Avondale On Hayden, Inc. v. Hall

• Decision Date: 02 February 1983
• Docket Number: No. 13594,13594
• Citation: 658 P.2d 992,104 Idaho 321
• Parties: AVONDALE ON HAYDEN, INC., an Idaho Corporation; Kermit D. Petersen and Katherine M. Petersen, his wife; Donald E. Babcock and Mary Jane Babcock, his wife; Donald H. Klages and Violet Klages, his wife; and Robert Turnipseed and Clara B. Turnipseed, his wife, Plaintiffs-Respondents, v. William HALL & "Jane Doe" Hall, his wife, Defendants-Appellants, and Paul F. Walters, a/k/a Walter F. Pool and "Jane Doe" Walters, his wife; Win M. Self and "Jane Doe" Self, his wife; and Aera Lee Pool, a single woman, Defendants.
• Court: Idaho Court of Appeals

Page 992

658 P.2d 992

104 Idaho 321

AVONDALE ON HAYDEN, INC., an Idaho Corporation; Kermit D. Petersen and Katherine M. Petersen, his wife; Donald E. Babcock and Mary Jane Babcock, his wife; Donald H. Klages and Violet Klages, his wife; and Robert Turnipseed and Clara B. Turnipseed, his wife, Plaintiffs-Respondents, v. William HALL & "Jane Doe" Hall, his wife, Defendants-Appellants and Paul F. Walters, a/k/a Walter F. Pool and "Jane Doe" Walters, his wife; Win M. Self and "Jane Doe" Self, his wife; and Aera Lee Pool, a single woman, Defendants.

No. 13594.

Court of Appeals of Idaho.

Feb. 2, 1983.

Thomas A. Mitchell and Michael J. Vrable, Coeur d'Alene, for defendants-appellants.

David A. Frazier, Coeur d'Alene, Kenneth D. Carpenter (Underwood, Campbell, Brock & Cerutti, P.S.), Spokane, Wash., for plaintiffs-respondents.

BURNETT, Judge.

This is an appeal from an order refusing to set aside a default judgment. Cases of this type typically are assigned to the Court of Appeals. In this opinion, we set forth the general standards governing our appellate review of such cases; and we affirm the order at issue here.

I

Before examining the facts of this case, we address the question of what legal standards should be applied. The criteria for granting relief from a judgment are plainly enunciated in I.R.C.P. 60(b). ¹ These criteria guide the decision made by a trial court, in the first instance, on a motion for relief. However, the standards governing appellate review of this decision are not so plain. We are confronted with a trinity of seemingly contradictory principles--(1) that the trial court's discretion will not be disturbed unless abused, (2) that an appellate court may substitute its own discretion upon a record consisting entirely of documentary evidence, and (3) that findings of fact by a trial court shall not be set aside on appeal unless clearly erroneous. Our task is to synthesize these principles into a coherent standard of appellate review.

A trial court's discretionary authority, when deciding whether to relieve a party from a judgment entered by default, has deep historical roots. In Holland Bank v. Lieuallen, 6 Idaho 127, 53 P. 398 (1898), our Supreme Court held:

The setting aside of a default [and judgment] is a matter of discretion, reposed in the trial court, whose action will not be disturbed on appeal, unless there has been an abuse of such discretion. [6 Idaho at 130, 53 P. at 398.]

However, this rule has long been subject to an exception. The exception arose from a general principle, advanced early in this century, that where evidence in any proceeding is entirely documentary, the case would be considered on appeal as though it were being heard or tried for the first time. See Roby v. Roby, 10 Idaho 139, 77 P. 213 (1904). ² The Roby principle spawned a corollary in Parsons v. Wrble, 19 Idaho 619, 115 P. 8 (1911), where the Supreme Court held that if a motion for relief from a default judgment is submitted upon entirely written evidence, the appellate court can make an original examination of the record and exercise its own discretion in determination of the issue presented.

Many, if not most, requests for relief from default judgments are submitted entirely upon affidavits or other documentary evidence. Consequently, Parsons has been followed in a substantial number of appellate decisions including, most recently, Wood v. Wood, 100 Idaho 387, 597 P.2d 1077 (1979). Parsons, and the Roby principle upon which it was based, have created a tension between the traditional doctrine that discretionary decisions will be disturbed on appeal only when discretion has been abused, and the notion that trial court discretion should be displaced through the exercise of appellate discretion whenever the evidence is wholly documentary.

