Montez v. Tonkawa Village Apartments, 47304

• Decision Date: 15 June 1974
• Docket Number: No. 47304,47304
• Citation: 523 P.2d 351,215 Kan. 59
• Parties: Evelyn Sue MONTEZ and Manuel J. Montez, Appellees, v. TONKAWA VILLAGE APARTMENTS, a corporation, Appellant.
• Court: Kansas Supreme Court

Page 351

523 P.2d 351

215 Kan. 59

Evelyn Sue MONTEZ and Manuel J. Montez, Appellees, v. TONKAWA VILLAGE APARTMENTS, a corporation, Appellant.

No. 47304.

Supreme Court of Kansas.

June 15, 1974.

Syllabus by the Court

1. Defaults are not favored in law but become necessary when the inaction of a party frustrates the orderly administration of justice.

2. The granting of relief from a default judgment rests in the sound discretion of the district court.

3. In determining whether to set aside a default judgment a court should resolve any doubt in favor of the motion so that cases may be decided on their merits.

4. A motion to set aside a default may be granted whenever the court finds (1) that the nondefaulting party will not be prejudiced by the reopening, (2) that the defaulting party has a meritorious defense, and (3) that the default was not the result of inexcusable neglect or a willful act.

5. In a personal injury action by a tenant against her landlord, where service on the corporate defendant was made on the resident manager of its apartment complex who misplaced the papers, and no actual notice of the suit was ever received by any person having responsibility for defending such an action, the record is examined and it is held that under the circumstances set forth in the opinion the trial court abused its discretion in refusing to set aside a default judgment in favor of the plaintiff.

David R. Frensley, of Sheffrey, Ryder, Skeer, Krigel & Rose, Kansas City, Mo., argued the cause, and Timothy J. Evans, of Loughbom & Docking, Kansas City, was with him on the brief for the appellant.

Robert V. Wells, Kansas City, argued the cause, and Samuel J. Wells, Kansas City, was with him on the brief for the appellees.

FOTH, Commissioner:

The determinative issue in this case is whether the trial court abused its discretion in refusing to set aside a default judgment on the defendant's plea of inadvertence and excusable neglect.

On December 27, 1971, the plaintiff Evelyn Montez slipped and fell on some icy steps leading to her third floor apartment. On March 28, 1972, she brought this suit for $15,000 for her injuries, tangible and intangible; her husband Manuel joined her suit with a claim for $2,000, basically for loss of consortium.

The Montez apartment was in a complex known as Tonkawa Village Apartments in Kansas City, Kansas. Title to the complex, when Mrs. Montez fell and when she sued, was in Tonkawa Village, Inc., a Missouri corporation. The corporation was an instrumentality created for financing purposes by five individuals who exercised their beneficial ownership of the apartment complex through a limited partnership. The defendant named in plaintiffs' petition was obviously intended to be the corporate owner of the complex, albeit it was misnamed and was described as a Kansas corporation.

When the petition was filed counsel directed that service be made on the 'Resident Manager for defendant.' The next day, March 29, 1972, the deputy sheriff to whom the task was assigned sought out the resident manager of the complex, one Warren 'Sandy' Nyland, and asked him if he was in fact the resident manager for the defendant. Upon receiving an affirmative reply the deputy delivered a copy of the summons and petition. His return showed that he had served the defendant 'Tonkawa Village Apartments, a corporation by Serving Resident Manager Personally-Sandy Nyland.'

Nyland's job was to manage the day-today operations of the apartment complex. He placed the papers he received from the deputy with others on his desk and went on about his business; neither he nor anyone else ever saw them again. He could only speculate that they were knocked off the desk and mingled with the trash when the office was cleaned. Although he meant to discuss the papers with his superiors he neglected to do so. He saw no particular urgency in the matter since an insurance agent had already made several trips to the apartments and had interviewed him about Mrs. Montez's accident. He assumed his employers had received copies, but in fact none of the principals involved nor their insurance company had any knowledge of the suit-only Sandy Nyland knew, and he forgot.

Naturally no answer was filed, and on May 12, 1972, plaintiffs' counsel took default judgment in favor of Mrs. Montez for the $15,000 prayed for. The hearing was distinctly informal, with no sworn testimony or exhibits being introduced. The court's award was based on the 'statements and arguments of counsel as to the nature, extent of damage and the contents of the medical report and doctor's statements as to the expenses for said treatment relative to the injuries suffered by the plaintiff as set forth in her petition.' No record was made of any disposition of the claim of Mr. Montez. The trial judge later stated orally that to him the absence of any notes or other written record indicated that he had considered it and denied it, but that determination was not journalized either.

