Goodson v. Bogerts, Inc.

• Decision Date: 26 June 1967
• Citation: 60 Cal.Rptr. 146,252 Cal.App.2d 32
• Parties: George W. GOODSON, Individually and dba Delta Products Company, Plaintiff, v. The BOGERTS, INC., a California corporation, John Phillips, individually, Zepha Bogert, individually, John Does I, II, III, IV, Jane Does I, II, III, IV, Defendants. The BOGERTS, INC., a California corporation, Cross-Complainant and Respondent, v. George W. GOODSON, individually and dba Delta Products Company, Cross-Defendant and Appellant. Civ. 31217.
• Court: California Court of Appeals Court of Appeals

Page 146

60 Cal.Rptr. 146

252 Cal.App.2d 32

George W. GOODSON, Individually and dba Delta Products Company, Plaintiff, v. The BOGERTS, INC., a California corporation, John Phillips, individually, Zepha Bogert, individually, John Does I, II, III, IV, Jane Does I, II, III, IV, Defendants.

The BOGERTS, INC., a California corporation, Cross-Complainant and Respondent, v. George W. GOODSON, individually and dba Delta Products Company, Cross-Defendant and Appellant.

Civ. 31217.

Court of Appeal, Second District, Division 1, California.

June 26, 1967.

Edwin D. Hamlin, Glendale, for plaintiff and appellant.

Baker, LeBel & McNairy, Santa Monica, for defendant and respondent.

LILLIE, Associate Justice.

On January 20, 1966, plaintiff, a mail-order vendor, filed in propria persona Complaint for Breach of Contract and for Unfair Competition against an advertising agency and two of its officers, praying for $756, $6,000 attorney's fees and $25,000 punitive damages. On February 1, 1966, defendant agency, The Bogerts, Inc. (hereinafter referred to as defendant), in addition to filing an answer, cross-complained against plaintiff for $12,192.63 for services rendered under the same contract. Plaintiff and cross-defendant having failed to answer, his default was entered and after a trial on the cross-complaint a default judgment against him in the sum of $12,192.63 was entered on March 8, 1966. Thereafter, writ of execution was issued March 30, 1966, and garnishment levied thereunder on April 4, 1966, upon Security First National Bank and Keen Factors, the proceeds of which amounted to $7,428.64. Nothing was done in the case by plaintiff until May 1, 1966, when for the first time an attorney appeared on his behalf thereafter (May 11, 1966) filing Notice of Motion for Order Setting Aside Default * * * Vacating the Default Judgment, etc., to which was attached proposed answer to cross-complaint and declarations of plaintiff and his counsel. In his declaration plaintiff alleged that he first knew of the judgment in March 1966 when he was notified by his bank that his account had been levied on; during the first week in March 1966 he received Memorandum of Costs and Disbursements through the mail but did not understand its significance; at no time did he receive a copy of the cross-complaint through the mail or any other notice thereof, the default hearing or the judgment; and even had he received the cross-complaint he would not have known of the requirement that he file an answer thereto. Opposing the motion, defendant filed numerous declarations. On June 6, 1966, the trial court ordered the motion to set aside the default judgment against plaintiff and cross-defendant be granted as of July 6, 1966, 'upon the express condition that on or before said date the cross-defendant has deposited with the Clerk of this Court the sum of $12,192.63 in cash (credit for $7,428.64 (proceeds of the execution) deposited with the court by defendant was allowed, leaving a balance of $4,763.99). * * * In the event said sum of cash is not so deposited as of July 6, 1966, the motion is denied. * * *' Plaintiff and cross-defendant made no such deposit, but nine days before the expiration of the time allowed (June 28, 1966) filed Notice of Appeal from the order. Appellant seeks affirmance of the order with deletion therefrom of the condition.

The following was adduced through the testimony of Zepha Bogert at the trial on the cross-complaint. On August 14, 1965, the parties entered into a written contract (Exh. 6), execution of which is admitted in plaintiff's complaint. Thereunder defendant became the advertising and merchandising agency of record for plaintiff (doing business as Delta Products Company and engaged in the sale of kitchen appliance roller units) and his products; it provided that all expenditures for advertising and merchandising be approved first by plaintiff, that all space advertising and radio and television time placed by defendant be billed at the usual rates and certain other expenses and out-of-pocket disbursements be billed to plaintiff at cost or at defendant's time charge rate, and that plaintiff pay defendant for all expenditures for advertising within ten days of 'on-sale' date (ten days after appearance of ad in advertising media). Pursuant to the terms of the contract, defendant rendered advertising services on plaintiff's account and at his request in the sum and at the agreed rate of $16,079.99, of which $6,285.36 was paid by plaintiff, leaving a balance due of $9,742.63 (ledger sheet, Exh. 7). Under the contract, John Phillips, an account executive of many years experience with defendant, rendered 98 hours of service on account of plaintiff and at his request consisting of merchandising, counselling and preparation of all types of schedules, plans and packaging, working with him in his factory and mail order business; plaintiff was billed therefor at $25 an hour (standard rate within the industry), a total of $2,450 (list of hours, Exh. 9). Accordingly, judgment was rendered in the total amount of $12,192.63 for advertising and merchandising services.

