Voellmeck v. Northwestern Mutual Life Ins. Co.

• Decision Date: 05 July 1939
• Docket Number: 6658
• Parties: GRACE C. VOELLMECK, Appellant, v. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Respondent
• Court: Idaho Supreme Court

92 P.2d 1076

60 Idaho 412

GRACE C. VOELLMECK, Appellant, v. THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Respondent

No. 6658

Supreme Court of Idaho

July 5, 1939

DEFAULT JUDGMENT-JUDICIAL DISCRETION-SUMMONS-SERVICE-STATUTORY AGENT-SHOWING TO SET ASIDE DEFAULT-INVITED ERROR.

1. Although district judge is authorized to exercise discretion in granting or refusing to grant motion to set aside default and vacate judgment, the discretion must be exercised within well-defined rules of law and is subject to review. (I. C A., sec. 5-905.)

2. Commissioner of finance, who was designated by foreign insurer to receive service of process for it as provided by statute, was insurer's "statutory agent," and delivery of copy or summons and complaint to the commissioner constituted "service" on the insurer. (I. C. A sec. 40-502.)

3. A defendant against whom a default judgment has been taken, in order to be relieved therefrom, must, in addition to establishing that his failure to appear and answer was due to mistake, inadvertence, surprise, or excusable neglect, set forth facts showing that he has a good and meritorious defense to the cause of action stated in the complaint.

4. Foreign insurer was not entitled to have default judgment entered against it vacated where only showing made that defense existed appeared in affidavit of attorney for insurer which stated that insurer had good and meritorious defense to the action but set forth no facts to justify such conclusion. (I. C. A., sec. 5-905.)

5. The amendment to the statute authorizing court to relieve a party from default judgment, which required the setting aside of judgment taken against a party through neglect or failure of attorney of the party to timely file or serve any paper, relates solely to default entered because of such failure, and does not dispense with necessity for showing of meritorious defense in order to vacate default judgment taken against defendant without fault of its attorney. (I. C. A secs. 5-905, 40-502.)

6. The plaintiff was not required to move to strike a showing made in support of motion to set aside default and vacate judgment entered against foreign insurer, because of insufficiency of showing which failed to state facts indicating meritorious defense to the action, and plaintiff's failure to move to strike would not be held to have invited an erroneous ruling on the motion so as to preclude plaintiff from obtaining reversal thereof. (I. C. A., secs. 5-905, 40-502.)

The foregoing syllabus is by West Publishing Company, that following is by author of opinion.

I. While a district judge is authorized to exercise discretion in granting, or refusing to grant, a motion to set aside a default and vacate a judgment, the discretion must be exercised within well-defined rules of law and is reviewable.

II. The commissioner of finance, when designated by a foreign insurance corporation to receive service of process for it as provided by sec. 40-502, is its statutory agent, and delivery to him of a copy of the summons and complaint in an action wherein it is defendant is service on it.

III. A defendant against whom a default judgment has been taken must, in order to be relieved therefrom, set forth facts showing he has a good and meritorious defense to the cause of action stated in the complaint.

IV. The 1921 amendment of sec. 5-905 relates, solely, to defaults which have been entered because of the failure of an attorney-at-law to file or serve a paper within the time limited therefor.

V. It is not necessary to move to strike a showing made in support of a motion to set aside a default and vacate a judgment, and failure to do so cannot be held to have invited an erroneous ruling on the motion.

APPEAL from the District Court of the Tenth Judicial District for Nez Perce county. Hon. Miles S. Johnson, Judge.

Appeal from an order setting aside a default and vacating a judgment. Reversed.

Order reversed with direction. Costs awarded to appellant. Petition for rehearing denied.

Durham & Hyatt, for Appellant.

The trial court was authorized to use its discretion in setting aside a default or judgment taken against a party through his mistake, inadvertence, surprise or excusable neglect. (Sec. 5-905, I. C. A.)

The discretion referred to in the statute must be exercised by the court within well-defined rules, and a legal discretion reviewable by this court. (Ticknor v. McGinnis, 33 Idaho 308, 193 P. 850; Holzeman & Co. v. Henneberry, 11 Idaho 428, 83 P. 497; Valley State Bank v. Post Falls etc. Co., 29 Idaho 587, 161 P. 242.)

The negligence of Mr. Wedgwood, respondent's statutory agent, to properly notify the corporation of the date of service of the summons upon it, is not sufficient to set aside the default. (Boise Flying Service, Inc. v. General Motors Acceptance Corp., 55 Idaho 5, 36 P.2d 813; San Antonio Paper Co. v. Morgan, (Tex. Civ. App.) 53 S.W.2d 651; Boise Valley Traction Co. v. Boise City, 37 Idaho 20, 214 P. 1037; Missouri, K. & T. Ry. Co. v. Ellis, 53 Okla. 264, 156 P. 226, L. R. A. 1916E, 100; Atwood v. Northern Pacific Ry. Co., 37 Idaho 554, 217 P. 600; Marabia v. Mary Thompson Hospital, 309 Ill. 147, 140 N.E. 836; Black on Judgments, sec. 340.)

