Crawford v. Gipson

• Decision Date: 02 March 1982
• Docket Number: No. 52267,52267
• Citation: Crawford v. Gipson, 642 P.2d 248, 1982 OK 31 (Okla. 1982)
• Parties: Toylar J. CRAWFORD, a minor, by and through her mother and next friend Carolyn J. Crawford, and Carolyn J. Crawford, individually, Appellees, v. Lee Otis GIPSON, Appellant, and State Farm Mutual Automobile Insurance Company, Intervenor.
• Court: Oklahoma Supreme Court

Page 248

642 P.2d 248

1982 OK 31

Toylar J. CRAWFORD, a minor, by and through her mother and next friend Carolyn J. Crawford, and Carolyn J Crawford, individually, Appellees, v. Lee Otis GIPSON, Appellant and State Farm Mutual Automobile Insurance Company, Intervenor.

No. 52267.

Supreme Court of Oklahoma.

March 2, 1982.

As Corrected March 3, 1982.

Certiorari from the Court of Appeals, Division No. 1. An appeal from the District Court of Oklahoma County; Charles L. Owens, Judge.

Appeal by non-defendant Insurance Company from order denying its Petition to

Vacate Default Judgment entered against their insured. Court of Appeals, Div. No. 1, Reversed and Remanded the matter for trial on the merits of plaintiff's petition.

CERTIORARI GRANTED. OPINION OF COURT OF APPEALS VACATED. JUDGMENT OF TRIAL COURT DENYING PETITION TO VACATE REVERSED AND REMANDED FOR TRIAL ON MERITS.

Foliart, Mills & Niemeyer, Oklahoma City, for appellees.

Proctor, Fleming & Speck, Richard A. Proctor and Scott M. Rhodes, Oklahoma City, for appellant and intervenor.

PER CURIAM:

Toylar J. Crawford filed this action against Lee Otis Gipson for personal injuries and property damage resulting from an automobile collision that occurred in Oklahoma City. Defendant Gipson was personally served with summons. No pleading or answer was filed and on June 27, 1977, a default judgment was taken against Gipson for $25,000.

On November 29, 1977, defendant's insurer, State Farm Mutual Automobile Insurance Company, without the consent of defendant, filed a Petition to Vacate Judgment. The petition alleged that the insurer received no notice of the lawsuit and was denied its right to present a good and valid defense. On February 9, 1978, a second Petition to Vacate was filed by State Farm "on behalf of" defendant. The facts as to when or if the insurer received notice of Gipson's pending lawsuit before default was taken are highly disputed.

On March 2, 1978, a hearing was held on State Farm's Petition to Vacate. Thereafter, the trial court denied State Farm's Petition to Vacate for failure to show unavoidable casualty or misfortune under 12 O.S.1971, § 1031, subd. 7. ¹

State Farm (with Gipson as named appellant) appealed. The Court of Appeals vacated the default judgment, concluding that the order overruling State Farm's petition was clearly against the weight of the evidence and that the trial court abused its discretion in refusing to vacate on the ground of unavoidable casualty or misfortune. The Court of Appeals realigned the parties and remanded the case for trial on the merits.

We Grant Certiorari to review two major issues: (1) The standing of an insurance company not a party to the suit below to petition to set aside a judgment; (2) Whether the trial court abused its discretion in overruling State Farm's petition because of the company's failure to prove that the action of its insured constituted an unavoidable casualty or misfortune under 12 O.S.1971, § 1031, subd. 7. ²

I.

Oklahoma's statutory provisions for vacation of judgments, 12 O.S.1971, § 1031, et seq., do not expressly comment on the standing of an insurance company to petition for the vacation of the default judgment of its insured nor does Oklahoma case law provide guidance on the specific question. Fidelity Building and Loan Ass'n. v. Newell, 176 Okl. 184, 55 P.2d 131 (1936) cited by appellee is not controlling. Though Fidelity Bank states that the Oklahoma statutes are not sufficiently broad to authorize one not a party to the action to maintain proceedings to vacate a judgment valid on its face, ³ the actual holding of the case refines that general rule and holds that no third party without an interest can move to change a judgment.

The general rule that only parties to a judgment have standing to set it aside has long been recognized. 1 Freeman on Judgments, 5th ed. § 260; 49 C.J.S. Judgments, § 293 b. The law also recognizes exceptions to that rule:

"The rule that none but parties to the judgment are permitted to interfere admits of exceptions, excluding from its operation persons not nominal parties to the action, but who are necessarily affected by the judgment, and who have equities entitled to be protected from its operation." 1 Freeman on Judgments, § 260.

"One who is ultimately liable as indemnitor of the judgment debtor may seek relief." Id.

