Ward v. Burley State Bank

• Decision Date: 05 April 1924
• Citation: 38 Idaho 764,225 P. 497
• Parties: H. H. WARD, Appellant, v. BURLEY STATE BANK, a Corporation, Respondent
• Court: Idaho Supreme Court

225 P. 497

38 Idaho 764

H. H. WARD, Appellant, v. BURLEY STATE BANK, a Corporation, Respondent

Supreme Court of Idaho

April 5, 1924

JUDGMENT BY DEFAULT-SETTING ASIDE DEFAULT-ABUSE OF DISCRETION-CONSTITUTIONAL LAW-LEGISLATIVE FUNCTIONS-BANKS AND BANKING - INSOLVENT BANKS - CLAIMS AGAINST - CHAPTER 42, 1921 SESSION LAWS, HELD VALID.

1. The trial court did not abuse its discretion in opening a default and permitting an answer to be filed by a bank which was in the possession and under the control of the commissioner of commerce and industry when the action was instituted and whose officers were told by the commissioner that he "would look after and attend to the matter of the suit of the plaintiff against this defendant," the said commissioner failing to do so.

2. An enactment changing the procedure for prosecuting a claim against an insolvent bank, after action therefor has begun which provides a new, different and adequate procedure according to which such claim can be presented and determined, is a valid exercise of legislative power.

APPEAL from the District Court of the Eleventh Judicial District for Cassia County. Hon. T. Bailey Lee, Judge. Appeal from order opening default. Affirmed.

Motion to strike denied. Order affirmed. Costs, to respondent.

E. R Dampier and L. H. Phillips, for Appellant.

In this case the defendant is pleading a mistake at law as a surprise to it in order to have the default vacated, and the court vacating a default upon the grounds of surprise, which surprise consists of a mistake of law, is abusing the judicial discretion of the court. (Bemis v. Williams, 33 Tex. App. 393, 74 S.W. 332; Phillips v. Wheeler, 10 Tex. 536; 8 Words and Phrases, 6818.)

S. T. Lowe, for Respondent.

Legislation which affects only the remedy or the procedure applies to actions pending at the time of the coming into effect of such legislation, and embraces pending actions even where such legislation does not specially so provide. (Brainard v. Coeur d'Alene A. M. Co., 35 Idaho 742, 208 P. 855.)

"An application to set aside and vacate a judgment is addressed to the sound legal discretion of the court; unless it appears that such discretion has been abused, the order will not be disturbed upon appeal." (C. S., sec. 6726; Dellwo v. Peterson, 34 Idaho 697, 203 P. 472; Pittock v. Pittock, 15 Idaho 47, 96 P. 212; Humphreys v. Idaho Gold Mines etc. Co., 21 Idaho 126, 120 P. 823; Nuestel v. Spokane Internatl. Ry. Co., 27 Idaho 367, 149 P. 462; Montigo v. Robert Sherer & Co., 5 Cal.App. 736, 91 P. 261; Williams v. Breen, 25 Wash. 666, 66 P. 103; Nash v. Treat, 45 Mont. 450, 122 P. 745.)

The following cases also bear upon the question of the excusability of the defendant in this case: (Beebe v. North-western Dairy Co., 62 Wash. 164, 113 P. 573; Morse v. Callantine (Cal.), 47 P. 635; Watson v. San Francisco & Humboldt Bay R. R. Co., 41 Cal. 17; Francis v. Cox, 33 Cal. 323; Collier v. Fitzpatrick, 22 Mont. 553, 57 P. 181.

