Lawrence v. Burke

• Decision Date: 01 September 1967
• Docket Number: No. 1,CA-CIV,1
• Citation: 6 Ariz.App. 228,431 P.2d 302
• Parties: Sandra LAWRENCE, Johnny Easter and Linda Sue Easter, by their friend Geraldine Lawrence, Appellants, v. Thomas Harold BURKE and Shirley Ann Burke, his wife, and State Farm Mutual Automobile Insurance Company, Appellees. 242.
• Court: Arizona Court of Appeals

Page 302

431 P.2d 302

6 Ariz.App. 228

Sandra LAWRENCE, Johnny Easter and Linda Sue Easter, by their friend Geraldine Lawrence, Appellants, v. Thomas Harold BURKE and Shirley Ann Burke, his wife, and State Farm Mutual Automobile Insurance Company, Appellees.

No. 1 CA-CIV 242.

Court of Appeals of Arizona.

Sept. 1, 1967.

Rehearing Denied Sept. 29, 1967.

Review Denied Nov. 14, 1967.

Langerman, Begam & Lewis, by Samuel Langerman, Mark I. Harrison, Phoenix, for appellants

Lewis, Roca, Beauchamp & Linton, by John P. Frank, James Moeller, D. W. Grainger, Phoenix, for appellees.

STEVENS, Judge

The matters in connection with this appeal arise out of an automobile accident which occurred on Sunday, 17 January 1960. The appellants were the plaintiffs in the trial court. The Burkes filed an answer in the Superior Court through the services of an attorney who was selected by the insurance company. Later the attorney withdrew. The defaults of the defendants were entered for failure to file answers to interrogatories and a formal written default judgment was entered. The insurance company intervened in the case and the default judgment as well as the supporting defaults were set aside. This appeal questions the propriety of permitting the insurance company to intervene and the propriety of the order vacating the default judgment and the defaults.

INTERESTED PARTIES

Geraldine Lawrence lives in the vicinity of Litchfield Park west of the City of Phoenix. She is the mother of the plaintiff Sandra Lawrence and the grandmother of the plaintiffs Linda Sue Easter and Johnny Easter who are sister and brother. At the time of the accident the above named minor plaintiffs were of the following approximate ages: Sandra, 17; Linda Sue, 8; and Johnny, 7. All three lived in the Lawrence household. Linda Sue and Johnny are the children of a daughter of Mrs. Lawrence and they lived with their grandmother substantially all of their lives. The record suggests, but is not clear, whether the grandmother had either adopted her two grandchildren or was possibly their legal guardian.

Mrs. Lawrence operated a grocery store. Next to the grocery store was a service station operated by the Van Winkles. Mrs. Van Winkle is a daughter of Mrs. Lawrence and their residence is in close proximity of the Lawrence home. The Van Winkles are not parties to the litigation and are mentioned because of the family relationship.

At one time Mrs. Lawrence received foster children into her home and Thomas Harold Burke resided with her for some time in this relationship. After his service during the Korean Conflict, he married Mrs. Lawrence's daughter Shirley Ann. For a time Mr. and Mrs. Burke rented living quarters from Mrs. Lawrence. They then entered into the purchase of a home in the City of Tempe which lies east of Phoenix and there resided for a time. At the time of the accident the Burkes had two children and Mrs. Burke was pregnant. From time to time Burke had worked in Mrs. Lawrence's store and was interested in establishing a garage for the repair of automobiles in the vicinity of the store and service station.

The State Farm Mutual Automobile Insurance Company issued its policy of insurance wherein Burke was the named insured and this policy was in effect on the date of the accident.

Louise C. Powell is the trustee in bankruptcy in relation to Burke's voluntary petition in bankruptcy.

THE INSURANCE POLICY

At the time of the accident Burke was insured by a policy issued by State Farm. Coverage A related to bodily injury liability and coverage B related to property damage liability. The policy provided that State Farm,

'* * * agrees with the insured named herein subject to the provisions of the policy: * * *

'(2) As respects the insurance afforded under coverages A and B And in addition to the applicable limits of liability:

'(a) To defend any suit against the insured Alleging such bodily injury or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent * * *.' (Emphasis supplied.)

The policy contained exclusions reading, in part, as follows:

'(g) coverage A, to bodily injury injury to the insured or any member of the The maximum liability specified in the policy was $10,000.00 for any one person and $20,000.00 for any one accident.

family of the insured residing in the same household as the insured * * *.'

