Clute v. Concrete, 14023

• Decision Date: 29 November 1978
• Docket Number: No. 14023,14023
• Citation: 587 P.2d 392,179 Mont. 475,35 St.Rep. 1775
• Parties: George E. CLUTE, Plaintiff and Respondent, v. A. B. CONCRETE, Defendant and Appellant.
• Court: Montana Supreme Court

Page 392

587 P.2d 392

179 Mont. 475

George E. CLUTE, Plaintiff and Respondent, v. A. B. CONCRETE, Defendant and Appellant.

No. 14023.

Supreme Court of Montana.

Submitted Oct. 16, 1978.

Decided Nov. 29, 1978.

Tipp, Hoven & Skjelset, Missoula (Thomas W. Frizzel, Missoula, argued), for defendant and appellant.

Milodragovich, Dale & Dye, Missoula (Michael J. Milodragovich, Missoula, argued), for plaintiff and respondent.

SHEEHY, Justice.

Defendant A. B. Concrete appeals from the order of the District Court, Missoula County, denying its motion to set aside a default judgment.

In February 1973, defendant transferred an asphalt plant to plaintiff George E. Clute, as compensation for paving work plaintiff had performed sometime earlier. Plaintiff did not take possession of the plant and it remained on defendant's premises until the spring of 1976, when defendant sold it to James Day of Missoula, Montana, for $300.00.

In October 1976, plaintiff arranged with a person in Vancouver, Washington, to sell the asphalt plant for $8,000.00. When plaintiff attempted to take possession of the plant defendant informed him that it had been sold. Defendant attempted to rescind the sale to Day, but Day would not agree to this, so defendant asked Day to tender the purchase price to plaintiff. Plaintiff refused to accept the money. Six months later plaintiff filed a complaint in District Court, alleging unlawful conversion of the asphalt plant by defendant.

The complaint was served on Jerry Aaguard, who was listed as the registered agent of the defendant corporation. Aaguard was a past president of the corporation. He had been removed from the presidency in August 1976. Consequently at the time of service, Aaguard had not had business relations with the corporation for eight months. The corporation's directors, who were without legal counsel during this management change, had failed to change the name of the registered agent in the files of the Secretary of State.

Aaguard made no attempt to notify the defendant concerning service of the complaint. Defendant received no actual notice of the lawsuit until it was reported in the "green sheets" of the local credit bureau. By that time plaintiff had obtained a default judgment against defendant.

The Clerk of Court's minute entry on May 9, 1977, read as follows:

"Harold V. Dye, attorney for the plaintiff, came into court. The defendant having been served personally with summons, and the default of the defendant having been entered by the Clerk on May 4, 1977, pursuant to Praecipe filed herein.

Harold V. Dye testified, and IT IS ORDERED, ADJUDGED AND DECREED that the plaintiff recover from the defendant the amount set forth in the Judgment filed herein."

Based upon the testimony of plaintiff's attorney, the District Court awarded the plaintiff a default judgment in the amount of $8,000.00.

On June 14, 1977, shortly after discovering the default, defendant filed a motion to set aside the default judgment on the grounds of excusable neglect, accompanied by an affidavit stating the reason the complaint was not answered, and a proposed answer. A hearing was held on the motion and briefs were submitted. On August 26, 1977, the District Court entered its order denying defendant's motion. This appeal followed.

Defendant presents three issues:

1. Did the District Court's denial of defendant's motion to set aside the default judgment constitute an abuse of discretion?

2. Do negotiations prior to suit constitute an "appearance" under Rule 55, Mont.R.Civ.P., thereby requiring three days notice before a motion for default can be made?

3. Was testimony by plaintiff's counsel sufficient to prove the total amount of plaintiff's damages?

Montana's Rules of Civil Procedure permit a default judgment to be set aside for the same reasons a trial court would set aside a judgment following a trial on the merits. Rule 55(d), Mont.R.Civ.P., states:

"For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b) . . ."

Turning to Rule 60(b), Mont.R.Civ.P., we find:

"On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:

"(1) Mistake, inadvertence, surprise, or excusable neglect; . . ."

Many parties have appeared before this Court seeking relief from default judgments. Most of the leading cases that establish the parameters of excusable neglect arose prior to January 1, 1962, the date our present rules of civil procedure were adopted. However, adoption of those rules did not mean that the prior decisions of this Court relating to default judgments were being abandoned. Uffleman v. Labbit (1968) 152 Mont. 238, 448 P.2d 690; Sewell v. Beatrice Foods Co. (1965) 145 Mont. 337, 400 P.2d 892. We look then to the body of caselaw developed through the years for the general rules of law to be applied in determining when a default judgment should be set aside.

Since it is the policy of the law to have every litigated case tried on the merits, judgments by default are not favored. Reynolds v. Gladys Belle Oil Co. (1926) 75 Mont. 332, 243 P. 576; Brothers v. Brothers (1924) 71 Mont. 378, 230 P. 60.

In Holen v. Phelps (1957) 131 Mont. 146, 308 P.2d 624, we said:

"In furtherance of justice, trial courts should, in applying the above statute (Sec. 9187, Rev. Codes, 1921, a predecessor of Rule 60(b), Mont.R.Civ.P.), maintain and exercise that liberal spirit which prompted the Legislature to grant them this discretionary power, and while this court will disturb the action of a trial court in opening default only in exceptional cases, 'no great abuse of discretion by the trial court in refusing to set aside a default need be shown to warrant a reversal.' "

A rule repeatedly stated in decisions of this Court comes from Nash v. Treat (1912) 45 Mont. 250, 122 P. 745 ...