Fleisher v. Fleisher Co.

Citation483 A.2d 1312,60 Md.App. 565
Decision Date01 September 1984
Docket NumberNo. 201,201
PartiesMartin D. FLEISHER v. The FLEISHER COMPANY, et al. ,
CourtCourt of Special Appeals of Maryland

Michael J. Schaefer, Hagerstown, with whom were Urner, McGrory, Nairn, Barton & Schaefer, Hagerstown, on the brief, for appellant.

Richard W. Douglas, Hagerstown, with whom were John R. Salvatore, Richard E. Basehoar and Meyers & Young, P.A., Hagerstown, on the brief, for appellees.

Argued before GILBERT, C.J., MOYLAN, J., and JAMES C. MORTON, Jr., Associate Judge of the Court of Special Appeals (retired), Specially Assigned.

MOYLAN, Judge.

On this appeal, we are asked to balance the Finality of Judgment Rule (new Md. Rule 2-535; formerly Md.R.P. 625 a) against the possibility that an earlier judgment was fraudulently obtained, and thus not deserving of the protection otherwise accorded final judgments. Recognizing that there must be a definite and foreseeable end to litigation and that ordinarily judgments should not be vacated once the thirty-day review period has expired, id., we also recognize that in exceptional cases judgments may be stricken when specific criteria are met.

In the present case, appellant Martin D. Fleisher claims that the appellees, The Fleisher Company and the Donkey Corporation, failed to prove sufficiently the existence of the aforementioned criteria, and that Judge John P. Corderman of the Circuit Court for Washington County erred in vacating confessed judgments entered on behalf of the appellant some 3 1/2 years earlier.

A brief review of the pertinent facts indicates that Max Fleisher, now deceased, owned and operated Fleisher's Department Store in Hagerstown, Maryland for a period of approximately sixty years. Max conducted the business through two corporations, The Fleisher Company and the Donkey Corporation, both of which were wholly owned by Max Fleisher.

Throughout the sixty-year period, Max was assisted in managing the department store by his brother Martin, the appellant in this case. Martin had no ownership interest in the business, but during the period of time critical to this case he served as a director and officer.

In 1977, Max Fleisher became physically disabled and entered a nursing home. At that time, Martin Fleisher was appointed his attorney-in-fact by virtue of a Power of Attorney executed by Max.

On June 20, 1979, two confessed judgment notes were executed in favor of "Naron, Wagner & Voslow, Chartered and Martin D. Fleisher," each in the amount of $150,000. The first note was executed by the Fleisher Company as follows: "By: Max Fleisher by Martin Fleisher, Attorney-in-Fact, President." The second note, executed by the Donkey Corporation, read as follows: "By: Max Fleisher, by Martin Fleisher, Attorney-in-Fact for Max Fleisher, President." These notes were prepared by the corporate attorney at the request of the corporate accounting firm, Naron, Wagner & Voslow, Chartered, and Martin Fleisher, the named beneficiaries.

Five days later, on June 25, 1979, the attorney filed the Confession of Judgments in the Circuit Court for Washington County. Service of process was made upon the Resident Agent of the corporation, Martin Fleisher. No defense to the suits was entered on behalf of the corporation and the judgments were entered.

Subsequently, Max Fleisher died in July, 1982. His daughters, Etta Cohen and Jean Goldman, were later appointed personal representatives of their father's estate, at which time they discovered the existence of the subject judgments and liens. Shortly thereafter, on January 4, 1983, they instituted this action to have the judgments set aside. 1

Both the appellant and the appellees agree upon the legal standard to be applied where a final judgment is sought to be vacated. As Chief Judge Gilbert of this Court recently stated in Hamilos v. Hamilos, 52 Md.App. 488, 450 A.2d 1316 (1982), aff'd 297 Md. 99, 465 A.2d 445 (1983), the moving party must initially produce evidence sufficient to show that the judgment in question was the product of "fraud, mistake or irregularity."

Our review of the record makes clear that upon the facts presented, there was neither a mistake nor an irregularity as those terms are defined in light of Rule 625 a and the pertinent case law such as Hamilos. 2 Thus, the initial inquiry in our analysis turns upon whether or not the appellees produced sufficient evidence of fraud. If the fraud was sufficiently proven, then our analysis must proceed to determine whether the appellees acted in good faith and with ordinary diligence in seeking to have the judgment vacated and whether they have a meritorious defense to the underlying judgment. Owl Club, Inc. of Baltimore v. Gotham Hotels, Ltd., 270 Md. 94, 310 A.2d 534 (1973).

In Schwartz v. Merchants Mortg. Co., 272 Md. 305, 322 A.2d 544 (1974), the Court of Appeals reaffirmed Maryland's adherence to the reasoning and language of the United States Supreme Court in the case of United States v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93 (1878), wherein the Court stated:

"Where the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells out his client's interest to the other side,--these, and similar cases which show that there has never been a real contest in the trial or hearing of the case, are reasons for which a new suit may be sustained to set aside and annul the former judgment or decree, and open the case for a new and a fair hearing." 98 U.S. at 95. 3

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