Peaslee v. Pedco, Inc.

• Decision Date: 03 July 1978
• Citation: 388 A.2d 103
• Parties: Edward PEASLEE, Jr. and Eileen Peaslee v. PEDCO, INC.
• Court: Maine Supreme Court

Page 103

388 A.2d 103

Edward PEASLEE, Jr. and Eileen Peaslee v. PEDCO, INC.

Supreme Judicial Court of Maine.

July 3, 1978.

Lipman, Parks, Livingston & Lipman, P.A. by John M. Parks, Augusta (orally), for plaintiff.

Clark & Jones, P.A. by Dennis L. Jones, Gardiner (orally), David R. Downing, Wesley C. Archer, Brewer, for defendant.

Before DUFRESNE, C. J., and POMEROY, WERNICK, ARCHIBALD, DELAHANTY and GODFREY, JJ.

GODFREY, Justice.

Appellees Edward Peaslee, Jr. and Eileen Peaslee brought an action to rescind a contract between themselves and appellant Pedco, Inc. Appellant answered, raised affirmative defenses, and filed a paper denominated a counterclaim. After more than three and one-half years of pretrial maneuvers the parties agreed to refer the entire case to a referee. Attorneys for both parties were seasonably notified of a hearing date of May 5, 1975. On May 2, 1975, the referee received a letter from one of appellant's attorneys requesting a continuance. The request was supported by a month-old unsworn statement by a physician that one of appellant's witnesses would be unavailable for the hearing because of illness. The referee, court reporter, and appellees with their counsel appeared at the appointed time, but no representative of appellant appeared. Appellees argued that the letter was not a proper motion for continuance and was not filed in time or supported by affidavit, but the referee held a hearing on May 5 on whether a continuance should be granted. After receiving evidence to the effect that appellant's witness was not unavailable because of illness, the referee denied the request for a continuance.

The referee then proceeded to a hearing on the merits and found as follows: Mr. Peddle, president of Pedco, and Mr. Archer, attorney for Pedco, were on May 5, 1970, officers and stockholders of appellant. Preliminary conversations, extending over several months, had taken place between Mr. Peddle and appellees with respect to Pedco's acquisition and development of certain real estate appellees then owned or were in a position to acquire. As the time for closing the transaction approached, appellees having not yet retained counsel in the matter, Mr. Peddle suggested that Mr. Archer could and would act as counsel for both Pedco and the appellees at no cost to the appellees. On May 5, 1970, Mr. Peddle, Mr. Archer, and Mr. Downing, who was Mr. Archer's associate in law practice, met with appellants to complete the transaction. Mr. Archer produced documents for execution which appellees executed. Appellees reasonably believed they were represented by Mr. Archer with Mr. Downing as his assistant. However, no disclosure was made to the Peaslees that Mr. Archer owned any interest in Pedco, Inc.

The referee found that the May, 1970, transaction was disadvantageous to appellees in five significant respects: (1) The Peaslees were permitted to execute a warranty deed containing no reference to a purchase-money mortgage they were taking back from Pedco; (2) no reservation was made of a homestead lot the Peaslees intended to reserve; (3) no provision was made for any monetary investment by Pedco either in development of the property or otherwise, despite the fact that appellees could be deprived of any revenue from the property for a period of ten years; (4) appellees were required to pay taxes on the property unless Pedco should develop an escrow fund from sales or leases of the property; (5) an instrument in the form of a mortgage for $200,000 without interest, given by Pedco to the appellees at the closing, was never executed by Pedco, but a differently worded mortgage, back-dated, was later executed and recorded; the defeasance clause in the substituted mortgage contained no statement of the amount of the mortgage or terms of payment, but merely a reference to a contemporaneous note of Pedco payable to appellees.

The referee also found that appellant Pedco could be restored to the status quo and therefore concluded that appellees were entitled to rescind the contract. The referee's report of findings of fact and conclusions, dated October 18, 1975, was submitted to the Superior Court. On motion and over objection of appellant, the court accepted the referee's report and entered judgment on January 22, 1976, in favor of appellees. The appellant's putative counterclaim was dismissed with prejudice. Appellant now presents six grounds for reversing the judgment below.

On October 15, 1975, appellant had presented a motion for relief to the referee, who did not act on it. Appellant claims that the referee erred in his failure to act on the motion for relief, arguing that Rule 60(b), M.R.Civ.P. provides that a court may relieve a party from judgment on certain specified grounds. For a motion for relief from judgment under Rule 60(b) to be proper, there must be a judgment. When the motion was made, there was no judgment. Under Rule 53, M.R.Civ.P. a referee is given power to report but is given no power to enter judgment. The referee had no authority to grant relief from judgment under Rule 60(b).

Second, appellant argues that the referee erred in not granting a continuance on May 5, 1975, despite the fact that the order of reference had stated that if either party neglected to appear before the referee after due notice given, the referee should proceed ex parte. Rule 40(c), M.R.Civ.P. provides that a court need not entertain any motion for a continuance based on the absence of a material witness unless supported by an affidavit containing specified information, and that, in any case, the grant or denial of a continuance is discretionary. Since there was no affidavit, the referee was not even required to entertain the motion. In view of the absence of any affidavit and the fact that there was substantial evidence that the witness was not unavailable because of illness as stated in the letter, we cannot conclude that the referee abused his discretion in denying the motion for continuance.

Third, appellant claims that holding the hearing on the merits in the absence of appellant's counsel deprived appellant of property without due process. Due process requires that before a party can be deprived of property the party must have notice and an opportunity to be heard. Ginsberg v. Epstein, 118 Me. 487, 105 A. 854 (1919). In this case, appellant's c...