Sprung v. Negwer Materials, Inc.

727 S.W.2d 883, 1987 Mo. LEXIS 291

• Court: Supreme Court of Missouri
• Decided: April 14, 1987
• Docket: 68670
• Status: Published

Opinions

ROBERTSON, Judge.

Plaintiff, Melvin J. Sprung, Jr., appeals from an order of the circuit court sustaining defendant’s motion to set aside, on “equitable grounds”, a final default judgment entered against defendant. Defendant, Negwer Materials, Inc., cross-appeals from that part of the circuit court’s order overruling defendant’s Motion to Set Aside Judgment for Irregularity.

The Court of Appeals, Eastern District, affirmed the order denying the motion to set aside the judgment for irregularity and reversed the order setting aside the judgment on “equitable grounds” with direction to reinstate plaintiff’s default judgment. We granted transfer and have jurisdiction. Mo. Const, art. V, § 10. At issue are the jurisdiction of the circuit court to set aside the default judgment on equitable grounds and the propriety of the procedures employed by the circuit court in setting the default judgment aside.

We affirm the circuit court’s order overruling defendant’s Motion to Set Aside Judgment for Irregularity. We also reverse the order setting aside the default judgment on “equitable grounds,” but remand the cause with directions to treat defendant’s Motion to Set Aside Final Judgment of Default on equitable grounds as a petition in equity.

I.

On December 27, 1984, plaintiff filed a petition in the circuit court for damages sustained when a cart, which was rented from the defendant, tipped over and threw drywall on the plaintiff. Defendant was personally served on January 11, 1985. Defendant delivered the suit papers to his insurance company which, in turn, delivered them to a law firm. On January 31, 1985, a partner in the law firm dictated an entry of appearance and request for extension of time to plead. A secretary typed the documents and delivered them to the partner for his signature. Defendant asserts that the documents were returned to the secretary, who, instead of mailing them to the clerk of the circuit court, allegedly mailed the original documents to the insurance company by mistake. Neither the clerk of the circuit court nor plaintiff’s attorney ever received the entry of appearance and request for extension of time to plead from the defendant.

On February 28, 1985, the circuit court entered an interlocutory judgment of default against defendant. On March 11, 1985, the circuit court conducted a hearing, at which defendant did not appear, to consider the issue of damages. Following testimony of the plaintiff, the circuit court entered a final judgment by default in the amount of $1,500,000 for injuries sustained by plaintiff.

On April 22, 1985, defendant’s counsel was informed by the plaintiff’s counsel that a final judgment had been entered on March 11, 1985. On May 3, 1985, the defendant filed two motions to set aside the default judgment. The court entered the following order:

Defendant’s Motion to Set Aside Default Judgment for Irregularity overruled. Defendant’s Motion to Set Aside Default Judgment on Equitable Grounds sustained. Default Judgment previously granted plaintiff set aside and held for naught. Defendant has shown that it had a good excuse for being in default, had a meritorious defense, and plaintiff will not be substantially harmed by the delay resulting from setting aside the default, and therefore is entitled to have this cause decided on the merits. Murray v. Sanders, 667 S.W.2d 426 (Mo.App. 1984).

These appeals followed.

II.

We recognize six methods to set aside an otherwise final default judgment: (1) a separate suit in equity, (2) a petition for review under Rule 74.12, (3) a nunc pro tune order, (4) a motion in the nature of a writ of error coram nobis, (5) a motion under Rule 74.32, and (6) a motion to set aside for fraud. Kranz v. Centropolis Crusher, Inc., 630 S.W.2d 136, 138-39 (Mo.App.1982); Godsy v. Godsy, 565 S.W.2d 726, 732 (Mo.App.1978); Diekmann v. Associates Discount Corp., 410 S.W.2d 695, 700 (Mo.App.1966). Of these, defendant has invoked Rule 74.-32, and, by motion, sought to initiate a separate suit in equity.

A.

Defendant contends that the plaintiff’s original petition failed to state a cause of action and that this defect in the petition is an irregularity within the scope of Rule 74.32.

