Unsatisfied Claim & Judgment Fund Board v. Fortney

Smith, J., delivered the opinion of the Court. Appellant Unsatisfied Claim and Judgment Fund Board (Board) complains because it was ordered to pay appellees, Frances M. Fortney et al., (Fortney) on a default judgment obtained against appellant Mark J. Haselbauer (Haselbauer) during the time that he was in the military service, without any attempt to comply with the provisions of the Soldiers’ and Sailors’ Civil Relief Act of 1940 (50 U.S.C. App. § 520). Under Maryland Rule 871, we shall remand the case for further proceedings without affirmance or reversal. Appellants raised three points, namely (1) whether oral notice to a representative of the company to whom the case had been assigned under Code (1970 Repl.

Vol.) Art. 66V2, § 7-607 (b) for investigation is the notice to the Board required by § 7-616 (a) (2) ; (2) whether an oral disclaimer of insurance coverage said to have ²⁴⁸ been given to Fortney’s attorney on September 3, 1969, was sufficient to start the period of 30 days within which Fortney was required by § 7-606 to give notice to the Board of his intention to make a claim; and (3) whether the Soldiers’ and Sailors’ Civil Relief Act prevented the entry of a default judgment. For the purposes of our decision, the facts are relatively simple. On May 21, 1967, Haselbauer, then 15 years of age, was involved in an accident in Washington County when a vehicle operated by him struck the car operated by appellee Frances M. Fortney and owned by appellee Fortney Trailer Sales, Inc. The Haselbauer vehicle, allegedly used without permission of his parents, was furnished Haselbauer’s father by the father’s employer who leased it from the owner. It was impounded after the accident and released only when an insurance company stated that it was “assuming responsibility for the accident.” The insurance company claims representative who signed that statement was transferred before any settlement was effected.

A regional supervisor of that company said that on September 3, 1969, he advised counsel for Fortney at the office of the attorney that his company was denying coverage on the basis of unauthorized use of the vehicle. The attorney for Fortney was asked about this by the court. He replied: “Your Honor, the only time I heard that September 3 was when the petition was answered and when Mr. Crossley stood up and mentioned to the Court in his opening statement that date. If — I can guarantee, Your Honor, that if Mr. Lightner, on September 3 had told me formally that Aetna Casualty Company was denying coverage we would have filed our petition with the Uninsured Motorist Fund immediately.

I am quite familiar with that Act.” On direct examination the record reads: “During this entire period of time I had a number of conversations with Mr. Lightner and ²⁴⁹ at no time did Mr. Lightner formally notify me that he was not going to cover this case. On January 9, 1970 I called Mr. Lightner on the telephone and I said, ‘Mr. Lightner, did you or are you going to deny coverage on this case? We must have from you a formal letter of denial so that we have something to go on, and we can then put the Uninsured Motorist Fund on notice.’ Mr. Lightner, in response to my request on January 9, said that he was not in a position to give me a letter denying coverage. He would have to check it out with his home office.

I again called him on January 12, 1970 at which time Mr. Lightner said he had talked to his home office and his home office was formally denying coverage and he would write me accordingly. And, therefore, on January 13 Mr. Lightner did write me denying coverage, and we wish to have that letter entered into evidence, Your Honor. (Letter from Mr. Lightner for Aetna Casualty Company entered into evidence as Plaintiffs Exhibit No. 2.) “On receipt of that letter we put the Unsatisfied Claim and Judgment Fund Board on notice by registered mail, enclosing not only the Notice of Intention to make claim, but also a copy of the suit papers entered into this case, and notice was received by the Fund on January 15, 1970, the following day as evidenced by the card which is the usual card they send out and which we now wish to have in evidence as Plaintiffs Exhibit No. 3.” Suit was filed against Haselbauer on November 12, 1969. Service was made on the Secretary of State under the provisions of what was then Code (1967 Repl.

Vol.) Art. 66]/2, § 115. An affidavit of compliance showing receipt of copy of suit papers by Haselbauer was filed ²⁵⁰ on November 19. The notice of intention to make claim against the Board was filed after the written disclaimer by the insurance company. It was received by the Board on January 15, 1970.

Pursuant to the mandate of what is now Code (1970 Repl. Vol.) Art. 66V2, § 7-606 (a) (4), this notice included copy of the suit papers previously filed. On February 24, 1970, the Board assigned the claim “for investigation, handling and defense” to an insurance company under § 7-607 (b) which in turn assigned it to an adjusting organization. Contrary to what the Board describes as its usual policy, no defense counsel was assigned on behalf of Haselbauer until after the default judgment upon which we shall comment further.

At some time subsequent to the filing of suit Haselbauer entered the U. S. Marine Corps. It is said that the adjuster advised counsel for Fortney of a visit to Haselbauer at his training camp, “that he had advised Haselbauer he should contribute something,” that Haselbauer “showed no interest whatsoever in paying a dime,” but the insurance company representative promised to keep after him “to force him to contribute something.” Counsel’s exasperation at the passage of three years from accident and one year from his initial contact, with no money in hand, reached the point where he felt affirmative action necessary. He described what then took place: “Finally I told Mr. Schultz, [the representative of the insurance company to which the Board assigned the case], and this was sometime in May of 1970, that we had reached the point where we could not wait any longer; that we had been trying to work out something on this case for months without any indication of any interest on the part of anybody involved, and that we had no choice but to go ahead and obtain a judgment by default, and he said, T don’t blame you a bit, and if I were you I would go ahead’, or words to that effect, and I said, ‘Well, we’re just ²⁵¹ going to have to do it, we just don’t have any choice.’ We then obtained a judgment by default. On June 11, 1970.

