Continental Nat. Bank v. Dolan

• Decision Date: 03 February 1977
• Docket Number: No. 76--359,76--359
• Citation: 39 Colo.App. 16,564 P.2d 955
• Parties: CONTINENTAL NATIONAL BANK, a National Banking Association, Plaintiff-Appellee, v. James V. DOLAN, Ivy M. Dolan, and Dolan Electric Company, Inc., a corporation, Defendants-Appellants. . I
• Court: Colorado Court of Appeals

Page 955

564 P.2d 955

39 Colo.App. 16

CONTINENTAL NATIONAL BANK, a National Banking Association Plaintiff-Appellee, v. James V. DOLAN, Ivy M. Dolan, and Dolan Electric Company Inc., a corporation, Defendants-Appellants.

No. 76--359.

Colorado Court of Appeals, Div. I.

Feb. 3, 1977.

Rehearing Denied March 10, 1977.

Certiorari Denied May 31, 1977.

Dawson, Nagel, Sherman & Howard, H. Clay Whitlow, Denver, for plaintiff-appellee.

James V. Dolan, pro se.

Ivy M. Dolan, pro se.

COYTE, Judge.

Defendants, James and Ivy Dolan, appeal the denial of their motion to set aside a summary judgment entered in favor of plaintiff, Continental National Bank. We modify the judgment and, as modified, affirm.

Plaintiff commenced this litigation in July 1974, seeking recovery of an alleged debt under the terms of a promissory note executed by Dolan Electric Company, Inc., and guaranteed by defendants. Following various procedural developments, including the filing of an amended complaint containing a second claim for relief and the filing of counterclaims by defendants, Dolan Electric, acting pursuant to C.R.C.P. 68, served plaintiff with an offer of judgment in the amount of $500. This offer was accepted on May 28, 1975, but was not filed until February 3, 1976.

In August 1975, plaintiff moved for summary judgment against the Dolans on the basis that, inasumch as they had failed to respond to requests for admissions, certain matters were deemed admitted and therefore no material factual issue remained in the case. Plaintiff did not bring to the attention of the trial court, either in its motion or in the supporting memorandum, the previous offer and acceptance.

Defendants failed to appear at the January 12, 1976, hearing on the summary judgment. The court accordingly granted plaintiff's motion, directing that a written order be prepared. This order does not appear in the record.

On January 23, 1976, defendants moved for relief under C.R.C.P. 60 requesting the judgment be set aside and a new hearing granted. The trial court concluded that defendants had failed to establisha meritorious defense to the summary judgment motion and thus denied defendants' motion for relief. This ruling was in error.

Relief from a judgment may be granted on equitable grounds. C.R.C.P. 60(b); Dudley v. Keller, 3&3 Colo.App. 320, 521 P.2d 175 (1974). While the grant or denial of such relief is within the discretion of the trial court, an abuse of this discretion will warrant reversal. Ehrlinger v. Parker, 137 Colo. 514, 327 P.2d 267 (1958). Here, the defense raised by the Dolans based on the offer and acceptance was prima facie meritorious, as is prerequisite to the granting of relief. Orebaugh v. Doskocil, 145 Colo. 484, 359 P.2d 671 (1961), and operated to limit plaintiff's recovery.

The offer and acceptance of May 1975, had been made part of the record prior to the hearing on defendants' C.R.C.P. 60 motion. Consequently, it was incumbent upon the trial court to recognize the validity of what was, in effect, a previous judgment. As C.R.C.P. 68 explicitly states, when a party files an offer and notice of acceptance, 'thereupon The clerk shall enter judgment' (Emphasis added). Such settlements operate as an accord and satisfaction, Berdell v. Bissell, 6 Colo. 162 (1882), and the policy underlying Rule 68 demands that they be supported so far as legally possible. Stanley v. Nazarenus, 86 Colo. 326, 281 P. 358 (1929); See also Janicek v. Hinnen, 34 Colo.App. 68, 522 P.2d 113 (1974). Defendants' offer and plaintiff's acceptance thus should have been regarded by the trial court as a judgment against Dolan Electric and wholly determinative of plaintiff's claim against it as the principal debtor.

Similarly, Dolans' liability as guarantors should have been reduced to the amount of the principal indebtedness. We reject as unpersuasive plaintiff's contrary assertion that the Dolans remained liable for more than the amount of the offer under their earlier contract to 'absolutely and unconditionally guarantee' the indebtedness of Dolan Electric.

An absolute guaranty is one by which the guarantor unconditionally promises payment or performance of the principal contract on default of the principal debtor. Yama v. Sigman, 114 Colo. 323, 165 P.2d 191 (1946). Unless expressly agreed otherwise, a guarantor's liability is generally co-extensive with...