Sprung v. Negwer Materials, Inc.

Decision Date14 April 1987
Docket NumberNo. 68670,68670
Citation727 S.W.2d 883
PartiesMelvin James SPRUNG, Jr., Plaintiff-Appellant, v. NEGWER MATERIALS, INC., Defendant-Respondent.
CourtMissouri Supreme Court

Charles Merz, Godfrey P. Padberg, St. Louis, for plaintiff-appellant.

Albert E. Schoenbeck, Brent W. Baldwin, St. Louis, for defendant-respondent.

ROBERTSON, Judge.

Plaintiff, Melvin J. Sprung, Jr., appeals from an order of the circuit court sustaining defendant's motion to set aside, on "equitable grounds", a final default judgment entered against defendant. Defendant, Negwer Materials, Inc., cross-appeals from that part of the circuit court's order overruling defendant's Motion to Set Aside Judgment for Irregularity.

The Court of Appeals, Eastern District, affirmed the order denying the motion to set aside the judgment for irregularity and reversed the order setting aside the judgment on "equitable grounds" with direction to reinstate plaintiff's default judgment. We granted transfer and have jurisdiction. Mo. Const. art. V, § 10. At issue are the jurisdiction of the circuit court to set aside the default judgment on equitable grounds and the propriety of the procedures employed by the circuit court in setting the default judgment aside.

We affirm the circuit court's order overruling defendant's Motion to Set Aside Judgment for Irregularity. We also reverse the order setting aside the default judgment on "equitable grounds," but remand the cause with directions to treat defendant's Motion to Set Aside Final Judgment of Default on equitable grounds as a petition in equity.

I.

On December 27, 1984, plaintiff filed a petition in the circuit court for damages sustained when a cart, which was rented from the defendant, tipped over and threw drywall on the plaintiff. Defendant was personally served on January 11, 1985. Defendant delivered the suit papers to his insurance company which, in turn, delivered them to a law firm. On January 31, 1985, a partner in the law firm dictated an entry of appearance and request for extension of time to plead. A secretary typed the documents and delivered them to the partner for his signature. Defendant asserts that the documents were returned to the secretary, who, instead of mailing them to the clerk of the circuit court, allegedly mailed the original documents to the insurance company by mistake. Neither the clerk of the circuit court nor plaintiff's attorney ever received the entry of appearance and request for extension of time to plead from the defendant.

On February 28, 1985, the circuit court entered an interlocutory judgment of default against defendant. On March 11, 1985, the circuit court conducted a hearing, at which defendant did not appear, to consider the issue of damages. Following testimony of the plaintiff, the circuit court entered a final judgment by default in the amount of $1,500,000 for injuries sustained by plaintiff.

On April 22, 1985, defendant's counsel was informed by the plaintiff's counsel that a final judgment had been entered on March 11, 1985. On May 3, 1985, the defendant filed two motions to set aside the default judgment. The court entered the following order:

Defendant's Motion to Set Aside Default Judgment for Irregularity overruled. Defendant's Motion to Set Aside Default Judgment on Equitable Grounds sustained. Default Judgment previously granted plaintiff set aside and held for naught. Defendant has shown that it had a good excuse for being in default, had a meritorious defense, and plaintiff will not be substantially harmed by the delay resulting from setting aside the default, and therefore is entitled to have this cause decided on the merits. Murray v. Sanders, 667 S.W.2d 426 (Mo.App.1984).

These appeals followed.

II.

We recognize six methods to set aside an otherwise final default judgment: (1) a separate suit in equity, (2) a petition for review under Rule 74.12, (3) a nunc pro tunc order, (4) a motion in the nature of a writ of error coram nobis, (5) a motion under Rule 74.32, and (6) a motion to set aside for fraud. Kranz v. Centropolis Crusher, Inc., 630 S.W.2d 136, 138-39 (Mo.App.1982); Godsy v. Godsy, 565 S.W.2d 726, 732 (Mo.App.1978); Diekmann v. Associates Discount Corp., 410 S.W.2d 695, 700 (Mo.App.1966). Of these, defendant has invoked Rule 74.32, and, by motion, sought to initiate a separate suit in equity.

A.

Defendant contends that the plaintiff's original petition failed to state a cause of action and that this defect in the petition is an irregularity within the scope of Rule 74.32.

Rule 74.32 provides:

Judgments in any court of record shall not be set aside for irregularity, on motion, unless such motion be made within three years after the rendition thereof.