To resolve this tension we must examine critically the underlying principle of Roby. The starting point is to recognize a difference between the functions of trial courts and those of appellate courts. Trial courts find facts and apply law to the facts found. Appellate courts determine the correctness of the law applied, but their review of factual findings is limited. Rule 52(a) of the Idaho Rules of Civil Procedure, adopted in 1958, provides that findings by a trial court shall not be disturbed unless clearly erroneous. ³ This rule, on its face, applies to all cases regardless of whether the evidence submitted to the trial court is documentary or testimonial. By its own terms, Rule 52(a) is strengthened, but not limited, by regard for a trial court's special opportunity to evaluate the credibility of witnesses who appear and testify. Restraint in appellate review of factual questions is not confined to credibility determinations. Rather, it is a general concept underlying the differentiation of trial and appellate courts. T-Craft Aero Club, Inc. v. Blough, 102 Idaho 833, 837, 642 P.2d 70, 74 (Ct.App.1982); see also Ustick v. Ustick, 103 Idaho ---, 657 P.2d 1083 (Ct.App.1983). It is the structural anchor of the familiar axiom that a trial court, not an appellate court, resolves conflicting evidence and determines the weight, credibility and inferences to be drawn from the evidence. E.g., Angleton v. Angleton, 84 Idaho 184, 370 P.2d 788 (1962).

The restrained standard of appellate review of factual issues, presently mandated by Rule 52(a), stands in stark contrast to the suggestion in Roby, that a case involving wholly documentary evidence should be considered on appeal as though it were being presented for the first time. Our research indicates that Roby never has been overruled, but that it has not been cited for the principle discussed here since Perry v. Perkins, 73 Idaho 4, 245 P.2d 405 (1952). Perry, in turn, appears to have been cited for the Roby principle only once since Rule 52(a) was adopted. In Pharris v. State, 91 Idaho 456, 424 P.2d 390 (1967), the Supreme Court applied the principle to a single issue--indigency of a criminal defendant who sought appointment of an attorney--upon which the evidence was documentary.

The atrophied function of the Roby principle, following adoption of I.R.C.P. 52(a), has its analogue in the federal system. Until the 1960's, some federal appellate courts applied a de novo standard of review to findings of fact in cases where the evidence was wholly documentary. See cases collected in 9 C. Wright & A. Miller, Federal Practice and Procedure § 2587, pp. 742-44 n. 30 (1971) and Supp.1982). However, the de novo standard had been criticized by the Advisory Committee on the Federal Rules of Civil Procedure, as being contrary to the plain language and intent of federal Rule 52(a), which resembles I.R.C.P. 52(a). See Committee Note of 1955 to Proposed Amendments 51-54, as quoted in 5A J. Moore, Moore's Federal Practice p 52.01 at pp. 2608-10 (2d ed. 1982). Moreover, the United States Supreme Court has held that the "clearly erroneous" standard of review, under federal Rule 52(a), applies to findings based upon either testimonial or documentary evidence. E.g., United States v. Singer Mfg. Co., 374 U.S. 174, 194-95 n. 9, 83 S.Ct. 1773, 1783-84, n. 9, 10 L.Ed.2d 823 (1963); United States v. United States Gypsum Co., 333 U.S. 364, 394, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948).

Consequently, the modern trend among federal appellate courts has been away from de novo review and toward application of the "clearly erroneous" rule to findings of fact, even where the evidence is documentary. See cases collected in 9 C. Wright & A. Miller, supra, pp. 745-47 n. 33. As stated by the Court of Appeals for the Ninth Circuit Rule 52(a) should be construed to encourage appeals that are based on a conviction that the trial court's decision has been unjust; it should not be construed to encourage appeals that are based on the hope that the appellate court will second-guess the trial court. Rule 52(a) explicitly[,] clearly applies [even] where the trial court has not had an opportunity to judge of the credibility of the witnesses.

Lundgren v. Freeman, 307 F.2d 104, 114 (9th Cir.1962).

In view of the receding importance of the Roby principle in Idaho, and the apparent demise of the de novo review standard in the federal system, we believe the time has come to re-examine the corollary of Roby which was adopted in Parsons v. Wrble, supra. We can no longer accept uncritically the rule of Parsons, that if a motion for relief from a default judgment is submitted upon entirely written evidence, the appellate court should make an original evaluation of the record and exercise its own discretion as though the matter were being considered for the first time on appeal.

A motion for relief from a default judgment invokes both the fact-finding and law-applying functions of the trial court. It requires the court to determine the facts concerning the circumstances of the default, and to apply the criteria of I.R.C.P. 60(b) to the facts found. Appellate restraint, in review of such factual determinations, is consistent with the principles embodied in Rule 52(a) and with the traditional principle of deference to trial court discretion in deciding whether to grant relief from default judgments. We believe these important principles are unduly damaged by the broad suggestion in Parsons and its progeny, that where the evidence in proceedings to set aside a default judgment is wholly documentary, an appellate court may displace both the fact-finding and law-applying functions of the trial court. In our view, the rule of Parsons should be narrowed to mean that, although an appellate court may draw its own impressions from evidence entirely in writing, it will not substitute those impressions for findings of fact by the trial court unless the findings below are deemed to be clearly erroneous. This formulation brings the rule of Parsons into greater accord with the basic principles of trial court discretion in default cases and of deference to trial court findings...