Fillhardt v. Schmidt

• Decision Date: 29 September 1942
• Citation: 165 S.W.2d 155,291 Ky. 668
• Parties: FILLHARDT v. SCHMIDT et al. RARDIN'S ADMIX v. SAME.
• Court: Kentucky Court of Appeals

165 S.W.2d 155

291 Ky. 668

FILLHARDT v. SCHMIDT et al.

RARDIN'S ADMIX v. SAME.

Court of Appeals of Kentucky

September 29, 1942

Rehearing Denied Nov. 17, 1942.

Appeal from Circuit Court, Campbell County; Ray L. Murphy, Judge.

Suits by Carl Fillhardt and by Carrie Rardin, administratrix of Mary Lou Rardin, deceased, against Peter Schmidt, and others for new trials on ground of fraud practiced by defendants in obtaining judgments dismissing as settled two causes of action for damages. From judgments dismissing plaintiffs' petitions, plaintiffs appeal.

Reversed.

Benton & Benton, of Newport, for appellant.

Lester & Riedinger and John William Heuver, all of Newport, for appellee.

STANLEY Commissioner.

The joint appeals are from judgments dismissing petitions for new trials, brought under Section 518, subsection 4, of the Civil Code of Practice, upon the ground of fraud practiced by the successful party in obtaining judgments dismissing as settled two actions for damages. The new suits and the appeals are against the defendants in the tort actions and their attorneys; also against plaintiff's attorneys of record in those cases. The questions are whether an order overruling a motion to set aside an original judgment from which no appeal was taken is a bar to the maintenance of a suit for a new trial under Section 518 of the Code, and, if not, whether the plaintiffs proved their cases. The court had sustained demurrers to the pleas in bar but when the cases were submitted on the evidence the court (a different judge presiding) set aside the former orders and ruled that the orders on the motions to vacate the original judgments were res adjudicata of these proceedings. The court also ruled that the plaintiffs had not proved fraud in obtaining the judgments.

