Gemmer v. Diehl

• Citation: 411 N.E.2d 1248
• Decision Date: 08 October 1980
• Docket Number: No. 2-1076A394,2-1076A394
• Parties: Arthur H. GEMMER, Appellant-Defendant, v. Wallace G. DIEHL, Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 1248

411 N.E.2d 1248

Arthur H. GEMMER, Appellant-Defendant, v. Wallace G. DIEHL, Appellee-Plaintiff.

No. 2-1076A394.

Court of Appeals of Indiana, Fourth District.

Oct. 8, 1980.

Frank E. Spencer, Arthur H. Gemmer, Indianapolis, for appellant-defendant.

Paul Hirsch, Indianapolis, for appellee-plaintiff.

MILLER, Judge.

Defendant-appellant, Arthur H. Gemmer appeals from a judgment for the plaintiff-appellee, Wallace G. Diehl, rendered in the Marion Superior Court, Room No. 2 on Diehl's complaint alleging Gemmer's failure to pay a promissory note for $11,500 executed in return for a loan from Diehl to Gemmer. After a trial to the bench, the lower court entered a judgment for Diehl awarding him $11,500 on the note plus interest accrued at 8% interest from October 1, 1971 and $950 for attorney's fees, a total of $16,387.

Essentially Gemmer claims that a dismissal of the case on its merits entered early in the cause was never appealed nor properly set aside and therefore the earlier judgment constituted res judicata and denied the court jurisdiction to proceed to trial and judgment against him.

We affirm.

Gemmer borrowed $11,500 from his then client Diehl and gave his promissory note for $11,500 on October 1, 1968. The due date of the note was October 1, 1971 and Gemmer was required and did pay 7% interest during the life of the note. When the note was not paid when due, attempts to settle the matter were made. Finally, on February 26, 1974 suit was brought in the Marion Superior Court, Room No. 2. Summons was issued to Gemmer by registered mail; however, the letter was not delivered and returned some few days later. Subsequently, on May 23, 1974, upon Diehl's motion, the court entered a default judgment against Gemmer providing for damages of $11,500, $1,380 interest and attorney's fees of $2,500 for a total default judgment against Gemmer of $15,380. When notice was given to Gemmer of a proceedings supplemental to execution, he filed, on June 11, 1974, a "Motion To Set Aside Default Judgment, Void For Lack of Jurisdiction and For Abuse of Process." In the Motion Gemmer pointed out that the summons was returned by the post office and not delivered. He claimed the attorney for Diehl had falsely represented that service was completed and asked the court to set aside the default judgment and order to appear at the proceedings supplemental. In addition, Gemmer alleged that he

"has never been served with process in this cause, and has a good and meritorious and complete defense against the alleged promissory note sued upon, and that said note was completely paid off and replaced by a subsequent promissory note on October 1st, 1971, as both plaintiff and his attorney Paul Hirsch well knew and specifically knew."

This Trial Rule 60(B) motion was verified by Gemmer.

On July 8th, 1974, the Court entered the following order:

"COURT ORDER: SETTING ASIDE DEFAULT JUDGMENT FOR LACK OF JURISDICTION

Comes now the Court and counsel for defendant having filed their verified pleadings entitled 'Defendant's Motion To Set Aside Default Judgment for Lack of Jurisdiction, Based upon Misrepresentation and Abuse of Process by Plaintiff's Attorneys' which is in the following words and figures as follows: (H.I.)

And the Court having examined said verified motion and having checked the record and particularly the sheriff's return, and being thus duly advised in the premises, now finds that, as alleged in defendant's motion, there has never been any service of process upon defendant and that this Court lacks jurisdiction over the person and over the subject matter; that these facts of non-service were clearly and conclusively shown on May 23, 1974, when it was misrepresented to this Court by counsel for plaintiff that there had been service upon defendant, and that this Court was induced by said misrepresentation to erroneously enter a default judgment against defendant, which default judgment was accordingly void and should be set aside.

And the Court further finds that defendant has alleged a good and sufficient defense under oath to the subject action on the subject promissory note, to-wit: that said note was paid off and replaced and nothing is due and owning (sic) thereon, and that both plaintiff and his counsel knew these facts when they filed this action, and accordingly the action should be dismissed.

