Mount v. Massachusetts Mutual Life Insurance

796 P.2d 388 (1990) 103 Or.App. 156

Tenny MOUNT, Respondent,
v.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, a Massachusetts Corporation, Appellant, and James D. Pittman, Defendant.

A8901-00193; CA A61196.

Court of Appeals of Oregon.

Decided August 29, 1990. Argued and Submitted July 2, 1990.

Janet M. Schroer, Portland, argued the cause for appellant. With her on the briefs were Wayne A. Williamson and Schwabe, Williamson & Wyatt, Portland.

Michael A. Greene, Portland, argued the cause for respondent. With him on the brief was Rosenthal & Greene, P.C., Portland.

Before RICHARDSON, P.J., and NEWMAN and DEITS, JJ.

RICHARDSON, Presiding Judge.

Plaintiff brought this action against the defendant insurance company (defendant) and its agent, Pittman. Pittman was served personally and defendant's registered agent, Chamness, was served. Neither of them appeared, and an order of default and a default judgment were duly taken against them. Both defendants moved to set the judgment aside pursuant to ORCP 71 B(1)(a). The trial court allowed Pittman's motion but denied defendant's. Defendant appeals,^[1] and we affirm.

Defendant argues that it failed to appear because of mistake, inadvertence, surprise or excusable neglect by Chamness whose affidavit in support of defendant's motion relates, as relevant:

"I do not deny being served with the Summons and Complaint in this case on January 30, 1989, but my memory of it is not clear. As far as I can recall, I received the papers and followed my routine practice which was to give the Summons and Complaint to Susan Cusick, the office manager, or put it into her mail slot. She would then forward the papers to our home office in Springfield, Massachusetts. I believe I followed that procedure on this occasion."

Cusick said in her affidavit that her routine practice after receiving a summons and a complaint was to forward them to defendant's legal counsel in Massachusetts but that she did not recall receiving the papers in this case. Defendant also introduced the affidavits of persons in its home office and its counsel's office. They described the procedures that defendant follows when it has been served with process and indicated that they had received no papers in this case.

The trial court analogized the circumstances to Lowe v. Institutional Investors Trust, 270 Or. 814, 529 P.2d 920 (1974), where the court held that relief from default could not be granted on a mere showing that the officer of a defendant who was authorized to receive service had no recollection or record of having been served and could not find the papers in his or the defendant's files. Defendant argues that it made more of a showing than that here, that this case is more analogous to later cases than it is to Lowe and that Lowe has become questionable authority in the light of those later cases.

Defendant relies, inter alia, on Hiatt v. Congoleum Industries, 279 Or. 569, 569 P.2d 567 (1977); Wagar v. Prudential Ins. Co., 276 Or. 827, 556 P.2d 658 (1976); Hackett v. Alco Standard Corp., 71 Or. App. 24, 691 P.2d 142 (1984), rev. den. 298 Or. 822, 698 P.2d 963 (1985); and Reitz v. Coca-Cola, 36 Or. App. 487, 584 P.2d 791 (1978). We agree with defendant that those cases establish a liberal standard for relieving corporate defendants from default when process goes awry in the corporation's procedures. See also Walker v. Allied Fidelity Ins. Co., 97 Or. App. 568, 573, 777 P.2d 990, rev. den. 308 Or. 466, 781 P.2d 1215 (1989). We do not agree, however, that those cases support relief on a mere showing that the corporate officer or employee who is held out as the agent for service, and who is responsible for setting matters in motion when he receives service, cannot say to a probability what he did with the papers and whose speculation that he followed normal procedures is belied by the recollections of the other employees that they did not receive the papers. We also disagree with defendant that the relevant aspects of its showing in support of the motion amounted to anything more than that. If the default judgment in this case cannot stand, it is difficult to visualize any circumstances under which a default could be taken against a corporation for any failure to appear that falls short of a wilful refusal.

Defendant also argues that the trial court abused its discretion by denying relief to it while allowing relief to Pittman, when his was the direct misconduct, according to defendant's understanding of plaintiff's allegations, and defendant's liability could only be vicarious. We disagree. Pittman's basis for seeking relief from default was entirely different from defendant's.^[2]

Affirmed.

NOTES

[1] A final judgment was entered against defendant pursuant to ORCP 67B.

[2] Defendant does not argue that the default against it is improper on the theory articulated in Hiatt v. Congoleum Industries, supra, and State ex rel Everett v. Sanders, 274 Or. 75, 544 P.2d 1043 (1976), that a defaulting defendant is entitled both to relief from default and a favorable judgment if a co-defendant prevails on a defense that necessarily absolves both defendants from liability. That argument might be premature at this time. Whether the Hiatt and Sanders rationale might assist defendant if Pittman ultimately prevails in the action is a question that is not before us now.