Appeal from the Court of Common Pleas of Baltimore City (BYRNES, J.).
The cause was argued before Henderson, Hammond, Horney and Marbury, JJ., and Anderson, J., Associate Judge of the Sixth Judicial Circuit, specially assigned.
MARBURY, J., delivered the opinion of the Court.
On September 8, 1960, the appellee, Elizabeth S. McMillan, executed a contract of sale with Chester Beach, Inc. Attached thereto and also executed by her at the same time was an "Installment Note" containing standard clauses for acceleration and for the confession of judgment in the event of default by the maker. Shortly thereafter, the contract and note were assigned to the appellant, Clarence M. Plitt. Although notified to make payments to him, the appellee failed to do so, and a confessed judgment was entered against her on March 6, 1962, for the amount of $890, with interest and attorney's fee. Within thirty days, in accordance with Maryland Rule 645 b she filed a sworn motion supported by a statement to have the judgment stricken. The motion was granted, pleadings filed, and after the case was tried before the court sitting without a jury, a judgment was
entered in favor of the appellee for costs. From that judgment Plitt appeals.
The contract was for the purchase of unimproved real property consisting of Lot 5, Block S of the subdivision of Harbor View-2 in Queen Anne's County, in consideration of $900. It acknowledged a down payment of $10 prior to its execution, and both the contract and the note provided that $890 was to be paid at the rate of $15.25 per month including 6% interest. Paragraph numbered 2 of the contract provided that in the event the purchaser failed to make monthly payments the seller "may declare this contract void, and shall retain as liquidated damages for breach of contract all amounts paid prior to the time of such default." The contract contained the signatures of Mrs. McMillan and David M. Nichols for Chester Beach, Inc. No other signatures appeared on the contract, but the name of Joseph Mroczek was typed in as the sales representative.
At the trial Mrs. McMillan acknowledged execution of the contract and note. She then offered testimony as to statements allegedly made to her by Mroczek, but an objection by appellant's counsel was sustained. However, she then volunteered that the salesman's signature was on the contract, and the court, upon hearing this, overruled the prior objection. Mrs. McMillan then testified that she was assured by Mroczek that if she failed to pay as required she would not be held financially responsible but would simply lose the lot. In its memorandum opinion, the court held that paragraph 2, the relevant portion of which is quoted above, and the terms of the note sued upon were repugnant and that based upon Mrs. McMillan's testimony, paragraph 2 did not permit the seller to waive the breach in case of the buyer's default, but that the clause operated to void the contract and entitled the seller to retain only the installment theretofore paid as liquidated damages. The court also held, and we think properly, that the contract and note are to be read together and construed as constituting a single integrated instrument. Brown v. Fraley, 222 Md. 480, 489, 161 A.2d 128; Ahern v. White, 39 Md. 409.
Appellant first contends that the trial court was in error in granting the motion to strike the judgment by confession. Essentially
he claims the motion did not contain facts sufficient to warrant the relief sought. Rule 645 b provides, in part, that a defendant, upon receipt of a summons, may show cause within thirty days why the judgment by confession should be vacated or opened, and that the court may take "such action * * * as justice may require." A full treatment of the proper practice may be found in Keiner v. Commerce Trust Co., 154 Md. 366, 141 Atl. 121. This case has been quoted and followed even since the adoption of the rule in 1941. See Cropper v. Graves, 216 Md. 229, 233-34, 139 A.2d 721; Remsburg v. Baker, 212 Md. 465, 468-69, 129 A.2d 687; Bolotin v. Selis, 212 Md. 239, 242, 129 A.2d 130. The rule stated in the Keiner case to be applied in situations of this nature is that as to defenses going to the merits of the claim upon which the judgment rests, one must make a showing in support of his motion, by oral testimony or affidavit, sufficient to persuade the fair and reserved judgment of an ordinary man that there are adequate grounds for an actual controversy as to the merits of the case. Stankovich v. Lehman, 230 Md. 426, 432, 187 A.2d 309. As we stated there:
"If a meritorious defense is made out (by affidavits or testimony, Johnson v. Phillips, [143 Md. 16, 122 Atl. 7]), the Court should liberally exercise its equitable jurisdiction over judgments entered by confession and, on application of a defendant who prima facie shows such defense, vacate the judgment to permit a trial on the merits. [Citing cases.]"
We think there were sufficient facts stated in the sworn motion to strike, coupled with the statement submitted to the court by appellee's attorney in support of the motion, to warrant the court's action in striking out the confessed judgment. For example, to support an allegation of failure of consideration the appellee stated that the appellant knew that title to the subject property "had not and would not be conveyed." This we think raises at least an inference ...