Rule 74.32 provides:

Judgments in any court of record shall not be set aside for irregularity, on motion, unless such motion be made within three years after the rendition thereof.

The irregularity contemplated by the rule must be patent on the record and must not depend on proof beyond the record. Casper v. Lee, 362 Mo. 927, 245 S.W.2d 132, 138 (Mo. banc 1952).¹ “[Ijrregularities are not ordinary judicial errors in a judgment that are reached through proper procedures.” Barney v. Suggs, 688 S.W.2d 356, 359 (Mo. banc 1985). Thus, Rule 74.32 provides no basis for review of judicial errors committed in the rendition of a judgment.

A judgment rendered upon a petition which fails to state a cause of action indicates judicial error. Casper, 245 S.W.2d at 140. Our courts have repeatedly held that “failure of a pleading to state facts upon which relief can be granted is not an ‘irregularity’ within the meaning of this type of proceeding.” Falcon Enterprise, Inc. v. Precise Forms, Inc., 509 S.W.2d 170, 172 (Mo.App.1974), citing State ex rel. Ozark County v. Tate, 109 Mo. 265, 18 S.W. 1088 (1892); Casper, 362 Mo. 927, 245 S.W.2d 132.

The trial court properly overruled defendant’s Motion to Set Aside Judgment for Irregularity.

B.

Plaintiff contends that because the thirty days provided in Rule 75.01 had elapsed, the trial court was without jurisdiction to sustain appellant’s Motion to Set Aside Final Judgment of Default on equitable grounds.

1.

Rule 75.01 provides, in pertinent part, that “the trial court retains control over judgments during the 30-day period after entry of judgment and may, after giving the parties an opportunity to be heard and for good cause, vacate, reopen, correct, amend or modify its judgments within that time period.” The only authority cited by the trial court in setting aside the default judgment on equitable grounds is Murray v. Sanders, 667 S.W.2d 426 (Mo.App.1984).

In Murray, the defaulting defendant filed its motion to set aside the default judgment 16 days after the entry of that judgment. The trial court issued its order refusing to set aside the default judgment within the 30 days provided by Rule 75.01. On appeal, the Court of Appeals reasoned that the propriety of setting aside a default judgment within the time provided by Rule 75.01 is a matter “left to the discretion of the trial court and the trial court’s ruling is to be interfered with by the appellate court only for abuse of discretion.... ” Murray, 667 S.W.2d at 427. Thus, the court applied the same standard as would be applied under equity to find that the trial court abused its discretion in refusing to set aside the default judgment.

Murray provides no authority² for the trial court to set aside the default judgment in this case, where the 30 days provided by Rule 75.01 had expired prior to the filing of defendant’s motions. After the expiration of the 30 days provided by Rule 75.01, the trial court had no jurisdiction to rule on the motions. Nor is the proper standard of review abuse of discretion.³ Under the circumstances of this case, once the trial court lost jurisdiction, only a new petition in equity could provide the necessary jurisdiction for the trial court to proceed.

We turn now to the question whether the trial court could treat the Motion to Set Aside Final Judgment of Default as an independent petition in equity.

2.

Default judgments have been particularly troubling to our appellate courts over the years. Fundamental and competing interests are at stake. One commentator observes that

[i]f the courts are too lenient with the party in default, the rules of procedure will not be complied with and litigation will become increasingly inefficient. Furthermore, a primary goal of the judicial system is finality. Litigation must end if the public is to have confidence in the court’s ability to resolve disputes. If judgments are too easily vacated, then the public will not be able to rely on the court’s decisions to formulate a future course of conduct. On the other hand, a primary goal of the judicial system is to seek the truth and to do justice between the parties. To promote this goal a case must be decided on the merits; procedural ‘niceties’ should not pose insurmountable barriers. These competing goals of efficiency, finality, and justice must be carefully balanced to ensure the public’s confidence in the court system.

Laughrey, Default Judgments in Missouri, 50 Mo.L.Rev. 841, 843-44 (1985) (footnotes omitted).

