Johnson v. Matelich ( 1973 )

No. 12461
I N THE SUPREME COURT O THE STATE O MONTANA
F F
CHARLES G. JOHNSON and GUNNAR E. JOHNSON,
a p a r t n e r s h i p d / b / a Park Motors Company,
P l a i n t i f f s and Respondents,
LOUIS B. MATELICH, i n d i v i d u a l l y , MATELICH
TRAILER SALES & SERVICE, a Montana c o r p o r a t i o n ,
and ASSOCIATES FINANCIAL SERVICES, a Montana
corporation,
Defendants and A p p e l l a n t s .
Appeal from: D i s t r i c t Court of t h e Third J u d i c i a l D i s t r i c t ,
Honorable S i d G . S t e w a r t , Judge p r e s i d i n g .
Counsel of Record:
For A p p e l l a n t s :
John N . Radonich argued, Anaconda, Montana
For Respondents :
Knight, Dahood, Mackay and McLean, Anaconda, Montana
Wade J . Dahood and David M. McLean argued, Anaconda,
Montana
Submitted : November 27, 1973
Filed : &.c 1 9
Clerk
Mr. Chief J u s t i c e James T . H a r r i s o n d e l i v e r e d t h e Opinion
of t h e C o u r t .
T h i s i s a n a p p e a l by d e f e n d a n t , L o u i s M a t e l i c h , from
a n o r d e r d e n y i n g h i s motion t o s e t a s i d e e n t r y of d e f a u l t s
and a n o r d e r g r a n t i n g p l a i n t i f f s ' motion f o r e n t r y of d e f a u l t
judgments.
P l a i n t i f f s b r o u g h t two s e p a r a t e a c t i o n s i n t h e d i s t r i c t
c o u r t of t h e t h i r d j u d i c i a l d i s t r i c t . The c a s e s a r e c o n s o l i -
d a t e d f o r t h e p u r p o s e of t h i s a p p e a l b e c a u s e t h e i s s u e s r a i s e d
a r e t h e same i n b o t h c a s e s .
The f i r s t c l a i m f o r r e l i e f f i l e d by p l a i n t i f f s w a s f o r
t h e p u r p o s e of c o l l e c t i n g i n s u f f i c i e n t f u n d s c h e c k s d u e and owing
t o them i n t h e sum of $3,948.04, plus reasonable a t t o r n e y ' s fee.
P l a i n t i f f s ' c o m p l a i n t was f i l e d on J a n u a r y 27, 1971. A motion
t o d i s m i s s was f i l e d on b e h a l f of d e f e n d a n t on F e b r u a r y 5 , 1971,
by t h e law f i r m of G a r l i n g t o n , Lohn and Robinson, M i s s o u l a , Mon-
t a n a , and on F e b r u a r y 1 7 , 1971, t h e motion was d e n i e d , w i t h d e -
f e n d a n t b e i n g g r a n t e d 30 d a y s w i t h i n which t o f u r t h e r p l e a d . No
f u r t h e r p l e a d i n g s were f i l e d b u t on March 9, 1971, a s u b s t i t u -
t i o n of a t t o r n e y s was f i l e d showing t h e s u b s t i t u t i o n of t h e law
f i r m of Murray & H o l t , M i s s o u l a , Montana, a s a t t o r n e y s f o r d e -
fendant.
On August 2 6 , 1971, a n amended c o m p l a i n t was s e r v e d on
Murray & H o l t , who moved t o d i s m i s s t h e same on September 7 ,
1971. The motion was d e n i e d on September 1 5 , 1971, w i t h d e f e n d -
a n t b e i n g g r a n t e d 30 d a y s w i t h i n which t o f u r t h e r p l e a d .
he second c l a i m f o r r e l i e f was b r o u g h t by p l a i n t i f f s i n
t h e sum of $52,595.53 f o r t h e purpose of f o r e c l o s i n g l i e n s . The
c o m p l a i n t was f i l e d on F e b r u a r y 11, 1971. A motion t o d i s m i s s
was f i l e d by Murray & H o l t on May 25, 1971. On J u n e 9 , 1971,
t h e motion was d e n i e d and d e f e n d a n t was g r a n t e d 30 d a y s w i t h i n
which to further plead. In this cause Associates Financial
Services was a party defendant, and by stipulation filed on
September 14, 1972, the cause was dismissed as against Associates
Financial Services.
