Continental Assur. Co. v. Sickels

• Decision Date: 19 November 1969
• Docket Number: No. 1268A207,No. 2,1268A207,2
• Citation: 19 Ind.Dec. 302,145 Ind.App. 671,252 N.E.2d 439
• Parties: CONTINENTAL ASSURANCE COMPANY, Appellant, v. Richard SICKELS and Wanda Sickels, Appellees
• Court: Indiana Appellate Court

Page 439

252 N.E.2d 439

145 Ind.App. 671

CONTINENTAL ASSURANCE COMPANY, Appellant, v. Richard SICKELS and Wanda Sickels, Appellees.

No. 1268A207.

Appellate Court of Indiana, Division No. 2.

Nov. 19, 1969.

Rehearing Denied Dec. 17, 1969.

White, Raub, Reis & Wick, Indianapolis, for appellant.

Steers, Klee, Jay & Sullivan, Indianapolis, for appellees.

PFAFF, Chief Justice.

Plaintiffs-appellees filed suit against defendant-appellant to recover benefits allegedly due under a contract of insurance. Upon appellant's failure to appear and defend this cause of action, a default judgment was entered against the defendant-appellant. Upon learning of the entry of the default judgment in plaintiffs-appellees' favor, appellant filed a complaint to set aside said default judgment, alleging therein excusable neglect in addition to a proper defense to the cause of action, i.e., termination of the appellant's obligation to pay under the contract provisions prior to the date of injury. Appellees demurred to the appellant's amended complaint to set aside said default judgment and said demurrer was sustained for the reason that the trial court concluded that the appellant's complaint did not state facts sufficient to constitute a cause of action to set aside the default judgment.

The correctness of the court's ruling on appellees' demurrer is the issue on appeal. It is our opinion that the judgment of the Municipal Court of Marion County, Room No. 2, in sustaining appellees' demurrer constitutes reversible error.

The setting aside of a default judgment is provided for by Acts 1881 (Spec.Sess.), ch. 38, § 135, p. 240, as last amended by Acts 1941, ch. 72, § 1, p. 185, being Burns' Ind.Stat.Anno. § 2--1068 (1967 Repl.). ¹

Section 2--1068, supra, states in pertinent part as follows:

'The court shall relieve a party from a judgment taken against him through his mistake, inadvertence, surprise, or excusable neglect, on complaint filed and notice issued, as in original actions within two (2) years from and after the date of the judgment, * * *.'

Appellees' demurrer and memorandum in support thereof maintains that appellant's amended complaint to set aside default judgment did not state facts sufficient to constitute a cause of action to set aside the default judgment because appellant did not establish 'excusable neglect'. The applicable statute, § 2--1068, supra, speaks of four separate grounds available when a party seeks to set aside a default judgment: mistake, inadvertence, surprise, or excusable neglect. We believe, and appellant so maintains, that a technical interpretation of the statute would compel a conclusion that appellees have conceded that appellant's amended complaint to set aside said default judgment is sufficient to constitute a cause of action to set aside the default judgment because of alleged facts sufficient to show 'mistake, inadvertence, or surprise', that is, the demurrer speaks of only 'excusable neglect'. Further, the demurrer does not question the sufficiency of the defense raised by appellant in its complaint. Here, however, we need not resort to a conclusion supported by a technical construction of the appropriate statute, nor is it necessary to speak of appellees' waiver of issues that might have been interposed by their demurrer. We prefer to consider the essential question of whether or not appellant provided the trial court with facts sufficient to show 'excusable neglect', this being the exact basis of appellees' demurrer.

We have heretofore stated that it was error to sustain the demurrer, the reason being that appellant's excusable neglect was reason to set aside the prior default judgment. Defendant-appellant did not appear and defend the original action filed against it because of the following facts which we here hold to be facts establishing appellant's excusable neglect.

