Case Title: U.S. Aviation, Inc. v. Wyoming Avionics, Inc.

Citation: 

Docket Number: 5845

State: wyoming

Court: Wyoming Supreme Court

Date: 1983-06-03T00:00:00Z

Document:
U.S. Aviation, Inc. v. Wyoming Avionics, Inc.1983 WY 59664 P.2d 121Case Number: 5845Case Number: 5845Decided: 06/03/1983Supreme Court of Wyoming
U.S. AVIATION, INC., A WYOMING 
CORPORATION, D/B/A AIR U.S., 
APPELLANT (DEFENDANT),

v.

WYOMING AVIONICS, INC., A WYOMING 
CORPORATION, APPELLEE (PLAINTIFF). No. 5845

Appeal from the District Court, 
NatronaCounty, Dan Spangler, 
J.

Patricia M. Baird of 
Williams, Porter, Day & Neville, P.C., Casper, and Donald Marturano of Lee & Marturano, P.C., 
Englewood, Colo., signed the brief on behalf of appellant. Ms. Baird 
appeared in oral argument.

Ronald A. Kastanek, 
Casper, signed 
the brief and appeared in oral argument on behalf of 
appellee.

Before ROONEY, C.J., and RAPER, THOMAS, ROSE, and 
BROWN, JJ.

RAPER, Justice.

[¶1.]      Wyoming Avionics, 
Inc. (appellee), a Wyoming corporation, brought suit against U.S. Aviation, Inc. 
(appellant), a Wyoming corporation, for payment of past due accounts. A default 
judgment was entered in favor of appellee when appellant failed to file an 
answer. Appellant moved to set the default judgment aside and to quash any 
orders issued thereunder. The district court denied the motion. It is from the 
district court's order denying appellant's motion that appellant appeals. The 
issues on appeal are:

I. "Should the district court have 
set aside the default judgment of appellee for failure to give the 3-day notice 
before entering default as required by Rule 55(b), W.R.C.P. when appellee knew 
that appellant was represented and intended to defend?"

II. "Did the district court err in 
failing to set aside the default judgment for mistake, inadvertence, surprise, 
or excusable neglect inasmuch as appellant had no actual notice of the lawsuit, 
and substitute service was utilized, and appellant relied on the representation 
of appellee's counsel that he would respond to appellant's telephone 
contacts?"

III. "If the district court was 
correct in denying the motion to set aside the default judgment for the above 
reasons should the default judgment have been vacated under the court's broad 
remedial power pursuant to Rule 60(b)(6) `for any other reason justifying relief 
from the operation of the judgment', given the facts of substitute service, no 
actual notice and the misconduct of appellee's counsel?"

We will 
affirm.

[¶2.]      On August 27, 
1982, appellee filed a complaint against appellant in the district court 
alleging that over the preceding sixteen months appellee, at appellant's 
request, had performed services and supplied materials for which it had not been 
paid. Although appellant made sporadic payments on the account during that time, 
appellee claimed appellant owed $19,853.73 on the account when suit was brought. 
Appellee alleged that, in the face of demands for payment, no payments on the 
account had been received from appellant since May 25, 
1982.

[¶3.]      On August 27, 
1982, a summons was issued for service on appellant's registered agent for 
service located in Fremont 
County, Wyoming. The 
summons was returned unserved by the Fremont County Sheriff with the notation 
that "[a]fter due & diligent search," appellant's agent for service could 
not be found in FremontCounty. Thereafter appellee sent a copy of 
the summons and complaint to the Secretary of State as agent for the defendant. 
Section 17-1-111(b), W.S. 1977, infra fn. 3. The Secretary of State advised 
appellee that she was unable to locate appellant, a Wyoming corporation, at 
its last known address.

[¶4.]      Appellant 
stipulated that it had failed to maintain a registered agent for service of 
process in Wyoming since 1978. Appellant further 
stipulated that it had not had a corporate office in Wyoming since 1978 when it moved its offices to Denver, Colorado.

[¶5.]      At appellee's 
request, the clerk of court then entered default against appellant for failure 
to file an answer. Rule 55(a), W.R.C.P.1 A default judgment was 
thereafter entered by the district judge on October 25, 1982, in favor of 
appellee and against appellant for $19,853.73 plus 
interest.

[¶6.]      On November 8, 
1982, appellant made its first appearance in the case and filed a motion to set 
aside the default judgment for the reasons that: (1) the judgment was void for 
lack of proper service; (2) appellant had no actual notice until a garnishment 
order was served on its Wyoming bank account; (3) appellant's Colorado attorney 
had not been notified despite the fact that his existence was well known to 
appellee; and (4) appellant had several unspecified meritorious defenses to 
appellee's complaint. That same day, appellant moved to quash execution on the 
default judgment and any orders and summons issued 
thereunder.