We find the line of cases allowing an insurance company to petition to set aside a default judgment against its insured to be well reasoned. ⁴

The reasoning of Kollmeyer v. Willis, Mo.App., 408 S.W.2d 370 (1966) is especially applicable to the case at bar:

"The general rule, upon which plaintiff relies, is that a stranger to the record has no right to move for a vacation of a judgment ... But plaintiff overlooks the limitation that, in some instances, one not a party to the record, whose rights are injuriously affected by a judgment as the rights of an indemnitor may be, will be heard upon his motion to set aside a judgment." At 382.

Cases disallowing the vacation of a judgment on the insurer's petition frequently do so ostensibly on the insurer's lack of standing; however, the insurer's negligence in defending the insured forms the basis of the opinions. In Foos v. Tripet Construction Co., ⁵ for example, the court (considering the motion to have been made in the interest of the insurer) reversed an order granting the insured's motion to reopen a default judgment. The court said that the summons had come into the possession of the claims office manager who neglected to give it to an attorney. The court concluded that the insurer "by its gross negligence has forfeited its right to affirmative relief." In other words, the court held that one who is negligent will not be allowed relief from a default judgment, not that an indemnitor per se will not be allowed relief.

In ruling that a liability insurer not a party to the suit below, who is injuriously affected by the judgment, will be heard on his petition to set aside a judgment, we in no way change the aforementioned general rule that a stranger to the record has no right to move for vacation. To disturb the general rule would encourage litigation, allowing third persons to intervene and overturn adjudications to which the original parties made no objection and disrupting the presumption that every litigant understands his own interests. 1 Freeman on Judgments, § 258.

II.

Granting, then, State Farm's standing, did the default result from an unavoidable casualty or misfortune as defined in 12 O.S.1971, § 1031, subd. 7, and did the trial court abuse its discretion in overruling State Farm's petition?

In Independent Sch. Dist. No. 1, Etc. v. Jackson, Okl., 608 P.2d 1153, we said:

"The general rule is that a provision in an automobile liability policy requiring that the insured forward to the insurer every demand, notice, summons or other process received by the insured is unambiguous, reasonable, valid, and a condition precedent to recovery on the policy. The purpose of this policy provision is to enable the insured to inform the insurer of the lawsuit so that it may investigate the accident, and prepare a timely defense for the insured."

In the instant case, defendant Gipson did not deliver the summons and petition to his insurance carrier until over six months after they were served on him, and that was approximately four months after he learned of the default judgment of which he told no one. ⁶

In Burroughs v. Bob Martin Corporation, Okl., 536 P.2d 339, it was stated that:

"(m)embers of this Court have on occasion been more impressed with the need to grant relief to a defaulting litigant than the lower court believed the party deserved. In the following cases we reversed the lower court's refusal to vacate default judgments: Haskell v. Cutler, 188 Okl. 239, 108 P.2d 146; First Nat. Bank of Okmulgee v. Kerr, 165 Okl. 16, 24 P.2d 985; Shuler v. Viger, 103 Okl. 129, 229 P. 280; Hamburger v. Fry, Okl., 338 P.2d 1088.

"(d)efault judgments are never viewed with favor; litigated questions should be tried on their merits; it is the policy of the law to afford every party to an action a fair opportunity to present his side of a cause; an application to vacate a judgment, under 12 O.S.1971, § 1031, is addressed to the sound legal discretion of the trial court, and an order vacating said judgment will not be disturbed on appeal unless it clearly appears that the trial court has abused that discretion; such discretion should always be exercised so as to promote the ends of justice, and a much stronger showing of abuse of discretion must be made where a judgment has been set aside than where it has been refused."

We conclude that the trial court abused its discretion in refusing to vacate the default judgment on the ground of unavoidable casualty and misfortune. We vacate the default judgment and remand for trial on the merits.

IRWIN, C. J., BARNES, V. C. J., and HODGES and LAVENDER, JJ., and CORNISH, Sp. J., and BRETT, Sp. J., concur.

SIMMS, DOOLIN and OPALA, JJ., concur in part, dissent in part.

DOOLIN, Justice, concurring in part, dissenting in part:

I find no fault with the majority opinion which affords standing to State Farm in seeking vacation of the default judgment. I concur in Part I.

I dissent to Part II of the majority opinion, when it holds the trial court abused its discretion in refusing to vacate the default judgment.

In affirming the decision of the trial court, we follow the general rule that where it is contended that the trial court abused its discretion in refusing to vacate a default judgment, and the question of such abuse depends on a disputed question of fact pertaining to the ground relied on for vacating the judgment, the presumption is that the finding of fact was consistent with the order denying the motion to vacate and, therefore, there was no abuse of discretion. Woodruff v. Moore, 182 Okl. 120, 77 P.2d 62 (1938.)

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