Penn Cent. Co. v. Buffalo Spring & Equipment Co.

• Decision Date: 03 February 1971
• Docket Number: No. 229,229
• Citation: 273 A.2d 97,260 Md. 576
• Parties: PENN CENTRAL COMPANY v. BUFFALO SPRING & EQUIPMENT CO., Inc.
• Court: Maryland Court of Appeals

Page 576

260 Md. 576

273 A.2d 97

PENN CENTRAL COMPANY v. BUFFALO SPRING & EQUIPMENT CO., Inc.

No. 229.

Court of Appeals of Maryland.

Feb. 3, 1971.

James W. Constable, Baltimore (George W. Constable and Constable, Alexander & Daneker, Baltimore, on the brief), for appellant.

Irving B. Grandberg, Baltimore, for appellee.

Before HAMMOND, C. J., and BARNES, SINGLEY, SMITH and DIGGES, JJ.

BARNES, Judge.

The appellant, Penn Central Company (Penn Central), seeks a reversal of an order of the Superior Court of Baltimore City (Howard, J.), dated May 7, 1970, denying Penn Central's motion of October 14, 1969, to strike out a judgment obtained by the appellee, Buffalo Spring & Equipment Co., Inc. (Buffalo Spring), on July 8, 1969, in the amount of $6,687.00 with interest from that date and costs against Penn Central as garnishee of James G. Mench. The principal question is whether the judgment was obtained by 'fraud, mistake, or irregularity' as provided in Maryland Rule 625 a, the motion to strike having been filed after the judgment had become enrolled 30 days after its entry.

In 1966, Buffalo Spring obtained a judgment for $8,200.82 in the Superior Court of Baltimore City against James G. Mench, on which the balance due was $6,687.00 when Buffalo Spring issued an attachment on that judgment on March 11, 1969, by its attorney, Irving B. Grandberg, Esquire, and laid it in the hands of Penn Central, as garnishee, on March 12, 1969. Mr. Mench on January 23, 1968, had driven a tractor trailer sold to him by Buffalo Spring into a car of a freight train operated by Penn Central in the State of New York. Mench thereafter filed an action against Penn Central in the Supreme Court of the State of New York (afterwards removed to the United States District Court) to recover damages allegedly resulting from that collision. Mench owed Buffalo Spring a balance due on the tractor trailer for which the 1966 judgment was recovered by Buffalo Spring against Mench.

The attachment was served on P. H. Hokemeyer, the Office Supervisor to the Division Superintendent of the Chesapeake Division of Penn Central, located in Baltimore, Maryland. Mench was not at that time and never had been an employee of Penn Central. Mr. Hokemeyer was unable to ascertain from the attachment what money Penn Central had which might possibly be due Mench. He telephoned Mr. Grandberg to discover what the matter was about. Mr. Hokemeyer testified that the following conversation was had with Mr. Grandberg:

'When I received the attachment papers, and the very little information in the papers, to give me any indication what the case was about, the attachment was all about-so, I called Mr. Grandberg, the plaintiff's attorney, and asked him if he would explain to me just what these papers were sent to the Penn Central. Mr. Mench proceeded to tell me. I am sorry-excuse me-Mr. Grandberg told me that Mr. Mench had purchased an automobile from the Buffalo Spring Equipment Company and that had failed to make payments. So, I said, 'Well, what has this to do with Penn Central?' Mr. Grandberg stated that Mr. Mench and his truck had had an accident with a train somewhere near the area of Elmira, New York and he knew that Mr. Mench had a pending suit against the company, the Penn Central Railroad, and the purpose of this attachment was in the event that any settlement was paid, any payments was paid by the Penn Central to Mr. Mench that he, Mr. Grandberg, or his client, would have first call or judgment or a claim to more moneys that were paid to Mench. That was the essence of the conversation. I immediately went to see Mr. Haun. I turned the papers over to him. this is normal procedure.'