[¶7.]      After a hearing, 
the district judge, on November 11, 1982, entered an order denying appellant's 
motions. In the order the district court found: (1) it had jurisdiction to act 
in the matter since service upon appellant had been proper; (2) the default 
judgment had been properly entered and was valid and enforceable; and (3) 
appellant had failed to show good cause for setting aside the default judgment 
in accordance with Rules 55(c) and 60(b), W.R.C.P.

[¶8.]      This appeal 
followed.

I

[¶9.]      In its first 
argument, appellant urges that Rule 55(b)(2), W.R.C.P., required that it be 
given written notice three days prior to the hearing on appellee's application 
for a default judgment. Rule 55(b)(2) provides in pertinent 
part:

"(b) Judgment by default may be 
entered as follows:

* * * * * *

"(2) By the Court. - In all other 
cases the party entitled to a judgment by default shall apply to the court 
therefor; but no judgment by default shall be entered against an infant or 
incompetent person unless represented in the action by a general guardian, 
guardian ad litem, trustee, or other such representative who has appeared 
therein. If the party against whom a 
judgment by default is sought has appeared in the action, he (or, if appearing 
by representative, his representative) shall be served with written notice of 
the application for judgment at least 3 days prior to the hearing on such 
application. * * *" (Emphasis added.)

The rule clearly provides 
that the three-day notice requirement is triggered when "the party against whom 
a judgment by default is sought has appeared in the action." It is undisputed 
that the three-day notice was not given. The query then is whether appellant 
made an appearance. An appearance in an action involves some submission or 
presentation to the court by which a party shows his intention to submit himself 
to the jurisdiction of the court. Cockrell v. World's Finest Chocolate Co., 
Inc., Ala., 349 So. 2d 1117 (1977) (construing Rule 
55(b)(2)). 

[¶10.]    Appellant failed to allege or 
argue this position before the district court in its motion to set aside the 
default judgment. It is aired for the first time in this court. As a general 
rule of appellate procedure, we refuse to consider issues not raised in the 
trial court unless they go to jurisdiction or a fundamental right. ABC Builders, Inc. v. Phillips, Wyo., 
632 P.2d 925 (1981). Because appellant failed to raise a Rule 55(b)(2) claim in 
the district court, we will consider it waived and not consider it. Bell 
v. West, W. Va., 284 S.E.2d 885 (1981); United States v. $22,640.00 in United States 
Currency, 615 F.2d 356 (5th Cir. 1980) (decided on similar Rule 55(b)(2), 
F.R.C.P.); see also, Robison v. Sales and 
Use Tax Div., State Tax Comm'n, Wyo., 524 P.2d 82 
(1974).

II

[¶11.]    Appellant's motion to set 
aside the default judgment was grounded in Rule 55(c), W.R.C.P., which allows 
the district court to set aside a default judgment for good cause shown in 
accordance with Rule 60(b), W.R.C.P., which provides in pertinent 
part:

"On motion, and upon such terms as 
are just, the court may relieve a party or his legal representative from a final 
judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or 
excusable neglect * * *. The motion shall be made within one (1) year after 
the judgment, order, or proceeding was entered or taken. A motion under this 
subdivision (b) does not affect the finality of a judgment or suspend its 
operation. * * *" (Emphasis added.)

[¶12.]    Appellant argues that because 
it had received no actual notice of the proceedings against it, it was entitled 
to relief from the default judgment under Rule 60(b)(1). Appellant contends that 
the district court committed reversible error when it denied its motion to set 
aside the default judgment.

[¶13.]    As noted earlier, appellant 
was a Wyoming 
corporation when the suit was filed. Appellee served notice of the suit on 
appellant in accordance with Rule 4(d)(4), W.R.C.P.2, and the 
corporation laws of the state.3 Appellant does not question the 
manner in which appellee served notice of the suit. Appellant's claim is that 
despite the fact that service of notice was proper, it is nonetheless entitled 
to its requested relief because it was without actual notice of the suit until 
after the default judgment was entered.

[¶14.]    In reviewing this question, 
we are cognizant of the language in Rule 55(c) which allows courts to set aside 
default judgments when good cause is shown together with the law that has 
developed around Rule 60(b)(1). Motions brought under Rules 55(c) and 60(b)(1) 
are addressed to the sound discretion of the court in which they are brought, 
and that court's decision will be reviewed only for an abuse of its discretion. 
Atkins v. Household Finance Corp. of 
Casper, Wyo., 581 P.2d 193 (1978); Booth v. Magee Carpet Co., Wyo., 548 P.2d 1252 
(1976). A Rule 60(b)(1) motion must be clearly substantiated by adequate proof; 
the burden is on the movant to bring himself within the rule. Atkins v. Household Finance Corp. of 
Casper, supra. An individual, in view of the foregoing, has no absolute 
right to have a default judgment set aside. Booth v. Magee Carpet Co., 
supra.

