Clark County State Bank v. Bennett

• Decision Date: 06 November 1975
• Docket Number: No. 1--974A133,1--974A133
• Citation: 166 Ind.App. 471,336 N.E.2d 663
• Parties: CLARK COUNTY STATE BANK and Citizens National Bank of Grant County, Appellants (Defendants below), v. Peter A. BENNETT and Arthur Myers d/b/a Falls Cities Cycle Co., Appellees(Plaintiffs below).
• Court: Indiana Appellate Court

Page 663

336 N.E.2d 663

166 Ind.App. 471

CLARK COUNTY STATE BANK and Citizens National Bank of Grant

County, Appellants (Defendants below), v. Peter A. BENNETT and Arthur Myers d/b/a Falls Cities Cycle

Co., Appellees(Plaintiffs below).

No. 1--974A133.

Court of Appeals of Indiana, First District.

Nov. 6, 1975.

Frank J. Biddinger, John W. Campbell, Marion, for appellants; Biddinger & Johnson, Marion, Thomas S. Pointer, Jeffersonville, of counsel

Ronald R. Fifer, Stephen W. Voelker, Fifer, Vogt, Hoodenpyl & Lanum, Jeffersonville, for appellees.

LYBROOK, Judge.

Defendant-appellant Citizens National Bank of Grant County (Citizens) appeals from a judgment by default entered following its alleged failure to timely respond to plaintiffs' complaint and requests for discovery. Ind. Rules of Procedure, Trial Rules 55(B) and 37(B)(4). The central issue presented is whether the court erred in granting plaintiffs' application for default and denying defendant Citizens subsequent motion for relief therefrom.

On December 13, 1973, plaintiffs filed their complaint against defendants Citizens and Clark County State Bank (Clark) and simultaneously filed interrogatories and requests for admissions addressed to each defendant. Service of summons on defendant Citizens was made on December 18, 1973. Both defendants entered appearances by counsel on January 2, 1974, and Clark answered on that date. On January 7, 1974, Citizens moved for an enlargement of time of thirty days in which to answer or otherwise respond to plaintiffs' complaint; however, the record fails to reveal a ruling by the court on the motion. During a telephone conversation on January 14, 1974, attorneys for plaintiffs and Citizens agreed to a fifteen day extension of time in which to answer plaintiffs' interrogatories. Thereafter, no further actions were taken by the parties until February 26, 1974, when plaintiffs filed consolidated alternative motions for (1) judgment by default against Citizens for its failure to answer or otherwise respond to plaintiffs' complaint, (2) judgment by default against Citizens for its failure to respond to requests for discovery, or (3) an order compelling discovery and (4) allowance of attorney's fees. Hearing was scheduled for March 18, 1974.

Four days prior to hearing, Citizens answered the complaint and filed responses to plaintiffs' interrogatories and requests for admissions. Notwithstanding Citizens' action, the court entered judgment by default against Citizens. The trial court found inter alia that Citizens had not timely answered the complaint, that the conduct of Citizens in failing to answer or respond to the interrogatories was unexcusable, that Citizens had in bad faith and abusively resisted or obstructed the interrogatories propounded, and that plaintiffs should recover attorney's fees in the sum of $500.00 from Citizens. The court also entered a judgment for compensatory damages in the sum of $2,592.00 with interest.

On April 22, 1974, Citizens moved to have the judgment by default vacated. Following hearing the motion was denied. Citizens' subsequent motion to correct errors was denied and this appeal ensued.

I.

The first issue presented is whether plaintiffs were entitled to entry of judgment by default due to Citizens' failure to timely plead or otherwise respond to plaintiffs' complaint. TR. 55(B) provides that an appearing party against whom judgment by default is sought must be served with notice of the application for judgment at least three days prior to hearing thereon. In the instant case, plaintiffs' application for judgment was filed on February 26, 1974, and Citizens was duly notified that hearing thereon would be held March 18, 1974. Citizens argues that by answering the complaint in the interim between the application and the hearing it rendered moot any question of plaintiffs' Drawn into question is the purpose of the three day notice requirement of TR. 55(B). Citizens' interpretation is that it is intended to provide a delinquent party with time in which to remedy its default. Support for this construction is drawn from Hiatt v. Yergin (1972), 152 Ind.App. 497, 284 N.E.2d 834. Therein, plaintiff's application for judgment by default and defendants' untimely answer were filed on the same date. Rejecting plaintiff's contention that judgment by default should have been rendered, this court wrote:

entitlement to judgment for Citizens' failure to timely plead.