Where a defendant, after service of summons, is advised by an attorney whose advice he relies upon that he has no defense, the default will be set aside. (Douglass v. Todd, 96 Cal. 655, 31 Am. St. 247, 31 P. 623; Wheratt v. Ellis, 70 Wis. 207, 5 Am. St. 164, 35 N.W. 314; Baxter v. Chute, 50 Minn. 164, 36 Am. Rep. 633, 52 N.W. 369; O'Brien v. Leach, 139 Cal. 220, 96 Am. St. 105, 72 P. 1004; Staley v. O'Day, 22 Cal.App. 149, 133 P. 620; Broderick v. Cochran, 18 Cal.App. 493, 122 P. 972; Mitchell v. California & O. C. S. S. Co., 156 Cal. 576, 105 P. 590.)

WM. E. LEE, J. McCarthy, C. J., and William A. Lee, J., concur.

OPINION

WM. E. LEE, J.

--On January 17, 1921, the Burley State Bank being insolvent, its affairs were placed in the hands of the commissioner of commerce and industry. Thereafter, on February 11, 1921, appellant commenced an action in the district court for Cassia county, against the Burley State Bank, for the recovery of the sum of $ 3,231.66, and summons was served on the bank on the same day. On March 5, 1921, the default of the defendant for its failure to appear and answer the complaint was duly entered, and on March 10, 1921, a judgment was made and entered in favor of appellant and against respondent. On September 7, 1921, respondent served and filed in the district court for Cassia county a notice of motion and motion to vacate and set aside the judgment. The motion was supported by an affidavit of the assistant cashier of the respondent. Respondent also presented an answer to the complaint and asked to have the same filed. The motion was thereafter argued, and it was ordered that the default of the defendant and the judgment by default be vacated and set aside and that the answer theretofore presented by the defendant be filed in the cause. The appeal is from the order vacating the default judgment and setting aside the default.

At the time of the filing of the complaint, C. S., sec. 5290, was in force and effect. This section provides, among other things, that upon the taking possession of any bank by the department of commerce and industry, the posting of a notice, on the front door of the place of business of the bank, announcing that the institution is in the hands of the department, "shall be sufficient to place all its assets and property, of whatever nature, in the possession of the department, and shall operate as a bar to any attachment proceedings whatever." On February 28, 1921, section 3, chapter 42, 1921 Session Laws, went into effect. Section 3, in substance, provided, among other things, that the taking over, by the commissioner of commerce and industry, of any bank, and the posting of the notice above mentioned, "shall operate as a bar to any attachment or any other legal proceedings against such bank or its assets, and no valid lien or claim can be acquired or created, or transfer or assignment made in any manner, binding or affecting any of the assets of such bank or trust company after the posting of such notice or after taking possession of any bank or trust company by the commissioner, without his consent." By referring to the dates hereinbefore mentioned, it will be seen that the complaint was filed after the commissioner of commerce and industry took possession of the bank and its assets, and that said section 3 went into effect before the default was taken and before the judgment was entered.

The motion to vacate the judgment was based upon two principal grounds: One, that at the time of the entry of judgment, the bank was in the hands of the department of commerce and industry and was not capable of being sued; the other, that the judgment was taken against the bank by surprise in that the department of commerce and industry had advised the officers of the bank that the bank was not capable of being sued, and that the department of commerce and industry "would look after and attend to the matter of the suit of the plaintiff against this defendant." It does not appear upon what particular ground of the motion the learned trial court ordered the judgment vacated. In the event, however, that the order is justified upon either of the grounds mentioned in the motion, it follows that the trial court did not abuse its discretion.

Appellant contends that when his action was instituted, there was no statute of this state prohibiting the commencement of an action or the taking of a judgment against a bank in the hands of the commissioner of commerce and industry; that the repeal of C. S., sec. 5290, and the enactment of said section 3, could not affect the action in any manner nor prevent appellant from taking a valid judgment against a bank so situated; that the judgment was valid; and that, in vacating the judgment, the court abused its discretion.

Chapter 42, 1921 Session Laws, provides what shall be done by the commissioner of commerce and industry in handling the affairs of any bank placed under his control under said section 3. This act also provides a full, complete and adequate method of procedure for presenting and enforcing claims against such bank. The...