The judicial struggle with this issue is evident by even a cursory reading of its historical treatment by appellate courts in this state. In this regard, we are blessed with two thoughtful, historical summaries: J.R. Watkins Co. v. Hubbard, 343 S.W.2d 189, 192-94 (Mo.App.1961), and Comment, Procedure — Setting Aside Final Judgments in Missouri, 28 Mo.L.Rev. 281, 299-305 (1963). We need not repeat their work here.

Instead, it is sufficient to acknowledge that the early jurisprudence of this state recognized a motion to set aside a default judgment on grounds of fraud and mistake as “the proper proceeding”, even when the judgment was taken in a preceding term⁴ of court. Downing v. Still, 43 Mo. 309, 319-20 (1869).

In 1914, this Court decided Jeude v. Sims, 258 Mo. 26, 166 S.W. 1048 (1914), casting doubt on Downing. In dicta, the Court said:

Counsel for respondents [defendants] do not seriously contend in their brief that this proceeding is one in equity to set aside a judgment for fraud.... To have invoked equity would have meant the bringing of an independent action. ... As this is not a bill in equity upon its very face, it is useless to discuss the question whether or not it states facts sufficient to constitute a good bill in equity.

166 S.W. at 1053. Jeude does not discuss whether the court could treat a motion invoking equity as an independent petition in equity.

Within a decade of Jeude, however, two cases contained language which seemed to answer the question affirmatively. In Scott v. Rees, 300 Mo. 123, 253 S.W. 998, 1000 (1923), acknowledging Jeude, this Court said:

While it is true that ordinarily motions in a cause both before and after judgment are not pleadings or part of the record unless made so by being incorporated in a bill of exceptions, yet motions, even though in the same case, may initiate independent proceedings, in which case they are in the nature of pleadings and will be so considered....

See also Audsley v. Hale, 303 Mo. 451, 261 S.W. 117, 121 (1924) (“This court has held in several cases that a motion filed after the term at which the judgment was rendered to vacate the judgment either for irregularities on the face of the record or for matters dehors the record is of the nature of an independent proceeding_”).

The Kansas City Court of Appeals decided Hubbard, 343 S.W.2d 189, in 1961. In that case, plaintiff took a default judgment on October 5, 1959. On October 14, 1959, defendant filed a motion to set aside the default judgment, alleging fraud in the procurement of the judgment. The trial court heard evidence, took the matter under advisement, and set aside the default judgment on May 19, 1960. The Court of Appeals viewed the motion as “an independent, separate suit, instituted by motion instead of petition.” Hubbard, 343 S.W.2d at 191. The court relied on Downing, 43 Mo. 309, cases following Downing, and language in the (then) newly adopted Rules of Civil Procedure admonishing liberal construction in order to promote justice and the elimination of unjustifiable expense and delay, to find authority for a trial court to treat the motion as a separate suit in equity. The court concluded:

Courts regard proceedings raised by a motion in the nature of a writ of error coram nobis, filed in the original action, as a separate suit directly attacking the judgment.... Consistency directs the same treatment of defendants’ pleading. It likewise is filed in the original court, for the same purpose, also as a direct attack on the judgment, but on equitable grounds. The remedy should be as readily extended as an instrument of relief from intentional wrong as from honest mistake⁵ — fraud being one of the special abhorrences of the law.

Hubbard, 343 S.W.2d at 195-96.

Hubbard involved a judgment procured by extrinsic fraud. It might be argued that Hubbard is limited to motions to set aside judgments procured by fraud. See Comment, 28 Mo.L.Rev. at 305. (“Although Watkins v. Hubbard provides direct authority for the use of a motion to set aside for fraud rather than a separate suit in equity, quite probably a petition in equity is the safe route and the one most likely to be approved under the present state of the law”).

