State Exchange Finance Co., Matter of
| Decision Date | 05 March 1990 |
| Docket Number | No. 89-1089,89-1089 |
| Citation | 896 F.2d 1104 |
| Parties | In the Matter of STATE EXCHANGE FINANCE COMPANY, Debtor. Appeal of Alfred E. McCLURE. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Alfred E. McClure, Lafayette, Ind., for appellant.
Mark J. Phillipoff, Jones, Obenchain, Ford, Pankow & Lewis, South Bend, Ind., for debtor-appellee.
Before CUMMINGS and POSNER, Circuit Judges, and PELL, Senior Circuit Judge.
Alfred McClure appeals from a decision by the district court affirming a default judgment in bankruptcy court obtained by State Exchange Finance Company (known as SEFCO), which had filed a complaint in that court on January 27, 1987, to collect a promissory note of $200,000 that McClure had issued to SEFCO. SEFCO attempted to serve McClure on February 9 by mailing a summons and a copy of the complaint, certified mail. When the post office returned the letter to SEFCO with the notation that it had been unclaimed after two attempts to notify the addressee, SEFCO both asked the sheriff to serve McClure personally and on March 13 mailed McClure's lawyer, Randolph Wolfson, a copy of the summons and complaint. The sheriff's office issued a certificate that SEFCO filed with the bankruptcy court on March 26, certifying that on March 18 the office had personally served McClure with the summons and complaint.
As stated in the summons, McClure was required to file his answer to the complaint on April 9. No answer was filed that day, and the next day SEFCO moved for entry of default pursuant to Fed.R.Civ.P. 55(a), made applicable to bankruptcy proceedings by Bankr.R. 7055. The default was entered on April 13, and the next day SEFCO moved for entry of judgment. On April 9 or 10, Wolfson had mailed an appearance, and a motion for an extension of time within which to file an answer, to the bankruptcy court, and the appearance and motion were filed in the court on April 13, the same day the default was entered. On April 22, Wolfson moved to set aside the default, and at the same time filed the answer to the complaint; but after a hearing the bankruptcy judge denied the motion and set a further hearing to determine damages, after which he entered judgment for $197,905.56 against McClure.
McClure argues first that the bankruptcy court never obtained personal jurisdiction. The argument is based on a discrepancy in the sheriff's certificate, and is frivolous. This is not because there is no discrepancy (although it appears to be trivial), but because Wolfson filed an appearance on McClure's behalf without contesting jurisdiction--and indeed acknowledged in his filing that McClure had been served around March 30. Neither in the motion to set aside the default nor in the answer to the complaint did McClure raise the issue of personal jurisdiction. He raised it for the first time at the hearing at which the bankruptcy judge denied the motion to set aside the default. This was too late. Fed.R.Civ.P. 12(h)(1); Giotis v. Apollo of the Ozarks, Inc., 800 F.2d 660, 663 (7th Cir.1986).
The only substantial question is whether the motion to set aside the default should have been granted. Two judges have said no, and we are not disposed to disturb their decision. It is true that the answer was filed only two weeks late (April 22, instead of April 9 when it was due). But even if the answer is filed two minutes late, if a default is entered the defendant cannot get it set aside...
To continue reading
Request your trial
-
Select Creations, Inc. v. Paliafito America, Inc., 91-C-1240
...787 F.2d 1186, 1192 (7th Cir.1986), and has become reluctant to reverse refusals to set them aside. See In re State Exchange Finance Co., 896 F.2d 1104, 1106 (7th Cir.1990). The precise extent of a district court's discretion to enter default judgment as a sanction has thus waxed uncertain.......
-
In re Hostetter
...(7th Cir.1995); Profile Gear Corp. v. Foundry Allied Industries, Inc., 937 F.2d 351, 354 (7th Cir. 1991); Matter of State Exchange Finance Co., 896 F.2d 1104, 1106 (7th Cir.1990). However, in the bankruptcy context, where a debtor has a presumptive right to a discharge, default judgment mot......
-
Swaim v. Moltan Co.
...Trustees of Central Laborers' Welfare Fund v. Lowery, 924 F.2d 731, 732-33 (7th Cir.1991) (per curiam); In re State Exchange Finance Co., 896 F.2d 1104, 1106 (7th Cir.1990). This forfeiture rule reflects the functional similarity between a personal jurisdictional challenge to a default judg......
-
Johnson v. Gudmundsson
...caseloads, however, we have in recent years become more tolerant of the use of default judgments, see Matter of State Exchange Finance Co., 896 F.2d 1104, 1106 (7th Cir.1990), "in order to ensure that litigants who are vigorously pursuing their cases are not hindered by those who are not." ......