Restarting sendmail fails with "No local mailer defined" error.

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Issue

Sendmail outputs following errors when restarting:

# /etc/rc.d/init.d/sendmail restart
Shutting down sendmail: [ OK ]
Shutting down sm-client: [FAILED]
Starting sendmail: 554 5.0.0 No local mailer defined
554 5.0.0 QueueDirectory (Q) option must be set
[FAILED]
Starting sm-client: [ OK ]

Environment

Red Hat Enterprise Linux 5
sendmail
sendmail-cf

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