'A delinquent party only need be nimble enough to plead or otherwise comply with the rules within the three-day period in order to avoid the default question entirely. Yergin wisely filed a responsive pleading on May 4, the very day Hiatt filed the Application for Default Judgment. Thus the question became moot even before a hearing could be held under the three-day notice requirement. . . .'

We are unable to approve of this holding to the extent that it may be construed to vest a delinquent party with the absolute option to sua sponte cure its default and proceed as a matter of right without judicial approval at any time prior to the entry of judgment by default.

A primary objective in the adoption of our present procedural rules was elimination of delay resulting in protracted litigation. See, Ind. Rules of Procedure, Trial Rule 1; 1 Harvey, Indiana Practice 212 (1969). Commenting on the federal rules, after which our rules are patterned, the court in Canup v. Mississippi Valley Barge Line Co., 31 F.R.D. 282 (W.D.Pa.1962), aptly stated:

'One of the basic purposes of the Rules of Federal Procedure is to secure the 'speedy' determination of pending litigation. Since Magna Carta * * * delay has been recognized as pro tanto denial of justice. In Shakespeare Hamlet 'the law's delay' is condemned. The evil is an old one. It has merely become more widespread as the number of pending cases has increased in our urban civilization.

Theoretically and ideally the object of procedural rules is to accord a plaintiff the same relief which he would receive if the case were decided immediately at the moment of filing. For the wrong (if any) has then occurred; the remedy should also be available at the same time.

Calendar control by the Courts and the setting of fixed dates for the various steps to be taken in the course of litigation are among the means by which it is sought to eliminate delay.

The bar must realize, and we declare it as emphatically as we can, that these dates fixed by law, rule, or court order mean something. They are not empty formalities.'

Realization of the objective of speedy determination of actions is defeated by any construction of the rules divesting the trial court of its power to effectively deal with delay. However, Citizens' interpretation of TR. 55(B) would do just that. In effect, Citizens asks us to hold that compliance with the time period in which to answer or otherwise respond to a complaint is committed to the discretion of the defending party and that such party may with impunity violate the rules resting secure in the knowledge that action need be taken only upon receipt of notice of an application for judgment by default.

The drafters' intent that the trial court at all times remain vested with the discretion to permit untimely compliance with the rules is reflected by the following relevant excerpt from Ind. Rules of Procedure, Trial Rule 6:

'(B) Enlargement. When an act is required or allowed to be done at or within (2) upon motion made after the expiration of the specified period, permit the act to be done where the failure to act was the result of excusable neglect; but, the court may not extend the time for taking any action for judgment on the evidence under Rule 50(A), amendment of findings and judgment under Rule 52(B), to correct errors under Rule 59(C), or to obtain relief from final judgment under Rule 60(B), except to the extent and under the provisions stated in those rules.'

a specified time by these rules, the court may at any time for cause shown

Citizens' argument that the purpose of the three day notice requirement of TR. 55(B) is to provide a delinquent party with further time in which to plead and thereby entirely avoid the question of default conflicts with constructions of the rules drawn by both federal authority and states which have adopted rules similar to the Federal Rules of Civil Procedure. In Orange Theatre Corp. v. Rayherstz Amusement Corp., 130 F.2d 185 (3d Cir. 1942), the parties by stipulation attempted to extend the time in which defendants might answer or otherwise respond to plaintiff's complaint. No application to the court was made with respect to the stipulation. Within the period agreed to by the parties, defendants filed an untimely motion to dismiss which the court granted. In reversing, the Court of Appeals held that in the absence of an order of the court enlarging time, defendants were in default for failing to plead or otherwise respond to plaintiff's complaint within the time allotted by the rules, and that permission to plead or respond should have been obtained through application seeking exercise of the trial court's discretion.

In Rogers v. Lyle Adjustment Co. (1962), 70 N.M. 209, 372 P.2d 797, construing a state rule...