Kelly Adjustment Co. v. Boyd

• Decision Date: 31 July 1975
• Docket Number: No. 8239.,No. 8240.,8239.,8240.
• Citation: 342 A.2d 361
• Parties: KELLY ADJUSTMENT CO., a corporation, Appellant, v. Robert BOYD and Ibula Boyd, Appellees. KELLY ADJUSTMENT CO., a corporation, Appellant, v. Winston C. JOHNSON, Jr., Appellee.
• Court: D.C. Court of Appeals

342 A.2d 361

KELLY ADJUSTMENT CO., a corporation, Appellant, v. Robert BOYD and Ibula Boyd, Appellees.

KELLY ADJUSTMENT CO., a corporation, Appellant, v. Winston C. JOHNSON, Jr., Appellee.

No. 8239.

No. 8240.

District of Columbia Court of Appeals.

Argued September 11, 1974.

Decided July 31, 1975.

Rehearing Denied September 25, 1975.

Bernard D. Lipton, Silver Spring, Md., for appellant.

Michael O. DeMouy, Washington, D.C., with whom Edward E. Schwab and Margaret A. Stone, Washington, D.C., were on the brief, for appellees in No. 8239.

No appearance or brief filed on behalf of appellee Johnson.

Before KERN and GALLAGHER, Associate Judges, and PAIR, Associate Judge, Retired.

GALLAGHER, Associate Judge:

Appellant is a collection agency which obtained judgments against appellee debtors prior to our decision in J. H. Marshall and Associates, Inc. v. Burleson, D.C.App., 313 A.2d 587 (1973). In net effect, Marshall terminated practices long carried on by collection agencies in this jurisdiction and elsewhere in the collection of debts as being an unauthorized practice of law. We held that:

Appellant is hereby enjoined, from and after this date, from: advising creditors when to bring suit; soliciting and receiving assignments of claims or debts for collection under which payment, to the assignor or creditor, is dependent on collection from the debtor and which contemplates or authorizes the enforcement of collection by suit, brought in the name of either party, by an attorney at law; employing a lawyer on behalf of the creditor or an assignor without specific written authority to do so; interposing itself between the creditor and the lawyer handling legal action on the claim; instituting or maintaining legal actions for others; and appropriating to its own use as attorney fees sums adjudged against debtors on assigned claims except when such judgment is its bona fide property. Id. at 600.

From all that appears, appellant does not dispute that its practice in obtaining pre-Marshall judgments in this case fell within the strictures of Marshall laid down soon thereafter. The issue here is whether these pre-Marshall judgments are enforceable notwithstanding that decision. This in turn comes down in the final analysis to the question of whether Marshall was intended to be prospective only in application.

Appellant attempted to execute upon his pre-Marshall judgment against the Boyds by causing a writ of attachment to be issued and served upon The Riggs National Bank as garnishee. After answer by Riggs that it was holding $533.52 to the credit of appellees appellant moved for a judgment of condemnation. Viewing our opinion in Marshall as likely to be controlling, the trial court entered an order denying the relief sought and staying the expiration of the attachment pending review by this court.¹

The practices ended by Marshall had been engaged in by collection agencies here for decades without judicial disapproval. They were, in a manner of speaking, a recognized "trade custom". If the practices complained of had been engaged in while seeking a judgment against a debtor after Marshall came down, we would of course be governed by that decision. But here the ultimate question is whether Marshall should be applied retrospectively.

While Marshall did not specifically speak to this question, we hold it was (and should have been) the intent of this court that it be applied prospectively only. Not only were the judgments in question valid when entered but these collection agency practices had a long prior history amounting to custom. If we were to agree with the trial court, we would not only be declining to enforce judgments valid when entered — which would give rise to a serious constitutional problem to say the least — but because of the long-standing custom it would also be inequitable and not required by compelling public policy considerations.²

While it is true that in Marshall this court prohibited any collection agency ". . . from and after this date, from . . . instituting or maintaining legal actions for others . . ." this was intended to apply only to the institution and maintenance of an action looking toward a judgment and should not affect execution on pre-Marshall judgments valid when entered. This is in the interest of a fair and orderly administration of justice. See e. g., Linkletter v. Walker, 381 U.S. 618, 85 S.Ct. 1731, 14 L.Ed.2d 601 (1965), and Great Northern Railway Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 53 S.Ct. 145, 77 L.Ed. 360 (1932). In Linkletter, the Court stated that "the accepted rule today is that in appropriate cases the Court may in the interest of justice make the rule prospective." Id. 381 U.S. at 628, 85 S.Ct. at 1737.