The following facts are the same as to both claims for
relief: On September 16, 1971, notice of taking the deposition
of defendant was filed. A consent to withdrawal of the law firm
of Murray & Holt as attorneys for defendant was signed by defend-
ant on December 9, 1971. The consent indicated that the defend-
ant would continue to appear in person until further notification
was given to plaintiffs. On the same day, the deposition of de-
fendant was taken. Defendant stated under oath that he was
represented by Mr. "Ty" Robinson, Missoula, Montana, but that Mr.
Robinson could not be present. The deposition was continued.
In the foreclosure case application was made to the clerk
of the district court for entry of default of defendant on Feb-
ruary 16, 1972. On the same day, defendant's default was entered
by the clerk of the district court. In the insufficient funds
case application to the clerk for entry of default was made on
September 20, 1972, and on the same day, defendant's default was
entered.
On October 11, 1972, affidavits by plaintiffs1 attorney
and motions for judgment by default by the court were filed in
both causes, and judgments by default by the court were signed
and filed.
On December 4, 1972, the firm of Boyd & Radonich, Anaconda,
Montana, filed motions to set aside the default and judgment in
the insufficient funds case. Affidavit of defendant was filed
on December 7, 1972. On December 13, 1972, the hearing on the
motion was held. At the hearing plaintiffs agreed to setting aside
the judgment and noticed a hearing on the motion for entry of default
judgment for December 20, 1972. On the same day, counsel for
defendant inoved the court to set aside the default judgment
in the foreclosure case and noticed a hearing on the motion for
entry of default judgment for December 20, 1972.
On December 15, 1972, the district court granted the
motions to set aside the default judgments entered on October
11, 1972 for the reason that no notice of application for entry
of default judgments was sent to the defendant. The motion to
set aside entry of defaults was denied and December 20, 1972
was set for hearing plaintiffs' motions for entry of default
judgments .
a
On December 19, 1972,/consolidated motion by defendant
to set aside entry of defaults, memorandum in support thereof,
and the answers of defendant were filed. On December 20, 1972,
hearing was held on plaintiffs1 motion for entry of default
judgments and on defendant's motion to set aside entry of defaults.
The matter was submitted to the district court on briefs, and
on December 28, 1972, Judge Sid Stewart, presiding, denied de-
fendant's motion to set aside entry of default and granted plain-
tiffs' motion for entry of default judgment.
Judgment was thereupon entered in the sum of $32,237.73
in the foreclosure action and in the sum of $5,699.46 in the
insufficient funds checks case.
Defendant presents two issues on appeal: (1) Whether
the district court erred in denying defendant's motion to set
aside the entry of defaults, and (2) whether the district court
erred in granting plaintiffs1 motion for entry of default judg-
ments.
As to the first issue defendant contends that his affidavit
filed on December 7, 1972, established good cause for setting aside
the defaults pursuant to Rule 55(c), M.R.Civ.P., which provides:
"For good c a u s e shown t h e c o u r t may s e t a s i d e
a n e n t r y of d e f a u l t and, i f a judgment by de-
f a u l t h a s been e n t e r e d , may l i k e w i s e set it
a s i d e i n a c c o r d a n c e w i t h Rule 6 0 ( b ) . * * * "
D e f e n d a n t ' s f i r s t motion t o s e t a s i d e t h e e n t r y of de-
f a u l t , f i l e d on December 4 , 1972, had been d e n i e d f o r t h e r e a s o n
t h a t under Rule 5 5 ( a ) , M.R.Civ.P. no n o t i c e of e n t r y of d e f a u l t
t h e c l e r k of t h e d i s t r i c t c o u r t i s r e q u i r e d t o be g i v e n t o t h e
defendant. T h i s i s one of t h e r e a s o n s g i v e n by t h e d i s t r i c t
c o u r t f o r d e n y i n g d e f e n d a n t ' s motion of December 1 9 , 1972. The
d i s t r i c t c o u r t was c o r r e c t , f o r no n o t i c e of e n t r y of d e f a u l t
by t h e c l e r k of t h e d i s t r i c t c o u r t i s r e q u i r e d . Sealey v.
