Florida Inv. Enterprises, Inc. v. Kentucky Co.

• Decision Date: 13 February 1964
• Docket Number: No. E-187,E-187
• Citation: 160 So.2d 733
• Parties: FLORIDA INVESTMENT ENTERPRISES, INC., a Florida corporation, and Ralph Hayes and Grace Hayes, Appellants, v. The KENTUCKY COMPANY, Inc., a Florida corporation, Appellee.
• Court: Florida District Court of Appeals

Page 733

160 So.2d 733

FLORIDA INVESTMENT ENTERPRISES, INC., a Florida corporation, and Ralph Hayes and Grace Hayes, Appellants, v. The KENTUCKY COMPANY, Inc., a Florida corporation, Appellee.

No. E-187.

District Court of Appeal of Florida, First district.

Feb. 13, 1964.

Conklin, Borns & Wilson and William W. Judge, Daytona Beach, for appellant.

Walter A. Shelley, Daytona Beach, for appellee.

DAWLS, Judge.

The defendants Florida Investment Enterprises, Inc., Ralph Hayes and Grace Hayes appeal from a default judgment, a final judgment and an order denying defendants' motion to vacate and set aside default and final judgments.

Plaintiff, Kentucky Company, brought this action on January 17, 1963, to recover damages for an alleged breach of a lease which was signed by the three defendants. Personal service of process was made upon Ralph Hayes and upon the corporate defendant. Substituted service under Section 47.16, Florida Statutes, F.S.A., was attempt for nonresident defendant Grace Hayes. Attorneys for the resident defendants filed with the Clerk a Notice of Taking Depositions of seven people onFebruary 13, 1963. This notice bears the signature of Robert L. Wilson and indicates W. W. Judge as co-counsel. The taking of these depositions was delayed to accommodate plaintiff's counsel, and the conclusion of the transcript of one deposition contains the following colloquy:

'BY MR. WILSON--We had scheduled for this morning Thomas C. Simpson, J. L. Townsend, Jr. and his wife, and for this afternoon John Petty and Priscilla Petty, his wife, and due to previous unavoidable commitment, Mr. Shelley voluntarily canceled these depositions. He has agreed that we will try to set these back up at the mutual convenience of counsel.

'BY MR. SHELLEY--Iagree to that statement and will be glad to attend any resetting of these depositions by Mr. Wilson.

'BY MR. WILSON--The only thing, I don't want to have to file a bunch of dilatory motions to stall it, but I want to get John Petty's and Priscilla Petty's testimony before I file responsive pleadings.

'BY MR. SHELLEY--I will submit those individuals at the convenience of Mr. Wilson and the Reporter.

'BY MR. WILSON--And I won't have to file an Answer before we take the depositions?

'BY MR. SHELLEY--Sir?

'BY MR. WILSON--I won't have to file an Answer before we take the depositions?

'BY MR. SHELLEY--I wouldn't relax the Rules on that, but I'll submit them before time.

'THEREUPON the hearing was ADJOURNED.'

On March 4, 1963, Robert L. Wilson wrote a letter to plaintiff's attorney advising that his trial schedule would be terminated at the end of the week, at which time he would be able to continue the depositions and would thereafter file responsive pleadings to the complaint. This letter was answered four days later by plaintiff's attorney who advised Mr. Wilson that he had not agreed to the extention of time beyond the return date, February 20, 1963, and that on February 26, 1963 default and final judgments (in the sum of $42,140.03) had been entered. On March 19, 1963, Mr. Wilson filed a motion to vacate. This motion was denied and defendants appealed.

We are confronted with two essential points: 1. Did the trial court abuse its discretion in refusing to set aside the default and final judgments due to mistake, inadvertence, surprise or excusable neglect? 2. Is Grace Hayes operating, conducting, engaging in or carrying on a business venture in this State as contemplated by the statute authorizing substituted service upon nonresidents?

As to the first point appellants rely upon the following facts to show reversible error:

1. They relied upon the automatic referral systen contained in the Rules for Internal Government of the Circuit Court of the Seventh Judicial Circuit of Florida, pursuant to which the complaint in this cause was referred to division 'D' presided over by the Honorable Horace D. Riegle, whereas the default and final judgments were entered by retired Judge George W. Jackson.

2. Their attorney, Mr. Wilson, understood from the quoted colloquy that he would not be required to file dilatory pleas in order to gain time necessary for the completion of the pending two trials on his schedule but that the attorneys would 'work things out.'

