Burns v. Madden

• Decision Date: 22 December 1980
• Docket Number: No. 80-261,80-261
• Citation: 609 S.W.2d 55,271 Ark. 572
• Parties: B. L. BURNS, Jr., Appellant, v. M. L. MADDEN, D/B/A Shamrock Club, Appellee.
• Court: Arkansas Supreme Court

Page 55

609 S.W.2d 55

271 Ark. 572

B. L. BURNS, Jr., Appellant, v. M. L. MADDEN, D/B/A Shamrock Club, Appellee.

No. 80-261.

Supreme Court of Arkansas.

Dec. 22, 1980.

Batchelor & Batchelor by Fines F. Batchelor, Jr., Van Buren, for appellant.

Everett & Whitlock by John C. Everett, Prairie Grove, for appellee.

HOLT, Justice.

This appeal results from the trial court's denying appellant's motion to quash and vacate a default judgment.

On November 7, 1978, the appellee filed an action against the appellant asserting he had suffered property damages to his building as a result of the negligent operation of an automobile by appellant and that a separate defendant had negligently entrusted the automobile to appellant. On November 13, 1978, a summons was served on him. On January 8, 1979, a default judgment for $5,000, plus costs, was rendered against him. On January 9 a summons, issued 4 days earlier, was served on the separate defendant, the owner of the automobile. On January 23, 1979, a motion to quash service was filed on behalf of both the appellant and the separate defendant. On March 9, 1979, during term time, appellant amended this pleading, seeking to set aside the judgment. The court treated the supplemental pleading as a motion to vacate and, after a hearing, overruled the motion.

We need only to discuss appellant's contention that the court erred in not setting aside the default judgment for "excusable neglect, unavoidable casualty and other just cause." Ark.Stat.Ann. § 29-401 (Repl. 1962). ^* It is within the sound discretion of the trial court to grant or deny a motion to set aside a default judgment, and the question on appeal is whether there has been an abuse of that discretion. Johnson v. Jett, 203 Ark. 861, 159 S.W.2d 78 (1942); and § 29-401, supra. Default judgments are not favorites of the law and should be avoided when possible. Winters v. Lewis, 260 Ark. 563, 542 S.W.2d 746 (1976); and Perry v. Bale Chevrolet Co., 263 Ark. 552, 566 S.W.2d 150 (1978). "The granting of a default judgment is a harsh and drastic action and may deprive a party of substantial rights." Winters v. Lewis, supra.

Appellee's suit was filed by an attorney, who had previously represented appellant on an unrelated matter in which he had been given power of attorney for appellant during a period of time from 1976 to 1977. There was some evidence he had also represented him in the spring of 1978, 7 months prior to the filing of this action, on a DWI charge. When appellant received the summons on November 13, 1978, he telephoned his former attorney, who informed him that he was representing the appellee in the matter, could not discuss the suit with him, and advised appellant to get an attorney to represent him. When appellant said he had insurance coverage, the attorney explained the carrier's duty to defend him and advised appellant to contact the carrier. According to appellant, the attorney did not advise him to hire a lawyer but told him he wanted the name of the insurance company because he wanted to collect from it. However appellant admitted he knew by the end of this conversation that the attorney was representing the appellee and would not represent him. It is undisputed that appellant called back that same day and left the name of his insurance carrier with the attorney's secretary. That day the attorney wrote the insurance carrier, sending a copy of the complaint. About a week later, or within the 20 days after service of process, the carrier advised him by telephone and letter that there was no insurance coverage on the vehicle. The attorney did not pass this information on to the appellant. Appellant testified that when he called back and gave the name and telephone number of the insurance company to the attorney's secretary, appellant "thought that was the end of it." After receiving notice of the default judgment, appellant then consulted his present attorney, who promptly filed the motion to quash service, as indicated, and later amended the pleading to vacate judgment.

When it is demonstrated there exists a just cause for a defendant not filing a timely answer, a default judgment should be set aside. Barkis v. Bell, 238 Ark. 683, 384 S.W.2d 269 (1964). As a proper guide to the exercise of discretion, the basic underlying policy is to have each case determined on its merits because, in the normal course of litigation, substantial rights are preserved and justice between the parties is best served by this policy. In view of the former relationship between appellant and appellee's attorney and appellant's promptness in questioning the default judgment, we are of the view that there was an honest and unfortunate misunderstanding which constituted a just cause for not filing a timely answer. Therefore, the default judgment is set aside and vacated.

Reversed and remanded.

FOGLEMAN, C. J., and HICKMAN, J., dissent.

FOGLEMAN, Chief Justice, dissenting.

