White v. Holm

• Decision Date: 14 March 1968
• Docket Number: No. 39267,39267
• Citation: 73 Wn.2d 348,438 P.2d 581
• Court: Washington Supreme Court
• Parties: Etta A. WHITE, Respondent, v. Richard B. HOLM and Jane Doe Holm, husband and wife, doing business as Holm Enterprise Realty, Appellants.

Page 348

73 Wn.2d 348

438 P.2d 581

Etta A. WHITE, Respondent, v. Richard B. HOLM and Jane Doe Holm, husband and wife, doing business as Holm Enterprise Realty, Appellants.

No. 39267.

Supreme Court of Washington, Department 2.

March 14, 1968.

Rehearing Denied April 23, 1968.

Lynch & Lynch, Jack Lynch, Olympia, for appellants.

Torbenson, Thatcher, Stevenson & Burns, Larrie E. Elhart, Seattle, for respondent.

HAMILTON, Judge.

Defendants appeal from an order denying their motion to vacate a default judgment claimed against them by plaintiff. We reverse the order and remand the cause for trial on the merits. The pertinent facts are these:

At approximately 11 a.m., on August 31, 1965, plaintiff, Etta A. White, an elderly woman, was walking east on the sidewalk adjoining Fourth Avenue, in downtown Olympia, Washington. At the same time defendant Richard B. Holm was leaving the recessed entryway of his place of business, the Holm Enterprise Realty, which abutted on the sidewalk. As Mr. Holm reached the sidewalk and turned west, he collided with Mrs. White. As a result, Mrs. White fell to the sidewalk and sustained various injuries, including a fracture of the left thigh bone.

On April 6, 1966, plaintiff filed a claim for relief in the Superior Court for Thurston County, alleging negligence on the part of Mr. Holm and seeking compensation for her injuries. Process was served on defendants April 11, 1966. In the meantime, Mr. Holm had heard a radio newscast on April 7, 1966, concerning the filing of Mrs. White's claim and had consulted with his insurance agent, an insurance adjuster, and an attorney about the matter. As a result of these conferences, and a 'nonwaiver' agreement which the adjuster had requested Mr. Holm to sign, Mr. Holm was under the impression that, although coverage was questioned, his insurance carrier would provide legal counsel. Relying upon this belief, Mr. Holm did not retain the attorney he had consulted. After service of plaintiff's claim on April 11, 1966, Mr. Holm immediately relayed the papers to the insurance adjuster, who, in turn, on April 19, 1966, forwarded them to the San Francisco, California, office of Mr. Holm's insurance carrier with a statement to the effect that the adjuster understood Mr. Holm would be represented by his own attorney until such time as insurance coverage was determined. Because of this misunderstanding as to who would provide interim legal counsel for defendants, no timely appearance or answer to the claim was made on behalf of the defendants.

On May 5, 1966, 24 days after service of the claim, plaintiff moved for a default judgment which, after testimony by Mrs. White, was granted on that date awarding damages in the sum of $16,497.

Upon learning of the entry of the default judgment, Mr. Holm, through counsel then provided by his insurance carrier, prepared a motion to vacate the judgment on May 13, 1966. This motion was filed on May 16 and served on May 18, 1966. The basis for the motion was that the defendants' failure to timely appear and answer plaintiff's claim was due to mistake, inadvertence, surprise, or excusable neglect, and that defendants had a meritorious defense. RCW 4.32.240. ¹

So far as plaintiff's claim for relief be concerned, it is essentially her contention that Mr. Holm was negligent in that he walked backwards out of the recessed entryway leading to the sidewalk from his place of business and failed to observe her presence on the sidewalk before he turned and forcibly collided with her. Mr. Holm, on the other hand, by way of his affidavit in support of the motion to vacate the default judgment, contends that plaintiff was not visible to him as he backed away from his office door; that his presence and actions in the entryway were plainly observable to Mrs. White as she approached on the sidewalk- ; that in turning onto the sidewalk he merely brushed her with his arm; and that Mrs. White's fall was occasioned by her own evasive action. Mrs. White, in a controverting affidavit, denies that the recessed entryway or Mr. Holm's activities therein were visible to her as she approached and asserts that Mr. Holm was moving rapidly when he turned and forcibly knocked her to the sidewalk.

The trial court, in denying defendants' motion, determined that defendants had failed to show a meritorious defense to the plaintiff's claim and that the failure to timely appear or answer plaintiff's claim was due to inexcusable fault on the part of the insurance carrier.