Our appellate courts have not read Hubbard so narrowly and have “learned to look at the substance of the allegations contained in the defendant’s motion to vacate and to ignore the defendant’s labeling of the motion.” Laughrey, 50 Mo.L.Rev. at 870. As a result, “the formal distinctions between post-judgment remedies are beginning to fade.” Id. Thus, for example, Barker v. Friendly American, Inc., 606 S.W.2d 457, 458 (Mo.App.1980) cites Hubbard for the broader proposition that any motion directly attacking a judgment on equitable grounds is “unaffected by constraints of trial court jurisdiction.” See also Kranz, 630 S.W.2d at 139-40 (“[E]quity may give relief ... when a wrong has been done through accident or mistake as readily as when there has been fraud in the concoction or procurement of a judgment. ... Our procedural law is not so technical as [to require a separate suit in equity].... It is well established that a motion to set aside a judgment may be treated as a proceeding in equity_”); Fulton v. I.T. & T. Corp. 528 S.W.2d 466, 469 (Mo.App.1975) (“A motion to set aside a default judgment is in the nature of an independent proceeding and a direct attack on the judgment.”); Askew v. Brown, 450 S.W.2d 446, 450 (Mo.App.1970) (“It is not important to give a specific name to this proceeding. It is a motion to set aside a default judgment. It is in the nature of an independent proceeding and a direct attack on the judgment.”); In re Jackson's Will, 291 S.W.2d 214, 220 (Mo.App.1956) (“[A] motion to vacate makes a direct attack upon the judgment and is an independent proceeding, instituted by motion instead of a petition. Such motion takes the place of a petition and becomes a pleading from which the issues are gauged. Thus the proceeding assumes the dignity of a separate lawsuit, and denial of the motion constitutes a final judgment in itself.”) (emphasis in original). These cases are, of course, consistent with Downing.

Equity will relieve a defendant of a default judgment for extrinsic fraud “and where a defendant is denied the occasion to present a meritorious defense by reason of accident, mistake, inadvertence, mischance or unavoidable circumstances unmixed with neglect or inattention...” Hamm v. Hamm, 437 S.W.2d 449, 453 (Mo.App.1969) (emphasis in original). We see no reason to make a distinction between a motion alleging fraud and a motion alleging other grounds sufficient for equitable relief in determining whether a court has jurisdiction to grant relief. We find no compelling appellate court precedent in our jurisprudence which dictates a contrary result.

We, therefore, believe the trial court had jurisdiction to treat defendant’s Motion to Set Aside Default Judgment on equitable grounds as an independent suit in equity, provided the Motion sufficiently pleaded grounds for equitable relief.

III.

Equity requires that the defendant show a meritorious defense, good reason or excuse for the default and that no injustice will accrue to the plaintiff as a result of the delay occasioned by setting aside the judgment. Whitledge v. Anderson Air Activities, Inc., 276 S.W.2d 114, 116 (Mo.1955); Murray, 667 S.W.2d at 428. We have carefully reviewed defendant’s Motion to Set Aside Final Judgment of Default on equitable grounds. Defendant avers a meritorious defense, good cause for its failure to answer, and the absence of significant harm to plaintiff if the judgment is set aside. The motion is sufficient to invoke the equitable powers of the court; it may be treated as an independent suit in equity.

If, however, defendant’s motion is to be accorded the status of a petition, the proceedings that follow must be consistent with that status. Defendant is required not only to plead its cause, but also to prove it. And plaintiff is entitled to defend his judgment vigorously and to labor to defeat defendant’s equitable claims. Thus, plaintiff is entitled to the full panoply of procedures established by our Rules, including the opportunity to join the issues by filing an answer to defendant’s motion, to conduct discovery and to present evidence on contested issues at a hearing. We find no evidence in the record that the trial court ever notified plaintiff that it was treating the motion as an independent petition in equity.⁶ In failing to conduct itself in accordance with the Rules of Civil Procedure, the trial court erred in setting aside the default judgment entered against defendant March 11, 1985.

Judge Donnelly’s dissent cites Robinson v. Clements, 409 S.W.2d 215 (Mo.App.1966), as authority for the trial court setting the final default judgment on a motion filed after the expiration of thirty days provided in Rule 75.01. Robinson is not inconsistent with our result, however.