In Bump v. Barnett, 235 Iowa 308, 16 N. W.2d 579 (1944), the court was faced with this question, and said:

There should, however, be no uncertainty in the effect upon [prior judgments] of the decree herein. We do not deem these judgments void or voidable by reason of appellant's unauthorized practice of law in obtaining them. The decree should not prevent their enforcement . . . provided that in so doing he does not engage in further unauthorized practice of law. Id. at 316, 16 N. W.2d at 584.

If there is no unauthorized practice by the agency in the process, we hold appellant may proceed to enforce these judgments.

Reversed and remanded for further proceedings.

KERN, Associate Judge (concurring):

My view of this case differs enough from those of my colleagues to warrant a brief outline first of the facts and then of my conclusion therefrom.

Appellant, represented by an attorney, sought to execute on the two judgments it had earlier obtained against the appellees in these cases — one in the Civil Division and the other in the Small Claims and Conciliation Branch of the trial court. The sparse records before us reflect that the trial judge, without comment, denied leave to appellant to file a wage attachment against appellee Johnson;¹ and refused, by written order to enter a judgment of condemnation upon a garnishment which appellant had issued against the garnishee of appellees, the Boyds, with a comment that the original judgment obtained by appellant "may be void under authority" of Marshall v. Burleson, D.C.App., 313 A. 2d 587 (1973) (Emphasis added.) Appellant now challenges the propriety of these actions by the trial court.

Since appellant in this court does not dispute it was engaged in the unauthorized practice of law, as defined recently by our decision in Marshall, when it had earlier obtained the judgments in these cases, I proceed on that assumption, also. The issue then posed, as I see it, is whether now we should either (1) declare these judgments void, or (2) refuse to permit their enforcement and leave them dangling on our court system's dockets like so many useless appendages.

The general rule is that for a judgment valid on its face to be declared void there must be a defect going to its very essence. I find no authority which persuades me that a judgment obtained through the unauthorized practice of law under the circumstances disclosed here is so utterly flawed that it must as a matter of law be voided.² Nor do I find anything in Marshall³ that requires us to reach that conclusion.

Hence we are left in my view with the question whether we should as a matter of public policy and equity declare that there shall be no execution upon any extant judgment obtained through what Marshall declared was the unauthorized practice of law.

While this court should not, after our explicit ruling in Marshall, sanction further unauthorized practice of law by collection agencies, we must recognize that to declare unenforceable the facially valid judgments in the instant cases because they were obtained in violation of the principles later announced in Marshall would effectively render unenforceable every judgment presently of record in the name of a collection agency. The resulting confusion between creditors and debtors in the District of Columbia would be quite contrary to public policy and equity. Specifically, if a judgment, valid on its face, held in the name of a collection agency is rendered unenforceable, the creditor would appear to be foreclosed from further proceedings on the debt. Alternatively, the debtor, unless the statute of limitations has run, might be liable also to the creditor for the underlying debt and be left with two judgments of record against him on but one obligation.

Balancing the considerations of public policy and equity,⁴ I think we are required to permit the enforcement of judgments in favor of collection agencies entered of record at the time of Marshall, provided their subsequent enforcement complies with the applicable rules of the court.⁵ See Bump v. Barnett, supra.

Accordingly, I would reverse the trial court and allow appellant to proceed to enforce its judgments.

PAIR, Associate Judge, Retired (dissenting):

I am unable to agree with my colleagues that we should permit enforcement of appellant's judgment against appellees Robert and Ibula Boyd (the Boyds). In the first place, the judgment is of very doubtful validity in my opinion. Of course, as a general rule this court may not go behind a judgment to inquire as to its validity. However, the court cannot escape its responsibility to examine the record brought here for review.

What appears from the record is that appellant commenced in the Civil Division of the Superior Court an action entitled "Complaint on a Promissory Note."¹ The note, made under seal by the Boyds on December 23, 1970, was payable to a credit union in installments. Appellant alleged in its sworn complaint² that it was the assignee of the credit union and as such was entitled to the balance due on the note. Appellant obtained judgment against the Boyds³ for $1,386.41, representing the balance due on the note, plus interest from March 24, 1972 at 1% per month to date of ...