National Sur. Corp. v. Shoemaker

• Decision Date: 25 February 1972
• Docket Number: No. 10762,10762
• Parties: NATIONAL SURETY CORPORATION, a Corporation, Plaintiff-Respondent, v. Gale SHOEMAKER, also known as Gale H. Shoemaker, Defendant-Appellant.
• Court: South Dakota Supreme Court

Page 134

195 N.W.2d 134

86 S.D. 302

NATIONAL SURETY CORPORATION, a Corporation Plaintiff-Respondent, v. Gale SHOEMAKER, also known as Gale H. Shoemaker Defendant-Appellant.

No. 10762.

Supreme Court of South Dakota.

Feb. 25, 1972.

Douglas W. Bantz, Aberdeen, for defendant-appellant.

Raymond M. Schutz, of Siegel, Barnett, Schutz & O'Keefe, Aberdeen, for plaintiff-respondent.

RENTTO, Associate Judge.*

This is an appeal from an order of the circuit court of Brown County dated June 10, 1969 denying defendant's application to set aside a judgment entered against him by default. He claims that the trial court abused its discretion in denying his motion. While not framed in the language of the rule, or otherwise too clearly stated, it appears from the record that one ground of the motion presented to the court by the defendant was that his failure to answer in time was occasioned by excusable neglect.

On June 4, 1959 in the District Court of Mitchell County, Kansas, plaintiff was awarded a judgment for $65,000 against the defendant. He was then living in Kansas but later moved to Aberdeen, South Dakota, where he was employed as a teacher in the public schools. The record indicates that he made periodic payments on the judgment after it was entered and apparently was doing so while living in South Dakota.

On June 4, 1964 the summons and complaint in this action were served on him at Aberdeen. It is based on the Kansas judgment and prays relief in the full amount awarded in that suit, $65,000, together with interest from the date of its entry. Shortly before this litigation was commenced defendant had secured a college teaching position in Michigan and went there to arrange housing for his family. When he returned to Aberdeen he learned that the sheriff had been at his home so he went to the sheriff's office where he was served with process.

On the day that he was served he contacted plaintiff's South Dakota counsel who resided in Aberdeen and wrote a letter to its Minneapolis office. In it he complained that the bringing of this suit violated an assurance made to him by plaintiff's Kansas City office. He also inquired as to the present balance due so that he could refute the amount asked in the complaint.

On July 2, 1964 he talked with plaintiff's counsel and at his suggestion telephoned the Minneapolis office which he claimed advised him that the action would be dropped. He also claims that plaintiff's counsel verified this when he got in touch with him again on July 6th, that being a Monday and the last day of his answer time. Plaintiff's version is that it did not assure him that the action would be dropped but only that it would be held in abeyance pending his making satisfactory arrangements to pay the Kansas judgment.

Defendant moved to Michigan in August of 1964. Before making the trip he wrote plaintiff's office in Minneapolis on July 20th about stopping there to see them on his way and suggested August 14th as a suitable date. In acknowledging this letter plaintiff's office agreed to the date and indicated they wanted to talk about a substantial increase in payments. Plaintiff's inter-office memo of August 18, 1964 indicates that the meeting was held and devoted largely to a scathing rebuke of the defendant and some discussion about increasing his payments. Apparently he made periodic payments in increased amounts until June 1, 1966. In the memo it is suggested that if he were kept under enough pressure his father would probably come to his financial rescue. After this meeting the Minneapolis office sent its file to its Detroit office.

Plaintiff started an action in Michigan against the defendant on October 20, 1966 on the Kansas award asking $62,935, the balance then due. The complaint made no mention of the suit in South Dakota. On November 10, 1966 he filed an answer to it in which he claimed that there was no balance owing on the Kansas judgment and that it no longer existed. These defenses are based on K.S.A. 60--2403, which provides in effect that if execution is not sued out within five years from the date of the judgment it shall be dormant, and if not revived within two years after that as provided in K.S.A. 60--2404, it is released and the clerk required to release it and make an entry in the docket reciting that it is barred and released of record. The judgment in issue was so endorsed on October 31, 1966. His answer did not refer to the litigation in South Dakota.