THE ACCIDENT

Mrs. Burke was not feeling well, and the night before the accident Mr. and Mrs. Burke and their two children stayed with their relatives. It is not clear whether the Burke family were all in the Lawrence home or part in the Lawrence home and part in the Van Winkle home. Shortly before noon on the day of the accident Burke, together with Sandra, Linda Sue and Johnny, left the Lawrence residence in the Burke automobile, intending to go to the Lawrence store. The car overturned and the minors sustained injuries of varying degrees. It is not clear whether the accident was entirely a one car accident or whether the car was forced off the road by another vehicle. Statements by Burke and Sandra indicated that Burke was driving in a careful manner and that a second vehicle was driven in such a manner as to cause the accident.

THE PERSONAL INJURY ACTION

Through attorneys not now of record in this cause and on 21 April 1960, the three minors, through Mrs. Lawrence as their next friend, sued Mr. and Mrs. Burke and a Mr. and Mrs. Johnson. The allegations of the complaint are a routine, concise statement giving no indication of the relationship between the plaintiffs and the Burkes. Prior to the filing of the suit and on 25 January 1960, a State Farm representative secured a statement from Burke. This statement is not conclusive as to the exact residence of the Burkes, that is, whether they were then residing at their property in Tempe and merely visiting Mrs. Lawrence, or were then residing at the Lawrence home. In a sworn statement taken from Burke by a State Farm representative on 16 August 1960, the indications were stronger that the Burke family lived with Mrs. Lawrence at the time of and just prior to the accident.

On 30 August 1960, through an attorney selected by State Farm who is not an attorney of record at this time, the Burkes filed their answer to the complaint. An answer was filed by the Johnsons. Depositions were taken. The Johnsons prevailed on their motion for summary judgment.

On 11 May 1961, Mrs. Lawrence made a statement to a State Farm representative. On 25 August 1961, pursuant to a motion filed and served, the Superior Court entered its order authorizing the withdrawal of the attorney selected by State Farm, leaving the Burkes without an attorney of record. The motion was based upon the assertion that the minor plaintiffs and Burke were all residing in the same house-hold and that the above quoted policy exclusion relieved State Farm from any further duty in the litigation.

In December 1961 the attorneys of record for the plaintiffs were granted leave to withdraw and thereafter the present attorneys undertook their representation. We do not recite the several efforts to secure a default judgment against the Burkes. On 24 January 1963, pursuant to Rule 33 of the Rules of Civil Procedure, 16 A.R.S., interrogatories were mailed to Mr. Burke only. Answers thereto were not filed within the time specified in the rule. Based upon the absence of answers to the interrogatories a motion was filed on 29 August 1963, seeking to strike the answers of both Mr. and Mrs. Burke. This motion was granted. On 10 January 1964, upon request of the plaintiffs the default of both Mr. and Mrs. Burke was entered.

Rule 55(b)(1) provides, in part:

'* * * If the party against whom judgment by default is sought Has appeared in the action, he or, if appearing by representative, his representative, shall be served with written notice of the application for judgment at least three days prior to the hearing on such application.' (Emphasis supplied.)

In an apparent effort to comply with this rule a 'Notice of Application for Default Judgment' was filed, the body thereof reciting,

'TO: THOMAS HAROLD BURKE and JANE DOE BURKE, his wife:

'Please take notice that the undersigned will make application to this Court in the Court Commissioner's office on the 14th day of January, 1964, at 10:00 o'clock, A.M., or as soon thereafter as counsel may be heard, for entry of a Default Judgment in favor of plaintiffs and against defendants THOMAS HAROLD BURKE and JANE DOE BURKE for such damages as are prayed for in the Complaint filed herein.'

This motion was served on Mr. Burke only, service being by mail. At that time in Maricopa County there were 17 Superior Court Judges and 2 Court Commissioners. (See pages vii and viii of 95 Ariz.) Burke attempted to attend the hearing. The plaintiffs did not appear in person or by their attorney and Burke was not informed as to a new hearing date. On 5 February 1964, Mrs. Lawrence and Sandra appeared before a court commissioner with their attorney; they were sworn and testified, and formal written judgment was entered against 'Thomas Harold Burke and Jane Doe Burke' in the aggregate sum of $300,000.00, being $100,000.00 for 'each of the said above mentioned plaintiffs'. The address of Burke does not appear on the minutes, so the Clerk of the Superior Court could not comply with the mandate of Rule 77(g) requiring that,

'Notice of orders or judgments. Immediately upon the entry of an order or judgment the clerk shall serve a notice of the entry by mail in the manner provided for in Rule 5 Upon every party affected thereby who is not in default for failure to appear, and shall make a note in the docket of the mailing. * * *' (Emphasis supplied.)

It was some time thereafter that Burke learned of the entry of the judgment. Burke was experiencing financial troubles induced in part at least, by the adverse effect of the judgment upon his credit rating and he sought advice of ...