3. Mr. Wilson, by the motion, informed the trial judge that he began preparation on February 14, 1963 for two previously scheduled jury trials, the case of the Arthur E. Cleveland v. R. H. Wright, Inc. tried on February 25 and 26 in Volusia County and June Henderson v. Broward County Board of Public Instruction tried on March 6 and 7 in Cocoa, Brevard County, Florida.

4. Mr. Wilson in the spirit of cooperation postponed the taking of some of the depositions, but plaintiff's attorney did not extend him the courtesy of notifying him by letter or phone call prior to taking the default judgment and did not inform the trial judge that defendants had retained counsel. At this point we note the record reveals that the attorneys maintain their offices in the same town, and that plaintiff's attorney admitted he did not inform Judge Jackson that defendants had retained counsel.

5. Defendants have a meritorious defense as is shown by the deposition of Martin Petty (attached to the motion). The corporate defendant has a meritorious defense independent from those of Ralph Hayes, and such defenses include satisfaction, a corporate accounting, setoff, misappropriation of funds by the plaintiff corporation against the individual Ralph Hayes and a counterclaim for moneys due and owing for work and labor.

The general rule in cases such as this is that relief may be granted within the sound discretion of the trial court upon a showing of the existence of a meritorious defense and a legal excuse for failure to comply with the rules. This court has reviewed the deposition filed in the record and concludes that the order of the trial court denying defendants' motion to vacate was not based upon the absence of a meritorious defense.

The hostory of the statutory provision regulating the setting aside of default judgments has been reviewed in detail in North Shore Hospital, Inc. v. Barber ¹ and need not be reiterated here. Pertinent here, however, is the Supreme Court's pronouncement that the repeal of the statute and the reversion to the common law likewise abrogated prior decisions holding that under the statute a showing of 'gross abuse' of the trial court's discretion was a prerequisite to reversal of a ruling upon a motion to vacate. Instead, that opinion emphasized the liberalizing of the rules of procedure toward the achievement of substantial justice and quoted with approval Waterson v. Seat and Crawford, ² to wit:

"Whether a default should be opened, must depend on all the facts and circumstances connected with the case. If the party be guilty of gross megligence, the default will not be opened.' [Emphasis supplied.]

'The court also stated that '* * * it is the tendency of the courts of the present age to stand less upon strict rules of practice than formerly, and to keep the door a long time open to a defendant who seems to be honestly striving to get in that he believes to be a good defense.' Those lines were penned in 1863.'

Subsequent to the occurrence of the facts that gave rise to the North Shore Hospital case and subsequent to the entry of the order reveiewed by this court in Thomason v. Jernigan, ³ the liberalization of the rules was further advanced by the adoption of Rule 1.38(b), Florida Rules of Civil Procedure, 30 F.S.A, which is substantially the same as Federal Rule 60. this rule provides: 'On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, decree, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect * * *.' [Emphasis supplied.]

The numerous cases construing the Federal Rule have also leaned toward liberality. One of the earlier and leading cases ⁴ on the subject elaborated on the 'sound discretion' of the trial court by holding that such discretion is not absolute or capricious but must be applied to give effect to the will of the law, not that of the judge, toward the objective that legal procedure becomes the vehicle for determination of the issues upon their merits instead of upon refinements of procedure, though limited to the extent that litigants and counsel are not allowed with impunity to disregard the processes of the court.

The Federal cases have repeatedly asserted that the purpose of the rule is to assure a party claiming in good faith to have a good and substantial defense to an action, an opportunity to be hears, and the trial courts should exercise the power vested in them liberally in order to achieve this result. Accordingly, these cases give strong consideration to whether the original cause has been litigated and have often granted relief for inadvertence of counsel in failing to file an answer under factual situations not warranting relief for inadvertence occurring after the trial of the cause. For example, Wolfsohn v. Raab, ⁵ held that an attorney's mistake in calculation of time for filing answer is mistake or inadvertence under the rule, and when coupled with a showing of a meritorious defense constitutes grounds for granting relief. Weller v. Socony Vacuum Oil Co. of New York ⁶ held that failure of a clerk in the employ of plaintiff's attorney to serve bill of particulars is mistake or inadvertence sufficient to vacate the order dismissing the case for lack of prosecution. United States, for use of Kantor Bros., Inc. v. Mutual Construction Corp. ⁷ held that failure of an attorney to file an answer due to the fact that he was then engaged in prosecuting a case as a special assistant to the United States Attorney General is excusable neglect.

Although it is well settled that default judgments may not be set aside for a party guilty of gross negligence, the precise...