Summary
In Wagner v. Springaire Corp. (1971), 50 Wis.2d 212, 217, 218, 184 N.W.2d 88, this court defined "excusable neglect" as the neglect which might have been the act of a reasonably prudent person under the same circumstances, and held that the pressure of other work is not excusable neglect without additional persuasive explanation.
Summary of this case from Cukrowski v. Mt. Sinai HospitalOpinion
Nos. 56, 57.
Argued January 6, 1971. —
Decided March 2, 1971.
APPEALS from judgments and orders of the county court of Winnebago county: JAMES V. SITTER, Judge. Affirmed.
For the appellant there was a brief by Hersh, Magidson Lensky of Milwaukee, and by Horwitz Regner of Oshkosh, and oral argument by Arthur Magidson.
For the respondents there was a brief by Van Epps, Gull Werth of Weyauwega, and oral argument by Jerome E. Gull.
These are appeals from two judgments of default against the defendant, Springaire Corporation, and from two orders denying motions for the vacation of those judgments.
Number 56 was an action commenced by Ray Wagner against Springaire Corporation. Erwin F. Pleshek, vice-president of the defendant corporation, admitted service of the summons on May 21, 1969. The corporation retained Dempsey, Dempsey, Magnusen Williamson of Oshkosh to represent it, but on August 5, 1969, a consent to substitution of attorneys was filed, and Horwitz Regner of Oshkosh were designated as the corporation's attorneys of record. Defendant's attorneys admitted service of Wagner's complaint on August 12, 1969.
The complaint alleged that Springaire was indebted to Wagner in the sum of $2,500 and that payment had not been made.
Number 57 was an identical action commenced in the same court by Erwin Pleshek against Springaire Corporation. Service of the summons was admitted by Ray Wagner as secretary of the corporation on May 21, 1969. The corporation also retained Dempsey, Dempsey, Magnusen Williamson to represent it in this action, but on August 5, 1969, Horwitz Regner were substituted as attorneys for the corporation. Service of Pleshek's complaint was admitted on August 12, 1969.
This complaint alleged that Springaire was indebted to Pleshek in the sum of $3,700 remaining due on a note in the amount of $10,500.
No answer to either the Wagner complaint or the Pleshek complaint was ever served by Springaire. The twenty-day limit for answering (sec. 263.05, Stats.) expired on September 1, 1969. On October 20, 1969, plaintiffs in both actions served Springaire's attorneys with notice of application for default judgments. Both applications were heard in the Winnebago county court on November 3, 1969. Attorney Simon Horwitz, arguing on behalf of Springaire, admitted that his client was in default, but contended that the default was entirely the responsibility of Horwitz and should not be imputed to the defendant corporation. He requested that his client be granted an enlargement of time to serve an answer under sec. 269.45 (2), Stats. The trial court denied the request and then took testimony to determine whether the claims stated in the respective complaints were bona fide. In its findings of fact and conclusions of law, the trial court determined that all allegations of Wagner's complaint were true and that $1,500 was then due and owing on the note from Springaire, instead of the $2,500 alleged. The trial court determined that the allegations of Pleshek's complaint were true and that $3,700 was owing on his note from Springaire. Judgments were entered in favor of Wagner and Pleshek for those amounts plus the costs and disbursements.
On November 20, 1969, attorneys for Springaire procured orders requiring each plaintiff to show cause why the judgment entered in his favor against Springaire should not be vacated pursuant to sec. 269.46 (1), Stats. Attached to each order was an affidavit of Aladdin Eid, president of Springaire, which purported to show the merit of Springaire's defense. There is no transcript of what transpired at the hearing on the orders to show cause, but on January 20, 1970, the trial court entered an order concluding that the neglect of the defendant corporation in failing to answer the complaints of the plaintiffs was not excusable and that Springaire had failed to submit sufficient evidence to permit the trial court to find that Springaire had defenses to the causes of action alleged in the complaints.
The defendant corporation appeals from both judgments against it and from both orders denying its motions to vacate the judgments. The cases were consolidated for appeal by stipulation of the parties.
The hearing on applications for default judgments was held on November 3, 1969, more than sixty days after the expiration of the time for answering the complaints. The hearing was upon due notice. At the hearing the defendant asked for enlargement of the time in which to answer.
Sec. 269.45 (2), Stats., provides:
"After the expiration of the specified period . . . the court may in its discretion, for like cause, upon notice, extend the time where the failure to act was the result of excusable neglect . . . ."
To show excusable neglect, Springaire's attorney submitted identical affidavits in each case. The affidavits state that he, the attorney, had failed to timely file Springaire's answer because of the "pressure of work and personal affairs, including distress by reason of prolonged illness of his wife during the past three months." The attorney further stated that the neglect was his and was not attributable to the president of Springaire.
