Weaver Const. Co. v. District Court In and For El Paso County, 4th Judicial Dist., 27016

• Decision Date: 02 February 1976
• Docket Number: No. 27016,27016
• Citation: 545 P.2d 1042,190 Colo. 227
• Parties: WEAVER CONSTRUCTION CO., a Colorado Corporation, Petitioner, v. The DISTRICT COURT IN AND FOR EL PASO COUNTY, 4TH JUDICIAL DISTRICT, the Honorable George M. Gibson, one of the judges thereof, Respondent.
• Court: Colorado Supreme Court

Page 1042

545 P.2d 1042

190 Colo. 227

WEAVER CONSTRUCTION CO., a Colorado Corporation, Petitioner, v. The DISTRICT COURT IN AND FOR EL PASO COUNTY, 4TH JUDICIAL

DISTRICT, the Honorable George M. Gibson, one of

the judges thereof, Respondent.

No. 27016.

Supreme Court of Colorado, En Banc.

Feb. 2, 1976.

Ronald M. Andersen, Denver, for petitioner.

Cole, Hecox, Tolley, Edwards & Hero, P.C., Henry B. Eastland, Colorado Springs, for respondent.

KELLEY, Justice.

Petitioner instituted this original proceeding under C.A.R. 21 seeking to prevent the district court from setting aside a default judgment and from destroying the priority of its judgment lien. A rule to show cause was issued, and we now make the rule absolute in part and discharge the rule in part.

The default judgment entered on May 1, 1975, was in petitioner's favor, as plaintiff, against defendants Robert Grinnell, Joy Grinnell, and Claire Bingham, individually, and Joy Construction Company, a Colorado corporation. The judgment, based on allegations of fraud and conversion, was in the amount of $54,386.

On or about August 13, 1975, defendants Robert and Joy Grinnell joined in filing a motion to set aside judgment pursuant to C.R.C.P. 60(b). They requested 'a reasonable period of time' in which to file an answer to the complaint and asserted the following grounds to support their motion:

'(1) a meritorious defense; and (2) the Judgment is void because of lack of proper service or they should be relieved of the Judgment because of inadvertence or excusable neglect.'

On or about October 15, 1975, defendants Robert and Joy Grinnell, through counsel, filed several documents with the district court: an entry of special appearance, a motion to quash service of process, and a statement of meritorious defense. The filing of these documents was an attempt to apper solely for the purpose of contesting personal jurisdiction. Had the district court found that personal jurisdiction existed, then in the alternative the Grinnells would have entered a general appearance for the purpose of setting aside the default judgment and receiving a trial on the merits. Their statement of meritorious defense specified several grounds of defense to the merits of the allegations in the complaint.

A hearing on the motions was conducted on October 27, 1975. The trial judge set aside the default judgment as to Robert Grinnell because of the lack of proper service of process, and as to Joy Grinnell because of 'excusable neglect,' and the presence of the statement of meritorious defense.

Petitioner brings this action primarily to restrain the district court from destroying the priority of its judgment lien obtained as a result of the default judgment, in light of the creditors who have obtained subsequent liens.

I.

C.A.R. 21 provides in pertinent part:

'Relief in the nature of prohibition may be sought in the Supreme Court where the district court is proceeding without or in excess of its jurisdiction . . ..'

We have recently held that the 'only proper procedure to secure review of a trial court's order' granting or denying an application to set aside a default judgment is by appeal after final judgment. Stiger v. District Court, Colo., 535 P.2d 508 (1975). This holding reflects a general policy which disfavors the use of an original writ where an appeal would be an appropriate remedy. First National Bank v. District Court, 164 Colo. 9, 432 P.2d 1 (1967); Leonhart v. District Court, 138 Colo. 1, 329 P.2d 781 (1958); Prinster v. District Court, 137 Colo. 393, 325 P.2d 938 (1958). However, where an appeal is not a 'plain, speedy, and adequate remedy,' one may be entitled to an original writ of prohibition. Blank v. District Court, Colo., 543 P.2d 1255 (Announced December 12, (1975); People ex rel. Bonfils v. District Court, 29 Colo. 83, 66 P. 1068 (1901); People ex rel. L'Abbe v. District Court, 26 Colo. 386, 58 P. 604 (1899); McInerney v. Denver, 17 Colo. 302, 29 P. 516 (1892).

