Healy v. Wick Bldg. Systems, Inc.
Decision Date | 15 November 1977 |
Docket Number | No. 19251,19251 |
Citation | 560 S.W.2d 713 |
Parties | John E. HEALY et ux., Appellants, v. WICK BUILDING SYSTEMS, INC., Appellee. |
Court | Texas Court of Appeals |
Royal H. Brin, Jr., Strasburger & Price, Dallas, for appellants.
Mark C. Hill, Cantey, Hanger, Gooch, Munn & Collins, Fort Worth, for appellee.
This is an appeal from an order denying a motion to set aside a default judgment in a garnishment action. Wick Building Systems, Inc. filed an application for writ of garnishment against Mr. & Mrs. John E. Healy after obtaining a $95,486.00 judgment against Healy Mortgage Company. In that suit, Wick also sought judgment against these garnishees individually but was not successful in that respect. Then Wick filed this garnishment which the garnishees failed to answer. After the default judgment was entered against the garnishees on October 21, 1976, they filed, on October 26, a motion to set aside the default or, alternatively, a motion for new trial. The questions presented on this appeal are: (1) whether garnishees' failure to answer was a result of conscious indifference and (2) whether the garnishee's motion set up a "meritorious defense". The latter question turns on whether appellants' failure to deny "that any other persons within his knowledge are indebted to the defendant" (debtor) as required by Tex.R.Civ.P. 666 for discharge, precludes, as a matter of law, a meritorious defense to the garnishment action being set up. We hold that it does not. We also hold that garnishees' failure to answer was not the result of conscious indifference. Accordingly, the trial court abused its discretion in refusing to set aside the default.
On March 4, 1975, Wick applied for a writ of garnishment against the Healys. This writ was served on them on March 8, 1975, after which the Healys turned the matter over to their attorney who had represented them successfully in the original suit when Wick had sought judgment directly against them. The motion to set aside the default, supported by affidavits, shows that the attorney promptly prepared an answer and mailed it to the Healys on March 10. Apparently, Wick's attorney knew that the Healys were represented in the garnishment because of a letter dated March 9 to the Healys' attorney requesting depositions. On May 19, Wick's attorneys gave written notice of intent to take oral depositions. This notice was specifically addressed to the Healys and their named attorney. Pursuant to this notice, the Healys' depositions were taken and their attorney was present and participated. On August 11, the Healys' attorney sent the depositions to the court's clerk and sent a copy of the letter of transmittal to Wick's attorneys. This deposition was received and filed on August 12. The case was set for trial on October 21, but neither the garnishees nor their attorney received notice of the setting. Consequently, a default was entered against them on that date for $95,486.00. Upon receipt of notice of default, the Healys' attorney immediately filed the motion to set aside the default and offered to compensate Wick for any expenses entailed in taking the default and to go to trial forthwith. The trial court denied the motion, and the garnishees appealed, asserting that the court abused its discretion in denying the motion. Wick argues, on the other hand, that over two hundred days expired between service and the default and that both the Healys and their attorney were aware that no answer had been filed. In this respect, Wick points to the following testimony in Healys' deposition:
Q. 1 All right. This is not the same lawsuit which was tried on December, 1975. This is a different lawsuit in which Writs of Garnishment were served upon you and your wife. And you received from the Court a Writ of Garnishment?
A. I received one, yes sir.
Q. And you discussed this with your attorney?
A. Yes, sir.
Q. Have you filed any answer in response to that Writ of Garnishment with the Court, advising the Court as to what property you do or do not have that belonged to Healy Mortgage Company?
A. I don't believe we have.
HEALY'S COUNSEL: I don't know.
Q. Well, as far as I am aware, there has been no answer filed, but I'm asking, you do not know of any answer that's been filed?
