Worstell v. Devine , 135 Mont. 1 ( 1959 )

MR. JUSTICE CASTLES:

This is an appeal from an order denying a motion to set aside a default judgment under the provisions of R.C.M. 1947, sec; 93-3905.

On May 15, 1956, respondents, plaintiffs below, filed a complaint to foreclose a contract for the sale of real property. Prior to the filing of the complaint, it appears from an Exhibit attached to the complaint that a notice was given by the respondents to the appellant, defendant below, on April 11, 1956, that she was in arrears under the contract and unless such indebtedness was paid her contract was forfeit. The summons and copy of the complaint was served on the appellant on May 17, 1956, and on June 7, 1956, the 21st day after service of process, the appellant’s default was entered for failure to appear. On June 19, 1956, judgment by default was entered. On June 22, 1956, the appellant served and filed a notice of motion to vacate and set aside the default and decree. With this notice, appellant’s counsel filed an affidavit, setting forth that the summons and complaint were delivered to his office by the appellant, his client, during his absence on May 21, 1956; that he did not thereafter contact his client, since he had become familiar with the facts of the case during the previous year while another action was pending between the same parties for the same cause; that he believed that process was served on appellant the •same day that the papers were delivered to his office; and that he did not discover his mistake as to the date of service until after the default was entered.

At the same time the appellant served and filed a proposed answer and counterclaim containing admissions and denials and alleging another action pending between the same parties for the same cause; that respondents breached the contract themselves by failing to execute-a warranty deed to appellant; that appellant was induced to enter into the contract by the false and fraudulent representations and concealments of respondents ; and other matters. The proposed answer and counterclaim iseeks rescission of the contract, return of the money paid by appellant to respondents, and reimbursement for improvements made by appellant.

Upon the hearing of the motion to set aside the default, July 11, 1956, respondents did not file any affidavits or present any evidence in opposition to the motion. The district court denied the motion on September 10, 1956, by an order from which this appeal is taken-.

But one specification of error is urged. It is that the district court erred and abused its discretion by refusing to relieve appellant from the default judgment taken against her through mistake, inadvertence, surprise, or excusable neglect.

The appellant urges that her counsel’s mistaken belief that service was made the same day that she delivered the papers to his office in his absence was excusable neglect.

The respondents’ argument is two-fold. First that under the circumstances such a mistake is not excusable neglect; and second, that even so,' a meritorious defense is not shown.

The statutory basis for the motion and this appeal from the order denying the motion is R.C.M. 1947, sec. 93-3905, in part providing that the “court * * * may, also, upon such terms as may be just, relieve a party or his legal representative from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise, or excusable neglect; provided, that application therefor be made within reasonable time, but in no case exceeding six months after such judgment, order, or proceeding was taken. ’ ’

The application of this statute to relief from default judgments has been before the court many times. The most recent pronouncement being in Holen v. Phelps, 131 Mont. 146, 308 Pac. (2d) 624. Certain familiar rules were reviewed in that case. Quoting from Reynolds v. Gladys Belle Oil Co., 75 Mont. 332, 340, 243 Pac. 576, 579, the court stated: “However, since, ‘it is the policy of the law to have every litigated case tried on its merits,’ judgments by default are not favored. [Citing cases.] In furtherance of justice, trial courts should, in applying the above statute to a given case, maintain and exercise that liberal spirit which prompted the Legislature to grant them this discretionary power, and, while this court will disturb the action of a trial court in opening default only in exceptional cases, ‘no great abuse of discretion by the trial court in refusing to set aside a default need be shown to warrant a reversal.’ [Citing cases.] ”

In view of these pronouncements, we shall examine whether the actions of counsel for appellant are such as to be considered excusable neglect. A review of Montana cases indicates that this court has considered varying shades of neglect as excusable.