In Robinson, plaintiff obtained a default judgment on July 1, 1965. Defendant filed a motion to set aside on August 13, 1965, alleging, among other things, fraud in the procurement of the judgment. The trial court conducted a hearing at which the attorney for the plaintiff conceded the essential elements of the fraud. Relying on J.R. Watkins Co. v. Hubbard, 343 S.W.2d at 192, as authority for setting aside a default judgment on equitable grounds, the Court of Appeals affirmed.

It is our opinion, too, that plaintiff’s counsel overreached defendants where, as conceded, he represented that defendants were without counsel, and when he agreed and promised the court to notify defendants of the default but did not do so until after the judgment had become final.

409 S.W.2d at 221 (emphasis added). Plaintiff’s concession eliminated any question of fact which might otherwise have remained. There being no dispute as to the facts, the Court of Appeals addressed the legal question appropriately.

Unlike Robinson, we do not have before us in this case all the facts necessary to determine whether equitable grounds exist for setting aside the default judgment. Defendant’s motion does not aver fraud in the procurement of the judgment. Instead, defendant claims that its failure to answer resulted from mistake, inadvertence, mischance, or accident. Plaintiff does not concede that defendant’s failure to answer proceeded from “accident, mistake, inadvertence, or unavoidable circumstance unmixed with neglect or inattention.” Hamm v. Hamm, 437 S.W.2d at 453 (emphasis in original). Whether defendant had a good cause or excuse for its inattention is a factual matter not fully addressed in the proceedings before the trial court. Further proceedings are required.

IV.

We affirm the circuit court’s order overruling defendant’s Motion to Set Aside Judgment for Irregularity. The order of the circuit court sustaining defendant’s Motion to Set Aside Final Judgment of Default on equitable grounds is reversed. The cause is remanded to the circuit court with directions to treat defendant’s Motion to Set Aside Final Judgment of Default as a petition in equity and for such further proceedings as may be consistent with this opinion.

HIGGINS, C.J., and BILLINGS, J., concur. BLACKMAR and RENDLEN, JJ., concur in separate opinions. DONNELLY, J., dissents in separate opinion. WELLIVER, J., concurs in part and dissents in part in separate opinion and concurs in dissenting opinion of DONNELLY, J.

1 . Discussing § 511.250, RSMo 1949, a statutory predecessor of Rule 74.32.

2 . Whitledge v. Anderson Air Activities, Inc., 276 S.W.2d 114 (Mo.1955), cited by Judge Donnelly in his dissent, arises from a motion filed nine days after the entry of a default judgment and within the time allowed for filing motions for new trial. As is Murray, Whitledge is inappo-site.

3 . The obvious fallacy of Judge Welliver’s application of the abuse of discretion standard in his dissenting opinion is its failure to distinguish between motions filed within the time allowed under Rule 75.01 and those filed after that time has expired — and after the trial court’s judgment has become final.

4 . "Under the common law, a judgment remained in the breast of the court, so to speak, during the term at which it was rendered, and during the term, ... a judgment could be set aside or modified by the court as justice required." Wooten v. Friedberg, 355 Mo. 756, 198 S.W.2d 1, 5 (1946). For procedural purposes, terms have been abolished. The thirty days provided in Rule 75.01 replaces the term for purposes of tried court modification of its judgments.

5 . Coram nobis requires a showing that the trial court’s judgment is based on a mistake of fact which, if known to the trial court, would have prevented the court from entering its judgment on jurisdictional grounds. Edson v. Fahy, 330 S.W.2d 854 (Mo. 1960); Francois v. Francois, 612 S.W.2d 794 (Mo.App.1981).

6 . With a prescience with which most are not gifted, Judge Welliver concludes that the trial court had before it all the evidence necessary to make an appropriate judgment on defendant’s equitable claims. Given the fact that plaintiff has had no opportunity to contest the issues, we cannot share his confidence about the outcome of the proceedings on remand and are unwilling, at this juncture, to determine the merits on the incomplete record before us.