Hamilton Watch Co. v. Atlas Container, Inc.

• Decision Date: 01 August 1972
• Docket Number: No. 12952,12952
• Citation: 156 W.Va. 52,190 S.E.2d 779
• Court: West Virginia Supreme Court
• Parties: HAMILTON WATCH COMPANY, a corporation as Assignee of DeVal Corporation v. ATLAS CONTAINER, INC., a corporation.

Page 779

190 S.E.2d 779

156 W.Va. 52

HAMILTON WATCH COMPANY, a corporation as Assignee of DeVal Corporation v. ATLAS CONTAINER, INC., a corporation.

No. 12952.

Supreme Court of Appeals of West Virginia.

Submitted April 25, 1972.

Decided Aug. 1, 1972.

Syllabus by the Court

1. While a default judgment obtained in accordance with the provisions of Rule 55(b), West Virginia Rules of Civil Procedure, is a valid and enforceable judgment, a motion to set aside such judgment should be granted upon the showing of good cause therefor as prescribed in Rule 60(b) of the aforesaid rules.

2. Inasmuch as courts favor the adjudication of cases on their merits, Rule 60(b) of the West Virginia Rules of Civil Procedure should be given a liberal construction.

3. 'A motion to vacate a default judgment is addressed to the sound discretion of the court and the court's ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of such discretion.' Point 3, Syllabus, Intercity Realty Co. v. Gibson, W.Va., 175 S.E.2d 452.

Steptoe & Johnson, Oscar J. Andre, George W. McQuain, Kingsley R. Smith, Clarksburg, for appellant.

George Shedan, John R. Morris, Parkersburg, Frederick D. Sarkis, Morton S. Jaffee, Philadelphia, Pa., for appellee.

CAPLAN, Judge:

This is an appeal from a final judgment of the Circuit Court of Wood County entered in an action which actually involves three separate civil actions. Hamilton Watch Company, a corporation, and Atlas Container, Inc., a corporation, are the parties to such actions, all of which arise out of contentions relating to hereinafter described identical subcontracts. The circuit court entered a default judgment in favor of Atlas and Hamilton prosecutes this appeal.

Prior to and during the year 1966 Hamilton entered into a number of contracts with the United States government for the manufacture of a large number of fuses for artillery shells. These fuses were highly complicated and had to be manufactured under rigid and precise standards. Under a subcontract between Hamilton and Atlas the latter was to manufacture certain parts of these fuses and deliver them to Hamilton. Atlas in turn subcontracted the manufacture of certain parts to Craftneeds, Inc.

Alleging that Atlas failed to deliver sufficient parts and that the parts that were delivered were completely unsatisfactory and so substandard that they had to be rejected, Hamilton terminated its subcontract with Atlas. Subsequently, on March 20, 1967, Hamilton instituted a civil action against Atlas in the United States District Court for the Northern District of West Virginia seeking damages in the amount of $825,500.00. This is the amount Hamilton claims as damage by reason of Atlas' substandard work. That action is still pending in said district court.

Subsequently, on December 26, 1968, the second action between these parties was instituted in the same federal court by Atlas against Hamilton, the former claiming damages under the same subcontract in the amount of $1,950,000.00. In that action Atlas claimed that Hamilton had breached such contract.

The third action between these parties, and the one on appeal in this Court, is an action instituted on January 3, 1969 in the Circuit Court of Wood County by Hamilton as the assignee of DeVal Corporation against Atlas seeking recovery upon an account in the amount of $9,625.33 which Atlas is alleged to have owed DeVal.

On January 22, 1969 Atlas dismissed the action it had instituted in the federal district court and filed an answer and three counterclaims in the action instituted in the Circuit Court of Wood County. The counterclaims consisted of the same claims as those contained in its federal court case and amounted to something over one million dollars. Atlas then moved for discovery and production of certain documents by Hamilton, many of which were supplied, and a great number of which were being prepared for delivery.