The motions for enlargement of time to answer were denied, and after further hearing default judgments were entered.
The power conferred by sec. 269.45 (2), Stats., is highly discretionary, and a trial court's determination in this respect will not be disturbed except for a clear abuse of discretion. Greenfield v. Milwaukee (1951), 259 Wis. 101, 47 N.W.2d 291; Bornemann v. New Berlin (1965), 27 Wis.2d 102, 133 N.W.2d 328. The burden is upon the party seeking to extend the time to show proper notice, cause, and excusable neglect. Miller v. Belanger (1957), 275 Wis. 187, 81 N.W.2d 545.
There is no doubt that defendant's attorney showed there was "cause" for the delay. There was not a mere disregard of his duty as an attorney to prepare and serve the answers of the defendant. There was a reason asserted for neglecting to act in a timely manner.
The question remains, was the neglect "excusable"?
In Giese v. Giese (1969), 43 Wis.2d 456, 168 N.W.2d 832, a case involving the failure to timely serve a complaint, we reasserted that a trial judge's determination to enlarge the time for acting was highly discretionary and would only be upset in the event there is a clear abuse of discretion.
In Giese, page 461, we cited with approval the definition of "excusable neglect" appearing in 15A Words and Phrases (perm. ed.), 225: "`Excusable neglect' is that neglect which might have been the act of a reasonably prudent person under the same circumstances."
In Giese, where, as here, the pressure of other work was asserted by the attorney, we concluded that "excusable neglect" was not shown without additional persuasive explanation. As in Giese, no persuasive further explanation is given in this case. In fact, no explanation is given beyond the above assertion. We conclude that there was no abuse of discretion when the trial judge determined that the "pressure of work" did not constitute a sufficient excuse for the neglect to file an answer.
Additionally, defendant's attorney states that distress occasioned by a prolonged illness of his wife caused him to neglect to file the answers. Again, however, he has given no explanation of how much of his time was diverted from his law practice by reason of this family illness. Nor was any explanation given why he was unable to have another member of his law firm draft timely answers. In the absence of persuasive explanation by the defendant, the trial judge's determination that these factors do not suffice to constitute "excusable neglect" must be sustained.
We also note that defendant contends that the plaintiffs had acquiesced in at least a portion of the delay. Our review of the record leads only to the conclusion that the plaintiffs, after the service of the summonses, deferred the service and filing of the complaints to permit Springaire's attorney to catch up on other work. The summonses were served on May 21, 1969, but the complaints were not served until August 12, 1969. While there is evidence of some agreement to delay the service of the complaints, there is no. evidence that plaintiffs agreed to a delay for answering after the complaints were served. While neglect in filing an answer as the result of an agreement between counsel is clearly "excusable neglect," no such agreement is shown here. Giese, supra, page 462.
Shortly after default judgments were entered, defendant moved to vacate the judgments, pursuant to sec. 269.46 (1), Stats., which provides as follows:
"269.46 Relief from judgments, orders and stipulations; review of judgments and orders. (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. In addition to the required affidavits, all motions to vacate a judgment entered upon default or cognovit and to obtain a trial upon the merits shall be accompanied by a proposed verified answer disclosing a defense."
Motions to vacate default judgments are addressed to the sound discretion of the trial court, and this court will not disturb the trial court's decision unless an abuse of discretion appears. Marshall Field Co. v. Fishkin (1923), 180 Wis. 149, 192 N.W. 463; Newman v. Newman (1950), 257 Wis. 385, 43 N.W.2d 453; Wesolowski v. Wesolowski (1966), 30 Wis.2d 15, 139 N.W.2d 660.
The affidavits submitted with Springaire's motions to vacate the default judgments did not state any grounds for its assertion that the neglect to serve the answers was "excusable" other than the grounds which were asserted at the time of Springaire's motion for enlargement of the time to answer. For the reasons stated in the discussion of that issue, we conclude that it was not an abuse of discretion for the trial court to hold that the neglect of Springaire and its counsel to serve the answers was not "excusable."
The trial court also held that Springaire had not submitted sufficient evidence to establish that it had meritorious defenses to the actions of the plaintiffs, but it stated that, inasmuch as Springaire had failed to show that the judgments resulted from "excusable neglect," the existence of a meritorious defense was immaterial.
Counsel for Springaire contends that the question of whether the defendant's answers allege meritorious defenses is one of the factors to be considered by the trial court in determining whether the neglect resulting in the default judgments should be excused. He further contends that the proposed answers stated a meritorious defense and that this factor, along with the factors mentioned at the hearing of Springaire's request for an enlargement of time to serve answers, constituted a sufficient showing of excusable neglect to render denial of the motions to vacate the judgments an abuse of discretion. We fail to follow the reasoning that a defendant may inordinately delay his answer if his defense is meritorious.
