Parsons v. McCoy

• Decision Date: 19 February 1974
• Docket Number: No. 13089,13089
• Citation: 157 W.Va. 183,202 S.E.2d 632
• Court: West Virginia Supreme Court
• Parties: Sue Anne PARSONS, etc., et al. v. Donald C. McCOY et al., and Berton W. Cremeans et al.

Page 632

202 S.E.2d 632

157 W.Va. 183

Sue Anne PARSONS, etc., et al. v. Donald C. McCOY et al., and Berton W. Cremeans et al.

No. 13089.

Supreme Court of Appeals of West Virginia.

Submitted Sept. 26, 1973.

Decided Dec. 4, 1973.

Dissenting Opinion Feb. 19, 1974.

Syllabus by the Court

1. An order granting a motion to set aside a default judgment made under the provisions of Rules 55(c) and 60(b), R.C.P., is appealable under Code, 58--5--1(i).

2. The Rules of Civil Procedure pertaining to the setting aside of default judgments should be liberally construed in order to provide the relief from onerous consequences of default judgments.

3. 'A motion to vacate a default judgment is addressed to the sound discretion of the court and the court's ruling on such motion will not be disturbed on appeal unless there is a showing of an abuse of such discretion.' Pt. 3, syllabus, Intercity Realty Co. v. Gibson, W.Va., (175 S.E.2d 452) (Decided by this Court July 7, 1970).

Preiser & Wilson, David C. McCue, Chester Lovett, James Cooper, Charleston, for appellants.

Jackson, Kelly, Holt & O'Farrell, Charles Q. Gage, W. T. Shaffer, Charleston, for appellees Martha White Bean Co. and Martha White Mills.

BERRY, Chief Justice:

This is an appeal by the plaintiffs below, Sue Anne Parsons and Anna Leola Hall, from a judgment of the Circuit Court of Kanawha County entered August 4, 1970 which vacated, set aside and annulled an order by the court of June 2, 1970 which had granted the plaintiffs a default judgment against Martha White Mills of West Virginia, a corporation and Martha White Bean Company, a corporation. Sue Anne Parsons, individually, and by her next friend, Anna Leola Hall, and Anna Leola Hall on her own behalf brought the action for personal injuries to Sue Anne Parsons against numerous defendants as a result of a multi-vehicle collision. The two corporate defendants failed to answer the complaint or otherwise appear within 30 days, and a default judgment was entered against them. However, the two corporate defendants promptly filed a motion to set aside the default judgment, contending that their failure to file an answer within 30 days was the result of excusable neglect. The plaintiffs allege that the lower court erred in setting aside the default judgment contending that the failure of the corporate defendants to file an answer was inexcusable neglect. This Court granted plaintiffs' appeal on May 10, 1971; the case was continued on December 18, 1972, and on September 26, 1973 the case was submitted for decision upon arguments and briefs on behalf of the respective parties.

Sue Anne Parsons was injured as a result of a multi-vehicle collision on Interstate 64 near Dunbar, West Virginia on April 25, 1969. The chain collision accident occurred at approximately 7:15 a.m. in a fog bank. The defendant corporations had leased a truck which was involved in the accident and the corporations had insured the truck with Liberty Mutual Insurance Company. After the accident, the defendant corporations notified Liberty Mutual Insurance Company and the insurance company investigated the accident.

Stanley A. Smith, the claims supervisor for Liberty Mutual, who worked in the Cincinnati office and was responsible for claims in this region of West Virginia, opened a property damage file in the name of Sue Anne Parsons after receiving a letter from the Buckeye Union Insurance Company, asserting a subrogation claim against Steiner Leasing, Inc., the lessor of the truck, and Martha White Mills of West Virginia. Stanley A. Smith denied the subrogation claim on behalf of Liberty Mutual on October 2, 1969.

On July 24, 1969 Patricia Ann Morrison, administratrix of the estate of Ronald Eugene Morrison, deceased, brought an action in the Common Pleas Court of Kanawha County against Berton W. Cremeans, the driver of the truck, and Steiner Leasing, Inc., insureds of Liberty Mutual. Smith, the claims supervisor, opened a file in the name of Patricia Ann Morrison and contacted the law firm of Jackson, Kelly, Holt, and O'Farrell in Charleston, which regularly represents Liberty Mutual in that locality, but was informed by the law firm that it would not be able to represent Liberty Mutual because other insurance companies represented by Jackson, Kelly, Holt and O'Farrell were involved in the litigation arising out of the multi-vehicle accident. Smith then employed Spilman, Thomas, Battle and Klostermeyer, and Howard R. Klostermeyer, Esquire of that law firm, to represent Liberty Mutual in the Morrison action.

