Summary
In Cruis Along, the circuit court considered the reasons advanced by the dilatory party, including the press of other legal business, and found that the facts failed to establish that the neglect was excusable.
Summary of this case from Hedtcke v. Sentry Ins. Co.Opinion
January 8 — February 4, 1964.
APPEAL from an order of the county court of Milwaukee county: ROBERT J. MIECH, Judge. Affirmed.
For the appellant there was a brief by Kivett Kasdorf, attorneys, and Nonald J. Lewis of counsel, all of Milwaukee, and oral argument by Mr. Lewis.
For the respondent there was a brief by Robertson, Hoebreckx Davis, attorneys, and Walter S. Davis of counsel, all of Milwaukee, and oral argument by Walter S. Davis.
Action by plaintiff, Cruis Along Boats, Inc. (hereinafter "Cruis Along"), against defendant, Standard Steel Products Manufacturing Company (hereinafter "Standard Steel Products"), to recover the agreed purchase price of two boats, with a cross complaint against impleaded defendant, Kenosha Auto Transport Corporation (hereinafter "Kenosha Auto Transport"), to recover damages to one of the boats allegedly resulting from negligence in transporting such boat from Maryland to its destination in Texas.
In the principal action, which was commenced January 13, 1962, and after two continuances by stipulation and order, defendant filed an answer on March 16, 1962. The same day the county court issued an order to show cause, returnable March 23, 1962, why Kenosha Auto Transport should not be made a party to the action. Service of the order was had on Kenosha Auto Transport but no appearance was made on the return date. On March 23, 1962, an order was issued making Kenosha Auto Transport a party to the action and allowing Standard Steel Products' cross complaint for damages. The order, which was served on Kenosha Auto Transport on March 27, 1962, limited the time for answer to twenty days after service, exclusive of the day of service, which made April 16, 1962, the last day for filing an answer.
On April 20, 1962, the court held a pretrial conference at which Cruis Along and Steel Products appeared but not Kenosha Auto Transport. A stipulation was then entered into whereby judgment was granted in favor of Cruis Along against Standard Steel Products. The latter then requested the court to grant a default judgment against Kenosha Auto Transport because of its failure to answer the cross complaint. The court adjourned the case until April 23, 1962, for the purpose of either granting a default judgment against Kenosha Auto Transport or for permitting the late filing of an answer by it. On April 23, 1962, no answer having been filed nor any notice given to the court that Kenosha Auto Transport was represented by counsel, the court permitted Standard Steel Products to proceed to put in testimony which proved to the satisfaction of the court the cause of action that Standard Steel Products had set forth in the cross complaint. The court thereupon granted judgment in behalf of Standard Steel Products against Kenosha Auto Transport in the sum of $4,000 together with costs and disbursements. The findings of fact, conclusions of law, and judgment bear date of April 25, 1962, but judgment was not formally entered until April 26, 1962, after costs were taxed.
On April 23, 1962, the law firm of Kivett Kasdorf of the city of Milwaukee, attorneys for Kenosha Auto Transport, mailed an answer to the cross complaint to counsel for Standard Steel Products. Presumably this answer was received by counsel the following day, April 24, 1962, but they refused to admit service upon it and returned the same to Kivett Kasdorf and informed them that default judgment had been taken. On May 7, 1962, upon the affidavit of one of the attorneys associated with the firm of Kivett Kasdori, the county court issued an order requiring both Cruis Along and Standard Steel Products to show cause on May 11, 1962, why the default judgment obtained against Kenosha Auto Transport should not be set aside. Attached to the order to show cause was the affidavit referred to, together with Kenosha Auto Transport's proposed answer to the cross complaint, which also contained a counterclaim whereby Kenosha Auto Transport sought to recover the freight charges for transporting the two boats from Maryland to Texas. The proposed answer denied, upon information and belief, the allegations of the cross complaint both with respect to liability and damages, and was verified by counsel.
The material portions of the aforedescribed affidavit are as follows: On March 21, 1962, Kenosha Auto Transport retained Kivett Kasdorf to represent it in the instant litigation and the case was assigned to affiant. Affiant concluded it would serve no useful purpose to oppose the impleading of Kenosha Auto Transport as a party, and, therefore, no appearance was entered on March 23, 1962, when the county court impleaded Kenosha Auto Transport. Thereafter, affiant received from client the amended summons, cross complaint, and order of impleader which had been personally served on it. On or about April 12, 1962, he prepared Kenosha Auto Transport's answer to cross complaint and counterclaim but these had "to be done again due to stenographic reasons — that again relying upon the state of the file, in that prior to April 20, 1962, nothing appeared as to indicate that the case would not be processed except as a case for trial of the issues on a general docket, affiant caused the redraft of the pleadings to be completed on or about April 22, 1962, and he then corrected the date on the previous letter written to the attorneys for the defendant, for the purpose of transmitting the pleadings for service, from April 12, 1962 to April 23, 1962, and then caused the same to be mailed. That the additional delay was caused by the affiant having to prepare for and having commenced a trial to the Court and a jury in the Milwaukee County Circuit Court, in that Branch presided over by the Honorable ELMER W. ROLLER, Circuit Judge, on April 24, 1962. That preparations for such a case had been taken in a period of time subsequent to April 5, 1962 when affiant completed the case he was then and there trying in the Circuit Court as mentioned previously therein."
