Dallas Heating Co., Inc. v. Pardee

Decision Date23 November 1977
Docket NumberNo. 19333,19333
Citation561 S.W.2d 16
Parties23 UCC Rep.Serv. 901 DALLAS HEATING CO., INC., Appellant, v. W. E. PARDEE, Appellee.
CourtTexas Court of Appeals

Mike McCurley, McGuire, Levy, Collins & McCurley, Irving, for appellant.

John Paul Kelly, Dallas, for appellee.

ROBERTSON, Justice.

W. E. Pardee sued Dallas Heating Co., alleging violations of the Texas Consumer Protection-Deceptive Trade Practices Act, Tex.Rev.Civ.Stat.Ann. § 17.41 et seq. (Vernon Supp.1977), in the sale of a compressor for an air conditioning unit. Although Dallas Heating was duly served with process, it The primary issue in this case is whether the motion for new trial, together with the attached affidavits, established Dallas Heating's right to a new trial. To justify vacation of the default judgment, Dallas Heating's motion for a new trial must show that the failure to answer before judgment was not intentional or the result of conscious indifference, but rather was the result of a mistake or accident; further, the motion must set up a meritorious defense and be filed when its granting will cause no delay or hardship on the opposing party. Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124 (1939); United Beef Products Inc. v. Lookingbill, 528 S.W.2d 310, 312 (Tex.Civ.App. Amarillo 1975) writ ref'd per curiam 532 S.W.2d 958 (Tex.1976). Therefore, we must examine the sufficiency of Dallas Heating's motion and affidavits in light of these three elements.

failed to answer and a default judgment was rendered. Seven days after rendition of the judgment, Dallas Heating filed a motion for new trial by which it sought to have the judgment vacated. The trial court overruled the motion and Dallas Heating appealed. We reverse the judgment and remand for a new trial.

CONSCIOUS INDIFFERENCE

In its motion, Dallas Heating alleged that it unintentionally delayed the forwarding of citation to its attorney, and that the delay was not the result of conscious indifference. These allegations were supported by the affidavit of Dallas Heating's service manager, Ralph Grantham, in which he states that he received a copy of the citation for the purpose of gathering all invoices and records pertaining to Pardee's account, so that the materials could be delivered to Dallas Heating's attorney. He further stated that after gathering the records and preparing a memorandum summary of the facts relating to the account, he placed the materials into an "out" basket on his secretary's desk. It was his understanding that a corporate officer would then retrieve the documents and forward them to the corporation's attorney. The officer did not retrieve the papers, however, apparently because he thought Grantham had forwarded the papers directly to the attorney. Upon receipt of the default judgment, the records were recovered from under a stack of records where it had been "inadvertently misplaced."

Pardee argues that since the affidavit demonstrates Dallas Heating's negligence in failing to answer before judgment, the motion for new trial was properly denied. Negligence, however, is not the test by which the defaulting party's actions are measured. Ivy v. Carrell, 407 S.W.2d 212 (Tex.1966); O'Hara v. Hexter, 550 S.W.2d 379, 382 (Tex.Civ.App. Dallas 1977, writ filed); Healy v. Wick Building Systems, Inc., Doc. No. 19251 (Tex.Civ.App. Dallas 1977) (not yet reported); Farley v. Clark Equipment Co., 484 S.W.2d 142 (Tex.Civ.App. Amarillo 1972, writ ref'd n. r. e.). Rather, the question is whether the failure to answer was intentional or the result of conscious indifference. United Beef Products, Inc. v. Lookingbill, 528 S.W.2d 310, 312 (Tex.Civ.App. Amarillo 1975) writ ref'd per curiam 532 S.W.2d 958 (Tex.1976). In the present case, Grantham's affidavit shows that the default was the result of a misunderstanding as to who was to forward the process to the corporation's attorney. Thus, the failure to answer was caused by a mistake or accident, and was not intentional or the result of conscious indifference.

We recognize that the trial court filed numerous findings of fact in this case, and that these findings have been relied upon to support, among other arguments, Pardee's contention regarding Dallas Heating's conscious indifference. However, we cannot consider these findings because the recitals in Dallas Heating's affidavit were not controverted by Pardee. No fact issue was drawn regarding the allegations and in the absence of disputed facts, findings of fact are unauthorized. Ditto v. Ditto Investment Co., 158 Tex. 104, 309 S.W.2d 219 (1958); Spiller v. Spiller, 535 S.W.2d 683, 685 (Tex.Civ.App. Tyler 1976, writ dism'd); Hutchinson v. Texas Aluminum

Co., 330 S.W.2d 895, 898 (Tex.Civ.App. Dallas 1959, writ ref'd n. r. e.). In such a case, the conscious indifference question must be determined in the same manner as the issue of meritorious defense, and it is sufficient that the motion and affidavit set forth facts which, if true, would negate intentional or consciously indifferent conduct. See Ivy v. Carrell, 407 S.W.2d 212, 214 (Tex.1966); Abercia v. First National Bank of San Antonio, 500 S.W.2d 573 (Tex.Civ.App. San Antonio 1973, no writ). Of course, findings of fact would be authorized if the facts recited in the affidavit were controverted (and perhaps also if the facts recited would permit conflicting inferences), for in such a case, each party would be entitled to fully develop its view of the dispute at a full evidentiary hearing. This procedure does not apply to the sworn allegations of a meritorious defense which, if sufficiently specific, must be accepted as true despite the presence of disputed facts. Ivy v. Carrell, supra.

MERITORIOUS DEFENSES

Pardee pleaded two theories of recovery in his petition. He first alleged that Dallas Heating agreed to install a new compressor in his air conditioning system, but had installed a used, a rebuilt compressor instead. Alternatively, Pardee urged that the rebuilt unit, although warranted by Dallas Heating, was completely ineffective and inefficient.

a. Misrepresentation

In its motion for new trial, Dallas Heating denied the existence of any agreement regarding the sale of a new, rather than rebuilt, compressor unit. Since this factual dispute addresses the very basis of the misrepresentation theory urged by Pardee, it clearly serves as a meritorious defense, provided that it is supported with sufficiently specific proof. Legal conclusions regarding defenses are insufficient to set up a meritorious defense; there must be specific factual allegations supported by affidavits or other evidence proving prima facie that the defense exists. Bredeson v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 513 S.W.2d 110 (Tex.Civ.App. Dallas 1974, no writ). In response to Pardee's argument that Dallas Heating failed to install a new compressor unit under the agreement, Dallas Heating offered the affidavit of its sales manager, Hank Winget. He stated that he was contacted by Tom Pardee on behalf of his father, the Plaintiff, regarding the purchase of an air conditioning compressor unit. At that time, Tom Pardee wanted to have the broken unit replaced at the lowest possible expense, and after Winget explained the cost differential between new and rebuilt units, Tom Pardee decided to, and did, purchase a rebuilt unit.

Pardee challenges the sufficiency of this affidavit on two grounds: first, he argues that the statement that Tom Pardee was acting "on behalf of his father" is merely conclusory, and does not set forth sufficiently specific facts to establish a prima facie agency relationship; secondly, Pardee urges that the affidavit does not show whether the compressor unit purchased by Tom Pardee is the one upon which this suit is based. He argues that the present affidavits do not negate the possibility that two compressors were purchased: a rebuilt one by Tom Pardee and a supposedly new one in a separate transaction. We cannot accept these arguments. The agency relationship does not depend upon express appointment or assent by the principal; rather, it may...

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