Edgar v. Armored Carrier Corp.

• Decision Date: 09 June 1964
• Docket Number: No. 51241,51241
• Citation: 256 Iowa 700,128 N.W.2d 922
• Parties: Wilma C. EDGAR, Appellant, v. ARMORED CARRIER CORPORATION, a Corporation, Appellee.
• Court: Iowa Supreme Court

Page 922

128 N.W.2d 922

256 Iowa 700

Wilma C. EDGAR, Appellant, v. ARMORED CARRIER CORPORATION, a Corporation, Appellee.

No. 51241.

Supreme Court of Iowa.

June 9, 1964.

J. W. Ritchie, Indianola, for appellant.

Bannister, Carpenter, Ahlers & Cooney, Des Moines, for appellee.

THOMPSON, Justice.

To err is human; to forgive, or at least to permit correction of mistakes, is sometimes the prerogative of the courts. The mistake, or oversight in the instant case is obvious; the question before us is whether the trial court should be upheld in its ruling which gives the defendant a second chance to appear and defend. On June 6, 1963, the plaintiff filed her action for damages claimed to have arisen through the negligence of the defendant's driver in the operation of a motor vehicle. The driver was also made a party, but he is not involved in the present appeal. Armored Carrier Corporation will hereafter be known as Armored; its insurance carrier, Hartford Accident & Indemnity Company, will be referred to as Hartford.

On June 7th, 1963, original notice of the suit was served on Clarence Cosson, Armored's process agent, in Des Moines. The notice was promptly forwarded to Armored in New York, and by it to Hartford at its New York offices. Affidavits of Hartford officials show the notice was received by that company on June 13, but was lost or mislaid and has never been found. So it received no attention and no appearance was filed for Armored prior to the entering of default on June 27, and a judgment for $135,000.00 on July 1 next. Hartford had the duty to represent and defend for Armored, and Armored relied upon the insurer to do so. These things, and other facts, are shown by affidavits attached to the motion to set aside default. There is no substantial dispute in the facts, although it is possible different inferences may be drawn from them. An affidavit states: '* * * had said notice not been lost, it would have been processed in the ordinary course of business, our Des Moines claim office timely notified and our Des Moines counsel instructed to enter a timely appearance and defend on behalf of Armored Carrier Corporation.'

An affidavit of Dean F. Hodges, a claim supervisor in the Des Moines office of Hartford, was also attached to the motion to set aside default. From it these things appear: On June 24 Hodges talked with plaintiff's attorney, said he knew the driver had been served, and was told Armored's process agent had also been served. No service date was mentioned other than June 18, and Hodges concluded that was the approximate date of service against which he should guard, and he 'figured our appearance was due by July 8, 1963.' At all times it was his intention to see that a timely appearance was made for both defendants. Ritchie did not tell him service had been made on Armored on June 7, and he thought if an earlier service than June 18 had been had, Ritchie would have told him. Mr. Ritchie's affidavit, filed in connection with plaintiff's resistance to the motion to set aside the judgment, is not materially different, except he said he told Hodges the petition and return of service on Armored was on file in the courthouse; and that when Hodges said they would have until sometime after July 1 to appear he made no reply. Mr. Ritchie, then, knew that Hodges was under a misapprehension as to the date for Armored's appearance. Whether he was under any duty to correct this mistake we do not decide; but it is apparent he knew that Armored intended to appear and defend on the merits.

The motion to set aside default, around which the storm centers in this case, was filed on July 5, 1963. At the same time answer of Armored to the petition of the plaintiff was filed. It denies generally in separate paragraphs the material allegations of the petition, and so asserts a meritorious defense. Resistance to the motion was filed on July 15, and on September 16 next the trial court by written ruling set aside the default and judgment. We granted leave to appeal, under R.C.P. 332, 58 I.C.A.

I. R.C.P. 236 provides: 'On motion and for good cause shown, and upon such terms as the court prescribes, but not ex parte, the court may set aside a default or the judgment thereon, for mistake, inadvertence, surprise, excusable neglect or unavoidable casualty. Such motion must be filed promptly after the discovery of the grounds thereof, but not more than sixty days after entry of the judgment. Its filing shall not affect the finality of the judgment or impair its operation.'

The problem raised by this appeal is whether the trial court abused its discretion in setting aside the default and judgment. The plaintiff first asserts that 'an insurance carrier, not a party to the action, has no right or authority to have a default judgment against a named defendant, set aside, when it occurred as the result of the insurance carrier's intentional or unintentional failure to timely appear and defend.' If this means that the insurer may not in its own name ask that the default be set aside, the answer must be that we have no such situation here. The motion to set aside default was made in the name of Armored. It may be, and very likely is, that the duty rested upon the insurer to defend. Most defenses in this type of case are in fact made by an insurer; but we know of no precedent for holding that the insurance carrier may not defend in any legal and proper way in the name of its insured. The judgment was against Armored; and although the insurer may have been remiss in failing to see that a timely appearance was filed in the name of its insured, it still had the right to take whatever steps were then available to make a defense as agent for the one covered by the policy.

II. The substantial question in the case is whether the trial court was within its fair discretion in setting aside the judgment. The burden was upon the movant to show good cause which would warrant a finding of 'mistake, inadvertence, surprise, excusable neglect or unavoidable casualty'. Rule 236, supra. But we may not interfere with the findings of the trial court at this point unless its determination is without support in the evidence. Handy v. Handy, 250 Iowa 879, 884, 96 N.W.2d 922, 926.

There are of course other well-settled rules applicable to the present situation. The trial court has a broad judicial discretion in passing upon motions to set aside defaults; we are more reluctant to interfere with the grant of such a motion than with its denial; and every fair presumption will be indulged in favor of the trial court's ruling. Handy v. Handy, supra, loc. cit. 250 Iowa 884, 885, 96 N.W.2d 926.

Another and somewhat more specific rule is stated in Newell v. Tweed, 241 Iowa 90, 95, 40 N.W.2d 20, 23: 'It has been the holding of this court that where a party in good faith is shown to have intended to defend but fails to do so because of accident or excusable neglect the trial court is justified in setting aside the default and in permitting the pleading of a defense.' We quoted this with approval in Handy v. Handy, supra, loc. cit. 250 Iowa 885, 96 N.W.2d 926.

It will be noted that R.C.P. 236, supra, is more favorable to the litigant who seeks to set aside a default than was our statute prior to the adoption of the rule. Section 11589, Code of 1939, required that a 'reasonable excuse' must be shown; the rule now includes...