I think that is the date in the papers in front of you, Your Honor. And on that date we notified Haselbauer by registered mail that such a judgment had been obtained, and I will quote a letter to Mr. Haselbauer, Your Honor. The letter is dated June 11, 1970, registered mail, return receipt requested addressed to Mark J. Haselbauer, U. S. Marine Corps, Parris Island, South Carolina. ‘Dear Sir, Please be advised that a judgment by default was obtained against you in this case in the Circuit Court for Washington County on June 11, 1970 with leave to extend. A hearing is scheduled for June 23, 1970 to determine the extent of plaintiff’s damages.

You have a right to be present in Court in person or by counsel if you desire to do so. Yours very truly.’ “We got no reaction whatsoever from Mr. Haselbauer — Private Haselbauer at that point, and therefore on the date mentioned, on June 25,1970, we did obtain our judgment. We waited until the judgment became final and we notified the Fund. “Subsequently we received a letter from Mr. McGee, the General Counsel of the Fund, dated August 14, 1970, and I ask the Court to note in the letter from Mr. McGee, who is the General Counsel of the Fund, none of the issues raised in the petition subsequently filed in this case, are even mentioned, and I ask that this be entered into evidence as Plaintiff’s Exhibit No. 4.” No affidavit relative to military service was filed nor was any other action taken as required by the provisions of the Soldiers’ and Sailors’ Civil Relief Act of 1940 (50 U.S.C. App. § 520) prior to entry of the judgment. When ²⁵² Fortney filed a petition on September 2, 1970, for payment from the Board an answer was filed on behalf of the Board and Haselbauer in which they objected because of what they called a failure to file notice of intention to make a claim within the required period after disclaimer and the failure to comply with the requirement of notifying the Board prior to taking a default judgment, pointed to the absence of Haselbauer in the military service, claimed that investigation on behalf of the Board “could not be completed because of military service of the defendant”, and requested that the default judgment be stricken.

After testimony was taken, the trial judge directed payment by the Board. SOLDIERS’ AND SAILORS’ CIVIL RELIEF ACT The judge .below said of this act that it “was enacted for the benefit of soldiers and sailors, not for the benefit of the Board, and has no application under the facts of this case.” The Board argues that because of that act the judgment should be stricken. It does not appear that any evidence was presented to the court in an effort to show that Haselbauer was prejudiced in the defense of the action by his military service nor to show a meritorious defense. The trial judge erred in concluding that the issue of Haselbauer’s military service had no bearing on the judgment.

Counsel for the Board entered an appearance and signed on behalf of Haselbauer when he prayed that the judgment be stricken. Under § 7-608 the insurer to whom an action has been assigned is permitted by its attorney to “enter an appearance on behalf of the defendant, file a defense, appear at the trial or take such other steps as it may deem appropriate on the behalf and in the name of the defendant” and the statute further provides “all such acts shall be deemed to be the acts of the defendant.” Section 7-617 provides: “When the Board receives notice, as provided in § 7-616 [relative to default judgment], the in ²⁵³ surer to which the action has been assigned through counsel may enter an appearance, file an answer, appear at the trial, defend the action or take such other action as it deems appropriate on the behalf and in the name of the defendant, and take recourse to any appropriate method of review on behalf of, and in the name of, the defendant.” Under § 7-619 a prerequisite to payment of this judgment will be assignment of it by Fortney to the Board. The Board will then have all the rights of the judgment creditor under the judgment and be entitled to enforce the same. Maddox v. Shanks, 240 Md. 348, 351 , 214 A. 2d 323 (1965).

Haselbauer’s right to operate a motor vehicle in Maryland then will be suspended. Code (1970 Repl. Vol.) Art. 66(4, § 7-310. The suspension will continue until the judgment is stayed or satisfied.

Section 7-314. Judgments are not necessarily void because there has been no affidavit of nonmilitary service before they were entered. Kimbrough and Glen, American Law of Veterans (Shipley 1954) § 875. Judgments thus obtained are voidable.

Rentfrow v. Wilson, 213 A. 2d 295 (D.C. Ct. App. 1965); Thompson v. Lowman, 108 Ohio App. 453 , 155 N.E.2d 258 (1958) ; People v. Vogel, 46 Cal. 2d 798 , 299 P. 2d 850 (1956) ; Allen v. Allen, 30 Cal. 2d 433 , 182 P. 2d 551 (1947) ; Department of the Army Pamphlet No. 27-166 Soldiers’ and Sailors’ Civil Relief Act § 3.2 (a) (4) (July 1971) ; and annotation “Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended, as affecting matrimonial actions,” 54 A.L.R.2d 390 , 394 (1957). See also annotation “Soldiers’ and Sailors’ Civil Relief Act of 1940, as amended, as affecting negligence actions,” 75 A.L.R.2d 1062 (1961), and the series of annotations relative to the Soldiers’ and Sailors’ Civil Relief Act in 130 A.L.R. 774 and thence beginning at 147 A.L.R. 1366 and continuing through each volume of A.L.R. to 157 A.L.R. 1454 . “[T]he failure to file the affidavit is only ²⁵⁴ an irregularity and does not affect a default judgment rendered in such cause, since a default judgment rendered without the filing of such affidavit is voidable only, at the instance of the serviceman