The essential record may be summarized as follows: An alleged roadhouse gambling establishment in Campbell County was destroyed by an explosion and fire of incendiary origin on the night of February 3, 1936. Carl Fillhardt was living in the building as a caretaker and an infant, Mary Lou Rardin was in his home. The child died from burns and injuries. One man pleaded guilty to murder and two others were convicted all being sentenced to life imprisonment. Whitfield v. Commonwealth, 265 Ky. 640, 97 S.W.2d 565; second appeal, 278 Ky. 111, 128 S.W.2d 208. Fillhardt was seriously injured. Suits were filed against the owners of the establishment for damages for his injuries and the death of the child upon the ground that the owners had received threats, warning and notice of being burned out and had been negligent in not informing Fillhardt and the occupants of the building of the danger. The filing of the suits for damages was under these circumstances: The administrator of the child and Fillhardt had employed Daniel W. Davies as their attorney to bring the actions, but Mr. Davies was connected with the Whitfield prosecution and felt that he could not appear of record for the parties in the civil actions without embarrassment until that relationship had ceased. As the statute of limitations was about to bar the actions, it was purposed to procure a certain other lawyer to file them, but because of the cessation of business and general chaos in Newport on account of the great flood of 1937 he could not be presently found. Fillhardt, the administrator of the child, and Davies happened upon Charles E. Lester, an attorney, in the courthouse, on February 1st and got him to file the suits. Lester was given to understand that Davies would take charge of the cases when his connection with the Whitfield prosecution had ceased. Davies and Lester then prepared the petitions which were signed by Lester for himself and partner, Lawrence Riedinger, Jr., and then filed. No agreement or understanding was reached as to the attorneys' compensation for this temporary service. Before filing the suits Lester inquired whether the parties would settle their claims for $7,500. They were non-committal but told him that if any settlement should be made Mr. Davies must be consulted and that they wanted to know about it. Lester went to the telephone and on his return reported he had been talking to his partner and that Schmidt, one of the men against whom the claims were being made, was then in their office and that no settlement could be reached so it would be necessary to file the suits. Arrangements were made for the parties to be present at the taking of the deposition of some of the defendants, but that was not done. On the night of March 22nd Lester called them to his office and told them he had settled both cases for $2,500. Lester claimed a fee of one-half the amount he had received. Lester had a check of one of the defendants payable to the parties and to himself and Riedinger which he asked the parties to endorse, and had releases which he insisted they should sign. Neither of them nor Mr. Davies had been consulted and they disavowed the settlement and refused to endorse the check or execute the releases. Arthur J. Daly, attorney for the defendants, testified that he had delivered the check to Lester upon his assurance that the releases would be executed. Lester and Riedinger, for the plaintiffs, and Daly, for the defendants, signed an agreed order reciting that "all matters in dispute in the above styled cases have been fully and finally disposed of, the case is now dismissed at defendants cost." The order shows the filing stamp of the clerk of the court, of date March 22, 1937, scratched out. The clerk testified this was done because the Judge had not ordered it filed. It is significant that Fillhardt was called on to verify an amended petition the next day. Another significant thing is that J. W. Heuver, special attorney for one of the defendants, filed motions in the cases on March 24th, thus disclosing he was in the dark about the settlement. Daly testified he had nothing more to do with the case after signing the agreed order of dismissal and lodging it in the clerk's office on March 22nd. The check, payable to the parties and their attorneys jointly, was not honored by the bank. It is indicated by one of the defendants that this was because of insufficient funds, but there is no positive testimony to that effect. It is more likely that it was not paid because the parties as payees had not endorsed it. A day or so later the dishonored check was returned to the defendants. One of them took cash to a bank for which he obtained a cashier's check for $2,500, payable to the circuit court clerk by name--not to the parties or their attorneys--which was given Lester. This was endorsed specially by the clerk's deputy and delivered back to Lester who endorsed his own and his partner's name upon it. The bank's officers, after talking with some of the defendants and with Daly about honoring the check because of the irregular endorsements by the deputy clerk, cashed it for Lester or Riedinger. They pocketed the money and still have it so far as the record discloses. The order of dismissal bears another stamp of filing by the circuit clerk on April 24, 1937. This second transaction was unknown to the plaintiffs and Mr. Davies. Several weeks later Fillhardt went to the clerk's office to check up on the cases and learned they had been dismissed settled. He and Davies went to the office of Lester and Riedinger and were told by the latter he knew nothing about the dismissal. Lester was not there. The record in the original cases shows that motions to set aside the orders of dismissal were lodged on May 5, 1937, and later filed. They were prepared by Davies on printed motion blanks provided by the court and were filed by Fillhardt personally. The grounds for vacation of the judgment were not stated, and there were no supporting affidavits, nor were the motions signed by anyone. It does not appear there was any hearing or trial or anything else done about the motions until the court overruled them in October.

These suits for new trials were later filed. The defendants traversed the allegations of the petitions, pleaded that Lester and Riedinger had had full authority to settle the cases; and, further, that the plaintiffs were estopped from maintaining these suits by filing the motions to set aside the orders dismissing the actions, having elected to proceed in that manner. It is noted that the answers are signed by Lester and Riedinger as attorneys for the defendants and that they continue to represent them in opposition to their former clients whom they and others are charged with defrauding.

The general construction of Section 518 and accompanying provisions of the Code authorizing proceedings in the trial court to vacate or modify a judgment after the expiration of the term, as they have been related to a condition like the one at bar, is given in Commonwealth ex rel. v. Weissinger, Judge, 143 Ky. 368, 136 S.W. 875, 877, in the following language:

"We are of the opinion that in every action or proceeding pending in a court of justice, by whatever name it may be called, and without regard to the purpose of it, if either party is prevented by fraud, casualty, or misfortune from presenting his claim or defense, or from prosecuting an appeal from a judgment against him, if an appeal is allowed, he may have relief under section 518 of the Code, unless the right to secure relief under this section is denied by express statute or necessary implication. It cannot be tolerated that by the judgment of a court of justice a party who is without fault and who has not been guilty of laches shall by fraud, casualty, or misfortune be denied the privilege to assert his claim or defense or the opportunity to prosecute an appeal from a judgment against him. Section 518 of the Code was intended to and does

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