Davis v. Interstate Motor Carriers Agency

• Decision Date: 09 June 1970
• Docket Number: No. 10671,T-B-L,10671
• Citation: 178 N.W.2d 204,85 S.D. 101
• Parties: Eldon C. DAVIS, Plaintiff and Respondent, v. INTERSTATE MOTOR CARRIERS AGENCY, Little Audrey's Transportation Company, Inc.,Adjustors, and Underwriters At Lloyds and British Companies, Defendants, Little Audrey's Transportation Company, Inc., Appellant.
• Court: South Dakota Supreme Court

Page 204

178 N.W.2d 204

85 S.D. 101

Eldon C. DAVIS, Plaintiff and Respondent, v. INTERSTATE MOTOR CARRIERS AGENCY, Little Audrey's Transportation Company, Inc., T-B-L Adjustors, and Underwriters At Lloyds and British Companies, Defendants Little Audrey's Transportation Company, Inc., Appellant.

No. 10671.

Supreme Court of South Dakota.

June 9, 1970.

William L. Dickey, Sioux Falls, for plaintiff and respondent.

Woods, Fuller, Shultz & Smith, and J. B. Shultz, Sioux Falls, for defendants and appellant.

BIEGELMEIER, Judge.

This is an appeal from an order denying a motion to vacate a default judgment entered against defendant Little Audrey's Transportation Company, Inc. Plaintiff first named as defendants Interstate Motor Carriers Agency (IMCA) on whom service was made through the Insurance Commissioner June 6, 1968 and Underwriters at Lloyds and British Companies (Lloyds) who were never served with process. An amended complaint and summons dated June 25, 1968 added TBL Adjustors (TBL), later dismissed by plaintiff, and Little Audrey's Transportation Company, Inc. (Little Audrey) as defendants. These were again served on IMCA through the Insurance Commissioner on June 28, 1968. Service of the amended summons and complaint on little Audrey, a foreign corporation, was obtained by admission of service of two copies by the Secretary of State on July 8, 1968, who stated therein that one copy was mailed that day to Little Audrey at Fremont, Nebraska by registered mail. It may be doubted that the amended complaint states a cause of action against Little Audrey as an insurer or on any theory.

There is some confusion in the proceedings shown by the record; some of it may affect Little Audrey and some may not. On July 9, 1968, plaintiff's attorney made a motion for default judgment against 'Defendant' apparently based on his affidavit stating the two services of the summons and complaint on the Insurance Commissioner on June 6, 1968, and of the amended summons and complaint on June 28, 1968, and nonappearance of IMCA; July 10th the trial court entered a default judgment against IMCA for $20,793 for plaintiff's damages, $3,000 attorney's fees and $8.50 costs. On motion of plaintiff's attorney the court set aside the IMCA judgment on July 18th and later, pursuant to further motions by plaintiff's attorney, entered another default judgment against IMCA on August 19th for the same amounts, except $13.50 costs or a total of $23,806.50.

On August 8, 1968, which was 31 days after the Secretary of State was served with process for Little Audrey, plaintiff moved for and the court entered a judgment by default against Little Audrey for the same $20,793 damages, $3,000 attorney's fees and $13.50 costs and a like total as against IMCA of $23,806.50. ¹

Having learned of the entry of the August 8, 1968 judgment, Little Audrey on August 15th filed what is termed its 'first' motion to vacate the judgment and for leave to interpose an answer. It was supported by two affidavits which will be mentioned later. The hearing held on August 19, 1968, resulted in an order denying the motion, but stated upon motion and after hearing and for good cause appearing the court would rehear the question of damages. Little Audrey then applied to this court for a Writ of Prohibition against plaintiff and the circuit court to restrain them from further proceedings on the judgment which, after a hearing, the court denied on December 16, 1968. The next day Little Audrey made its 'second' motion to the circuit court for vacation of the default judgment which was heard and denied and this appeal is from that order.

RCP 60(b) now also SDCL 15--6--60(b) provides:

'On motion and upon such terms as are just, the court may relieve a party * * * from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect'.

The wording in (1) is the same as that in prior statutes and rules of court on this subject, but omits the words limiting court action 'in its discretion'. See SDC 33.0108. Appellant and respondent agree that there are over 50 cases in this jurisdiction relating to vacation of default judgments under various fact situations; some are cited in the note to SDCL 15--6--60(b). Before discussing that point, the evidence upon which the order was based being entirely by affidavits, our review is unhampered by the rule that a trial judge who has observed the demeanor of the witnesses is in a better position to intelligently weigh the evidence than the appellate court. Credit Management Service, Inc. v. Wendbourne, 76 S.D. 80, 72 N.W.2d 926; Brewster v. F. C. Russell Co., 78 S.D. 129, 99 N.W.2d 42.

