Sheepscot Land Corp. v. Gregory

• Decision Date: 24 February 1978
• Citation: 383 A.2d 16
• Parties: SHEEPSCOT LAND CORPORATION v. Elizabeth K. GREGORY.
• Court: Maine Supreme Court

Page 16

383 A.2d 16

SHEEPSCOT LAND CORPORATION v. Elizabeth K. GREGORY.

Supreme Judicial Court of Maine.

Feb. 24, 1978.

Samuel G. Cohen, Stanley P. Cohen (orally), Waldoboro, John R. Sandler, Wiscasset, for plaintiff.

Perkins & Perkins by James B. Perkins (orally), Boothbay Harbor, Grant Lyons, Damariscotta, for defendant.

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

DUFRESNE, A. R. J. ¹

The plaintiff, Sheepscot Land Corporation (Sheepscot), on February 5, 1974 filed through new counsel a motion in the Superior Court (Lincoln County) praying that the default which had been entered against it in its action against the defendant, Elizabeth K. Gregory, on January 7, 1974 be set aside for the following reasons:

"A. That it had relieved its Counsel, . . . on December 17, 1973.

"B. That the Plaintiff did not have knowledge or notice of the provision of default to be entered if it failed to appear at the trial.

"C. That the Plaintiff's complaint has merit." ²

Sheepscot's motion was denied on February 11, 1974 and the Court ordered a judgment of dismissal respecting the plaintiff's partition complaint and a default judgment in the defendant's counterclaim which in effect set aside as fraudulent conveyances real and personal property transfers by Lewis E. Gregory to the plaintiff corporation through the medium of one Julius H. Sedlmayr. Sheepscot appeals. We deny the appeal.

The record discloses the following factual background from which the reference judgments on appeal arose. Lewis E. Gregory and Elizabeth K. Gregory were divorced on December 17, 1965 after a spirited contest, the decree being granted on Mrs. Gregory's counterclaim. In the divorce action, the Superior Court Justice made certain findings of fact of some relevancy in the instant litigation, such as that Mr. Gregory, upon his being served a summons in New York in connection with a support proceeding, had transferred securities worth $80,000.00 to his brother, that these securities belonged to Lewis Gregory notwithstanding the transfer, and that the value of Mr. Gregory's total assets, at the time of the divorce, exclusive of the home (the subject of the present partition action) which he owned jointly with Mrs. Gregory, was in the amount of $150,000.00. The divorce Court ordered Mr. Gregory to pay to Mrs. Gregory forthwith, in lieu of alimony, the sum of twenty-five thousand ($25,000.00) dollars, but to this day no part of that judgment has been satisfied, even though several capias executions have been issued against Mr. Gregory, including one presently outstanding at the time of the instant proceedings.

Sheepscot Land Corporation, the plaintiff, was organized by plaintiff's original counsel in the partition action on June 21, 1972 as a Maine corporation, with only one shareholder of no par value stock, the charter providing that the meetings of the shareholders may be held outside the State of Maine.

On January 19, 1973 Sheepscot instituted the present action in the Superior Court (Lincoln County) to partition the real and personal property formerly held in joint tenancy by Mr. and Mrs. Gregory, claiming an interest therein as tenant in common by reason of assignments from Mr. Gregory.

In her counterclaim, Mrs. Gregory asserts that the conveyances made by Mr. Gregory, whether to the plaintiff corporation directly, or through the mesne intervention of his friend, Julius H. Sedlmayr, were effected for the sole purpose of hindering, delaying and defrauding her in her attempt to satisfy her judgment claim of twenty-five thousand ($25,000.00) dollars, plus interest, against Mr. Gregory, the then president of Sheepscot. In her counterclaim, Mrs. Gregory prayed, among other claims of relief, that all such transfers be set aside and that such property presently in the name of Sheepscot be placed back in the name of Lewis E. Gregory as the true owner in fact and that the same be so recorded in the Lincoln County Registry of Deeds, in aid to further proceedings to be taken in satisfaction of the outstanding execution on judgment.

In chronological order, the following procedural scenario took place. Both parties filed their respective pretrial memorandum pursuant to Rule 16, M.R.Civ.P., the plaintiff on September 18, 1973 and the defendant, on October 3, 1973. A pretrial conference was held on October 29, 1973 between counsel for the parties and a Justice of the Superior Court other than the Justice whose dismissal-default judgments are presently on appeal. The pro forma pretrial order signed by the then presiding Justice to the effect that

"(a)fter conference and review of the file it is apparent that the pleadings and Pre-Trial Memorandums are sufficient to govern the course of the Trial and are therefore adopted, except as hereinafter noted."

did nothing to refine the issues, to secure agreement on the admissibility of exhibits, to identify trial witnesses, to uncover the nature and scope of the special damages claimed, in other words, it utterly failed to promote the purposes for which Rule 16 was promulgated, which are "to consider:

(1) The simplification of the issues.