On July 28, 1972, one of the principal owners of the apartment complex learned for the first time that the judgment had been entered. On August 9, 1972, the following motion was filed to set aside the judgment:

'Comes now Tonkawa Village, Inc. and pursuant to K.S.A. 60-255(b) and K.S.A. 60-260((b) c) moves the Court to set aside the judgment by default entered herein on May 12, 1972, and as grounds therefor states that movant has a meritorious defense and failed to answer plaintiffs' petition as a result of mistake, inadvertance, surprise, and/or excusable neglect and said judgment adversely affects persons not parties to this suit, or for the reason the judgment is void for lack of personal jurisdiction in that this movant was not properly served in accordance with the laws of the State of Kansas.

'WHEREFORE, defendant moves the Court to sustain its motion and allow it to file an answer to the petition in the manner and form set forth in Exhibit C.'

Attached to the motion was a proposed answer consisting of a general denial and an allegation that Mrs. Montez's injuries, if any, were the result of her own negligence.

At its hearing on the motion the trial court had before it affidavits establishing the facts recited above, and others not material to the primary issue before this court. The court overruled the motion, allowing the judgment to stand. It is from this order that the defendant has appealed.

In addition to its claim of excusable neglect, which we find determinative and will discuss later, defendant makes a number of arguments which we regard as subsidiary. It contends, for example, that it was not properly served because it claims Nyland was not its 'managing or general agent' as required by K.S.A. 60-304(e) for personal service on a corporation. Nyland, it says, was a mere employee whose status did not rise to that of 'managing' agent. And besides, it says, Nyland was employed by the limited partnership and not by the corporation, so he wasn't defendant's 'agent' at all. Although we need not decide the issue, we note that the trial court made a factual determination contrary to defendant's contention. See Freeman v. Keltner, 175 Kan. 37, 259 P.2d 228.

Another of defendant's arguments is based on the misnomer of the defendant in the petition and the fact that it was described as a Kansas corporation. The fact remains that in its motion to set aside the judgment, quoted above, the defendant recognized that it was the object of the suit, and the intended defendant. It pleaded its own excusable neglect, and asked for leave to answer and defend. The same 'self-recognition' is evident in the defendant's notice of appeal, and in this court it seeks the same relief. Compare, Marr v. Geiger Ready-Mix Co., 209 Kan. 40, 495 P.2d 1399.

Additionally, it contends the judgment should be set aside because it was not based on any evidence, but only on the unsworn statements of counsel. It cites such cases as Becker v. Roothe, 184 Kan. 830, 339 P.2d 292 for the proposition that a default judgment for unliquidated damages is irregular and voidable where not supported by proof of damages. While there is much merit to this argument, we need not decide the point in view of our disposition of the case.

In the order appealed from the trial court found on the main issue simply 'That movant fails to show 'mistake, inadvertance, surprise or excusable neglect. " In this we believe the court erred.

We have just recently examined the question of opening default judgments in Reliance Insurance Companies v. Thompson-Hayward Chemical Co., 214 Kan. 110, 519 P.2d 730. We there recapitulated some of the underlying principles reflected in our earlier cases. Among them are:

'Defaults are not favored in law but become necessary when the inaction of a party frustrates the orderly administration of justice.' (Id., Syl. 1.)

'The granting of relief from a default judgment rests in the sound discretion of the district court.' (Id., Syl. 2.)

'The exercise of judicial discretion requires a judge have due regard for what is just under prevailing circumstances and not exercise that discretion in an arbitrary fashion.' (Id., Syl. 3.)

'. . . Consideration should be given to whether the party's conduct reflects neglectful indifference or negligence amounting to reckless indifference.' (Id., p. 117, 519 P.2d p. 735.)

In that case we once again recognized that the provisions of K.S.A. 1973 Supp. 60-255(b) and K.S.A. 60-260(b) were taken from the Federal Rules of Civil Procedure, and acknowledged the guidance to be derived from applicable federal cases.

Looking to those federal tuthorities, we find the leading case to be Tozer v. Charles A. Krause Milling Co., 189 F.2d 242 (3rd Cir., 1951). The court there set out the prevailing federal view:

'What is excusable neglect and what is inexcusable neglect can hardly be determined in a vacuum. . . . The recent cases applying, Rule 60(b) have uniformly held that it must be...