Little Audrey's president made affidavit that on June 28, 1968, the company received copies of the summons and amended complaint; they were immediately sent to United Transportation Adjustors, a firm in Chicago which handled all claims against Little Audrey, which sent them on to Toplis & Harding, an adjusting firm in New York. He was informed that firm would take care of it; that from time to time he had telephone conversations with U.T.A. representatives who advised him T. & H. were continuing to handle the law suit and he need not concern himself with it and he assumed the interests of his company were being protected; that Little Audrey had a good defense to plaintiff's claim. An officer of U.T.A. made affidavit that it received and sent the summons and amended complaint on to T. & H. who were agents of IMCA and Lloyds with a demand that defense be provided in the lawsuit for Little Audrey under the policy issued to it; that on July 18th an officer of U.T.A. wrote T. & H. asking what developments there had been and again requested they provide defense to the suit; that by a letter from T. & H. received by U.T.A. August 2nd a photo copy of which was attached Little Audrey was led to believe T. & H. were in the process of bringing the matter to a conclusion by settlement; relying on the information that the only judgment than taken was against IMCA and the T. & H. efforts to settle the claim, it took no action; it learned of the August 8th judgment on August 12th. The letter of July 30th from T. & H., which appears to be an international firm of adjustors, advised Little Audrey the policy covered only physical damage to the equipment and there was no defense clause in it; that its South Dakota counsel had advised T. & H. that judgment had been taken against IMCA only; ² that T. & H. had for some time been attempting to adjust the loss with Davis, but his demands were unwarranted and proofs of loss had been submitted to Davis but neither were acceptable despite the fact the demands in the amended complaint were within the figures submitted in the final proof. It ended 'We are still trying to bring this matter to a conclusion by settlement and when this has been accomplished you will be advised'.

The 'second' motion was based on these affidavits, one by W. H. Osborn, Little Audrey's secretary, and one by different legal counsel. The Osborn affidavit stated Little Audrey was a corporation with an I.C.C. permit to engage in hauling perishable products, all business is handled on a lease basis with contractors; when a new contractor came to work for them under lease, it inquired of his insurance coverage, advised him coverage was available through a master policy at considerable savings to cover physical damage on his equipment; that Davis indicated he desired this group policy coverage and to pay the premiums by monthly deductions from his settlements. Little Audrey is not in the insurance business in any way; it only made the insurance coverage available to Davis; counsel's affidavit stated he had investigated the matter, conferred with defendant and was of the opinion it had a meritorious defense set up in an answer attached.

Plaintiff's showing was by affidavit of counsel; most of it deals with efforts to locate and serve various defendants and obtain a copy of the policy in which plaintiff was insured. From the exhibits attached it appears plaintiff's prior counsel in April wrote a letter addressed to Little Audrey at Salt Lake City asking for a copy of the policies S--6228/9 which its Director of Safety answered by stating he had advised the 'insurance company of your request. If you do not receive an answer to your request, please contact me, and I will follow up on it.' Plaintiff changed counsel who on May 17th wrote Little Audrey asking the policies be sent to him; Stevens' answer of the 20th said he had forwarded this letter to IMCA in New York for handling.

Plaintiff does not dispute the facts in the Little Audrey showing. What pervades his argument is his claim of difficulty in obtaining a copy of the master policy, the name of the actual insurer, delay and lack of cooperation by some of defendants in his quest. He concluded and urged on the trial court with considerable vigor that their actions fostered disrespect for his pleadings and judicial procedures. Counsel in his haste to bring the 'matters to a speedy' conclusion may have contributed to some of the delay. Examination of the certificates of insurance attached to the complaint certified 'INTERSTATE MOTOR CARRIERS AGENCY (address given) has provided Insurance on behalf of: OPERATOR: Eldon C. Davis' for the carrier Little Audrey on the equipment then described for one amount on the tractor and another on the trailer for 'Collision with the Underwriters at Lloyds and British Companies, Policy #'s S--6228/9'. It is sufficiently clear IMCA as agents or brokers had placed this insurance on plaintiff's equipment with Lloyds by virtue of a master policy insuring Little Audrey. These are well known methods in the business of insurance as evidenced by group life, health and similar other insurance. The IMCA letter of July 29th to the South Dakota Insurance Commissioner, a part of plaintiff's showing, outlines and describes the...