Baker v. Goldsmith

• Decision Date: 23 May 1979
• Docket Number: No. B-7793,B-7793
• Citation: 582 S.W.2d 404
• Parties: Vernon R. BAKER et ux., Petitioners, v. Edward GOLDSMITH et ux., Respondents.
• Court: Texas Supreme Court

Page 404

582 S.W.2d 404

Vernon R. BAKER et ux., Petitioners, v. Edward GOLDSMITH et ux., Respondents.

No. B-7793.

Supreme Court of Texas.

May 23, 1979.

Eskew, Brady, Womack & Muir, R. Douglas Muir, Austin, for petitioners.

Kendall, Randle, Finch & Osborn, Terrence Kendall, Austin, for respondents.

McGEE, Justice.

This is a proceeding in the nature of a bill of review. The trial court denied the requested equitable relief from a prior default judgment, but the court of civil appeals reversed the judgment and remanded the cause for trial. 567 S.W.2d 590. We affirm the judgment of the court of civil appeals.

The original suit underlying this bill of review was filed by Vernon R. Baker and his wife, Audane Baker, against Edward and Juliette Goldsmith, Mark S. Barrow, and the Goldsmiths' son, Warren. The Bakers alleged that the four defendants entered into a conspiracy to sell them a gift shop franchise to be located in Austin, Texas. Specifically, the Bakers contended that the Goldsmiths and Barrow made certain fraudulent misrepresentations concerning the franchise and that in reliance thereon the Bakers paid $10,000 for the franchise in addition to other expenses incurred in anticipation of establishing the shop.

Upon receipt of citation to appear in the Baker suit, Edward Goldsmith sent a letter to the district judge of the court in which the suit was pending, substantially denying the material allegations in the Baker petition. A certified mail receipt returned to the Goldsmiths before appearance day indicates that the letter was received by a Travis County Courthouse mail room employee on December 11, 1973. On January 4, 1974 the Bakers' cause of action against Warren Goldsmith and Mark Barrow was severed from the suit, and neither of these defendants has participated further in the original suit or the subsequent bill of review. On the same day a default judgment was rendered against Edward and Juliette Goldsmith for $44,699.66.

On March 10, 1974, Edward and Juliette Goldsmith filed this bill of review praying that the default judgment be set aside. In their petition they alleged that the aforementioned letter constituted a timely filed answer to the Baker suit, and that the answer had been misplaced at the courthouse after its receipt. The petition also stated that the Goldsmiths received no notice of the judgment until more than 30 days after its rendition, thus precluding the timely filing of a motion for new trial. As a meritorious defense to the original suit the Goldsmiths alleged:

(1) that they had made no misrepresentations;

(2) that any representations made by them to the Bakers were true;

(3) that they had no franchise contract with the Bakers;

(4) that they had not received any money in exchange for a gift shop franchise;

(5) that if the Bakers paid a franchise fee, it was either to the two former defendants, Warren Goldsmith and Mark Barrow, or to a corporation controlled by them, that the Goldsmiths were not part of that corporation and had no knowledge of any moneys received by that corporation;

(6) that they had no knowledge of representations made by Warren Goldsmith, if any, to the Bakers;

(7) that they had no knowledge of the whereabouts of Warren Goldsmith.

After a trial before the court where evidence and testimony was presented by both sides, the court found as a matter of fact that the letter was received and forwarded to the judge of the court in which the suit was pending, but that it had subsequently "disappeared" through "no fault" of the Goldsmiths. The court further concluded that such letter constituted an "answer" to the Baker suit, but that the delivery of the instrument to the judge did not constitute a filing thereof. It was also found that the Goldsmiths received no notice of the January 4, 1974 default judgment until February 10, 1974, more than 30 days after its rendition. The court concluded, however, that a meritorious defense had not been established by a preponderance of the evidence, and rendered judgment that the Goldsmiths take nothing. Over a dissenting justice, the court of civil appeals reversed and remanded the case, holding that the trial court erred in requiring the Goldsmiths to establish their meritorious defense by a preponderance of the evidence. 567 S.W.2d 590. We granted the Bakers' application for writ of error.