The following was received on the motion. Plaintiff was engaged in selling kitchen appliance roller units by placing advertisements in various advertising media and receiving orders therefor by mail on a prepaid basis by those answering the ads. At the time he entered into the contract (Exh. 6) for advertising and merchandising services, plaintiff caused defendant to have confidence in his credit and character by discouraging a credit check and failing to advise it either of considerable pending litigation in which he was a party defendant ¹ or certain judgments rendered against him ² (Declaration of Lionel B. LeBel, Jr.); and by pre or prompt payment for early services and materials and defendant's reliance on his credit and character, plaintiff caused it to furnish to him under the contract greater services and materials for which he then refused to pay, all the while acknowledging the amount due (Declaration of Zepha Bogert). Phillips (vice president of defendant), experienced in mail-order advertising and merchandising development, developed for plaintiff, pursuant to the contract and at his request, a program of selectively placing advertisements in various advertising media over certain periods of time, which program was submitted to and approved by plaintiff who then ordered the various advertising placed. As part of the procedure of projecting advertising from time to time, and relating said advertising to sales results, plaintiff reported as of November 29, 1965, a total gross sales of $22,357.65, generated entirely through defendant's advertising campaign; and over $66,000 in future sales was estimated solely by reason of defendant's services, amounting to an 80% Profit to plaintiff after costs but before payment of advertising (Declaration of John Ward Phillips). As a result of services rendered under the contract on plaintiff's account, defendant placed for plaintiff over $13,400 worth of advertising through various media, 85% Of which was billed to defendant which it had to pay because plaintiff refused to do so thereby placing defendant's business in serious financial difficulties (Declaration of Zepha Bogert).

On the matter of plaintiff's default, Frederic M. McNairy, member of a law firm representing defendant, initially handled defendant's claim ($12,192.63) against plaintiff and demanded payment from him; between December 28, 1965, and January 19, 1966, he received from plaintiff various promises to pay; plaintiff at no time denied owing any portion of the amount due, except on January 19 or 20, 1966, by telephone he voiced his concern about $200 worth of charges from the Herald-Examiner, but said, '(I) will get you the checks'; inasmuch as on January 20, 1966, plaintiff obviously did not intend to make payment but was actively preparing litigation against defendant (plaintiff having filed his complaint on that day), he saw fit to neither further rely upon any representations or stipulations of plaintiff nor contact him regarding a default on the cross-complaint when the latter was thereafter served on plaintiff; the cross-complaint was served by mail on plaintiff at the same address to which Memorandum of Costs and Disbursements was mailed, which document plaintiff acknowledged having received; and said cross-complaint directed to plaintiff has never been returned by the Post Office to his office (Declaration of Frederic M. McNairy).

Citing established authorities that section 473, Code of Civil Procedure is remedial and should be liberally construed so as to dispose of cases on their substantive merits, appellant argues on the one hand that this court should 'scrutinize more rigidly orders denying relief' and on the other, that the order granting the motion be affirmed with deletion of the express condition and return of the $7,428.64 already deposited with the court. While admitting that the record shows that the cross-complaint was mailed to him, appellant reargues the merits of his motion entirely upon facts outside the record, such as--his 'office receives thousands of letters a day which are opened by an automatic opener and sorted by clerks,' 'it might well be that a piece of mail such as the cross-complaint in this action might never have come to (his) desk,' etc.

The granting or denying of a motion to vacate a default rests in the sound discretion of the trial court and the order will not be disturbed on appeal unless an abuse of discretion clearly appears. (Price v. Hibbs, 225 Cal.App.2d 209, 216, 37 Cal.Rptr. 270; Yarbrough v. Yarbrough, 144 Cal.App.2d 610, 614--615, 301 P.2d 426.) While section 473 is remedial and should be liberally construed, nevertheless the moving party has the burden of showing that the default was entered through 'mistake, inadvertence, surprise or excusable neglect' (§ 473), which he must...