Graham v. Yakima Stock Brokers, Inc.
| Decision Date | 29 October 1937 |
| Docket Number | 26350. |
| Parties | GRAHAM et al. v. YAKIMA STOCK BROKERS, Inc. |
| Court | Washington Supreme Court |
Appeal from Superior Court, Yakima County; A. W. Hawkins, Judge.
Action by R. A. Graham and others, copartners doing business under the firm name and style of Graham Brothers & Medley, against the Yakima Stock Brokers, Inc., wherein defendant filed a cross-complaint. Judgment for defendant by default on its cross-complaint, and plaintiffs appeal.
Reversed and remanded.
Cheney & Hutcheson and Walter J. Robinson, Jr., all of Yakima, for appellants.
Snively & Bounds and John Gavin, all of Yakima, for respondent.
This action was brought by the plaintiffs to recover for services rendered under, and damages for the breach of, a written contract for the performance of certain development work on a mine in the state of Idaho. The complaint was filed in the superior court of Yakima county February 24, 1934, but had been served on the defendant some time Before that date.
The plaintiffs, nonresidents of Yakima county at the time of the service of the complaint upon the defendant were represented by MacMahon & Poe, attorneys residing in the city of Tacoma. After a cost bond had been furnished, the defendant interposed a demurrer to the complaint, as well as a motion to make more definite and certain. These were argued and taken under advisement by the court. Nearly a year thereafter, the court advised the parties of its decision and, on February 18, 1935, an order was entered granting, in part, the motion to make more definite and certain.
After compliance by the plaintiffs with the court's ruling, the defendant, on March 4, 1935, served upon MacMahon & Poe its answer by mail, setting up an affirmative defense and cross-complaint, in which it sought recovery of $10,500 for alleged improper performance of tunnel work under the contract.
On July 30, 1935, plaintiffs having failed to serve their reply to the answer and cross-complaint, or make any other or further appearance, the defendant's attorneys mailed to MacMahon & Poe, at Tacoma, a motion for default, supported by affidavit.
An order of default was entered August 7, 1935. On the day preceding the entry of this order, however, August 6th, the law firm of Cheney & Hutcheson, of Yakima, served notice on the attorneys for the defendant of their substitution in the action as attorneys for the plaintiffs, and requested that all further notices therein be served upon them; and, on August 7th, served upon the defendant's attorney a reply denying all of the material allegations of the defendant's affirmative defense and cross-complaint. This notice of substitution was not signed by MacMahon & Poe, nor had they, prior to that time, formally notified the defendant or its attorneys of their withdrawal from the case.
The record discloses no further proceedings in the case until May 5, 1936, when findings and conclusions were made, and judgment thereon entered, awarding the defendant damages in the sum prayed for in its affirmative defense and counterclaim, and dismissing plaintiffs' action.
On May 15, 1936, the plaintiffs, by their counsel, Cheney & Hutcheson, moved to vacate the order of default and judgment. The motion was supported by an affidavit signed by Joseph C. Cheney and Elwood Hutcheson, attorneys for the plaintiffs, in which affiants state that, shortly prior to July 30, 1935, they had been substituted as attorneys for plaintiffs, although no notice of substitution had been served or filed; that, by reason of the change of attorneys, the motion for default was referred by MacMahon & Poe to the plaintiffs, then residing and working at South Bend, Wash., who promptly mailed it to affiants; that the motion and affidavit were mailed by MacMahon & Poe to the plaintiffs on August 1, 1935, and thereupon mailed by plaintiffs to affiants, and was received by them on August 6th; that affiants, on the same day the motion and affidavit were received, prepared a notice of substitution of attorneys and served it upon Snively & Bounds, attorneys for the defendant; that affiants also prepared a reply denying all of the affirmative allegations of the answer and cross-complaint, and served it upon Snively & Bounds on August 7, 1935.
They state that, without any notice whatever to the plaintiffs or their attorneys, the attorneys for the defendant, on August 7, 1935, subsequent to the service of the notice of substitution of attorneys and the service of reply, caused an order of default to be made and entered; that the default judgment of May 5, 1936, was entered without the knowledge of affiants, or notice to them, and that they were not aware of the entry of the order of default or the default judgment until May 8, 1936.
The affiants also state that, in April, 1936, plaintiffs instituted a suit in the United States District Court of Idaho, to recover for work performed by the plaintiffs under the tunnel contract and for damages for breach thereof, alleging that the contract was executed by the defendant, Yakima Stock Brokers, Inc., as agent for the Penman Mines Corporation, of which it was a subsidiary; that, on May 8, 1936, affiants were served with the answer of the defendant in the Idaho action, and from this learned for the first time of the entry of an order of default and judgment in the Yakima county case.
I. J. Bounds, one of the attorneys for the defendant, filed a controverting affidavit, in which he states that, subsequent to the order of default, the firm of Cheney & Hutcheson filed notice of substitution of attorneys, but that in the substitution they failed to comply with the requirements governed by statute. The affidavits on both sides contain much other matter not material to the immediate issue. The motion of vacate the order of default and judgment was denied June 13, 1936, with leave to the plaintiffs to renew the motion While the order denying the motion does not recite the fact, it appears the motion to vacate was denied because MacMahon & Poe had not served a formal notice of their withdrawal as attorneys for the plaintiffs.
Subsequently, June 16, 1936, formal notice of substitution was filed in the cause by MacMahon & Poe and Cheney & Hutcheson, who renewed the motion to vacate the default order and judgment.
On June 27, 1936, the court made an order vacating the order of default, findings, conclusions, and judgment. The order of vacation was made for the reason that it did not appear from the record that the defendant's motion for default had ever been noted for argument.
On this day, Cheney & Hutcheson reserved and filed the plaintiffs' reply to the affirmative defense and cross-complaint. Upon the vacation of the order of default and judgment, the attorneys for the defendant noted the motion for default for argument, and July 6, 1936, the court made an order granting the motion.
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