(2) The necessity or desirability of amendments to the pleadings.

(3) The possibility of obtaining admissions of fact and of documents which will avoid unnecessary proof.

(4) The limitation of the number of expert witnesses; and

(5) Such other matters as may aid in the disposition of the action."

The pretrial order of October 29, 1973, however, did accomplish two things. It ordered the case to be placed on the trial calendar as a non-jury matter by agreement and authorized amendments by the defendant, the docket entries of that date showing that hearing was set for 11:00 a. m. on November 8, 1973 on any future motions.

On November 8, 1973 the defendant's motion to amend her counterclaim was heard and granted by the second Justice. At that time, trial of the action was set for 9:30 a. m., December 12, 1973.

On December 12, 1973 counsel for both parties met with the second Justice and, in the apparent prospect of a probable settlement, they concurred in and endorsed a certain memorandum of record, in which it was agreed tentatively, among other things, as follows: the defendant, Mrs. Gregory, then Chapman, would release Lewis Gregory from any and all claims, including but not limited to the outstanding judgment in the divorce decree; Lewis Gregory and/or Sheepscot Land Corporation shall quitclaim any and all interest in the real estate in Sheepscot; the parties will agree upon a list of the inventory of personal contents which the defendant will agree to permit the plaintiff and/or Lewis Gregory to remove from the premises, with the plaintiff and/or Lewis Gregory to furnish not less than ten (10) days written notice of the time and dates when he is to come to remove the property; during the morning conference counsel for the plaintiff had been talking with his client (with Mr. Gregory) on the telephone on two occasions; the only matter left in dispute was the inventory items; if the inventory were satisfactory, he had agreed to the settlement; Lewis Gregory had indicated to counsel that as president of Sheepscot Land Corporation the settlement would be agreeable if he could retain twenty (20) of the forty (40) acres of real estate involved, leaving to Mrs. Gregory and/or Mrs. Chapman twenty (20) acres with the improvements thereon; if the settlement was not concluded by December 20, 1973, the case would be heard on December 27, 1973.

As indicated previously, the plaintiff corporation dismissed its counsel on December 17, 1973, which resulted in counsel's request for leave to withdraw addressed to the presiding Justice under date of December 26, 1973.

On December 27, 1973, when the case was scheduled to be tried pursuant to the parties' agreement under Court direction, the plaintiff's dismissed attorneys were present in court; so was the defendant with her attorneys and her witnesses. Mr. Gregory, president of the plaintiff corporation, was not present, although counsel for the plaintiff informed the Court that Mr. Gregory had been fully informed respecting the results of the pretrial conference of December 12, 1973. Under the circumstances, the presiding Justice, in addition to his granting leave to withdraw to plaintiff's counsel, made the following order:

"The Clerk will make the following entry:

Plaintiff Sheepscot Land Corp. to be defaulted on January 7th, 1974, unless on or before that date Plaintiff appears either personally (sic) or through new counsel to show cause why the default should not then be entered.

"Further ordered that the clerk send forthwith a copy of this decision and attachments thereto to Lewis Gregory, Sheepscot Land Corporation, Duck Pond Road, Glen Cove, New York 11542 by Registered Mail, Return Receipt."

The Court's order of December 27, 1973 was complied with and on the same day notice thereof was sent to Sheepscot Land Corporation in the name of Lewis Gregory, its president, with the selected optional service of delivery to addressee only. This registered mail was returned as having been refused on December 29, 1973.

Default judgments in favor of the defendant, Elizabeth K. Gregory, and against the plaintiff corporation, both on the main action and on the counterclaim, were not rendered by the Court below until February 11, 1974 when the Court denied the plaintiff's motion to set aside the entry of default which had been made on January 7, 1974 pursuant to the order of the Court dated December 27, 1973.

In order to determine the propriety of the denial of the plaintiff's motion to set aside the default entry which resulted in the default judgments which are the subject of this appeal, we must inquire into the factual situation which led to the default. It is well established that a motion to set aside a default entry, as well as the default judgment resulting therefrom, is addressed to the sound discretion of the...