Owl Club, Inc. of Baltimore v. Gotham Hotels, Ltd., 42

• Decision Date: 29 October 1973
• Docket Number: No. 42,42
• Citation: 310 A.2d 534,270 Md. 94
• Parties: OWL CLUB, INC. OF BALTIMORE v. GOTHAM HOTELS, LTD.
• Court: Maryland Court of Appeals

Page 94

270 Md. 94

310 A.2d 534

OWL CLUB, INC. OF BALTIMORE v. GOTHAM HOTELS, LTD.

No. 42.

Court of Appeals of Maryland.

Oct. 29, 1973.

Benjamin Swogell, Baltimore, for appellant.

B. Conway Taylor, Jr., Baltimore (Whiteford, Taylor, Preston, Trimble & Johnston, Baltimore, on the brief), for appellee.

Argued before MURPHY, C. J., and BARNES, McWILLIAMS, SINGLEY, SMITH, DIGGES and LEVINE, JJ.

McWILLIAMS, Judge.

We are presented here with a question both narrow in scope and in no way remarkable. The details of what happened make interesting but hardly exciting reading. We shall confine ourselves, however, to those facts and circumstances pertinent to the issue.

On 24 July 1972 the appellant (Owl) sued the appellee (Gotham) and The Snowden Corporation (Snowden). With but minimal editing the declaration is as follows:

COUNT 1

FOR THAT on or about June 1, 1971, Gotham was owner and operator of the Belvedere Hotel and it entered into a written lease with Snowden whereby it leased the entire premises for a period of ten years and three months. That the said lease contained a provision giving the tenant unrestricted right to assign the lease or to sub-let all or a portion of the premises. That on July 1, 1971 Snowden entered into a written lease agreement with Owl whereby it leased The Owl Room, consisting of a bar and adjacent grill, the first floor kitchen and a portion of the basement storage area. That after Owl opened the restaurant the U. S. Government picked up the liquor license because Gotham owed the Government a large sum of money for back taxes. That Owl was forced to be closed for a period of three weeks and was not permitted to reopen until it paid to the United States Government the sum of $1,000.00 to be applied to the Gotham tax claim. That Owl was unable to transfer the license to its name because there was owed a large sum to Baltimore City for personal property tax. Owl was forced to pay the City of Baltimore a large sum of money for Gotham in order to reopen. That due to being closed for this period of time Owl suffered a large amount of damages which were caused by Gotham's failure to pay its taxes.

WHEREFORE Owl claims $10,000.00 damages.

COUNT 2

For that Owl entered into a lease for the Owl Room, bar and kitchen as outlined in Count 1 herein and for that Gotham and Snowden in violation of the said written lease prevented Owl from operating on the premises and on June 28, 1972 Gotham and Snowden placed a padlock upon the premises and forcibly prevented Owl from occupying the premises and conducting its business. Thereof as a result Owl sustained great damages and suffered a great monetary loss.

WHEREFORE, Owl claims $100,000.00 damages.

On 25 July the sheriff's deputy 'summoned Gotham, a (foreign) corporation by service on United Corporation Company, Resident Agent, by service on Cyril R. Murphy, Secretary.' Copies of the narr, the notice to plead and the writ of summons were left with Murphy. Snowden was returned Non Est in July, August and September after which attempts to obtain service upon it were abandoned.

Murphy, a member of the Baltimore bar, testified he is the Assistant Secretary of United Corporation Company (United). He recalled the delivery to him by the deputy sheriff of the narr, the notice to plead and the writ of summons on 25 July. On the same day he sent those papers to his company's New York office where, he learned later, they were received by David Jackman who in turn mailed them to Jerry Wender, Gotham's attorney, at Gotham Hotels, Ltd., 405 Lexington Avenue, New York, New York 10017. He said he believed 'that every piece of correspondence sent out by his company has its name and address on the envelope.' It seems the letter to Wender was never returned to United. Wender said he never saw it.

On 14 September, about three weeks after the time for filing a defensive pleading had expired, Owl moved for a judgment by default. The judgment was entered on the same day.

James V. Campbell is the Civil Assignment Commissioner for the Supreme Bench of Baltimore City. He testified that a request was made to calendar an inquisition on the default judgment. On 16 October, he said, a card and a summons were sent to United stating that the inquisition had been set for 26 October. Murphy said service of the card and the summons was accomplished at 11:15 a. m. on 18 October, that they were mailed to New York on the same day and that, he learned later, they were received by David Jackman at the New York office on 20 October. Murphy said also that his company 'has only one service to perform and that is getting the summons and getting them to the client as quickly as possible.'

At the conclusion of the inquisition on 26 October Carter, J., directed the entry of judgment on Count 1 for $10,000 and on Count 2 for $100,000. We have set forth below an excerpt from an item which appeared in The (Baltimore) Sun of Wednesday, 1 November 1972:

'From Belvedere Hotel

'Owl Club owners get $110,000 judgment

'By George J. Hiltner

'The financial woes which have beset the owners and operators of the now-vacant Belvedere Hotel increased in Superior Court yesterday when a $110,000 judgment was recorded against them.

'The judgment was obtained by the Owl Club Inc., which leased the well-known Owl Room bar and grill in the hotel.

'Judge Joseph L. Carter awarded full damages to the club when Gotham Hotels, Ltd., the owner, and the Snowden Corporation, which leased the premises from Gotham, failed to answer or contest the litigation. * * *'

John J. Moran testified that he is a vice president of Monumental Life Insurance Company, the holder of the first mortgage on the Belvedere Hotel. The amount due at the time was 'about $775,000.' Moran said 'it was . . . (his) loan' and that he was the one who had to 'worry about when the payments are coming in.' He said that 'as soon as . . . (the Hiltner article) was published in the paper' he made a series of calls to Gotham and that he 'finally talked to Al Simon,' one of Gotham's vice presidents. Moran said that when he told him about the $110,000 judgment Simon said, 'What is the price of a bus fare to (in?) Baltimore.' Moran said, 'Thirty cents.' According to Moran, Simon replied 'that is what it's (the judgment) worth.'

On 15 December 1972 Owl directed the issuance of the writ of fieri facias. What follows is Moran's letter of 29 December to Simon:

'In accordance with our telephone conversation, I am enclosing a copy of the notice of the Sheriff's Sale of the Belvedere Hotel in Baltimore, to take place January 16. I assume someone in your organization has been served notice by the Sheriff.'

In the forenoon of 16 January 1973 (the sheriff's was scheduled for 2:00 p. m.) Gotham filed a petition to enjoin the sale and to strike out the judgment. In its petition Gotham alleged it had no knowledge of the litigation until 28 December and that the 'judgment was obtained by way of fraud, and/or was predicated upon mistake and/or was based upon or affected by irregularity.' It claimed also to have 'a complete, meritorious, legal defense' to Owl's suit and that 'the case has never been heard on the merits.'

Gotham's petition came on for a hearing before Judge Carter on 8 February 1973. On 7 March he struck out the judgment and gave Gotham 15 days 'to file appropriate pleadings.' In his opinion the learned chancellor said, in part:

'The courts are very loath to set aside judgments after they become enrolled; but the rule relating to revisory power and control over judgments serves a good and proper purpose. It provides a method for control over judgments entered wherein fraud, mistake or...