Opinion
Argued at Pendleton October 26, 1937
Reversed November 2, 1937
Appeal from Circuit Court, Wallowa County, J.W. KNOWLES, Judge.
Action by I.E. Snyder against the Consolidated Highway Company, Inc., a private corporation, wherein judgment by default was taken against the defendant. From an order and judgment denying motion to set aside order of default and judgment by default, defendant appeals.
REVERSED.
Lamar Tooze, of Portland (Ernest C. Sinnett, D. Stanley Boggs, and Jaureguy Tooze, all of Portland, on the brief), for appellant.
J.A. Burleigh, of Enterprise (Burleigh Burleigh, of Enterprise, on the brief), for respondent.
In Banc.
The defendant appeals from an order and judgment of the circuit court for Wallowa county denying its motion to set aside an order of default and a judgment by default against the defendant in the sum of $260 and costs and disbursements.
On April 27, 1937, the plaintiff filed his complaint in the circuit court for Wallowa county, alleging that because of the negligence of the defendant the Ford automobile belonging to the plaintiff was damaged in the sum of $200, and that plaintiff suffered a loss of the use of the automobile for a period of 30 days, for which special damages of $60 were claimed. The sheriff's return on the summons is to the effect that summons and complaint were served on T.I. Jently, vice-president, manager and superintendent of the defendant company in Wallowa county on April 27, 1937. On May 8, 1937, the defendant, not having appeared in the case, an order of default was entered, and on May 11, 1937, a judgment for the full amount demanded in the complaint, together with plaintiff's costs and disbursements, was awarded to plaintiff. On May 14, 1937, defendant tendered an answer to the plaintiff's complaint in which the material allegations of the complaint were denied and an affirmative defense of contributory negligence was set up, and a counterclaim against the plaintiff for damage to defendant's truck arising out of the same accident as mentioned in the complaint, and for loss of use, aggregating $626, based on the alleged negligence of the plaintiff was asserted.
It appears from the affidavits of Ernest C. Sinnett, one of defendant's attorneys, and Wayne E. Hibbard, secretary-treasurer of the defendant, filed in support of the motion to set aside the order of default and vacate the judgment, which were filed on May 18, 1937, that defendant's answer and counterclaim were mailed from Portland, Oregon, on May 13, 1937, and marked "Filed" by the clerk on May 14, 1937, defendant being ignorant that a judgment had already been taken against the defendant. Defendant's attorney, Mr. Sinnett, was operating under the erroneous assumption and belief that the defendant, whose principal office is located in Portland, Oregon, had been served with summons and complaint outside of Wallowa county and that the time for filing the answer, 20 days from the date of service, would not expire until May 17, 1937. Mr. Sinnett swore that he was not aware that the order of default and judgment had been taken until May 17, 1937. The affidavit of Mr. Hibbard is to the effect that at the time of the accident involved in this case the plaintiff's Ford car was being driven by plaintiff's son-in-law, Joe A. Berland, and the defendant's truck by one of its employees near Enterprise, Oregon. Mr. Hibbard, by reference, incorporated the answer of defendant in his affidavit. He states further that an action had been started in King county, Washington, against Joe A. Berland and Snyder Lumber Company, Inc., and that summons and complaint had been served on Berland on April 28, 1937. At that time the defendant was under the impression that Snyder Lumber Company, Inc., was the owner of the Ford car and that it was for that reason that Snyder Lumber Company, Inc., had been made a party defendant in the Washington case, rather than I.E. Snyder, the present plaintiff. He further deposed that the defendant's attorney, Ernest C. Sinnett, was unaware that service of summons and complaint in the present action had been made upon the company in Wallowa county, Oregon, and that the office of the defendant company is located in Portland, Oregon.
On May 29, 1937, plaintiff filed two affidavits in opposition to this motion, one by the plaintiff, I.E. Snyder, and the other J.A. Burleigh, one of his attorneys. It is stated in Mr. Snyder's affidavit that the case had been filed in time to have it tried at the May term of the circuit court for Wallowa county, which commenced on May 10, 1937. The default judgment was entered May 11, 1937. Mr. Snyder further states that summons was served on the vice-president and general manager of defendant in Wallowa county April 27, 1937, he being in Wallowa county managing the business of defendant in the construction of a section of the highway; that he paid court costs and attorneys' fees in the total sum of $89; that if defendant was permitted to file an answer and the case tried, the defendant would be compelled to pay an additional attorneys' fee of not less than $75; that if the case were tried he would be required to expend $50 to pay the expenses of two witnesses from Seattle; that it would cost Wallowa county $200 to try this case and there would be an injustice done to the taxpayers of Wallowa county if the case was tried.