IT IS, THEREFORE, ORDERED ADJUDGED AND DECREED that the default judgment entered against the defendant on May 23, 1974, be and the same is hereby declared void and set aside, and a good and conclusive defense having been shown to the action, this action is dismissed, costs versus plaintiff." (Emphasis added)

We must note at this point that we can find no basis for dismissing the action for the reasons given and at that stage in the proceeding. Such action was clearly erroneous. We know of no authority for dismissing a cause of action by judgment on the merits where, apparently, the action of the court is based on merely an assertion in a motion to set aside a default judgment that the defendant has a meritorious defense.

On July 12, 1974 Diehl filed two pleadings-a Request For Admissions relating to the merits of the action and an Answer to Defendant's Motion To Set Aside The Default Judgment with a request for a hearing. The next entry indicates that on November 25, 1974 Diehl filed a Motion For Summary Judgment based on the fact that no response was filed by Gemmer to Diehl's Request for Admissions.

Thereafter, and notably more than 60 days after the July 8th "dismissal", Gemmer, on December 13, 1974 filed a document entitled "Information Calling Court's Attention To Pleadings Purportedly Filed in Disposed of Cause With Final Judgment." In this pleading Gemmer pointed out that the judgment had been previously dismissed and moved the court to strike and expunge Diehl's request for admissions and motion for summary judgment. On December 16, 1974 the court did, indeed, strike those pleadings as inappropriate because the case had been dismissed.

On January 13, 1975, after a new judge had assumed the bench of the Superior Court, Diehl filed a "Motion to Reinstate Above Cause and Void Court Order of December 16, 1974." In this motion Diehl recited the history of the case noting that his original default judgment was inadvertently obtained in the belief that service had been perfected and the default judgment had been set aside on July 8, 1974. He stated that he moved for summary judgment believing that the default judgment had been set aside and the case was still pending before the court. Further, he claimed the court was "ill advised" by Gemmer that the matter had been disposed of by the court's judgment of July 8, 1974 in that the judgment merely set aside the default judgment and did not cause the entire action to be dismissed or otherwise disposed of by final judgment. Diehl requested a hearing and also asked the court to set aside its December 16 order striking his motion for summary judgment, and an order reinstating the cause. The next day, on January 14, 1975 the following order was entered by the court:

"Order of December 16, 1974 set aside, cause reinstated Motion set down for hearing."

On February 6, 1975 Gemmer filed his "Motion to Expunge Entries for Lack of Jurisdiction" claiming simply that the judgment entered on July 8, 1974 was a final judgment, no Motion to Correct Error had been filed within 60 days thereafter nor had an appeal been taken, and therefore the court was without jurisdiction to vacate or modify the final judgment which had dismissed the cause. Also on February 6, 1975 the court entered the following order: "the hearing heretofore set is continued to March 10, 1975 to allow counsel for parties to file memorandum of law."

On March 10, 1975 Diehl filed his "Memorandum In Support of Court's Order Reinstating Cause." This memorandum related some factual background indicating that Gemmer had represented Diehl in a condemnation action and, when the state deposited $11,500 with the court to enable it to enter onto the property, Gemmer borrowed the funds from Diehl. ¹ It also revealed some of the later court proceedings. In his memorandum of law Diehl claimed that Ind. Rules of Procedure, Trial Rule 5(A) required that the court's order of July 8, 1974 should have been served upon him and that until such time as the order was served it was without effect in tolling the appeal period. (This was incorrect. Ind. Rules of Procedure Trial Rule 72(D) requires the clerk to give notice of a judgment but provides that failure to do so "does not affect the time to appeal.") The memorandum was verified by Diehl and accompanied by an affidavit from his attorney, Paul Hirsch, stating he had not received notice of the court order of July 8, 1974 and that he did not learn of that court order until December 16, 1974. Gemmer also filed a brief in support of his motion to expunge all of the court's entries subsequent to the July 8, 1974 dismissal on the basis that there was no appeal therefrom.

On July 1, 1975, the Judge overruled Gemmer's motion of February 6, 1975 which had requested the court to expunge the entries of January 13, 1975 (Diehl's Motion to Reinstate) and January 14, 1975 (the entry which had apparently reinstated the cause and further set the Motion to Reinstate for hearing).

Finally, and most significantly, on August 26, 1975 the court entered an order which found that the parties had a hearing on February 6, 1975 at which time oral arguments were heard. The court also reviewed the proceedings noting that neither Diehl nor attorney Hirsch had notice of any hearing concerning the "good and conclusive defense of defendant Gemmer" which was the basis of the July 8, 1974 dismissal; noted that at the February 6, 1975 hearing the court heard oral argument from counsel of both parties and directed them to file their respective memoranda of law, and, finally, entered judgment that

"the Court...