In the present case, an appeal following a trial on the merits would not be an adequate remedy for a judgment lienor whose priority might be destroyed by the sale of the encumbered property by a judgment creditor whose rights attached subsequent to the default judgment. Thus, an original proceeding in this action is proper.

In determining whether, on the merits of the case, to issue a writ under C.A.R. 21, we must determine whether the trial court acted within its jurisdiction in setting aside the judgment as to the Grinnells, pursuant to C.R.C.P. 55(c) and 60, which are the governing rules. C.R.C.P. 55(c) provides:

'For good cause shown the court may set aside an entry of default and, if a judgment by default has been entered, may likewise set it aside in accordance with Rule 60(b).'

C.R.C.P. 60(b) provides in part:

'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; . . . (3) the judgment is void; . . . or (5) any other reason justifying relief from the operation of the judgment.'

The trial court set aside the judgment as to Joy Grinnell on the basis of 'excusable neglect,' on the strength of the defenses specified in her statement of meritorious defense. The judge was acting within his jurisdiction under the above cited rules when he set aside the judgment as to Joy Grinnell on the ground of 'excusable neglect' supported by a specific statement of meritorious defense. Coerber v. Rath, 164 Colo. 294, 435 P.2d 228 (1967).

The default judgment as to Robert Grinnell was set aside by the judge on the ground that he was not subjected to the personal jurisdiction of the court at the time of the judgment due to a lack of service of process. Joy Grinnell had been served on his behalf as his alleged wife, but at the time of service, the couple had been divorced for over a month. The rules specifically provide for setting aside judgments where a party has not been personally served, or where the judgment is 'void.' Therefore, the trial judge was acting within the scope of his jurisdiction in setting the judgment aside as to Robert Grinnell.

Further, the petitioner in this action has failed to sustain its burden of clearly proving that the trial court abused its broad discretion to set aside judgments. Credit Inv. & Loan Co. v. Guaranty Bank & Trust Co., 166 Colo. 471, 444 P.2d 633 (1968); General Aluminum Corp. v. District Court, 165 Colo. 445, 439 P.2d 340 (1968); Coerber v. Rath, supra; Riss v. Air Rental, Inc., 136 Colo. 216, 315 P.2d 820 (1957). We therefore hold that the trial court did not proceed 'without or in excess of its jurisdiction' in setting aside the judgment as to the Grinnells, and in this regard we discharge the rule.

II.

This brings us to the issue of whether the trial court's order setting aside the judgment could legally affect petitioner's judgment lien. Although none of our prior cases have required that we draw a distinction between Opening and Vacating a default judgment, such a distinction has been drawn by courts of other jurisdictions. Tierney v. Helvetia Swiss Fire Ins. Co., 126 App.Div. 446, 110 N.Y.S. 613 (1908); Halliburton v. Illinois Life Ins. Co., 170 Okl. 360, 40 P.2d 1086 (1935); Giles v. Ryan, 317 Pa. 65, 176 A. 1 (1935); Ackerman v. Burgard, 79 S.D. 119, 109 N.W.2d 10 (1961); See City of Park Ridge v. Murphy, 258 Ill. 365, 101 N.E.2d 524 (1913); Annot., 'Duty of Court upon Opening Default to Defer Vacation of Judgment or Order Until Result of Trial on Merits,' 98 A.L.R. 1380; Freeman, A Treatise on the Law of Judgments § 903 (5th ed. 1925).

The basic difference emphasized by the cases is that when a judgment is Opened the defendant is allowed to answer to the merits of the claim, but the original judgment and judgment lien remain in effect as security pending the resolution of the trial on the merits. Thus, if a judgment results in plaintiff's favor after the original judgment is Opened for a trial on the merits, his judgment lien will remain in full force and effect as if the original default judgment had not been Opened. If a judgment results in favor of the defendant after such a trial on the merits, then the original default judgment is Vacated--the judgment and judgment lien and dissolved as though they never existed. Therefore, generally, the court must refrain from Vacating a...