Winfield Associates, Inc. v. Stonecipher

• Citation: 429 F.2d 1087
• Decision Date: 14 July 1970
• Docket Number: No. 459-69.,459-69.
• Parties: WINFIELD ASSOCIATES, INC., Appellee, v. W. L. STONECIPHER, Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

429 F.2d 1087 (1970)

WINFIELD ASSOCIATES, INC., Appellee, v. W. L. STONECIPHER, Appellant.

No. 459-69.

United States Court of Appeals, Tenth Circuit.

July 14, 1970.

Robert H. Bingham, Kansas City, Kan. (Lee E. Weeks, Leonard O. Thomas, J. D. Lysaught, and Ervin G. Johnston, Kansas City, Kan., on the brief) for appellant.

Arlyn D. Haxton, Kansas City, Mo. (Blumenfeld & Blumenfeld, Chicago, Ill., McAnany, Van Cleave & Phillips, Kansas City, Kan., Dietrich, Tyler, Davis, Burrell & Dicus, and Robert K. Dreiling, Kansas City, Mo., on the brief) for appellee.

Before PICKETT, MURRAH and HILL, Circuit Judges.

HILL, Circuit Judge.

This appeal from the Kansas District concerns the denial of relief from a default money judgment rendered in the Northern District of Illinois.

The default judgment was rendered on June 30, 1966, in the amount of $27,000 plus interest and costs in favor of appellee and against appellant. Pursuant to 28 U.S.C. § 1963, on November 18, 1966, the judgment was registered in the District of Kansas for the purpose of enforcing the same against property in the Kansas District belonging to appellant. Stonecipher thereafter filed a motion under Rule 60(b), F.R.Civ.P., 28 U.S.C., in the Kansas District attacking the judgment as null and void, alleging therein all of the grounds set out in the Rule plus allegations of improper service upon Stonecipher and lack of notice of the application for default judgment and the hearing thereon in violation of Rule 55(b) (2), F.R.Civ.P., 28 U.S.C. Appellee then filed a motion to strike or dismiss the motion for a show cause order. This motion was denied and the matter proceeded to an evidentiary hearing, after which the controversy was submitted to the court.

The trial court made extensive findings of fact, which we summarize as follows:

Stonecipher entered into an agreement with appellee Winfield wherein Winfield agreed to provide Stonecipher with a "bonded deferred commitment" within 15 days. The commitment was to be used as a vehicle to obtain interim financing for Stonecipher in the amount of $300,000.00, and a condition of the agreement was that the commitment, when issued, had to be financially acceptable to the interim lender. The agreement further provided that Winfield should receive 10% of the amount of the commitment or a total of $30,000 as the fee for procuring the commitment, and $3,000 of this fee was advanced at the signing of the agreement. Subsequently Winfield instituted suit in the United States District Court for the Northern District of Illinois seeking the $27,000 balance of the fee and alleging that appellee had performed the agreement but had not been fully paid.

After process was served on Stonecipher on March 30, 1966, he forwarded the complaint and summons to Edward Sexton, an attorney practicing in the State of Arizona, the attorney who had previously represented him in the negotiations with Winfield, and Sexton agreed to represent Stonecipher in the Illinois suit. On April 20, 1966, Sexton telephoned one Edgar Blumenfeld of Chicago, counsel for Winfield, and obtained an oral extension of time within which to answer the pending complaint. Sexton also advised Blumenfeld that he would obtain and forward affidavits proving that Winfield had not procured a commitment satisfactory to the interim lender and was not entitled to recover the procurement fee.

On May 10, 1966, the Clerk of the Illinois District Court mailed notice to Blumenfeld that the pending suit was set for a status report on June 16th. Subsequently on May 16th Blumenfeld received another call from Sexton to inform Blumenfeld that the affidavits, answer and counterclaim, stipulation for an extension of time, and notice for leave to appear specially would be prepared soon and would be sent to Blumenfeld for presentation to the Court on behalf of Sexton's client. During that telephone conversation Blumenfeld agreed that upon receipt of the pleadings and motions he would present them to the Court on Sexton's behalf, but Blumenfeld did not inform Sexton the case had been set for report on June 16, 1966. The pleadings and motions were forwarded to Blumenfeld on June 6th, and he presented them to the Court on June 9th. The Court, under its local Court Rule 7(b), refused to entertain the application to appear specially and the answer and counterclaim were not filed.

Blumenfeld thereafter forwarded his letter dated June 13, 1966, in which he advised Sexton that the local rules of the court required his client to appear by an attorney admitted to practice in the Northern District of Illinois. He further suggested that this be accomplished by June 17th "so as not to make necessary the entry of an order of default judgment." Blumenfeld's letter contained no mention of the setting of the case for report on status on June 16th. Sexton received this letter from Blumenfeld on June 16 or 17, 1966.

Subsequently, Blumenfeld filed an affidavit for default judgment on June 21, 1966, obtaining a hearing on that date, and further obtained a setting for proof of damages on June 30, 1966. No notice of either the hearing on June 21st or the setting on June 30th was given Sexton or his client Stonecipher, and on June 30, 1966, Blumenfeld appeared in court and obtained default judgment against appellant on the agreement to provide a bonded deferred commitment. After entry of the judgment, appellant Stonecipher obtained Illinois counsel who appeared before the Illinois District Court with Sexton and moved to vacate the default judgment under both Rules 60(b) and 55(b) (2). The motion was denied and no appeal was taken from the default judgment or from the denial of the motion to vacate the judgment. Instead, appellant Stonecipher waited to attack the judgment in Winfield's proceedings to enforce the judgment before the United States District Court of Kansas.

The trial judge, upon the basis of his findings of fact, declined to consider the case under Rule 60(b) and determined that Stonecipher's attack was an independent equitable action for relief from the judgment. He further determined that Stonecipher had deliberately by-passed his legal remedy of appeal from the judgment and the subsequent order denying relief from the judgment under Rules 60(b) and 55(b) (2), both entered in the Northern District of Illinois, and denied any equitable relief.

Stonecipher takes this appeal urging that it was error to deny his motion to set aside the Illinois judgment because: 1) Rule 60(b) imposes on a trial court the power to grant relief from judgments obtained in other United States District Courts provided the grounds for relief stated in the Rule are established; and 2) although appellant appeared in the suit before the Illinois District Court, default judgment was entered against him without giving him three days written notice as required by Rule 55(b) (2), F.R.Civ.P., 28 U.S.C. Both contentions lack merit and we affirm.

Upon considering the first point on appeal, we initially note that appellant characterizes his motion before the trial court as an application for relief pursuant to Rule 60(b). The trial judge declined to treat appellant's motion as one under Rule 60(b) and instead treated the motion as an independent equitable action for relief from the default judgment. Although appellant now contends on appeal that Rule 60(b) imposes in the trial court the power to grant relief from the judgments entered in other United States District Courts, he ignores the point that relief under Rule 60(b) is addressed to the sound discretion of the court.¹ Appellant has made no attempt to show an abuse of discretion. On the contrary, it appears that central to the trial judge's exercise of discretion is the fact that appellant deliberately bypassed his legal remedies of appeal from the default judgment and from the rendering court's order denying relief from the judgment.

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