Majerus, 149 Mont. 268, 271, 425 P.2d 70.
I n i t s o r d e r o f December 28, 1972 denying d e f e n d a n t ' s
motion t o s e t a s i d e t h e e n t r y of d e f a u l t , t h e d i s t r i c t c o u r t
d e c r e e d t h a t d e f e n d a n t f a i l e d t o show any m i s t a k e , i n a d v e r t e n c e
o r e x c u s a b l e n e g l e c t t o j u s t i f y t h e f a i l u r e t o f i l e a n answer
w i t h i n t h e t i m e g r a n t e d by t h e c o u r t a f t e r d e n y i n g t h e motions
t o dismiss.
I n t h e a f f i d a v i t r e l i e d upon by d e f e n d a n t , d e f e n d a n t
s t a t e s t h a t from t h e t i m e of t h e w i t h d r a w a l of t h e f i r m o f Murray
& H o l t on December 9 , 1971, t o t h e t i m e of h i s a f f i d a v i t , t h a t h e
had n o t been informed of any p r o c e e d i n g s b e i n g t a k e n a g a i n s t him.
The a f f i d a v i t i n d i c a t e s t h a t by r e a s o n of a c r i m i n a l a c t i o n
pending a g a i n s t him t h a t d e f e n d a n t was l e d t o b e l i e v e t h a t no
f u r t h e r c i v i l p r o c e e d i n g s were b e i n g had on b e h a l f of p l a i n t i f f s .
I n a d d i t i o n , d e f e n d a n t s t a t e s t h a t b e c a u s e of ill h e a l t h he w a s
p r o h i b i t e d from l e a v i n g h i s home t o a t t e n d t o t h e s e m a t t e r s and
h e was u n a b l e t o p e r s o n a l l y l o o k a f t e r h i s b u s i n e s s a f f a i r s .
I n h i s b r i e f d e f e n d a n t c i t e s 6 Moore's F e d e r a l P r a c t i c e ,
1 55.05 ( 2 ) where i t i s s t a t e d :
1
"The g r a n t o r d e n i a l o f a motion f o r t h e e n t r y
by t h e c o u r t of a d e f a u l t judgment l i e s w i t h i n
the sound discretion of the trial court. This
proposition is supported by good sense. And
its soundness is also demonstrable by reference
to Rule 55(c), which authorizes the trial court
to set aside an entry of default on a showing of
good cause.
'The court, in exercising its discretion may
properly consider such factors as the following:
whether the defendant's failure to plead or
otherwise defend is largely technical; whether
the plaintiff will be prejudiced, and if so, the
extent thereof; whether entry of the default judg-
ment would result in injustice."
This Court has often stated that an application to set
aside a default is addressed to the sound discretion of the trial
court and its action will not be disturbed on appeal unless it
is manifest that its discretion has been abused. Ferguson v.
Parrott, 36 Mont. 352, 92 P. 965; Robinson v. Petersun, 63 Mont.
247, 206 P. 1092; Pacific Acceptance Corp. v. McCue, 71 Mont.
99, 103, 228 P. 761; Holen v. Phelps, 131 Mont. 146, 150, 308
:r
P. 2d 62& Williams v. Superior Homes, Inc., 148 Mont. 38, 417
We point out that defendant's affidavit was filed in the
insufficient funds case. Defendant has argued here as he did
in the district court that the facts in the affidavit show good
cause as to both cases. From our review of the record we con-
clude that the district court did not err in denying defendant's
motion.
Defendant was well aware of the fact that he was the de-
fendant in the lawsuit, that a summons and complaint had been
duly served upon him, and that motions to dismiss had been filed
upon his behalf. The record clearly indicates that the defend-
ant was aware that an answer was to be filed within 30 days from
the denial of his two motions to dismiss.
