S.C. Ryan, Inc. v. Lowe

• Decision Date: 20 April 1988
• Docket Number: No. 87-131,87-131
• Parties: S.C. RYAN, INC., a Montana corporation, d/b/a Taylor Distributing Co., and Northern Tier Distributing Co., Appellants (Appellants/Plaintiffs), v. Bill LOWE, individually and d/b/a World of Color Interiors, Appellee (Appellee/Defendant).
• Court: Wyoming Supreme Court

Page 580

753 P.2d 580

S.C. RYAN, INC., a Montana corporation, d/b/a Taylor Distributing Co., and Northern Tier Distributing Co., Appellants (Appellants/Plaintiffs), v. Bill LOWE, individually and d/b/a World of Color Interiors, Appellee (Appellee/Defendant).

No. 87-131.

Supreme Court of Wyoming.

April 20, 1988.

Clay B. Jenkins of Badley & Rasmussen, Sheridan, on briefs, for appellants.

H. Steven Brown of Brown, Raymond & Rissler, Casper, on briefs, for appellee.

Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT and MACY, JJ.

CARDINE, Justice.

Appellant S.C. Ryan, Inc., a Montana corporation, filed a complaint in county court alleging that appellee Bill Lowe owed it a debt of $1,035.31 plus a 1.5 percent per month service charge. Appellee failed to file a responsive pleading within the time permitted, and a default judgment was entered against him in the amount of $1,075.90. Appellee then filed a motion to set aside the default judgment, an answer, and a motion to dismiss, along with affidavits and other documents. Appellant filed counter affidavits, and the court ultimately set aside the default and dismissed appellant's complaint. Appellant appealed to the district court, which affirmed the county court. Appellant now appeals to this court, contending that no grounds existed for setting aside the default and that dismissal of its complaint was improper.

We reverse and remand.

Appellant S.C. Ryan, Inc. is a Montana corporation doing business as Taylor Distributing Company and Northern Tier Distributing Company. Appellee Bill Lowe is "engaged in the business of home interiors," apparently doing business as World of Color Interiors, and/or A World of Color, and/or Willor, Inc. Appellee purchased floor covering merchandise from appellant on a continuing account. Payments on the account were sporadic; and, on November 25, 1986, appellant filed an action for judgment on the outstanding balance.

DEFAULT

The county court initially entered a default judgment against appellee after he failed to respond to the complaint. Appellee moved to set aside the judgment, his attorney explaining that when he received appellant's complaint he was preparing to file bankruptcy for appellee's corporation Rule 55(c), W.R.C.P., provides that the court may set aside a judgment by default in accordance with Rule 60(b). Rule 60(b) provides:

and he inadvertently assumed that the debt would be included in the corporate bankruptcy. Appellee also filed affidavits purporting to establish that the debt to appellant was a corporate debt. The court set aside the default judgment without explanation.

"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; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment."

Rule 60(b) provides courts with the means of relieving a party from the oppression of a final judgment or order on a proper showing where such judgment is unfairly or mistakenly entered. Kennedy v. Kennedy, Wyo., 483 P.2d 516 (1971). The rule is remedial and is to be liberally construed, Spomer v. Spomer, Wyo., 580 P.2d 1146 (1978), but the movant carries the burden of bringing himself within its provisions. Atkins v. Household Finance Corporation of Casper, Wyoming, Wyo., 581 P.2d 193 (1978).

In the present case, the county court presumably granted relief under subdivision (b)(1) of Rule 60. The granting of relief under this subdivision is a matter of the exercise of discretion by the trial court, and appellate review is limited to the question of whether the trial court abused its discretion. U.S. Aviation, Inc. v. Wyoming Avionics, Inc., Wyo., 664 P.2d 121 (1983). In exercising its discretion, the trial court must consider whether the movant has established one of the enumerated grounds for relief and whether he has demonstrated a meritorious defense. Rule 60(b), W.R.C.P.; U.S. Aviation, Inc., supra.

In support of his motion to set aside the default judgment, appellee filed an affidavit in which his attorney stated that he failed to realize that the suit was against appellee personally. Thus the trial court could have reasonably concluded that appellee's failure to answer was the result of mistake or inadvertence. In addition, appellee filed affidavits designed to demonstrate that he had a meritorious defense to appellant's claim. As discussed below, these affidavits contained weaknesses, but they were sufficient to present "more than a bald conclusion" that a meritorious defense existed. U.S. Aviation, Inc., supra. We cannot say that the trial court abused its discretion by granting relief from the default judgment.

DISMISSAL

Appellee's motion to set aside the default judgment was accompanied by a motion to dismiss plaintiff's complaint. In the motion to dismiss, appellee asserted that he was not personally liable on the debt. Presumably the motion was one to dismiss for failure to state a claim under Rule 12(b)(6), W.R.C.P. Two affidavits and other documents were filed with appellee's motions, and appellant filed affidavits in resistance.

Rule 12(b), W.R.C.P., provides:

"If, on a motion * * * to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56 * * *."

The order dismissing appellant's complaint clearly demonstrates that the trial court relied on matters outside the pleadings when it found that "Willor, Inc. was a corporation in good standing." Accordingly, we will treat the motion as one for summary judgment. See Wyoming Insurance Department v. Sierra Life Insurance Company, Wyo., 599 P.2d 1360 (1979).

Summary judgment is appropriate only if there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. Rule 56, W.R.C.P. A fact is material if proof of that fact would have the effect of establishing or refuting one of the essential elements of a claim or defense. Johnson v. Soulis, Wyo., 542 P.2d 867 (1975).

In S-Creek Ranch, Inc. v. Monier & Company, Wyo., 509 P.2d 777, 783 (1973), we stated the following general principle of agency law:

"An agent of an undisclosed principal is subject to all liability, expressed or implied,...