The affidavit further averred: The boat was not damaged to the extent of $4,000 but was only damaged to the extent of $395, and that this figure of $395 had been given to Kenosha Auto Transport by a representative of a subsidiary company of Standard Steel Products. Affiant "is advised and believes" Kenosha Auto Transport has a valid and meritorious defense to the cross complaint.
A hearing was held on the order to show cause and on March 6, 1963, Judge MIECH, the county judge who heard the matter, filed a comprehensive memorandum decision in which he concluded that Kenosha Auto Transport's application to vacate the default judgment should be denied on these two grounds: (1) It had not established that its failure to appear and answer was due to "excusable neglect" within the meaning of sec. 269.46 (1), Stats.; and (2) there was neither a sufficient affidavit filed that Kenosha Auto Transport had a meritorious defense nor an answer verified upon personal knowledge. Thereafter, counsel for Kenosha Auto Transport moved the court to reconsider its decision of March 6, 1963. The court on April 19, 1963, filed a further short memorandum decision in which it determined that this further motion should be denied because counsel had not first obtained leave to bring this second motion for review.
On June 20, 1963, an order was entered denying both the original application to vacate the default judgment and the subsequent motion for reconsideration. Kenosha Auto Transport has appealed therefrom.
The issue on this appeal is whether the trial court abused its discretion in refusing to vacate the default judgment rendered upon the cross complaint of defendant Standard Steel Products against impleaded defendant Kenosha Auto Transport.
The contention of appellant Kenosha Auto Transport is that it has established a clear case of "excusable neglect" within the meaning of sec. 269.46 (1), Stats., which required the trial court to vacate the default judgment. It advances these reasons in support of this contention: (1) The attorney in charge of the case was prevented by the press of trial work from getting the answer and counterclaim served within the twenty-day allotted period; (2) the attorney had the right to assume that the principal action between plaintiff Cruis Along and defendant Standard Steel Products would not be reached for trial for some time so that it was of no vital importance to anyone concerned that the answer to the cross complaint be served expeditiously; (3) the answer to the cross complaint and counterclaim was in the hands of opposing counsel only eight days late, and proceedings to vacate the default judgment were instituted only eleven days after it was entered; and (4) without a vacation of the default judgment there will be a miscarriage of justice inasmuch as Standard Steel Products has been awarded $4,000 in damages when its actual damages are but $395.
This statute provides:"(1) The court may, upon notice and just terms, at any time within one year after notice thereof, relieve a party from a judgment, order, stipulation or other proceeding against him obtained, through his mistake, inadvertence, surprise or excusable neglect and may supply an omission in any proceeding."
This court has repeatedly held that the press of other trials and business is not such "excusable neglect" as to make it an abuse of discretion not to grant relief under such statutes as secs. 269.46 (1) and 269.45 (2). Millis v. Raye (1962), 16 Wis.2d 79, 113 N.W.2d 820; Jolitz v. Graff (1960), 12 Wis.2d 52, 106 N.W.2d 340; Millar v. Madison (1943), 242 Wis. 617, 9 N.W.2d 90. As the trial judge rightly pointed out in his first memorandum decision:
"It is very significant that while counsel for the impleaded defendant states he was engaged in another trial and that these other occupations formed a basis for finding excusable neglect, the record is absolutely barren of any statement by him that he was (a) Unable to phone counsel for the defendant, Standard Steel Products Manufacturing Company, (b) Unable to file and Serve a notice of appearance, (c) Move for an extension of time to file an answer because of the press of other trials, (d) Unable to stop in court, which is the same building where he claims the trials were proceeding, and notify the court of this fact, (e) Unable to have anyone of his associates do any of these things."
Appellant cites McArthur v. Slauson (1884), 60 Wis. 293, 19 N.W. 45, as negating the above observation of the trial judge that no showing was made why one of the other associates in the law firm of the lawyer, who was in charge of this matter for Kenosha Auto Transport, could not have been asked to take one of the enumerated steps to avoid a default. The McArthur Case held that even though a lawyer may have competent partners a client who has entrusted a case to a particular lawyer may be entitled to have him try the case. Here, however, we are not concerned with a trial, but with the routine matter of serving and filing a timely notice of appearance or securing an extension of time within which to answer.
We conclude that, whether or not the appellant's attorney had the right to assume that the principal action would not be reached for trial in the near future, is wholly immaterial on the issue as to the trial court's abuse of discretion. Under the law, counsel knew that appellant had twenty days from March 27, 1962, in which to answer the cross complaint. It was not for counsel to determine for himself whether any harm would result ii he was late in drafting, serving, and filing his client's answer to the cross complaint.
