Marquette Corporation v. Priester, Civ. A. No. AC-1097

• Decision Date: 29 October 1964
• Docket Number: Civ. A. No. AC-1097,AC-1112.
• Citation: 234 F. Supp. 799
• Court: U.S. District Court — District of South Carolina
• Parties: MARQUETTE CORPORATION, Plaintiff, v. Hugh W. PRIESTER, d/b/a Priester Furniture Company, Defendant. ALBION DIVISION, McGRAW EDISON COMPANY, Plaintiff, v. Hugh W. PRIESTER, d/b/a Priester Furniture Company, Defendant.

234 F. Supp. 799

MARQUETTE CORPORATION, Plaintiff, v. Hugh W. PRIESTER, d/b/a Priester Furniture Company, Defendant.

ALBION DIVISION, McGRAW EDISON COMPANY, Plaintiff, v. Hugh W. PRIESTER, d/b/a Priester Furniture Company, Defendant.

Civ. A. Nos. AC-1097, AC-1112.

United States District Court E. D. South Carolina, Aiken Division.

October 29, 1964.

Jefferies, McLeod, Unger & Fraser, Walterboro, S. C., for plaintiffs.

Sol Blatt, Jr., Barnwell, S. C., for defendant.

HEMPHILL, Chief Judge.

Receiver of default judgment debtor, moves, in accordance with Rule 60(b) (4) and (6) of the Federal Rules, to vacate and set aside two default judgments rendered against the party in receivership on the "grounds that said judgments are void and fraudulent insofar as the other creditors of the insolvent debtor, Hugh W. Priester, are concerned."

One judgment entered in favor of Marquette Corporation on May 23, 1963 is in the amount of $10,787.15, plus costs; and the other judgment entered in favor of Albion Division, McGraw Edison Company on May 21, 1963 is in the amount of $19,043.44, plus costs.

The facts upon which this motion is based are as follows: On April 11, 1963, an action was brought in the Court of Common Pleas for Allendale County, S. C., in which approximately twenty-five creditors joined against Hugh W. Priester, d/b/a Priester Furniture Company, alleging Priester insolvent; prayed for was the appointment of a general Receiver and a Receiver pendente lite for all his assets. At the time of the institution of the receivership action there were many suits pending against Priester in the Court of Common Pleas for Allendale County, in substantially all of which he had employed counsel who either had filed answers, or secured extensions of time in which to answer, so that default judgment would not be had.

On July 8, 1963, the Honorable W. L. Rhodes, Jr., Resident Judge of the Fourteenth Judicial Circuit, refused the motion for receivership pendente lite pending a determination on the merits of the action for the appointment of a general Receiver, but he restrained Priester from disposing of any assets except in the usual and customary mode of business. Prior to the Order of Judge Rhodes, on May 21st and May 23rd, because of the failure of counsel to answer or secure an extension of time, default judgments were take against the insolvent Priester in the actions about which this Court is now concerned.

On November 16, 1963, when the receivership motion was heard on its merits, Judge Rhodes ordered that Johnston Lee Crapse be appointed Receiver for the insolvent debtor and further directed the Receiver to have counsel move to set aside the default judgments obtained, which are now in issue. In accordance with this Order, two counsel were appointed to represent the Receiver, but because of a conflict of interest, one did not undertake the employment.

Because the insolvent debtor had secreted his assets and did not deliver same to the Receiver pursuant to Judge Rhodes' Order, the full time of the Receiver and his counsel was spent searching for these assets located in many diverse places around the State of South Carolina. (As a result of this disobedience of the Court Order, insolvent Priester was found guilty of contempt of Court and sentenced to four months in jail on August 4, 1964.)

Counsel for movant allege that as a result of great amount of time required in connection with the contempt proceedings and the work involved in searching for the secreted assets, Receiver and his counsel did not have an opportunity at an earlier date to pursue the motion now before this Court. Further alleged is that for the past several months counsel for the Receiver, Hugh O. Hanna, Esq., of the Hampton Bar, has been incapacitated because of bad health, and that he remained under the constant care of his doctor. Because of Mr. Hanna's physical condition, present counsel was appointed by the Court, and approximately three weeks thereafter this motion was filed.

It appears there was an "understanding" among counsel for the various creditors at the time of the sounding of the roster for the term of Court of Common Pleas in Hampton County in April 1963 that their claims would not be set for trial, "nor any effort made to reduce same to judgment until all possibilities of settlement had been exhausted." Also, eleven creditors' claims, all represented by one counsel, were nevertheless reduced to judgment in June 1963 because the two judgments, which are the subject matter of this motion, were entered in May 1963. However, counsel for the eleven judgment creditors, by affidavit, has stated his "willingness to set aside the judgments * * * obtained if all other creditors holding judgments likewise do so to the end that there be no preferred creditors in the Receivership proceeding now pending * * * against Hugh H. Priester, d/b/a Priester Furniture Company * * *." Aside from the judgments referred to above, there are only three other judgments lodged in the State Court. Efforts are presently being made by counsel for the Receiver to have them set aside as well, on substantially the same basis as the judgments being attacked here.

The first question to be decided is whether or not movant can properly proceed under Rule 60(b), which provides 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, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation. * * *"

It is apparent on the face of the papers before the Court that the default judgments in question were entered in May 1963 and that this petition was not filed until August 14, 1964. The "one year" limitation, therefore, applies without question to reasons (1), (2), and (3) above. The Court is powerless to extend it. Federal Deposit Ins. Corp. v. Alker, 30 F.R.D. 527, 529 (E.D.Pa.1962).

Movant has made his motion in accordance with clauses (4) and (6) which are not subject to the "one year" limitation. Clause (4), which deals...