We cannot agree with the conclusion reached by the trial court.

At the outset, we pause to note that a proceeding to vacate or set aside a default judgment, although not a suit in equity, is equitable in its character, and the relief sought or afforded is to be administered in accordance with equitable principles and terms. Roth v. Nash, 19 Wash.2d 731, 144 P.2d 271 (1943). Thus, we early took occasion to endorse the proposition that in such proceedings the court, in passing upon an application which is not manifestly insufficient or groundless, should exercise its authority liberally, as well as equitably, to the end that substantial rights be preserved and justice between the parties be fairly and judiciously done. Hull v. Vining, 17 Wash. 352, 49 P. 537 (1897).

In approaching the issues posed upon this appeal, we take note too of the established principle that a motion to vacate or set aside a default judgment, which is grounded upon RCW 4.32.240, is in the first instance, addressed to the sound judicial discretion of the trial court, and that this court, sitting in appellate review, will not disturb the trial court's disposition of the motion unless it be made to plainly appear that sound discretion has been abused. Yeck v. Department of Labor & Indus., 27 Wash.2d 92, 176 P.2d 359 (1947); Borg-Warner Acceptance Corp. v. McKinsey, 71 Wash.Dec.2d 637, 430 P.2d 584 (1967). In this vein, however, it is pertinent to observe that where the determination of the trial court results in the denial of a trial on the merits an abuse of discretion may be more readily found than in those instances where the default judgment is set aside and a trial on the merits ensues. Agricultural & Livestock Credit Corp. v. McKenzie, 157 Wash. 597, 289 P. 527 (1930); Graham v. Yakima Stock Brokers, Inc., 192 Wash. 121, 72 P.2d 1041 (1937); Yeck v. Department of Labor & Indus., supra.

The discretion which the trial court is called upon to exercise in passing upon an appropriate application to set aside a default judgment concerns itself with and revolves about two primary and two secondary factors which must be shown by the moving party. These factors are: (1) That there is substantial evidence extant to support, at least prima facie, a defense to the claim asserted by the opposing party; (2) that the moving party's failure to timely appear in the action, and answer the opponent's claim, was occasioned by mistake, inadvertence, surprise or excusable neglect; (3) that the moving party acted with due diligence after notice of entry of the default judgment; and (4) that no substantial hardship will result to the opposing party. Hull v. Vining, supra; Chehalis Coal Co. v. Laisure, 97 Wash. 422, 166 P. 1158 (1917); Yeck v. Department of Labor & Indus., supra; Hinz v. Northland Milk & Ice Cream Co., 237 Minn. 28, 53 N.W.2d 454 (1952); Whitledge v. Anderson Air Activities, 276 S.W.2d 114 (Mo.1955).

The first two are the major elements to be demonstrated by the moving party, and they, coupled with the secondary factors, vary in dispositive significance as the circumstances of the particular case dictate. Thus, where the moving party is able to demonstrate a strong or virtually conclusive defense to the opponent's claim, scant time will be spent inquiring into the reasons which occasioned entry of the default, provided the moving party is timely to show a strong or conclusive defense, but properly appear in the action in the first instance was not willful. On the other hand, where the moving party is unable to show or conclusive defense, but is able to properly demonstrate a defense that would, prima facie at least, carry a decisive issue to the finder of the facts in a trial on the merits, the reasons for his failure to timely appear in the action before the default will be scrutinized with greater care, as will the seasonability of his application and the element of potential hardship on the opposing party. Jacobsen v. Defiance Lumber Co., 142 Wash. 642, 253 P. 1088 (1927); Yeck v. Department of Labor & Indus., supra; Merrell v. Hamilton Produce Co., 55 Wash.2d 684, 349 P.2d 597 (1960).

In the instant case, it cannot be said that defendants, by the affidavits submitted in support of their motion, have presented a strong or conclusive defense. At best their motion rests upon the slender premise that the physical characteristics of the recessed entryway and the relative positions and actions of Mrs. White and Mr. Holm at the moment of and immediately before collision could, when fully explored at a trial on the merits, give rise to a factual issue revolving about either negligence on the part of Mr. Holm or contributory negligence on the part of Mrs. White, or both. See, Annot., 88 A.L.R.2d 1143 (1963), Liability of pedestrian to another pedestrian...