The irregularity contemplated by the rule must be patent on the record and must not depend on proof beyond the record. Casper v. Lee, 362 Mo. 927, 245 S.W.2d 132, 138 (Mo. banc 1952). 1 "[I]rregularities are not ordinary judicial errors in a judgment that are reached through proper procedures." Barney v. Suggs, 688 S.W.2d 356, 359 (Mo. banc 1985). Thus, Rule 74.32 provides no basis for review of judicial errors committed in the rendition of a judgment.

A judgment rendered upon a petition which fails to state a cause of action indicates judicial error. Casper, 245 S.W.2d at 140. Our courts have repeatedly held that "failure of a pleading to state facts upon which relief can be granted is not an 'irregularity' within the meaning of this type of proceeding." Falcon Enterprise, Inc. v. Precise Forms, Inc., 509 S.W.2d 170, 172 (Mo.App.1974), citing State ex rel. Ozark County v. Tate, 109 Mo. 265, 18 S.W. 1088 (1892); Casper, 362 Mo. 927, 245 S.W.2d 132.

The trial court properly overruled defendant's Motion to Set Aside Judgment for Irregularity.

B.

Plaintiff contends that because the thirty days provided in Rule 75.01 had elapsed, the trial court was without jurisdiction to sustain appellant's Motion to Set Aside Final Judgment of Default on equitable grounds.

1.

Rule 75.01 provides, in pertinent part, that "the trial court retains control over judgments during the 30-day period after entry of judgment and may, after giving the parties an opportunity to be heard and for good cause, vacate, reopen, correct, amend or modify its judgments within that time period." The only authority cited by the trial court in setting aside the default judgment on equitable grounds is Murray v. Sanders, 667 S.W.2d 426 (Mo.App.1984).

In Murray, the defaulting defendant filed its motion to set aside the default judgment 16 days after the entry of that judgment. The trial court issued its order refusing to set aside the default judgment within the 30 days provided by Rule 75.01. On appeal, the Court of Appeals reasoned that the propriety of setting aside a default judgment within the time provided by Rule 75.01 is a matter "left to the discretion of the trial court and the trial court's ruling is to be interfered with by the appellate court only for abuse of discretion...." Murray, 667 S.W.2d at 427. Thus, the court applied the same standard as would be applied under equity to find that the trial court abused its discretion in refusing to set aside the default judgment.

Murray provides no authority 2 for the trial court to set aside the default judgment in this case, where the 30 days provided by Rule 75.01 had expired prior to the filing of defendant's motions. After the expiration of the 30 days provided by Rule 75.01, the trial court had no jurisdiction to rule on the motions. Nor is the proper standard of review abuse of discretion. 3 Under the circumstances of this case, once the trial court lost jurisdiction, only a new petition in equity could provide the necessary jurisdiction for the trial court to proceed.

We turn now to the question whether the trial court could treat the Motion to Set Aside Final Judgment of Default as an independent petition in equity.

2.

Default judgments have been particularly troubling to our appellate courts over the years. Fundamental and competing interests are at stake. One commentator observes that

[i]f the courts are too lenient with the party in default, the rules of procedure will not be complied with and litigation will become increasingly inefficient. Furthermore, a primary goal of the judicial system is finality. Litigation must end if the public is to have confidence in the court's ability to resolve disputes. If judgments are too easily vacated, then the public will not be able to rely on the court's decisions to formulate a future course of conduct. On the other hand, a primary goal of the judicial system is to seek the truth and to do justice between the parties. To promote this goal a case must be decided on the merits; procedural 'niceties' should not pose insurmountable barriers. These competing goals of efficiency, finality, and justice must be carefully balanced to ensure the public's confidence in the court system.

Laughrey, Default Judgments in Missouri, 50 Mo.L.Rev. 841, 843-44 (1985) (footnotes omitted).

The judicial struggle with this issue is evident by even a cursory reading of its historical treatment by appellate courts in this state. In this regard, we are blessed with two thoughtful, historical summaries: J.R. Watkins Co. v. Hubbard, 343 S.W.2d 189, 192-94 (Mo.App.1961), and Comment, Procedure--Setting Aside Final Judgments in Missouri, 28 Mo.L.Rev. 281, 299-305 (1963). We need not repeat their work here.

Instead, it is sufficient to acknowledge that the early jurisprudence of this state recognized a motion to set aside a default judgment on grounds of fraud and mistake as "the proper proceeding", even when the judgment was taken in a preceding term 4 of court. Downing v. Still, 43 Mo. 309, 319-20 (1869).

In 1914, this Court decided Jeude v. Sims, 258 Mo. 26, 166 S.W. 1048 (1914), casting doubt on Downing. In dicta, the Court said:

Counsel for respondents [defendants] do not seriously contend in their brief...

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