Mr. Burleigh states in his affidavit that there would be no further jury term in Wallowa county until November 9, 1937; that if the defendant was permitted to file an answer the case would not be tried before that date, and plaintiff would be deprived of his right to have a speedy and early submission of his case and would be required to expend further sums of money, estimated at $150, if the case was tried. On May 29, 1937, an order was entered overruling defendant's motion to set aside the default and vacate the judgment from which defendant appeals.
Defendant assigns that the court erred in denying its motion to set aside the order of default and judgment. Section 1-907, Oregon Code 1930, affording relief to a party against whom a judgment has been taken by default on account of his mistake, inadvertence or excusable neglect, is a remedial statute and is given a remedial interpretation: McFarlane v. McFarlane, 45 Or. 360 ( 77 P. 837); Thompson v. Connell, 31 Or. 231 ( 48 P. 467, 65 Am.St.Rep. 818); Fildew v. Milner, 57 Or. 16 ( 109 P. 1092); Bratt v. State Industrial Accident Comm., 114 Or. 644 ( 236 P. 478); McCoy v. Huntley, 53 Or. 229 ( 99 P. 932).
It is a rule that where a party in default makes a prompt application for relief and has a meritorious defense, this is deemed to be an important consideration in determining whether relief should be granted: Hanthorn v. Oliver, 32 Or. 57 ( 51 P. 440, 67 Am.St.Rep. 518); Johnston v. Braymill White Pine Co., 142 Or. 95 ( 19 P.2d 93).
As a general rule the court looks with more favor upon the application for relief of a defendant in default than upon a similar application by a defaulted plaintiff: Capalija v. Kulish, 101 Or. 666 ( 201 P. 545); McAuliffe v. McAuliffe, 136 Or. 168 ( 298 P. 239).
Section 1-907, Oregon Code 1930, provides:
"The court may likewise, in its discretion, and upon such terms as may be just, allow an answer or reply to be made, or other act to be done after the time limited by this code, or by an order enlarge such time; and may also, in its discretion, and upon such terms as may be just, at any time within one year after notice thereof, relieve a party from a judgment, order, or other proceeding taken against him through his mistake, inadvertence, surprise, or excusable neglect."
In several decisions this court has construed this statute liberally to the end that every litigant shall have his day in court and his rights and duties determined only after a trial upon the merits of the controversy. In the case of McFarlane v. McFarlane, supra, where the lower court denied the motion to set aside the default decree, this court reversed the case, and, speaking by Mr. Justice WOLVERTON, at page 363, said:
"Ordinarily, if he presents reasonable grounds excusing his default, the courts are liberal in granting relief, for the policy of the law is to afford a trial upon the merits when it can be done without doing violence to the statute and established rules of practice that have grown up promotive of the regular disposition of litigation."
The same learned justice construed section 1-907, Oregon Code 1930, in Thompson v. Connell, supra, at page 235, where we find recorded the following language:
"True, the grant of such relief rests within the discretion of the court, but the discretion here spoken of is an `impartial discretion, guided and controlled in its exercise by fixed legal principles;' `a legal discretion to be exercised in conformity with the spirit of the law, and in a manner to subserve and not to defeat the ends of substantial justice,' and for a manifest abuse thereof it is reviewable by an appellate jurisdiction." See also Fildew v. Milner, supra.
In McCoy v. Huntley, supra, Mr. Chief Justice MOORE, as shown on page 236, said:
"The authority conferred by statute upon a court to vacate a judgment or a decree after the close of the term during which it was given (section 103, B. C. Comp.) is not an arbitrary power, to be employed at pleasure in granting or denying the summary relief invoked, but is a legal discrimination, to be exercised in furtherance of justice, and in accordance with the rules of modern jurisprudence."
The record clearly shows that defendant's failure to file his answer within the time limited by the code was due to an innocent mistake on the part of defendant as to the time for answering plaintiff's complaint. Defendant made prompt application for relief and we think has shown good reasons therefor.
The legal discretion to be exercised in the premises, guided by the principles of law as expounded many times by this court, demands that the judgment be set aside and that defendant be allowed his day in court to try the case, which is a very proper case for a jury to pass upon. The rule is that a motion to open up a default and set aside a judgment should be accompanied with an answer showing a meritorious defense: Johnston v. Braymill Co., supra. A reading of defendant's answer and counterclaim is sufficient to show that a meritorious defense and a valid counterclaim were alleged. The amount claimed on either side is not large and a delay has been caused largely since the motion to set aside the default was overruled. A party should have a trial of his cause on the merits. A judgment should not be rendered against a defendant where a default has been caused by an excusable mistake, such as was shown in the instant case. We think the principles of law heretofore referred to call for a reversal of the judgment. We are unable to see that under the law any different rule should be applied in a county in which only two jury terms of court are held each year than in any other county.
The judgment of the circuit court will therefore be reversed and the cause remanded for further proceedings.
BAILEY, RAND, BELT and LUSK, JJ., concur.