Apparently there was no further activity in connection with the proceeding in South Dakota until plaintiff's Michigan counsel on November 24, 1967, suggested that it have its counsel in this litigation proceed to obtain a default judgment. Defendant had heard nothing concerning it after he moved to Michigan until he received a notice of entry of judgment therein mailed to him by plaintiff's South Dakota counsel on January 23, 1968. It was dated January 22, 1968 and issued on an affidavit of default filed that date. He promptly retained a lawyer in Michigan who in turn engaged the services of his present counsel in South Dakota. Plaintiff's local attorney was advised of such retention on February 12, 1968.

The application to vacate the judgment filed October 8, 1968 was heard by the court solely on affidavits and written exhibits on November 7, 1968 and February 19, 1969. In view of this our review of the evidence is unhampered by the rule that a trial judge who has observed the demeanor of witnesses is in a better position to intelligently weigh the evidence than are we. State Automobile Casualty Underwriters v. Ruotsalainen, 81 S.D. 472, 136 N.W.2d 884; Davis v. Interstate Motor Carriers Agency, S.D., 178 N.W.2d 204. The effect of this is that we determine the facts on the written evidence in the record. Credit Management Service, Inc. v. Wendbourne, 76 S.D. 80, 72 N.W.2d 926. Consequently, complaints as to findings made or refused lose their traditional significance. Our inquiry is whether the court erred in denying the motion to vacate.

As indicated plaintiff denied that it told defendant the South Dakota action would be stopped. When he wrote it July 20th about discussing the matter on August 14th, he mentioned his appreciation of its quick action on his request to have it stopped. Its July 24th letter of acknowledgment agreeing to a meeting on the suggested date made no mention of his reference to its promise to stop the action. On July 8th plaintiff's Aberdeen counsel wrote the Minneapolis office acknowledging a telephone conversation had on July 6th instructing him 'not to proceed with obtaining the judgment' against the defendant. In it he also stated that 'Since this undoubtedly terminates the matter as far as we are concerned, we are closing our file and enclose to you our bill for services'. Counsel referred to it as a closed file when plaintiff next inquired of him concerning it on October 23, 1967.

An inter-office memo of the plaintiff dated July 24, 1964, indicates that its Minneapolis Claims Division, after learning that defendant was moving to Michigan to accept employment as a college instructor, felt that in view of such move it was not the opportune time to proceed with the South Dakota action because 'we would then again contend with the same pattern of transferring judgment from Dakota to the State of Michigan.' An inter-office memo of its Kansas City office of October 31, 1967 reveals that the claims division felt that the further expense of having the judgment transferred to South Dakota was not warranted and that plaintiff wait a reasonable time and sue on the judgment in Michigan.

In their affidavits plaintiff's counsel and three employees of its Minneapolis Claims Division denied that defendant had been told or assured that the action would be dropped. The version of the three employees was that it would be held in abeyance pending his efforts to make satisfactory arrangements for its payment. In this connection it is proper to observe that while defendant left south Dakota in August of 1964 and made no payments after June 1, 1966, the application for a judgment by default in this litigation was not made until January 22, 1968. The totality of the circumstances here present persuades us to accept defendant's version of the incident.

The procedure and grounds for relieving a party from a judgment, including those entered on default, are set forth in SDCL 15--6--60(b). This was originally adopted as RCP 60(b) effective July 1, 1966. It gives the trial courts a wide discretion to relieve from judgments entered on default. Davis v. Interstate Motor Carriers Agency, S.D., 178 N.W.2d 204. It is a copy of Rule 60(b) of the Federal Rules, without its last sentence. The portion here pertinent provides:

'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;'

In the federal courts this rule is liberally construed and any doubt resolved in favor of an application to set aside a judgment in order that the case may be...