United Salt Corp. v. McKee

• Decision Date: 15 May 1981
• Docket Number: No. 13447,13447
• Citation: 96 N.M. 65,1981 NMSC 52,628 P.2d 310
• Parties: UNITED SALT CORPORATION, Petitioner, and Gary W. Grice and Richard G. Patton, Defendants, v. Frankie L. McKEE, Individually and as Personal Representative of the Estate of Mona V. McKee, Deceased, Respondent.
• Court: New Mexico Supreme Court

Page 310

628 P.2d 310

96 N.M. 65

UNITED SALT CORPORATION, Petitioner, and Gary W. Grice and Richard G. Patton, Defendants, v. Frankie L. McKEE, Individually and as Personal

Representative of the Estate of Mona V. McKee,

Deceased, Respondent.

No. 13447.

Supreme Court of New Mexico.

May 15, 1981.

Rodey, Dickason, Sloan, Akin & Robb, Travis R. Collier, James C. Ritchie, Albuquerque, for petitioner

Thomas Fitch, Socorro, for respondent.

OPINION

SOSA, Senior Justice.

The issue before this Court on certiorari is whether a non-defaulting defendant is materially prejudiced by a default judgment as to liability and as to compensatory and punitive damages against its co-defendants in a wrongful death suit. The proper procedure to be followed in cases involving multiple defendants is an issue of substantial public interest. The district court granted a final default judgment under N.M.R.Civ.P. 54(b)(2), N.M.S.A. 1978 (Repl.Pamp.1980), which provides as follows:

(2) Judgment involving multiple parties. When multiple parties are involved, judgment may be entered adjudicating all issues as to one or more, but fewer than all parties. Such judgment shall be a final one unless the court, in its discretion, expressly provides otherwise and a provision to that effect is contained in the judgment. If such provision is made, then the judgment shall not terminate the action as to such party or parties and shall be subject to revision at any time before the entry of judgment adjudicating all claims and the rights and liabilities of all the parties.

Upon interlocutory appeal, the Court of Appeals affirmed the district court's denial of appellant's motion to set aside the default judgments of defendants Grice and Patton. The court held (1) that although the district court was technically incorrect in ordering the default judgment, appellant had no standing to challenge the validity of the judgment since it was not prejudiced or injured by the error and (2) that even if appellant had standing, the judgment was "harmless error" and the trial court did not abuse its discretion by acting arbitrarily or unreasonably under the particular circumstances. We affirm in part and reverse in part.

Mona McKee was killed on February 25, 1979, when a truck owned by appellant, United Salt Corporation, and operated by Gary W. Grice, collided with the vehicle which she was driving. Richard G. Patton was a passenger in the truck. A third vehicle was also involved. Frankie L. McKee, personal representative of the estate of Mona McKee, brought suit for damages for wrongful death against United Salt Corporation, Grice and Patton. He alleged that Grice and Patton were employees of United Salt and that they were negligent in the operation of the truck. He further alleged that United Salt was vicariously liable for the negligence of the individual defendants and that it had negligently entrusted the truck to them. He also alleged that all defendants were jointly and severally liable. Grice and Patton failed to answer. The district court entered default judgment against them in the amount of $359,899.00 (including $100,000.00 punitive damages) which is $50.00 more than the amount prayed for in the complaint. Default judgment was granted while United Salt's motion to dismiss the complaint, or in the alternative, to stay was pending. The district court denied appellant's motion to dismiss the default judgment. The Court of Appeals affirmed (Sutin, J., dissenting).

Appellant relies on Frow v. De La Vega, 82 U.S. (15 Wall.) 552, 21 L.Ed. 60 (1872), which involved a charge of jointly conspiring to defraud plaintiff out of certain lands in Texas. Plaintiff's complaint was eventually dismissed as to all the other defendants. The Supreme Court held that a final decree on the merits could not be made separately against one defendant where a joint charge was still pending against the others.

The true mode of proceeding where a bill makes a joint charge against several defendants, and one of them makes default, is simply to enter a default and a formal decree pro confesso against him, and proceed with the cause upon the answers of the other defendants. The defaulting defendant has merely lost his standing in court.

Id. 82 U.S. (15 Wall.) at 554.

It has been held that "it is most unlikely that Frow retains any force subsequent to the adoption of Rule 54(b). In any event, at most, Frow controls in situations where the liability of one defendant necessarily depends upon the liability of the others." (Citation omitted.) International Controls Corp. v. Vesco, 535 F.2d 742, 746-47 n. 4 (2d Cir. 1976). This is a joint claim against the defendant since the liability of United Salt as to the claim of vicarious liability necessarily depends on the negligence of the individual defendants. Therefore, a final default judgment as to the amount of damages should not have been ordered. Appellee asserts, however, that United Salt has no standing to challenge the validity of the judgment. The general rule of law is that a court of review will not entertain assignments of error made by the appellant which may be prejudicial or injurious to others but not as to him. 5 C.J.S. Appeal and Error § 1497 (1958).

I

The first question to be resolved is whether United Salt is prejudiced by the judgment. United Salt is not prejudiced by the default judgment establishing the liability of Grice and Patton individually since United Salt's negligence is not thereby decided. However, it may be prejudiced by the money judgment. United Salt is entitled to try the issues of negligence, respondeat superior and the amount of damages. As long as these issues were raised by United Salt's pleadings, it should not be foreclosed from litigating them merely because Grice and Patton defaulted. Grice and Patton should not be locked into an amount of damages without proof of the amount by pla...