if support for Fishman’s contention could be found in the decisions of this Court, testimony produced at a hearing might disclose a nexus between the alleged fraud in obtaining the judgment and Mr. Bell’s arrangements with Mr. Moore sufficient to render his contention inapplicable. Mr. Bell was his attorney of record and what he did in the conduct of the case must be considered as done by, and binding upon, his client. Thomas v. Hopkins, 209 Md. 321 , 121 A. 2d 192 (1956).

We think the trial judge should have heard testimony relating to the delay in filing the motion to vacate the judgment and the alleged fraud, mistake or irregularity in its obtention. In Thomas, supra, we said: "Normally a court would hear evidence on a charge of fraud and deceit, * * *. We find, however, from a close examination of the record and from concessions made in the brief of the appellants and at the argument that the trial judge reached the right result in denying the motion to strike, despite his unusual refusal to hear the testimony the appellants desired to offer.” Id at 324-25. (Emphasis supplied.) There was already before Judge Shook enough of the indicia of fraud to require the exercise of the court’s qwim-equitable ⁵⁴⁵ power to consider all of the facts and circumstances so that the ends of justice would be subserved.

Brothers v. Tilken, 236 Md. 267 , 203 A. 2d 702 (1964); Crawford v. Richards, 193 Md. 236 , 66 A. 2d 483 (1949); Harvey v. Slacum, 181 Md. 206 , 29 A. 2d 276 (1942); Craig v. Wroth, 47 Md. 281 (1877). Mr. Moore had stressed at the October “hearing” and again at the May “hearing” that the rights of the parties were controlled by the agreement, which was before the court; that there was nothing in the agreement authorizing 15% overhead or 10% profit; that there was nothing in the agreement authorizing labor and materials to be charged at cost; that Fishman’s claim, if he had any at all, had to be founded in Article 10 3 of the contract; that the affidavit made no mention of the agreement; that the affidavit was undated; that there were no “accounts stated