A bill of review is an independent equitable action brought by a party to a former action seeking to set aside a judgment, which is no longer appealable or subject to motion for new trial. See McEwen v. Harrison, 162 Tex. 125, 131-32, 345 S.W.2d 706, 709-10 (1961); Comment, Setting Aside Judgments Against the Absent Defendant, 37 Texas L.Rev. 208, 221 (1958). Rule 329b(b) of the Texas Rules of Civil Procedure provides that: "After the expiration of thirty (30) days from the date the judgment is rendered or motion for new trial overruled, the judgment cannot be set aside except by bill of review for Sufficient cause, filed within the time allowed by law." Tex.R.Civ.P. 329b(5) (emphasis added). The rules do not define "sufficient cause," but Texas courts have enunciated several requirements that must be satisfied. In Alexander v. Hagedorn, 148 Tex. 565, 568, 226 S.W.2d 996, 998 (1950), this court stated that in order to be successful upon a bill of review the complainant must "allege and prove: (1) a meritorious defense to the cause of action alleged to support the judgment, (2) which he was prevented from making by the fraud, accident or wrongful act of the opposite party, (3) unmixed with any fault or negligence of his own." Accord, Texas Machinery & Equipment Co. v. Gordon Knox Oil & Exploration Co., 442 S.W.2d 315, 317-18 (Tex.1969); Gracey v. West, 422 S.W.2d 913, 915 (Tex.1968). The second requirement of Hagedorn, however, has been qualified in later cases. To the extent there is reliance on the erroneous official information given by an official court functionary preventing the filing of a motion for new trial, the bill of review plaintiff is excused from showing the wrongful conduct, fraud or accident of the opposite party. Gracey v. West, 422 S.W.2d 913, 915-16 (Tex.1968) (citing Hanks v. Rosser, 378 S.W.2d 31, 34 (1964)).

The Bakers first contend that there are no pleadings or proof to support the conclusion that the prior judgment was rendered as the result of fraud, accident or wrongful act of the opposite party unmixed with any negligence on the part of the Goldsmiths. This contention is without merit. As aforementioned, in Gracey v. West, 422 S.W.2d 913 (Tex.1968), this court held that where an officer of the court gives wrong information which prevents the filing of a motion for new trial, the complainant in a bill of review is excused from showing that the judgment was rendered as the result of the wrongful conduct of the opposite party. Id. at 915 (citing Hanks v. Rosser, 378 S.W.2d 31, 34 (Tex.1964)). Consistent with this, it is also acceptable for the complainant to allege and prove that he was prevented from presenting his contentions in the former action by a mistake or error of the court or a functionary thereof in the discharge of official duties. Vogel v. Vogel, 405 S.W.2d 87, 90 (Tex.Civ.App. San Antonio 1966, no writ); Texas State Board of Examiners in Optometry v. Lane, 358 S.W.2d 636, 637 (Tex.Civ.App. Fort Worth 1962, writ ref'd n. r. e.); 4 R. McDonald, Texas Civil Practice in District and County Courts § 18.27 (1970).

Turning to the record, we find that there are pleadings, proof, and a finding that the letter was misplaced without the fault of the Goldsmiths after it was received at the Travis County Courthouse. We agree with the conclusion of the trial judge that this letter constituted an answer, and it is to be assumed that the presiding judge entered the default judgment against the Goldsmiths under the mistaken belief that the Goldsmiths had indeed failed to answer. These circumstances obviate the necessity of pleading and proving accident, fraud or wrongful act of the Bakers.

The Bakers next contend that the Goldsmiths, as bill of review complainants, had the burden of establishing their meritorious defense by a preponderance of the evidence. The Goldsmiths respond that the court of civil appeals correctly held that the complainants were only required to present probative evidence that the result would have been different whereupon the parties are relegated to their original status of plaintiff and defendant with the burden resting upon the plaintiff to make his case.

While this court has never confronted the exact issue presented by these contentions, several cases are helpful to an analysis of the problem. In McEwen v. Harrison, 162 Tex. 125, 345 S.W.2d 706 (1961), it was stated that:

. . . If . . . a defendant has not been negligent in suffering a default judgment to be rendered against him by a court which had jurisdictional power to render it, or in permitting it to become final, and if he has a meritorious defense to the suit, He may still have the suit tried on its merits with the right to require the plaintiff to prove his case and the corresponding right to establish his defense. Texas Employers' Ins. Ass'n v. Arnold, 126 Tex. 466, 88 S.W.2d 473, 474; Wear v. McCallum, 119 Tex. 473, 33 S.W.2d 723, 724.

Id. 345 S.W.2d at 710 (emphasis added); Accord, Texas Machinery & Equipment Co. v. Gordon Knox Oil & Exploration Co., 442 S.W.2d 315, 318 (Tex.1969). This language does not indicate what quantum of proof is required to show that the bill of review complainant "Has a meritorious defense," but it is clear that at some point in the proceeding the parties will revert to their original status as plaintiff and defendant with the burden on the plaintiff to prove his case.

In an earlier case the court of civil appeals in Crosby v. Di Palma, 141 S.W. 321 (Tex.Civ.App. El Paso 1911, writ ref'd), concluded that a good and meritorious defense had been presented when the complainant had...