Romer, O'Connor & Co. v. Huffman

• Decision Date: 16 June 1959
• Citation: 171 Cal.App.2d 342,341 P.2d 62
• Court: California Court of Appeals Court of Appeals
• Parties: ROMER, O'CONNOR & CO., Inc., Plaintiff and Appellant, v. J. F. HUFFMAN, also known as Forbes Huffman, also known as J. Forbes Huffman, Defendants and Respondents. Civ. 18161.

Page 62

341 P.2d 62

171 Cal.App.2d 342

ROMER, O'CONNOR & CO., Inc., Plaintiff and Appellant, v. J. F. HUFFMAN, also known as Forbes Huffman, also known as J. Forbes Huffman, Defendants and Respondents.

Civ. 18161.

District Court of Appeal, First District, Division 1, California.

June 16, 1959.

Romer & Brown, San Francisco, for appellant.

Jay Pfotenhauer, San Francisco, for respondent.

HANSON, Justice pro tem.

This is an appeal by the plaintiff from an order which set aside the entry of a default by the clerk and a default judgment entered thereon by the court. It is urged that the trial court abused its discretion in granting such relief under the provisions of section 473 of the Code of Civil Procedure.

At the outset the plaintiff-appellant contends that the motion of the defendant as filed on April 12, 1957, sought only that the default judgment be set aside and not the default which had been entered by the clerk and, hence, the court erred and abused its discretion in setting aside the clerk's entry of default along with the default judgment and in granting leave to file the answer which was tendered. Moreover, the plaintiff contends it was error to do so in view of the further fact that the court had denied a supplemental motion filed by defendant on May 28, 1957, to amend the original motion, so as to include therein nunc pro tunc that the entry of default be likewise set aside, as well as the default judgment.

We proceed now to state the salient facts which gave rise to the controversy before us.

It appears that the plaintiff's assignor under a written contract with the defendant consigned goods to the defendant for resale pursuant to certain restrictions and conditions set forth in the written contract. On Junary 21, 1955, an action was filed to recover the sum of $19,362.71, on a book account, and for alleged breach of that contract; an amended complaint was duly filed on November 30, 1955; on January 17, 1956, the plaintiff filed a bill of particulars; on March 8, 1956, the trial court denied a motion of a third party who entered the case as an intervenor. The defendant never filed an answer and this apparently was due in part to the fact that four different written stipulations, and several oral stipulations extending the time to answer, were entered into by the counsel for plaintiff and by the counsel for the defendant. Moreover, during the summer of 1956, the parties' counsel entered into extensive negotiations with a view to settlement. In the month of July 1956, counsel for defendant prepared an answer for filing, but further negotiations were carried on with the result that the answer was not filed. After August 4, 1956, no further negotiations were had.

On October 15, 1956, the clerk entered a default, and on October 16, 1956, the court signed and filed a default judgment for the amount prayed for in the amended complaint, notwithstanding that Miller, counsel for plaintiff, had conceded in the course of the negotiations that certain credits were due to the defendant that would reduce the demand of appellant. These proceedings were not discovered by counsel for defendant until February 26, 1957, whereupon he immediately communicated with Miller, a member of the Romer law firm with whom he had dealt exclusively, requesting a stipulation to set aside the default judgment. Miller stated he was not in a position to enter into such a stipulation, that he had been removed from the active handling of the file in September, and that the 'file had been undertaken' by another member of the Romer firm who was accountable for the action taken. Thereupon counsel for defendant informed Miller that the defendant was in Europe and the Middle East on business and that he, counsel, was having difficulty in communicating with him, but that he would make further efforts to do so shortly. Nevertheless, as defendant's counsel had not heard from defendant in response to letters and cables sent to him, he filed the motion on April 12, 1957, to set aside the default judgment and supported it with his own affidavit, accompanied by the answer which had been signed by the defendant in July 1956. Five days after the motion was filed, counsel for defendant received a letter from defendant dated April 14 advising him to go ahead and file the motion, and also explaining the reason why affiant had not been able to communicate with him; i. e., that defendant had been travelling about on business in many countries in Europe and the Middle East and affiant's communications had reached him only with difficulty. According to the supplemental affidavit of defendant's counsel he had an oral stipulation with Miller that no judgment or action would be taken against the defendant without prior notice to counsel for defendant and in sufficient time to enable affiant to file an appearance.

