Booth v. Central States Mut. Ins. Ass'n

• Decision Date: 17 October 1944
• Docket Number: 46549.
• Citation: 15 N.W.2d 893,235 Iowa 5
• Parties: BOOTH v. CENTRAL STATES MUT. INS. ASS'N.
• Court: Iowa Supreme Court

15 N.W.2d 893

235 Iowa 5

BOOTH v. CENTRAL STATES MUT. INS. ASS'N.

No. 46549.

Supreme Court of Iowa

October 17, 1944

G C. Stuart, of Chariton, for appellant.

H F. Garrett, of Corydon, for appellee.

BLISS Justice.

The appellant, on April 6, 1942, insured the appellee against the loss by fire of a certain panel truck, during the following year. On March 25, 1943, the truck was destroyed by fire. The appellant refused to pay the loss for two reasons. The first one being that the truck which was burned was not the one described in and covered by the policy. The second reason was that appellee had sold the truck prior to the time it was burned. The refusal to pay the loss and the reasons therefor were made known to the appellee when claim for the loss was made. A number of letters in regard to the matter passed between the attorney for the appellee and Mr Wilson, the vice-president and secretary of the appellant. In his letters the attorney admitted that the truck, through the mutual mistake of the insured and the insurer, had been incorrectly described in the policy, but that the truck which burned was the truck which was insured and which the parties intended to be insured. Respecting appellant's contention that the appellee had sold the truck before it was burned the attorney conceded that the appellee had been negotiating with a purchaser for the sale of the truck, but the sale was not completed, and the appellee was the owner of and in possession of the truck when it was burned.

The first letter written by the attorney to the appellant was on April 7, 1943. On the following day, Mr. Wilson replied, with some sarcasm, that he had already written 'our insured' denying liability. On April 28, 1943, appellee's attorney wrote the appellant suggesting that it reconsider its rejection of the claim. On April 30, 1943, Mr. Wilson wrote this short letter: 'Received your letter in regard to the above claim and there are so many reasons why we should not pay this claim that we don't feel it necessary to go into a lot of correspondence over it. We think all that is necessary to say is that we are denying liability and do not intend to pay.' On May 8, 1943, the attorney wrote the appellant acknowledging its letter of April 30th, and stating: 'I regret your rejection of this claim for it will now be necessary for me to file suit against you at an early date. I do not wish to file such suit without giving you another opportunity to adjust this claim. I shall assume, if I do not hear from you within ten days, that you propose to stand upon your objection.'

Appellant did not reply to this letter within the ten-day limit, and the attorney prepared an original notice in this action for the term of the Wayne District Court commencing on September 6, 1943, and it was duly served on the appellant by service upon its president and treasurer, E. A. Hayes, on May 21, 1943. On the same day this notice was served upon Mr. Hayes, Mr. Wilson, the vice-president and secretary, wrote a letter to appellee's attorney, expressing surprise that he insisted on pushing the claim, and further stated: 'It looks to me that it would be too bad for Mr. Booth to spend money in a lawsuit, trying to recover on his insurance on a property that he did not own as it would be expensive money paid out eventually for nothing. As you no doubt know, the Insurance Department wouldn't allow us to pay the claim if we wanted to. The only way we could pay it was after we had gone through all the courts and we had lost and the court had ruled that we should pay for property that our assured had sold previous to the time of the accident and that we should pay money to a party that we did not have insured. * * * I am sending a copy of this letter to our insured as we want to be fair with him, and we don't want him spending money in lawsuits without first being fairly warned as to what he is going into. You know you can't try lawsuits for nothing and especially when it seems to be necessary to carry it so far in court. It would be required for us to do that so as to convince the Department that it was a claim we should pay. It would not only be expensive for him but for us. * * *.'

This letter mailed to Mr. Booth, intimating that his attorney was not fairly advising him, was sent with the purpose and hope of deterring him from going into court to collect his claim. Mr. Booth evidently thought he had an honest claim which he was willing to spend money to establish if necessary. On August 13, 1943, he filed his petition alleging the payment of the premium, the execution of the policy intended by himself and the appellant to cover the truck which was burned and which was registered in his name in Wayne County, and his ownership of the truck at the time of its destruction. He prayed that the policy be reformed so as to correctly describe this truck and for judgment for $500 and for general equitable relief.

The appellant failed to plead or to appear, as so notified in the original notice, and required by statute, on September 7, 1943, the second day of the September Term. Default was taken at this time against the appellant and on September 14, 1943, the appellee supported the allegations of his petition by proof submitted to the Judge, who later heard and denied appellant's motion to set aside the default. Judgment and decree was rendered on September 15, 1943 for the appellee, reforming the policy as prayed, and for $500. Appellee's attorney notified appellant of the judgment by letter dated September 23, 1943, and on October 2, 1943, appellant filed its motion to set aside the default. On October 16th it filed an amendment to the motion with affidavits of Hayes and Wilson, and on February 2, 1944 a second amendment was filed which simply contained a verification of the motion and first amendment by appellant's attorney. After hearing on the last date the court, on February 3, 1944, filed its opinion overruling the motion.

The motion is based upon rule 236 of the Civil Procedure Rules, which rule provides for setting aside defaults. The motion was timely filed. The rule, so far as pertinent, states: 'On motion and for good cause shown, and upon such terms as the Court prescribes, but not ex parte, the Court may set aside a default or the judgment thereon, for mistake, inadvertence, surprise, excusable neglect or unavoidable casualty. * * *.'

The ground upon which appellant relies is 'excusable neglect.'

Rule 236 superseded section 11589, Code of 1939, which provided 'Default may be set aside on such terms as to the court may seem just, among which must be that of pleading issuably and forthwith, but not unless an affidavit of merits is filed, and a reasonable excuse shown for having made such...