A. No, sir.
(Emphasis added by appellee)
Appellee interprets the garnishee's response to mean that the garnishee affirmatively knew that no answer had been filed. However, we read this testimony as meaning that the garnishee did not know personally what specific documents his attorney may have filed. Indeed, laymen are not expected or required to be familiar with the technical intricacies of a lawsuit. In any event, it appears to us that the employment of an attorney to represent them in this action, and his appearance at the depositions negates any conscious indifference as set forth in Craddock v. Sunshine Bus Lines, 134 Tex. 388, 133 S.W.2d 124, 126 (1939), as follows:
A default judgment should be set aside and a new trial ordered in any case in which the failure of the defendant to answer before judgment was not intentional, or the result of conscious indifference on his part, but was due to a mistake or an accident; provided the motion for a new trial sets up a meritorious defense and is filed at a time when the We hold that under this rule the record establishes as a matter of law that garnishees' failure to file an answer was neither intentional nor the result of conscious indifference. Whether negligence exists on the part of the defendant or his attorney is immaterial. Ivy v. Carrel, 407 S.W.2d 212, 213 (Tex.1966); O'Hara v. Hexter, 550 S.W.2d 379, 382 (Tex.Civ.App. Dallas 1977, writ refused n. r. e.).
granting thereof will occasion no delay or otherwise work an injury to the plaintiff. (Emphasis added)
We now turn to whether the appellants have met the second part of the test required by Craddock, that is, whether they have set up a meritorious defense in their motion for new trial. In this respect, garnishees alleged in the sworn motion that neither of them is or has been indebted to the debtor and that they had no effects or funds in their hands belonging to the debtor. They also alleged they had never been indebted to either the debtor or the plaintiff. Wick argues that the garnishees have failed to set up a meritorious defense, as a matter of law, because they failed to deny "that any other persons within his knowledge are indebted to the defendant," as required by Tex.R.Civ.P. 666 for discharge. Our question is whether, as a matter of law, this omission is fatal to their alleged meritorious defense. We hold that it is not insofar as the rule in Craddock is concerned.
Tex.R.Civ.P. 666 2 sets forth the elements necessary for discharge of the garnishee. It provides:
If it appears from the answer of the garnishee that he is not indebted to the defendant, . . . and that he has not in his possession any effects of the defendant . . . and if he has either denied that any other persons within his knowledge are indebted to the defendant or have in their possession effects belonging to the defendant, or else has named such persons, should the answer of the garnishee not be controverted as hereinafter provided, the court shall enter judgment discharging the garnishee.
Thus, as we read this rule, it requires for discharge three items:
(1) a denial that the garnishee is indebted to the defendant;
(2) a denial that the garnishee has effects of the defendant; and
(3) a denial of knowledge of third persons who may be indebted to the defendant or have effects of the defendant, or the names of such persons.
Rule 667 sets forth when a default may be taken. That rule states:
If the garnishee fails to file an answer to the writ of garnishment at or before the time directed in the writ, it shall be lawful for the court, . . . on or after appearance day, to render judgment by default, as in other civil cases, against such garnishee for the full amount of such judgment against the defendant together with all interest and costs that may have accrued in the main case and also in the garnishment proceedings. The answer of the garnishee may be filed as in any other civil case at any time before such default judgment is rendered. (Emphasis added.)
As we read this rule, it provides that a default may be taken, as in other civil cases, only if no answer is filed. Cf. Tex.R.Civ.P. 239. It does not state that if the garnishee fails to answer any question contained in the writ that a default may be entered against the garnishee. Thus, it appears to us that an answer, even though insufficient for discharge, may be sufficient to prevent a default. This rule simply makes a garnishee subject to a default judgment, as in any other case, where no answer is filed.
Rule 668 reads:
Should it appear from the answer of the garnishee or should it be otherwise made to appear and be found by the court that the garnishee is indebted to the defendant in any amount, . . . the court shall render judgment for the plaintiff This rule authorizes judgment only where the garnishee is indebted to the defendant and then only to the extent of such indebtedness. Vick v. Merchants Fast Motor Lines, Inc., 151 S.W.2d 293, 294 (Tex.Civ.App. Eastland 1941, no writ). The rule contemplates that judgment will be predicated on the garnishee's answer admitting the indebtedness or, if garnishee's answer is traversed under rule 673, upon evidence of indebtedness at trial.
against the garnishee for the amount . . . found to be due . . . (Emphasis added)
Rule 674 provides that if the garnishee's answer is controverted the issue shall be tried as in other cases, and under rule 678 the garnishee is discharged if it is determined, after trial, that he was not indebted to the defendant and did not have effects belonging to the plaintiff.
Rule 669 provides for a sale of...
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