In the early ease of Nash v. Treat, 45 Mont. 250, 253, 122 Pac. 745, 746, Chief Justice Brantly observed: “While the courts should adhere to the rule that a party who has suffered a default ought not to have relief except upon showing a substantial excuse for his apparent neglect because the adverse party is prima facie justly entitled to the advantage which he has secured by the default, yet they should not indulge in refined distinctions or assign importance to matters of form, which might result in a denial of justice.' Bach case must be determined upon its own facts; and, when the motion is made promptly and is supported by a showing which leaves the court in doubt or upon which reasonable minds might reach different conclusions, the doubt should be resolved in favor of the motion. [Citing cases.] ”

We think that reasonable minds might differ in their conclusions of the instant case and therefore resolve the doubt in favor of a trial on the merits. The attorneys for each side live and office in the same city. They knew of the activities of each other in behalf of their clients, as it appears from the record that another case between the same parties in the same cause of action, with the same counsel, was pending. Appellant’s counsel’s excuse for his neglect was, that he assumed the papers were served on his client that same day. Surely such an assumption is neglect. It appears from the affidavit that the assumption of the date of service was an honest mistake — and not one dreamed up to excuse the neglect. We hold that a sufficient showing was made of excusable neglect. See Patterson v. Patterson, 120 Mont. 127, 179 Pac. (2d) 536; Madson v. Petrie Tractor & Equipment Co., 106 Mont. 382, 77 Pac. (2d) 1038; Reynolds v. Gladys Belle Oil Co., 75 Mont. 332, 243 Pac. 576; Greene v. Montana Brewing Co., 32 Mont. 102, 79 Pac. 693; Voelker v. Golden Curry Consol. Min. Co., 40 Mont. 466, 107 Pac. 414; Pengelly v. Peeler, 39 Mont. 26, 101 Pac. 147.

For cases holding neglect inexcusable see Vadnais v. East Butte Extension Copper Mining Co., 42 Mont. 543, 113 Pac. 747; Scilley v. Babcock, 39 Mont. 536, 104 Pac. 677; Pacific Acceptance Corp. v. McCue, 71 Mont. 99, 228 Pac. 761; Robinson v. Petersen, 63 Mont. 247, 206 Pac. 1092.

In Eder v. Bereolos, 63 Mont. 363, 371, 207 Pac. 471, 473, a case decided in 1922, the court remarked as follows:

“Fifty-two decisions of this court, construing the provisions of the Code involved in this case, have been examined, and it is worthy of note that in only six of these have the decisions of the district courts in setting aside defaults been reversed, because of the insufficiency of the showing of excusable neglect. They are: Thomas v. Chambers, 14 Mont. 423, 36 Pac. 814; Chambers v. City of Butte, 16 Mont. 90, 40 Pac. 71; Scilley v. Babcock, 39 Mont. 536, 104 Pac. 677; Pearce v. Butte Electric Ry. Co., 40 Mont. 321, 106 Pac. 563; Lovell v. Willis, 46 Mont. 581, 129 Pac. 1052, 43 L.R.A.,N.S., 930, Ann. Cas. 1914B, 587; and Robinson v. Petersen [63 Mont. 247], 206 Pac. 1092.”

We observe that since 1922, the cases we have studied indicate that the decisions turn on promptness and diligence in moving to set aside the default and on whether or not a showing of a meritorious defense is made.

This court has been hesitant to impute the neglect of an attorney to his client; and has been loathe to permit this neglect to bar a hearing on the merits. Whether or not the varying shades of excusable neglect previously remarked on can be distinguished, we choose to think that where reasonable minds might differ in their conclusions of excusable neglect, the doubt should be resolved in favor of a trial on the merits.

Having held that excusable neglect existed on the showing of the appellant, we find a slight abuse of discretion by the trial court in denying the motion to set aside the judgment.

Respondent contends, that even so, there must be a meritorious defense shown. This is the rule. See Holen v. Phelps, supra, 131 Mont. 146, 308 Pac. (2d) 624, and cases cited therein. It is further the rule that the showing of a meritorious defense cannot be controverted. Holen v. Phelps, supra.

We have examined the proposed answer and find that prima facie it does set up a defense. We do not feel it apropos to discuss the merits of the answer since that matter will be better handled by the standard methods of testing in the district court by demurrer, motion, reply or otherwise.

For the foregoing reasons the order of the district court is reversed, the default set aside and the appellant permitted to file his answer.

MR. JUSTICES BOTTOMLY and ANGSTMAN, concur.