The record establishes that appellant, Continental Assurance Company, received a copy of appellees' complaint and a summons on November 17, 1967. Appellant has an established procedure whereby complaints and summonses, when received at the appellant's Chicago office, are 'docketed' and sent to appellant's counsel. Appellant's 'docketing' of legal proceedings against appellant refers to an intra-office procedure whereby upon receipt of a complaint and summons the secretary of appellant's counsel records the same in a ledger which gives the date of receipt and the date upon which an appropriate response is due. When appellant received the complaint and summons in question, the aforesaid intra-office procedure was not effected and appellant's counsel first received notice of appellees' claim when notice of default judgment was received on December 5, 1967. At this time appellant company, after a thorough search of all records, discovered the original complaint and summons in a complaint file drawer and said documents were attached, by paper clip, to legal proceedings emanating from another jurisdiction. Appellant averred that in filing, a clerk allowed appellees' complaint and summons to become attached to a legal matter from another jurisdiction. Thus, appellant's counsel was not notified of the pending claim and a default judgment resulted from what we hold to be appellant's 'excusable neglect'. Thereafter, appellant immediately instituted this action to set aside the default judgment.

In reviewing Indiana decisions and authorities defining the statutory language 'excusable neglect' we find the following statement in 2 Wiltrout Ind.Civ.Proc. § 1230, p. 243:

'(4) What Constitutes Excusable Neglect, etc. No fixed rule can be stated as to what facts and circumstances will constitute excusable neglect, mistake, or inadvertence for not appearing and defending against the default judgment. What constitutes excusable neglect, mistake, or inadvertence within the meaning of the statute must be determined from the facts in each particular case, and any doubt should be resolved in favor of the application to set aside the default judgment in order to permit the merits of the case to be heard and determined. The term 'excusable neglect' or 'inadvertence' is a general term, and each case must necessarily depend upon its own facts and circumstances, and any doubt resolved in favor of the applicant in order that the merits of the cause may be heard and determined. There are innumerable decisions construing what is sufficient to constitute 'excusable neglect' and it is impossible to review all of them in this work. All that can be done is to refer to a few of the many decisions.

'The following facts have been held to constitute excusable neglect, mistake, and inadvertence: (a) absence of party's attorney through no fault of party; (b) an agreement made with opposite party, or his attorney; (c) conduct of other persons causing party to be misled or deceived; (d) unavoidable delay in traveling; (e) faulty process, whereby party fails to receive actual notice; (f) fraud, whereby party is prevented from appearing and making a defense; (g) ignorance of defendant; (h) insanity or infancy; (i) married women deceived or misled by conduct of husbands; (j) sickness of party, or illness of member of family.'

We refer to the opinion of this court in the case of Himelstein Bros., Inc. v. Texas Co. (1955), 125 Ind.App. 448, 125 N.E.2d 820. This decision and an earlier Appellate Court decision in Masten v. Indiana Car, etc., Co. (1900), 25 Ind.App. 175, 57 N.E. 148, provide ample authority for our judgment that it was reversible error to sustain appellees' demurrer.

In Himelstein, supra, this court stated at page 453 of 125 Ind. App., at page 822 of 125 N.E.2d as follows:

'This court is asked to excuse counsel's neglect in entering his appearance for two reasons--first, he contends that he asked the deputy clerk to enter his appearance for him, which was not done; second, he alleges and so testified that the summons and a copy of the complaint were misplaced on his desk by his secretary when she was straightening out the papers. The evidence shows that the counsel went to the courthouse, after being contacted by the secretary of appellant corporation, where he procured a copy of the complaint; that he told the deputy clerk he wished to enter his appearance for appellant; that the deputy clerk was unable to find the docket sheet for this case at that time, which was between 3:00 and 4:00 in the afternoon, and that counsel informed the deputy clerk to enter his appearance when she found the docket sheet. No evidence was presented that counsel ever checked the record further to determine whether or not his appearance had been entered. Evidence disclosed that counsel knew nothing about the judgment until several weeks thereafter when he was informed of its rendition by the secretary of appellant corporation who had been advised by Dun & Bradstreet that the judgment had been rendered. The counsel testified that his secretary rearranged various papers in straightening up his desk which was during tax-paying time, which the counsel said accounted for the reason that he failed to notice and pay any more attention to the summons. The attorney was unable to identify positively the deputy clerk with whom he allegedly talked and instructed to enter his appearance. The attorney's testimony was contradicted by the deputy clerk who ordinarily sits at the desk to the right as one enters the Clerk's Room which was the desk where the girl sat to whom counsel testified he requested to enter his appearance. The deputy clerk recalled no conversation as related by counsel and testified, 'We have never had a lost blank sheet'.

'Another deputy clerk testified that she recalled no request to enter counsel's appearance in the case.

'The burden of proof rested upon the appellant in this case. After hearing all of the evidence and observing the witnesses, the trial court found against the appellant. To disturb the decision of the lower court, we would have to...