Reversal of the action of the circuit court in denying the motion to set aside the default judgment in this case is a reversion to the rather chaotic situation that existed prior to the legislative reform undertaken a quarter of a century ago. A default judgment could not be set aside under Ark.Stat.Ann. § 29-401 (Repl. 1962) except for excusable neglect, unavoidable casualty or other just cause. This statute which is the combination of Acts 49 and 351 of 1955, as amended by Act 53 of 1957, seriously impaired previous holdings that had accepted almost any excuse given for failure of a defendant to file a timely pleading. See Pyle v. Amsler, 227 Ark. 785, 301 S.W.2d 441; Walden v. Metzler, 227 Ark. 782, 301 S.W.2d 439. In Walden, it was clearly stated that we were not foreclosing the possibility of relief to a defendant who has been prevented by unavoidable casualty from making his defense. In the absence of unavoidable casualty, excusable neglect or other just cause, the court had no discretion to set aside the default.

In Moore v. Robertson, 242 Ark. 413, 413 S.W.2d 872, where, as here, appellant moved to set aside a default judgment rendered during the same term, we said:

At one time our statutes were markedly liberal in permitting trial courts to grant extensions of time for the filing of defensive pleadings and to set aside default judgments within the term. That liberality was greatly curtailed by the enactment of Acts 49 and 351 of 1955. Those acts were construed in Walden v. Metzler, 227 Ark. 782, 301 S.W.2d 439 (1957), and Pyle v. Amsler, 227 Ark. 785, 301 S.W.2d 441 (1957). We held that the 1955 statutes were mandatory in requiring a defendant to plead within the time fixed by law and in allowing a trial court to set aside an ensuing default judgment only upon a showing of unavoidable casualty.

Some two months before the Walden and Pyle cases were decided the legislature adopted Act 53 of 1957, which relaxed the strictness of the 1955 acts to the extent of declaring that "nothing in this Act shall impair the discretion of the Court to set aside any default judgment upon showing of excusable neglect, unavoidable casualty or other just cause." Ark.Stat.Ann. § 29-401 (Repl. 1962). In the case at hand there is no issue of unavoidable casualty. The question is whether the trial court abused its discretion in finding either excusable neglect or other just cause for vacating the judgment.

What we said in Robertson v. Barnett, 257 Ark. 365, 516 S.W.2d 592, is equally appropriate here, viz:

Appellants quote from decisions of this court prior to Acts 1955, No. 49, and from decisions of other courts construing similar statutes to the effect that the delay in responding to the complaint came about through "excusable neglect, unavoidable casualty or other just cause." The history of the lax procedure before Acts 1955, No. 49, and the effect and purpose of the change brought about by Acts 1955, No. 49 can be found in Walden v. Metzler, 227 Ark. 782, 301 S.W.2d 439 (1957) and Pyle v. Amsler, Judge, 227 Ark. 785, 301 S.W.2d 441 (1957). The effect of the 1957 Amendment, Acts 1957, No. 53, which provided: ".... that nothing in this Act shall impair the discretion of the Court to set aside any default judgment upon showing of excusable neglect, unavoidable casualty or other just cause," has been considered in Interstate Fire Insurance Co. v. Tolbert, 233 Ark. 249, 343 S.W.2d 784 (1961); Moore Adm's v. Robertson, 242 Ark. 413, 413 S.W.2d 872 (1967); and Ryder Truck Rental v. Wren Oil Dist. Co., 253 Ark. 827, 489 S.W.2d 236 (1973). * * *

Further in Allied Chemical Corp. v. Van Buren School Dist., 264 Ark. 810, 575 S.W.2d 445, we added:

(W)e have discussed, in several cases, what does or does not constitute a showing of "excusable neglect, unavoidable casualty or other just cause." Perry v. Bale Chev. Co., 263 Ark. 552, 566 S.W.2d 150 (1978); Robertson v. Barnett, 257 Ark. 365, 516 S.W.2d 592 (1975); Ryder Truck Rental v. Wren Oil Dist. Co., 253 Ark. 827, 489 S.W.2d 236 (1973); Ark. Elect. Co. v. Cone-Huddleston, 249 Ark. 230, 458 S.W.2d 728 (1970); Barkis v. Bell, 238 Ark. 683, 384 S.W.2d 269 (1964); and Interstate Fire Insurance Co. v. Tolbert, 233 Ark. 249, 343 S.W.2d 784 (1961). Also we have often said that the question before us, when reviewing a trial court's decision to grant or deny a motion to set aside a default, is whether that court abused its discretion. Moore, Administratrix v. Robertson, 242 Ark. 413, 413 S.W.2d 872 (1967), and Ark. Elect. Co. v. Cone-Huddleston, supra.

The fact that the motion was filed during the term of court during which the judgment was rendered does not enlarge either the...