The most-potent argument advanced by appellant is that the attempted service of answer was made only eight days late, and that only eleven days elapsed from the date of entry of the default judgment until an application was made to vacate the judgment. Prompt action by a defaulting party to remedy the situation caused by his neglect is a material factor to be considered when determining whether such neglect is "excusable." Millis v. Raye, supra, at page 84, Valentine v. Patrick Warren Construction Co. (1953), 263 Wis. 143, 170, 56 N.W.2d 860; Johnson v. Eldred (1861), 13 Wis. 539 (*482), 541 (*484). It is for this reason that we would have granted appellant's motion to vacate the judgment if we were sitting as a trial court in this case. Sec. 269.46 (1), Stats., however, confers wide discretion on the trial court. Therefore, we are not prepared to lay down a rule that, in every case of neglect followed by a prompt application for relief, it is an abuse of discretion not to grant the relief.
If highly excessive damages were awarded to Standard Steel Products by the default judgment, this is a proper element to be considered in exercising the discretion authorized by sec. 269.46 (1), Stats. Preventing a miscarriage of justice is one of the elements to be considered. It is undisputed that appellant's driver reported that one of the two boats being transported from Cruis Along's factory in Maryland to Texas was damaged as a result of the side of the boat being scraped against a bridge. At the time of taking testimony, the president of Standard Steel Products testified that there was a loss in market value as a result of the damage in transit of $4,000, which was approximately between 20 and 25 percent of its market value in Texas. He further testified:
"This is quite a luxurious boat and the buyer is concerned, I would say, to a great extent, with the prestige value of the boat. Ii we were to repair the boat it would then become a rebuilt boat and subsequently it would lose a great deal of its appeal to that type of buyer. This has been quite a problem. Ii it were a less costly boat it wouldn't be quite that important."
Appellant, on the other hand, established by affidavit that the cost of repairing the damage would have been but $395.
The situation presented here is different than where the owner of a damaged automobile or piece of machinery has bought the property for his own use, and not for resale. Here we have a luxury boat being taken into a special market for resale. Under such circumstances the proper measure of damages was that applied by the trial court, viz., the loss in market value. W. A. Stackpole Motor Transportation v. Malden Spinning Dyeing Co. (1st Cir. 1958), 263 F.2d 47; Zucchero v. Illinois Central R. Co. (D.C. Mo. 1954), 121 F. Supp. 53, affirmed, 221 F.2d 934; Reider v. Thompson (5th Cir. 1952), 197 F.2d 158. See also McCormick, Damages (hornbook series), pp. 471, 472, sec. 124.
Appellant also advances the argument that a litigant should not be penalized for the mistake of his attorney and cites Paschong v. Hollenbeck (1961), 13 Wis.2d 415, 108 N.W.2d 668. That case holds that the mistake or negligence of an attorney is not necessarily imputable to his client so as to bar the client from claiming excusable neglect and being granted relief under sec. 269.46 (1), Stats. There the trial court refused to vacate a default order on the ground it had no power to do so where the mistake was one of law and not of fact. This court held this was not a valid ground for refusal to exercise discretion under sec. 269.46 (1), and reversed and remanded. On remand the trial court exercised its discretion and, in spite of the fact that the mistake was that of the lawyer, refused to vacate the order. Again the defeated movant appealed. The facts presented at the second hearing were the same as those presented on the first appeal, with one minor immaterial addition. On the second appeal this court affirmed, Paschong v. Hollenbeck (1962), 16 Wis.2d 284, 286, 114 N.W.2d 438, and stated, "A remand to the trial court to exercise discretion does not contain the thought that the discretion can properly be exercised in one manner only."
After a careful review of the record before us we are constrained to conclude that there was no abuse of discretion on the part of the trial court in denying the application to vacate the judgment.
In addition to deciding that appellant had not established that its default was due to execusable [excusable] neglect, the trial court advanced as a further reason for denying the application the fact that there had not been compliance with the requirement that the movant establish by affidavit or verified answer that it has a meritorious defense. A reading of the portion of the memorandum decision devoted to this point discloses that the trial judge was cognizant with the rule that an affidavit of meritorious defense is not required if the motion is supported by a verified answer. See Town of Omro v. Ward (1865), 19 Wis. 249 (*232). The instant affidavit of counsel was not a compliance with the rule because the averment of meritorious defense was made on information and belief. The trial court also held the proposed answer insufficient because the denials of liability and damages and the verification by attorney were both on information and belief. We agree.
In the absence of an answer properly verified by one having personal knowledge of the facts, appellant should have submitted an affidavit to the effect that the applicant has a meritorious defense. Such an affidavit should conform to the rules governing affidavits generally. Butler v. Mitchell (1863), 17 Wis. 54 (*52). It should be by the party or by one having personal knowledge of the requisite facts. Where the affidavit is the primary basis for the motion to vacate, affiant must aver that he has fully and fairly stated the case in the action to his attorney and that he is advised by said counsel, upon such statement thus made, that he has a valid and substantial defense to the action upon the merits and to the whole thereof. See 6 Callaghan's Wisconsin Pleading and Practice (3d ed.), pp. 27-29, sec. 40.20, and authorities cited therein. The affidavit of appellant's counsel in the instant case does not meet these requirements.
By the Court. — Order affirmed.