On April 17, 1970 Sue Anne Parsons brought the present action and the defendants Martha White Mills of West Virginia and Martha White Bean Company received the summons and complaint from the State Auditor on April 23, 1970. On April 20, 1970 Howard R. Klostermeyer forwarded a copy of a newspaper article to Smith in Cincinnati which advised Smith of the suit by Sue Anne Parsons. Smith incorrectly assumed that Klostermeyer would protect the company against default because over the years Liberty Mutual had worked out a procedure with its regular counsel, Jackson, Kelly, Holt and O'Farrell that if the local counsel were advised of an action against Liberty Mutual, the law firm would notify Smith in Cincinnati and would proceed to file an answer or seek to have the answer date extended. Smith, after receiving a copy of the summons and complaint from the insured, would forward the same to counsel along with any pertinent information received as a result of the company's investigation of the accident. However, in this case, Smith received the summons and complaint from the corporate defendants on April 24, 1970 and laid them on his desk with the intent of forwarding them to Klostermeyer at a later date. An unidentified clerk in Liberty Mutual's offices in Cincinnati picked up the summons and complaint from Smith's desk and mistakenly filed them in the previously opened property damage file in the name of Sue Anne Parsons. Smith did not open a new file for this action and forgot to forward the summons and complaint. Klostermeyer, not knowing of the procedure followed by Jackson, Kelly, Holt and O'Farrell, and not having received any instructions from Smith, did not take any action to protect the insureds against a default.

The plaintiff's contend that the conduct of the insurance company was inexcusable and the circuit court erred in setting aside the default judgment. The defendants filed a cross-assignment of error alleging that the order setting aside the default judgment is not a final order and thus is not appealable.

The defendants' cross-assignment of error will be considered first because if they prevail on this issue the appeal would be dismissed as improvidently awarded.

It is the contention of the defendants that the order of the trial court setting aside the default judgment is not an appealable order under the provisions of Code, 58--5--1. The two provisions of the aforementioned statute under which appeals may be granted by this Court are subsections (a) and (i). Subsection (a) allows appeals in civil cases where the amount involved is more than $100, exclusive of costs, where there is a final judgment, and subsection (i) allows appeals in civil cases from an order granting a new trial or rehearing.

The general rule in this country with regard to orders setting aside default judgments is that they are neither final orders nor orders granting a new trial, the reasoning being that they are interlocutory in nature and since there has never been a trial in the first instance they cannot be considered as orders granting a 'new' trial or 'rehearing'. Annot., 8 A.L.R.3d 1272; Dodd v. Bonds, 220 Ark. 951, 251 S.W.2d 587; Bergen v. Schrodi, 44 Wis.2d 19, 170 N.W.2d 698; Hall v. American National Plastics, Inc., 73 Wash.2d 203, 437 P.2d 693. However, this Court has held that an order setting aside a default judgment is appealable under Code, 58--5--1(i) by virtue of a liberal interpretation of the statute of the term 'trial'. Clark v. Lee, 76 W.Va. 144, 85 S.E. 64. There is virtually no other authority in other jurisdictions holding that such an order is appealable under statutes similar to Code, 58--5--1(i). See Annot., 8 A.L.R.3d 1272, 1316. The Clark case is the only case in which this matter has been squarely raised and discussed by this Court. An appeal was allowed by this Court from an order setting aside a default judgment in the case of Citizens' Trust & Guaranty Co. v. Young, 75 W.Va. 241, 83 S.E. 1007, and although the jurisdictional question was not raised by either the parties or the court, the order setting aside the default judgment was reversed primarily because no plea nor counter affidavit denying liability was filed during the term of the court in which the default judgment was entered, as required by the statute at that time. This case was decided before the Clark case.

In the recent case of McDaniel v. Romano, W.Va., 190 S.E.2d 8, an appeal was allowed by this Court from an order setting aside a default judgment but the question of whether or not the order was appealable was not raised or discussed in that case. There have been very few cases appealed to this Court involving the setting aside of default judgments for the simple reason that after a default judgment is set aside in most cases a trial is had on the merits, which, incidently, was done in the Clark case. Inasmuch as this Court has enunciated a rule allowing such appeals and since we did not desire to raise the jurisdictional matter on our own motion in the Romano case, we are not inclined at this time to overrule the Clark case.

It is the contention of the appellants, plaintiffs below, that the Circuit Court of Kanawha County erred in setting aside the default judgment in favor of the plaintiffs and against the defendants below, because the failure of the defendants to serve answers within thirty days as required by Rule 12(a), R.C.P.,...