The decisions of this court prior to 1963 required that party wishing to secure vacation of a default judgment must show two things: (1) That the judgment was entered through "mistake, inadvertence, surprise or excusable neglect," as provided by sec. 269.46 (1), Stats., and (2) that the party has a meritorious defense to the action. Velte v. Zeh (1925), 188 Wis. 401, 206 N.W. 197; Phillips v. Portage Transit Co. (1908), 137 Wis. 189, 118 N.W. 539; State v. Omernick (1961), 14 Wis.2d 285, 111 N.W.2d 135. In 1963 the requirement that the motion to vacate be accompanied by a verified answer disclosing a defense was put into the statute. Chapter 37, sec. 4, Laws of 1963. The cases cited and sec. 269.46 (1), Stats., treat the two requirements as separate and distinct. The excusability of the neglect is dependent on whether the acts or omissions of the defendant were consistent with those of "a reasonably prudent person under the same circumstances." Giese, supra, page 461 and 15A Words and Phrases (perm. ed.), 225. The merits of the defense proposed by the defendant are immaterial to such a consideration.
Since we conclude that the trial court in its discretion could properly deny the motions to vacate the judgments, for the reason that the neglect was not shown to be excusable, we need not consider the merits of the defense. Were we to find "excusable neglect," the meritoriousness of the defense would be pertinent. Even though the neglect were excusable, it would constitute an abuse of discretion to vacate the judgments unless there were a showing of an arguably meritorious defense.
Springaire further contends that, even if the neglect of its attorney to serve the answers was not excusable, that neglect should not be imputed to the corporation. In Paschong v. Hollenbeck (1961), 13 Wis.2d 415, 108 N.W.2d 668, this court said that mistakes, ill advice, or other failures of an attorney may constitute "excusable neglect" by a client, where the client has acted as a reasonable and prudent person in engaging an attorney of good reputation, has relied upon him to protect his rights, and has made reasonable inquiry concerning the proceedings. We made it clear, however, that, while the trial court need not impute the negligence of the attorney to the client, it has the discretionary power to do so. In each case, the trial court must exercise its "equitable powers to secure substantial justice between the parties." Paschong, supra, page 424. This may or may not call for imputation, depending on the facts of each case. We reversed and remanded in Paschong to permit the trial court to determine whether the attorney's negligence should be imputed to his client. On remand the trial court determined that the attorney's negligence in erroneously advising his client that he need not take further steps to protect his interest in real estate even in the face of an upcoming foreclosure sale of the property should nevertheless be imputed to the client. We affirmed in Paschong v. Hollenbeck (1962), 16 Wis.2d 284, 114 N.W.2d 438, and accepted the trial court's reasoning that the purchaser at the foreclosure sale followed the law and it would be unfair to him to reopen the foreclosure judgment to permit the plaintiff, who had not followed the law, to share in the judgment. See note in 1962 Wisconsin Law Review, 540. As in Paschong, the plaintiffs herein have diligently pursued their causes of action. It would be unfair to deprive them of their judgments because of the delays of the defendant. We pointed out in Lawrence v. MacIntyre (1970), 48 Wis.2d 550, 180 N.W.2d 538, the responsibility of an attorney in moving his case to final judgment. The defendant has a corollary responsibility to act in a timely fashion to preserve his rights, and in addition cannot inexcusably delay the proceedings and thus thwart the prosecution of a plaintiff's cause of action.
In the instant case, Springaire contends that it acted reasonably and prudently in engaging Attorney Horwitz as its attorney and that Springaire relied on Horwitz to do all things necessary to protect its rights. We have no reason to doubt the professional competence of Attorney Horwitz. On the other hand, the records are devoid of any showing that Springaire's president, Aladdin Eid, or any other representative of Springaire made "reasonable inquiry" concerning the proceedings in this action. Although the assertion was made that the president of Springaire had no knowledge of the pendency of these actions until the morning of the hearing on the default judgments, the record shows that he had signed the "Consent to Substitution of Attorneys" in this action on August 5, 1969, almost three months prior to the default proceedings. The affidavit of Attorney Horwitz indicates that the affairs of Springaire with regard to the transactions in respect to the two cases under consideration here "are in a state of confusion as reflected from the inadequate records" of the corporation. This alleged cause of delay is attributable directly to Springaire and not to its attorney. This is not the type of situation which might exonerate a "reasonably prudent person under the same circumstances" from the imputation of unexcused neglect. It was not an abuse of discretion to impute the neglect of Attorney Horwitz to Springaire.
By the Court. — Judgments and orders affirmed.