Defendant makes the argument that his failure to further
plead was technical because he was not represented by counsel at
t h e e n t r y of t h e d e f a u l t s . The r e c o r d shows t h e o p p o s i t e . De-
f e n d a n t w a s r e p r e s e n t e d by c o u n s e l a t the t i m e t h e m o t i o n s t o
d i s m i s s w e r e d e n i e d and f o r a t l e a s t s i x months t h e r e a f t e r .
When d e f e n d a n t a p p e a r e d a t t h e d e p o s i t i o n , h e s t a t e d t h a t h e had
r e p l a c e d h i s c o u n s e l , Murray & Holt, with M r . "Ty" Robinson.
There i s no n o t i c e i n t h e r e c o r d t h a t Boyd & Radonich had assumed
t h e r o l e of d e f e n d a n t ' s a t t o r n e y .
The f a c t i s r e g r e t t a b l e t h a t d e f e n d a n t s u f f e r e d ill h e a l t h ,
y e t t h i s d o e s n o t e x c u s e h i s f a i l u r e t o p l e a d , e s p e c i a l l y con-
s i d e r i n g t h e f a c t t h a t he was r e p r e s e n t e d by a t t o r n e y s t h r o u g h o u t .
The r e c o r d f u r t h e r i n d i c a t e s t h a t t h e c r i m i n a l proceed-
i n g s were n o t f i l e d u n t i l September, 1972. Defendant, however,
does n o t a t t e m p t t o e x p l a i n why no answers were f i l e d p r i o r t o
that time.
Defendant h a s made no showing of why h e f a i l e d t o f i l e
a n answer w i t h i n t h e t i m e g r a n t e d by t h e d i s t r i c t c o u r t . De-
f e n d a n t now a s s e r t s t h a t he w i l l be p r e j u d i c e d b e c a u s e h e h a s a
good d e f e n s e t o t h e c l a i m s and now w i l l be u n a b l e t o a s s e r t t h e
defense. I f d e f e n d a n t i s i n any way p r e j u d i c e d , t h e r e c o r d
c l e a r l y shows t h a t i t i s by h i s own f a i l u r e and d i s r e g a r d t o
a s s e r t h i s r i g h t s when a v a i l a b l e t o him.
D e f e n d a n t ' s second i s s u e i s t h a t t h e d i s t r i c t c o u r t e r r e d
i n g r a n t i n g p l a i n t i f f s ' motion f o r e n t r y of d e f a u l t judgments.
The d i s t r i c t c o u r t o r d e r e d p l a i n t i f f s ' motion g r a n t e d
f o r t h e r e a s o n t h a t d e f e n d a n t f a i l e d t o comply w i t h t h e o r d e r s
o f t h e d i s t r i c t c o u r t r e g a r d i n g f i l i n g of any answer u n t i l a f t e r
p l a i n t i f f s h a d f i l e d a motion f o r e n t r y of d e f a u l t judgment and
had n o t i c e d t h e motion f o r h e a r i n g .
The d i s t r i c t c o u r t ' s r e a s o n i n g i s c o n s i s t e n t w i t h o u r
h o l d i n g i n S e a l e y , where a t page 271 w e s a i d :
" * * * Defendants1 contention 2 is likewise with-
out merit. Their answers were not filed until
they had received notice of plaintiffls motion for
default judgment. The provisions of Rule 55(b) (2)
would be useless if defendants could remain in
default as long as they desired and then prevent
the judgment by default by merely filing the proper
pleading in the period between the notice and the
hearing on the motion for default judgment.
"Defendants were given the opportunity to appear
at the hearing on the motion for judgment by
default and to resist such motion. Under Rule
55(c) defendants were entitled to move to set
aside the entry of default for 'good cause shown'
and to move to set aside the judgment by default
.
under Rule 60 (b) "
In the instant case defendant's answers were not filed
until the day before the hearing on the motions. This procedure
is clearly inconsistent with our decision in Sealey.
For the reason that the district court did not find good
cause for defendant's failure to file his answer within the time
required and for the reason that defendant cannot correct his
default by filing his answer between the time of notice and the
hearing on the motion, the district court was not in error. There
has been no showing that the district court abused its discretion.
The orders of the
Chief Justice