As Mr. Hokemeyer indicated he then saw D. W. Haun, the District Claim Agent of Penn Central, and gave the attachment papers to him. This occurred on March 12, 1969. Mr. Haun checked and found that the action brought by Mench against Penn Central was being handled by the Penn Central legal department in New York. Before communicating with that department, he was advised to forward the papers to Penn Central's General Attorney, T. J. Smith, Esquire, in New York. He promptly did this. Buffalo Spring, on May 23, 1969, filed Interrogatories in the attachment case which were served on Mr. Hokemeyer, delivered by him on May 27, 1969, to Mr. Haun and by Mr. Haun forwarded to the legal department in New York on the same day.

No answer to the Interrogatories having been filed by Penn Central, Buffalo Spring, on June 17, 1969, filed a motion for judgment against Penn Central, as garnishee, for the full amount of Buffalo Spring's claim for failure to answer the Interrogatories, pursuant to Rule G56. On the same day, the Superior Court of Baltimore City passed an order nisi reciting that judgment was entered for $6,687.00 against Penn Central, as garnishee of Mench, unless cause to the contrary be shown on or before July 3, 1969, provided the copy of the motion and order was served on the garnishee on or before June 26, 1969. Service was again made upon Mr. Hokemeyer, who forwarded this paper to Mr. Haun on June 23; Mr. Haun forwarded the motion and order nisi to the Penn Central legal department in New York the same day.

The attachment was duly received in the legal department in New York and was given to Edward J. Murphy, Esquire, one of the attorneys in the office of the General Counsel of Penn Central, for attention. He mistakenly associated the Maryland attachment practice with the New York practice 'under which a creditor seeking payment from a party involved in a pending law suit may file a restraining notice pursuant to which the defendant would be restrained from making payment to the plaintiff unless the creditor is paid or the validity of his claim determined if disputed' and placed the papers in the Maryland case he received in the file assuming 'that the prescribed time period would not be adhered to and that there was no need to answer them prior to further developments in the underlying suit by Mench.' ¹

No answer having been filed by Penn Central pursuant to the order nisi, Buffalo Spring, on July 8, 1969, filed a motion for final judgment against Penn Central, as garnishee, stating that the order nisi had been issued, duly served and no cause was shown on or before July 3, 1969, as set forth in the order nisi, why judgment should not be entered against the garnishee. The lower court on July 8, 1969, entered judgment against Penn Central, garnishee, in favor of Buffalo Spring for $6,687.00 and costs.

On October 14, 1969, Penn Central filed its motion to strike out the judgment of July 8, 1969, alleging that it had been obtained by fraud, mistake and irregularity; that a misrepresentation had been made; that the attachment was to cover a future judgment which might be obtained by Mench against Penn Central, the garnishee; and that the attachment was solely related to such a potential judgment, which induced Penn Central to take no further action other than to file the documents in the Mench suit file. It was also alleged that Penn Central had a good and valid defense against the attachment in that it is not and never has been indebted to Mench. The affidavits of Hokemeyer, Haun and Murphy were attached in support of the motion to strike.

Buffalo Spring in its answer to the motion to strike generally denied any misrepresentation, fraud, mistake or irregularity and alleged that there was no fraud in the telephone conversation of its counsel with Mr. Hokemeyer; that the 'mistake' of Mr. Murphy was not the type of mistake contemplated in Rule 625 a; that the judgment was entered in accordance with the established Maryland practice; and, that the 'indifference or neglect' of Penn Central precluded the striking out of the judgment against it.

Judge Howard in his opinion filed May 7, 1970, stated that 'there is no evidence of fraud, mistake or irregularity sufficient to justify the striking of Plaintiff's enrolled judgment. Unfortunate as the result in this case may be, it is the Court's opinion that Plaintiff cannot be held responsible therefor.'

We cannot say that the conclusions of the lower court were erroneous and we shall affirm the lower court's order of May 7, 1970, denying Penn Central's motion to strike out the judgment.

Judge Horney, for the Court, in Tasea Investment Corp v. Dale, 222 Md. 474, 478, 479, 160 A.2d 920, 923 (1960) reviewed the prior...