The default of the respondent and the judgment entered were regularly and properly entered. The respondent was therefore required to set forth in its affidavit a meritorious defense or tender an answer disclosing a meritorious defense. The respondent failed to set forth any defense, and by reason thereof the court had no authority to vacate the judgment. (Holland Bank v. Lieuallen, 6 Idaho 127, 53 P. 398; Holzeman & Co. v. Henneberry, supra; Beck v. Lavin, 15 Idaho 363, 67 P. 1028; Culver v. Mountain Home Electric Co., 17 Idaho 669, 107 P. 65.)

It is practically a universal rule that a motion to set aside a default or vacate a judgment must be accompanied by an affidavit or answer setting forth the facts that constitute a meritorious defense. It is also almost universally held that the statement that defendant had a good and meritorious defense to the action, by the party in interest or his attorney, is not sufficient to satisfy this requirement. (15 R. C. L., pars. 169, 170, pp. 717, 718; 34 C. J., par. 551 (and cases cited under note 76), p. 335; Quirles v. Smith, 186 Ark. 835, 56 S.W.2d 427; Beltran v. Roll, 39 Ariz. 417, 7 P.2d 248.)

V. R. Clements, for Respondent.

The failure of an officer of a state, whom foreign corporations are compelled by the statute of the state to appoint their agent to receive service of process as a condition to doing business in the state, is not such fault or negligence of the defendant corporation as will estop it from securing equitable relief from a judgment, which it was prevented from defending itself against by the neglect of the officer. (National Surety Company of New York v. State Bank of Humboldt, (C. C. A.-8) 120 F. 593, 56 C. C. A. 657, 61 L. R. A. 394; James v. City of San Francisco, 6 Cal. 528, 65 Am. Dec. 526; Poeggler v. Supreme Council, Catholic Mut. Ben. Assn., 102 Neb. 608, 168 N.W. 194.)

Where a motion is made to set aside a default almost immediately after the entry of judgment, every effort should be exerted to permit a trial of the matter. (Pearson v. Drobaz Fishing Co., 99 Cal. 425, 34 P. 76; Snyder v. Consolidated Highway Co., 157 Ore. 479, 72 P.2d 932; Gumaer v. Bell, 51 Colo. 473, 119 P. 681.)

The custom of practice (not provided by statute or rule of court) requiring showing of facts constituting merits of defense was dispensed with by the 1921 amendment to section 6726, Idaho Comp. Stats. as adopted and now in force by section 5-905, I. C. A. (Weaver v. Rambow, 37 Idaho 645, 217 P. 610; Consolidated Wagon & Machine Co. v. Housman, 38 Idaho 343, 221 P. 143; Miller v. Brinkman, 48 Idaho 232, 281 P. 372.)

An honest mistake made in good faith as to the time for appearance is sufficient ground to vacate a default judgment where the defendant has acted promptly to set aside the default. (Braseth v. Bottineau Co., 13 N.D. 344, 100 N.W. 1082; Miller v. Carr, 116 Cal. 378, 48 P. 324, 58 Am. St. 180; Dalgardno v. Trumbull, 25 Wash. 362, 65 P. 528; Freeman on Judgments, vol. 1, p. 473, sec. 239; Titus v. Larsen, 18 Wash. 145, 51 P. 351; Hanthorn v. Oliver, 32 Ore. 57, 51 P. 440, 67 Am. St. 518.)

MORGAN, J. Ailshie, C. J., and Budge, Givens and Holden, JJ., concur.

OPINION

MORGAN, J.

--This is an action by appellant against respondent on four policies of life insurance in which she is named as beneficiary. Respondent is a foreign corporation engaged in the life insurance business. Pursuant to I. C. A., sec. 40-502, it appointed the commissioner of finance of Idaho its attorney-in-fact upon whom process against it might be served, as it was required to do in order to be permitted to transact its business in this state.

Summons was served on respondent September 16, 1938, by the sheriff of Ada county, by delivering a copy of it, together with a copy of the complaint in the action, to said attorney-in-fact in said county. October 7, 1938, respondent having failed to appear or answer within twenty days from date of service, fixed by statute for answering, its default was entered by the clerk of the court and judgment was thereafter made and entered. October 10, 1938, respondent filed a motion, supported by affidavit, to set aside the default and vacate the judgment, on the ground that they were prematurely entered. It also filed a general demurrer to the complaint.

October 13th, respondent amended its motion and alleged that the default and judgment were taken and entered against it through its mistake, inadvertence and excusable neglect, by relying on a notice of service of summons and complaint which it received from the...