The foregoing facts, gleaned from the affidavits of counsel for defendant which the court was entitled to believe, were not contradicted in the affidavit of Miller except that he stated in his own affidavit that during the summer of 1956 he made several oral requests to counsel for defendant that he file an answer and appear in the case and that the response to these requests was that it would be attended to shortly. Likewise Miller in his affidavit stated that he was 'removed from active handling of this file [the case] some time in September 1956 * * *.'

The time elapsing between the entry of default and the filing of defendant's moving papers was five months and twenty-six days.

On May 28, 1957, defendant filed a motion to amend his first motion (of April 12, 1957) so that the original motion would provide nunc pro tunc for the setting aside of not only the default judgment (October 16, 1956) but also the setting aside and vacating of the default (entered by the superior court clerk on October 15, 1956).

Upon the records, files, and affidavits of the parties, and upon the argument of counsel, the court ordered on September 18, 1957, that both the default and the default judgment entered in favor of the plaintiff be set aside and granted the defendant leave to file the answer that had been submitted with the original motion. The court further ordered that the defendant's motion of May 28, 1957, for an amendment nunc pro tunc of his original motion be denied.

Appellant's first contention is that the trial court abused its discretion in setting aside the default judgment of October 16, 1957.

The granting or denying of a motion to set aside a default judgment is within the sound discretion of the trial court (see, e. g., Gore v. Witt, 149 Cal.App.2d 681, 308 P.2d 770), and generally, since the code section allowing such a motion, Code of Civil Procedure, section 473, is a remedial measure and to be liberally construed (Waybright v. Anderson, 200 Cal. 374, 377, 253 P. 148; In re Estate of Strobeck, 111 Cal.App.2d 853, 858, 245 P.2d 317), any doubts existing as to the propriety of the trial court's action will be resolved in favor of a hearing on the merits. Beckley v. Reclamation Board, 48 Cal.2d 710, 718, 312 p.2d 1098; Benjamin v. Dalmo Mfg. Co., 31 Cal.2d 523, 525-526, 190 P.2d 593; Nomellini Construction Co. v. Deane, 160 Cal.App.2d 57, 59, 324 P.2d 654; Yarbrough v. Yarbrough, 144 Cal.App.2d 610, 614, 301 P.2d 426.

Further, as in any other case, the trial court's determination of the facts as found from the affidavits of the parties will be conclusive upon the appellate court (Nomillini Construction Co. v. Deane, 160 Cal.App.2d 57, 59, 324 P.2d 654), but if the facts as stated in the moving party's affidavit do not constitute valid grounds for the relief sought, the trial court's action in setting aside the default will be reversed (Benjamin v. Dalmo Mag. Co., 31 Cal.2d 523, 190 P.2d 593; Yarbrough v. Yarbrough, 144 Cal.App.2d 610, 301 P.2d 426). Hence the question narrows to whether or not the facts stated in the affidavit of defendant's counsel show reasonable grounds for setting aside the default judgment.

In substance the affidavit alleges that after the original complaint and the filing of the amended complaint the defendant's counsel and the plaintiff's counsel were engaged in rather extensive negotiations in an effort to settle the case; that numerous stipulations, both written and oral, for the extension of time in which to appear and answer were entered into. Thereafter, without the knowledge of the defendant's counsel and without his having received notice or a demand to file an answer, one of the counsel for the plaintiff, other than the counsel with whom defendant's counsel had been negotiating, sought and obtained the entry of a default judgment. That these allegations are sufficient is seen from the following language by this court in the Yarbrough case: 'There can be no doubt that a trial court may find excusable neglect or surprise where settlement negotiations are being had between counsel, and where there is an oral or implied understanding that no default will be taken without notice, and counsel takes such a default without notice. [Citations.]' 144 Cal.App.2d at page 616, 301 P.2d at page 430.

In Beard v. Beard, 16 Cal.2d 645, 648, 107 P.2d 385, 387, the court said: 'In the present case the trial court found that there was a sufficiently reasonable excuse to justify the setting aside of the default judgment, apparently on the basis of respondent's allegation that the continued negotiations * * * had lulled the respondent's attorney into a sense of security. This exercise of discretion presents no apparent abuse to justify interference by this court.'

So too in this case it cannot be said that the trial court abused its discretion in granting the relief sought under the allegations of counsel for defendant. After a long period of negotiation, along with numerous oral and written stipulations for extensions of time, defendant's counsel might well have been lulled into a sense of security, and, in any...