The circuit court on February 10, 1969, upon the motion of Hamilton and by agreement of Atlas, ordered that the time within which the plaintiff may answer or otherwise plead to the counterclaims be extended to March 1, 1969. On March 3, 1969 Hamilton filed a motion for a stay of further proceedings pending the final resolution of its claims against Atlas in the case pending in the United States District Court. This motion was never ruled on by the court.

Atlas complains on this appeal that the motion to stay was not timely filed. It is revealed by the record that the court extended the time to answer or otherwise plead to March 1, 1969 and that the motion to stay was not filed until March 3, 1969. However, no objection was made in the proceedings below when the motion to stay was filed. Furthermore, in its brief filed in support of its motion for a default judgment, which was made a part of the record, Atlas acknowledged that it was agreed between counsel that 'Hamilton might have an additional two or three days.' There were other indications in the record that an extension of time past March 1, 1969 was obtained by agreement of counsel. The matter of the alleged untimely filing of the motion to stay, not having been raised in the court below, will not be considered upon this appeal. Boury v. Hamm, W.Va., 190 S.E.2d 13 (1972).

By reason of Hamilton's failure to file a timely answer, Atlas, on April 1, 1969, filed its motion for a default judgment and gave Hamilton notice thereof. After oral argument and submission of briefs on the motion for default judgment, the circuit court granted said motion and entered a default judgment in favor of Atlas. Subsequently, Hamilton moved to set aside the default judgment, contending that reason therefor existed under the provisions of R.C.P., Rule 60(b). After further hearings and argument its motion was sustained in part and denied in part. This appeal resulted from that ruling.

In essence, the trial court, granting Atlas a default judgment, found that Hamilton elected not to answer but made a deliberate and informed choice to move for a stay. Furthermore, the court ruled that there were insufficient grounds under R.C.P., Rule 60(b) to warrant setting aside the default judgment.

The basic issue to be resolved on this appeal is whether or not the court erred in its ruling. Of pertinent consideration is the significance of Hamilton's motion for a stay and whether or not it could be considered as a substantial compliance with the court's extension of time to 'answer or otherwise plead' to the counterclaims.

A default judgment obtained in accordance with the requirements of the rules of civil procedure is a valid and enforceable judgment and will not be set aside unless good cause therefor is shown as prescribed in R.C.P., Rule 60(b). Intercity Realty Company v. Gibson, W.Va., 175 S.E.2d 452. Necessarily implicit in the above statement is the conclusion that such judgment will be set aside if good cause therefor is shown under R.C.P., Rule 60(b). Whether such cause is shown is addressed to the sound discretion of the court. Kelly v. Belcher, W.Va., 187 S.E.2d 617. Unless that discretion is abused, the court's ruling will be upheld. Smith v. Kincaid, 6 Cir., 249 F.2d 243; Provident Security Life Insurance Co. v. Gorsuch, 9 Cir., 323 F.2d 839.

It is the prerogative of an appellate court to review the record of a case and to determine therefrom whether or not the trial court abused its discretion in upholding or vacating a default judgment. In making such determination each case must be considered on its own facts and circumstances. Plumley v. May, 140 W.Va. 889, 87 S.E.2d 282. See Evans v. Farmer, 148 W.Va. 142, 133 S.E.2d 710; Pruitt v. Fetty, 148 W.Va. 275, 134 S.E.2d 713. It is then incumbent upon this Court to look to R.C.P., Rule 60(b) and to decide if, under the provisions thereof, good cause exists to reverse the ruling of the trial court in its refusal to set aside the default judgment.

Where pertinent to this case, Rule 60(b) reads as follows: 'On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, excusable neglect, or unavoidable cause; * * * or (6) any other reason justifying relief from the operation of the judgment.' It now becomes essential to determine whether the relief provided under Rule 60(b) is warranted by the facts of the instant case...