Kohlenberger, Inc. v. Tyson's Foods, Inc.

• Decision Date: 20 May 1974
• Docket Number: No. 73--219,73--219
• Citation: 256 Ark. 584,510 S.W.2d 555
• Parties: , 14 UCC Rep.Serv. 1281 KOHLENBERGER, INC., a corporation, Appellant, v. TYSON'S FOODS, INC., Appellee.
• Court: Arkansas Supreme Court

Page 555

510 S.W.2d 555

256 Ark. 584, 14 UCC Rep.Serv. 1281

KOHLENBERGER, INC., a corporation, Appellant, v. TYSON'S FOODS, INC., Appellee.

No. 73--219.

Supreme Court of Arkansas.

May 20, 1974.

Rehearing Denied July 15, 1974.

Eichenbaum, Scott, Miller, Crockett & Bryant by C. Richard Crockett, Little Rock, for appellant.

Crouch, Blair, Cypert & Waters by James F. Dickson, Springdale, for appellee.

FOGLEMAN, Justice.

This appeal involves a default judgment granted Tyson Foods, Inc. in its suit against Kohlenberger, Inc. to recover damages allegedly resulting from operational failures of a 'KR 60--A Krakice Maker' purchased by Tyson from Kohlenberger. Kohlenberger relies upon the following points for reversal:

I. The court erred in refusing to set aside the default judgment awarded appellee.

II. The court erred in awarding judgment to appellee because the complaint does not state a cause of action.

III. The court erred in awarding more than nominal damages to plaintiff-appellee.

We will first discuss point I and then treat point II and III together.

I.

Appellant is a foreign corporation, not authorized to do business in Arkansas. Its principal place of business is in Fullerton, California. The complaint was filed on November 8, 1972. Service was had under the 'Long Arm Statute,' Ark.Stat.Ann. § 27--2501 to 27--2507 (Supp.1973) by a letter dated November 11, 1972, from the Sheriff's Department, Washington County, Arkansas, addressed to Mr. Allan A. Morris, President, Kohlenberger, Inc., enclosing a copy of the complaint and a summons. In the letter, sent by certified mail, the sheriff stated that answer would be due 30 days from receipt of the letter. Based upon the postmark on the return receipt, the sheriff's return showed November 16, 1972, as the date of service.

On December 29, 1972, before judgment was entered, Kohlenberger, appearing specially, filed a motion to quash the summons and its service, upon jurisdictional grounds now immaterial. In the judgment entered February 22, 1973, after a hearing on February 8, 1973, the circuit court denied the motion to quash, held that the failure of Kohlenberger to appear or plead within the time allowed by law was not due to excusable neglect, unavoidable casualty or other just cause, and entered judgment against Kohlenberger for $84,060.86 and costs. Kohlenberger then filed a motion to set aside and vacate the judgment. One of the grounds of this motion relates to the failure to timely appear and plead. In the motion Kohlenberger alleged as excusable neglect, unavoidable casualty, or just cause for its default, that summons was served on November 16, 1972, and on December 13, 1972, first placed in the hands of its California attorney, who called Tyson's attorney, and requested that a default judgment not be taken. It was also alleged that the California attorney, being under the impression that the time for answer had already expired because the sheriff's letter was dated November 11, 1972, and for 'other reasons,' took no immediate steps to either file a pleading or apply for an extension of time within which to do so. Kohlenberger relied upon the pleadings and documents, testimony, evidence and statements of counsel at the hearing on February 8, 1973. This motion was denied.

The hearing on February 8 came upon regular call of the docket. Even though no allegation of unavoidable casualty, excusable neglect or other just cause was made in the motion to quash, it seems that the hearing was directed to the propriety of entry of a default judgment. In attempting to meet its burden Kohlenberger showed:

Robert J. DeMarco, a member of the litigation department of the California firm of Hill, Farrer and Burrell, consisting of 40 attorneys, received the summons which came to his firm's office by mail on December 13, 1972, about 4:30 p.m. in the afternoon. On the next morning he had a telephone conversation with Mr. Dickson, the attorney who had filed the complaint. Dickson declined to give any assurance that a default judgment would not be entered because of acrimony engendered between the parties through controversy about the icemaker. There was no further communication between DeMarco and Dickson until after December 22, 1972, the date on which Kohlenberger employed the Little Rock firm of Eichenbaum, Scott, Miller, Crockett and Bryant. DeMarco was unaware of the date his client had actually received the summons, and of the fact that the return receipt had gone to the sheriff's office rather than to Dickson's office. He had assumed, since the letter was dated November 11, it would have been received by his client on November 13 in the usual course of the mails, and that Dickson had seen the return receipt. The name of the president of Kohlenberger, Inc. was Arval, not Allan, Morris. The company had no record indicating the time of receipt of the summons and complaint and had given DeMarco no explanation why it took nearly a month to get them to him. DeMarco did not inquire of the Clerk of the Circuit Court of Washington County about the service and it did not occur to him that he might have had a Fayetteville attorney to check to determine whether Kohlenberger was in default or to seek an extension of time within which to plead. On the advice of a member of his firm, DeMarco sought to reach Mr. Charles Eichenbaum on December 14, but, finding that he was out of town and thinking that time was no longer of the essence because Dickson would seek a default judgment, did not talk to Eichenbaum until the following week. Dickson did not misrepresent the facts to DeMarco, but simply accepted DeMarco's statement that Kohlenberger was in default.

After the circuit judge announced that the motion to quash was denied, Kohlenberger requested permission to file an answer on the ground that the failure to plead earlier was due to excusable neglect or other just cause. This permission was denied, but the court permitted Kohlenberger's attorney to dictate its proposed answer into the record.

Appellant admits that there was neglect in this case, but asserts that it was excusable. It relies upon cases wherein we have held that neglect on the part of a defendant's attorney was excusable because of some justification in his belief either that the pleading had been or would be timely filed or that the time for filing had not expired. See Fitzwater v. Harris, 231 Ark. 173, 328 S.W.2d 501; Barkis v. Bell, 238 Ark. 683, 384 S.W.2d 269; Easely v. Inglis, 233 Ark. 589, 346 S.W.2d 206; Arkansas Electric Co. v. Cone-Huddleston, 249 Ark. 230, 458 S.W.2d 728. We need not consider whether DeMarco was justified in relying upon his assumptions or whether his failing to endeavor to talk to any of the four other members of Eichenbaum's firm, or to attempt to reach Eichenbaum outside Little Rock, or to attempt to reach any other attorney in Little Rock or Fayetteville or to check with the clerk as to the time for filing answer was excusable neglect. Neither do we consider whether there is a distinction where the neglect is shown to be that of the defendant, rather than of his attorney. Appellant hinges its whole argument on this point upon the premise that because of DeMarco's misunderstanding there was unavoidable casualty, excusable neglect and other just cause for its default. But even if we agreed, we would be unwarranted in holding that the totally unexplained cavalier treatment of the summons and complaint by the officers and agents of Kohlenberger, which were responsible for the dilemma in which its attorney found himself, was due either to unavoidable casualty, excusable neglect or other just cause. This we would have to do in order to find that the circuit judge erred in denying the motion to quash, granting default judgment or in denying the motion to set the judgment aside. This case is so nearly like Ryder Truck Rental v. Wren Oil Dist. Co., 253 Ark. 827, 489 S.W.2d 236, as to be governed by it. We find the suggestion that the judgment should have been set aside merely because Kohlenberger had a meritorious defense totally without merit. If we did follow this suggestion, we would revert to the wholly unsatisfactory conditions prevailing prior to the enactment of Act 49 of 1955. There was no error insofar as this point is concerned.

II. and III.

We treat these points together, because the arguments, pro and con, seem inextricably intertwined. In support of point II appellant contends that the complaint stated no cause of action because under the allegations of the complaint there was an unrevoked acceptance of the icemaker by Tyson, there having been no allegation of either rejection or revocation of acceptance prior to the filing of the complaint, and no allegations pertaining to cover. Appellant's argument under point III also depends, to some extent, upon the premise that the case is to be treated as if the goods were accepted.

Appellant admits that the complaint alleges notification of breach of warranty. Consequently, appellant argues there was no basis for the recovery of special, incidental or consequential damages prayed for in the complaint. This argument brings us to a consideration, first, of the damages recoverable for a breach of warranty and, then, of the right to recovery of special, incidental and consequential damages in the light of the facts alleged and those not alleged. In passing, however, we must say that appellee's positive, but unsupported, assertion that Kohlenberger's default bars it from raising these questions is without merit. A default admits only those facts alleged in the complaint and if they are insufficient to support the judgment, it will be reversed. Arkansas Bond Co. v. Harton, 191 Ark. 665, 87 S.W.2d 52; Wilson v. Overturf, 157 Ark. 385, 248 S.W. 898; Thompson v. Hickman, 164 Ark. 469, 262 S.W. 20. Although it is unnecessary that a complaint set out the evidence relied upon or a history of transactions leading up to the essential...