Newbern v. Gas-Ice Corp.

• Jurisdiction: Oregon
• Court: Oregon Supreme Court
• Writing for the Court: Before O'CONNELL; TONGUE
• Citation: Newbern v. Gas-Ice Corp., 501 P.2d 1294, 263 Or. 250 (Or. 1972)
• Decision Date: 19 October 1972
• Docket Number: GAS-ICE
• Parties: R. B. NEWBERN et al., Respondents, v.CORPORATION, a Washington corporation, Appellant.

Page 1294

501 P.2d 1294

263 Or. 250

R. B. NEWBERN et al., Respondents, v. GAS-ICE CORPORATION, a Washington corporation, Appellant.

Supreme Court of Oregon.

Argued and Submitted, Sept. 13, 1972.

Decided Oct. 19, 1972.

Kenneth M. Novack, Portland, argued the cause for appellant. With him on the briefs were Rives, Bonyhadi & Hall and Bruce M. Hall, Portland.

Nels Peterson, Portland, argued the cause for respondents. With him on the brief were Jack H. Cairns, Portland, and Peterson, Chaivoe & Peterson, Plrtland.

Before O'CONNELL, C.J. and McALLISTER, DENECKE, HOLMAN, TONGUE and HOWELL, JJ.

TONGUE, Justice.

This is an action for payments allegedly due under a lease of a so-called 'Tank Farm' owned by plaintiff and leased to defendant. Defendant appeals from an adverse judgment. We affirm. This case is a companion case to the case of Gas-Ice Corporation v. Newbern, Or. 501 P.2d 1288 (1972).

One of the contentions by the corporation as the plaintiff and appellant in that case was that the trial court erred in 'not determining that the Tank Farm was acquired by defendants (Newbern) and leased to plaintiff (Gas-Ice Corporation) in breach of defendants' fiduciary duties to plaintiff' as an officer and trustee of plaintiff corporation. Although the trial court rejected the contention that the lease was invalid 'ab initio' for those reasons, it cancelled that lease for other reasons as of May 1, 1970. We affirmed that determination by the trial court in that case by decision bearing this same date.

In this case the defendant corporation, by its answer, denied any obligation for payment of rent under the lease and alleged that it was invalid for the same reasons as urged by it in the other case. On oral argument before this court, however, it was conceded by defendant that an affirmance of the trial court on this same issue in that case would be dispositive of that issue, as a matter of res judicata or collateral estoppel, and that, in such an event, plaintiff Newbern would be entitled to the rental payments claimed by him in this case for the period April 1, 1969 to March 31, 1970, in the sum of $14,868, subject, however, to the contention by the defendant corporation that the trial court erred in setting aside a previous judgment on the pleadings in favor of it as the defendant in this case.

It appears from the record that after the failure of plaintiff to file a timely reply to the equitable defenses as alleged in defendant's answer and after a 'Rule 4' notice was sent to plaintiff by the trial court, defendant filed a motion for judgment on the pleadings, which was served on plaintiff's attorneys of record, together with a praecipe setting that motion for hearing on December 2, 1970. Plaintiff's attorneys did not appear at that time, but one of them, Mr. Peterson, advised the court by telephone that they would not contest that motion. Accordingly the court granted the motion and entered such a judgment on the pleadings.

Shortly thereafter, on January 6, 1971, plaintiff's counsel filed a motion to set aside the judgment on the pleadings, with an affidavit by Mr. Peterson stating that by mistake and inadvertence he believed, when informed of defendant's motion and of the hearing on that motion, that it involved still a third lawsuit between the same parties, rather than this case. On January 26, 1971, the trial court granted that motion and entered an order setting aside its previous judgment on the pleadings. ¹ The case was then tried and a judgment was entered in favor of plaintiff in the sum of $14,868, together with $6,000 in attorney fees.

Defendant contends on this appeal that the trial court erred in setting aside the judgment on the pleadings. In support of that contention defendant urges that the judgment on the pleadings was not taken through mistake, inadvertence, surprise or excusable neglect, at least 'of the type contemplated by ORS 19.160'; that the judgment was also consented to by plaintiff, and thus could not be set aside unless procured through fraud; that the court erred in 'applying the same standard of discretion to plaintiffs in default as to a defendant in default,' and that the court abused its discretion in setting aside the default judgment.

We have reviewed the entire record and hold that the trial court did not abuse its discretion or otherwise err in allowing plaintiff's motion to set aside the judgment on the pleadings. The trial judge apparently believed Mr. Peterson, who was plaintiff's principal attorney, in his statement to the court at the hearing on that motion that when he previously informed the court that plaintiff would not oppose defendant's motion he did so under the mistaken belief that it involved another case in a series of lawsuits between the same parties as a part of an extremely complex course of litigation between them. While that mistake may not have been of the usual type of 'mistake, inadvertence, surprise or excusable neglect' contemplated by ORS 18.160, we hold that the trial judge could properly find that it came within the terms of that statute. ² The fact that Mr. Peterson had associated Mr. Cairns to assist him in representing plaintiff does not require a different result under the facts of this case, despite defendant's contention to the contrary.

As for defendant's further contention that this was a 'consent judgment' and, as such, could not be set aside in the absence of fraud or mutual mistake, citing Stites v. McGee, 37 Or. 574, 61 P. 1129 (1900), and Zipper v. Zipper, 192 Or. 568, 235 P.2d 866 (1951), it is sufficient to point out that the basis for such a holding in those cases was that they both involved motions made after the expiration of the term of court to set aside previous judgments or decrees, in which it was properly held, as stated in Stites (at p. 577, 61 P. at p. 1129) that:

'* * * The only was (such a judgment or decree) can be attacked or impeached after the expiration of the term, whatever the rule may be during the term, is by an original bill, on the ground of fraud or mutual mistake * * *.'

The statute involved in those cases has since been amended so as to provide that the expiration of a term of court has no effect on the duties and powers of the court, provided that it acts 'within a reasonable period of time.' ORS 1.055. In this case, no contention is made that the order setting aside the judgment on the pleadings was not entered within a reasonable time.

Furthermore, this was not a 'consent decree' in the usual sense, in which such a judgment or decree is entered as a part of an over-all settlement of a case, usually by written stipulation. In this case the only basis for such a contention by defendant is that plaintiff's attorney, when notified of the motion and of the hearing on that motion, stated that plaintiff would not contest that motion.

In any event, we hold that since there is no contention that the order of the court setting aside the judgment on the pleadings was not entered 'within a reasonable period of time,' the court had discretion to consider whether plaintiff had made a sufficient showing of 'mistake, inadvertence, surprise or excusable neglect' to satisfy the requirements of ORS 18.160 and that defendant has failed to demonstrate that under the facts of this case there was an abuse of that discretion. ³

Defendant also assigns as error the contention that '(t)he trial court erred in not assessing plaintiffs for defendant's costs and attorneys' fees caused by plaintiffs' counsel's mistake,' citin...