Uffleman v. Labbitt

• Decision Date: 11 December 1968
• Docket Number: No. 11460,11460
• Citation: 448 P.2d 690,152 Mont. 238
• Parties: Alex UFFLEMAN, Jr., Plaintiff and Respondent, v. L. H. LABBITT, Defendant and Appellant.
• Court: Montana Supreme Court

Page 690

448 P.2d 690

152 Mont. 238

Alex UFFLEMAN, Jr., Plaintiff and Respondent, v. L. H. LABBITT, Defendant and Appellant.

No. 11460.

Supreme Court of Montana.

Submitted Nov. 19, 1968.

Decided Dec. 11, 1968.

Lamb & Snyder, Franklin A. Lamb, (argued), Billings, for defendant and appellant.

Bert W. Kronmiller, (argued), Hardin, for plaintiff and respondent.

HASWELL, Justice.

This is an appeal from an order of the district court of Big Horn County refusing to vacate a default judgment. The judgment awarded plaintiff $15,000 damages for breach of contract to lease certain lands on the Crow Indian reservation to him.

Plaintiff Alex Uffleman, Jr. and Defendant L. H. Labbitt entered into a written contract on May 10, 1965, whereby defendant agreed to sell to plaintiff several leases of Indian lands. Contrary to the written terms of the contract, the parties agreed that plaintiff was not to take possession of these lands until March 1, 1967, because defendant had subleased the lands to one Henry Seder until that time. Plaintiff agreed to pay a total consideration of $11,500 under the terms of the agreement through a series of installment payments represented by 10 promissory notes, the first of which was payable September 1, 1967. The notes and leases were escrowed in the Big Horn County State Bank in Hardin.

The written agreement contained no warranty of title to the leases. Defendant agreed to deliver only such right, title and interest as he had in the leases. However, the understanding was that defendant would guarantee and stand behind such leases and he so testified.

Prior to March 1, 1967, defendant gave notice to Seder that his sublease would not be renewed and to vacate the lands by March 1. Prior to March 1, plaintiff was advised by the superintendent of the Crow Indian reservation that defendant's leases were invalid and that he would not allow possession to be taken under them. Plaintiff also learned that Seder had obtained his own leases direct from the Indian owners, claimed the right of possession of the lands under such direct leases, and would not surrender possession.

On May 18, 1967, plaintiff made demand on defendant that he return the promissory notes escrowed in the bank and for $15,000 damages incurred in preparing his farming operations in reliance on securing the leased lands from defendant. Between the time of execution of the agreement with defendant and the time plaintiff was entitled to take possession of the lands, plaintiff had purchased (1) a 300 acre farm that could not be farmed profitably without the additional lands under defendant's leases, (2) 35 head of cattle, and (3) additional machinery. In his demand, plaintiff also advised that in the event of failure of defendant to comply, suit would be filed accordingly.

Defendant made no response to plaintiff, but orally advised the bank that the contract with plaintiff was dissolved and that plaintiff was to have the notes any time he called for them. Neither the bank nor defendant notified plaintiff of this. On July 20, 1967, plaintiff filed suit against defendant, making the same claims contained in his previous demand.

Defendant was served with summons and complaint on Jury 24 and on the following day wrote plaintiff that the lease agreement was cancelled, that the noted were available to him at the bank, and that 'I have no claim on you and I am sure you have no claim on me'. The following day without waiting for plaintiff to pick up the notes, defendant picked them up at the bank, marked each note 'This note and contract cancelled' and affixed his signature thereon, and mailed them by registered mail to plaintiff. The transmittal letter advised plaintiff to go to the bank and sign a release on the escrow, concluding with the words 'See you in court'.

Defendant did not answer the summons and complaint, so on August 15 plaintiff entered default against defendant. On August 24 a hearing was held on entry of default judgment. Thereafter plaintiff was granted a default judgment against defendant for $15,000 damages based on breach of contract.

Notice of entry of judgment was served on defendant on August 29. Defendant immediately wrote plaintiff threatening a damage action unless plaintiff cleared the records of the judgment. When this letter did not produce the desired results, defendant secured counsel and on September 14 filed his motion to vacate the default judgment on the grounds of mistake, inadvertence, surprise or excusable neglect. A full scale hearing was subsequently held, briefs were filed, and on December 19 the district court denied defendant's motion with a well reasoned 8 page supporting memorandum by Judge Luedke.

The issues presented for review upon this appeal can be summarized as follows: (1) Should the motion to vacate the default judgment have been granted? (2) Is the default judgment erroneous on its face? (3) Was an erroneous standard used by the court in determining damages? (4) Failure of proof to support the judgment.

The principal issue upon this appeal is whether the default judgment should have been vacated. Defendant's motion therefor was based on Rule 60(b)(1), M.R.Civ.P. which provides:

'On motion and upon such terms as are just, the court may relieve a party * * * from a final judgment * * * for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect * * *'.

By the adoption of the Montana Rules of Civil Procedure, the prior decisions of this Court relating to vacating default judgments have not been abandoned. Sewell v. Beatrice Foods Co., 145 Mont. 337, 400 P.2d 892. Prior decisions have established that only a slight abuse of discretion in refusing to set aside a default judgment is sufficient to justify a reversal, and when a motion to vacate a default judgment is supported by a showing which leaves the court in doubt or upon which reasonable minds might reach different conclusions, the doubt should be resolved in favor of the motion. Sewell v. Beatrice Foods Co., supra; United States Rubber Co. v. Community Gas & Oil Co., 139 Mont. 36, 359 P.2d 375; Cure v. Southwick, 137 Mont. 1, 349 P.2d 575.

Let us examine the supporting affidavits and evidence on defendant's motion in the instant case. At the outset, we observe that at the hearing on defendant's motion the court went to great lengths in examining all the evidence, not only in support of the motion but on the merits of the case and the defenses tendered in the proposed answer to the complaint.

Defendant's principal contention is that he was surprised at the entry of the default judgment against him. He claimed in his affidavit and in his own testimony that after the summons and complaint were served upon him, plaintiff's father came to see him and stated that his son was anxious to drop the suit, that he would talk to his son and his attorney to see what they could do to cancel the suit. Defendant then left for Seattle on a business trip and upon his return, learned that the default judgment had been taken against him.

The district judge aptly observed in his memorandum: 'If Defendant had in fact been misled at the...