[¶15.]    Appellant acknowledges that 
it had failed to maintain either a registered office or a registered agent for 
service of process as required by our statutes, fn. 3 supra, yet it would have 
us say that the trial court abused its discretion in denying appellant's motion 
for lack of actual notice. We decline the invitation to do 
so.

[¶16.]    From reading §§ 17-1-109, 
17-1-111, and 17-1-613, supra fn. 3, together, it is clear that their ultimate 
purpose is to require Wyoming corporations doing business within the state to 
maintain an office with a registered agent within the state and the jurisdiction 
of its courts where summons can be served and upon whom such service can be 
made. See, Badger Dome Oil Co. v. 
Hallam, 99 F.2d 293 (8th Cir. 1938). Pursuant to § 17-1-111, service in this 
case was properly made on the Secretary of State when it was determined that 
appellant, in violation of the corporation laws, had failed to maintain both a 
registered office and a registered agent.

[¶17.]    We turn down the proposition 
that we should hold that the trial court abused its discretion in refusing to 
set aside this default judgment. The statutes clearly do not condone appellant's 
behavior with regard to maintaining a registered office and a registered agent. 
To hold that the trial court abused its discretion in refusing to mitigate the 
effect of that behavior would be inappropriate under all the circumstances 
present. Statutes should not be construed to be meaningless. Haddenham v. City of Laramie, 
Wyo., 648 P.2d 551 (1982). We would be stretching reality 
to the breaking point to find mistake, inadvertence, surprise, or excusable 
neglect.

[¶18.]    Appellant contends that 
appellee's attorney, as well as appellee, obviously knew appellant's Colorado address since 
appellant and appellee had been doing business with each other for some time. 
Appellant contends that appellee's attorney was in contact with appellant's 
attorney after the complaint was filed and before the default judgment was 
entered but failed to mention the suit. Appellant argues that appellee's 
attorney should have provided appellant with actual notice of the suit. The 
record does not bear out appellant's contention. From an affidavit made by 
appellant's attorney, the record reflects that the only contact between the two 
attorneys occurred before the complaint was filed. A conversation with an 
attorney under those circumstances does not constitute an appearance under the 
rule, Ryan v. Collins, Ky., 481 S.W.2d 85 (1972), when made before 
the action is even filed. An appearance contemplates a pending action. 

[¶19.]    As the trial court noted, and 
as appellant acknowledges, notice of the action was properly served in 
accordance with law by appellee. No procedural rules were violated by appellee. 
In view of this discussion and the discussion of appellant's questionable 
behavior in disregarding the law, we are unable to find, on any basis, that the 
trial court abused its discretion when it denied appellant's Rule 60(b)(1) 
motion.

[¶20.]    In addition, appellant can 
hardly be said to have met its burden in showing good cause for granting its 
sought-after relief. Before granting a Rule 55(c) motion, the court generally 
requires the party in default to demonstrate a meritorious defense to the action 
as a prerequisite to vacating the default judgment. 10 Wright, Miller & 
Kane, Federal Practice and Procedure: Civil 2d § 2697 at 525 (1983), and Gifford v. Casper Neon Sign Co., Inc., 
Wyo., 639 P.2d 1385 (1982). The assertion, without supporting facts, that meritorious defenses 
to the original claim exist is not sufficient to meet that burden. Gomes v. Williams, 420 F.2d 1364 (10th 
Cir. 1970). Appellant failed to present more than a bald conclusion that it had 
meritorious defenses in its request for relief. The trial court had no factual 
basis to find good cause for setting aside the default 
judgment.

III

[¶21.]    In its final issue, appellant 
asks that this court hold, in the alternative, that it was reversible error for 
the trial court to refuse to vacate the default judgment under the broad 
remedial power in Rule 60(b)(6), W.R.C.P. That rule 
provides:

"On motion, and upon such terms as 
are just, the court may relieve a party or his legal representative from a final 
judgment, order, or proceeding for the following reasons: * * * (6) any other reason justifying relief from the 
operation of the judgment. The motion shall be made within one (1) year after 
the judgment, order, or proceeding was entered or taken. A motion under this 
subdivision (b) does not affect the finality of a judgment or suspend its 
operation. * * *" (Emphasis added.)

[¶22.]    Again, as in the previous 
issue, our review is limited to the question of whether the trial court abused 
its discretion since the granting of relief pursuant to Rule 60(b)(6) is left to 
the sound discretion of the trial court. McBride v. McBride, Wyo., 598 P.2d 814 
(1979).

[¶23.]    Appellant argues that the 
purpose of Rule 60(b)(6) is to provide courts with the power to vacate judgments 
whenever such action is appropriate to accomplish justice. We can find no fault 
with that characterization of the rule's purpose since it follows the generally 
accepted view. See, 10 Wright, Miller & Kane, supra, § 2695 at 510 
(discussing a somewhat similar Rule 60(b), F.R.C.P., and citing Klapprott v. 
United States, 335 U.S. 601, 69 S. Ct. 384, 93 L. Ed. 266 (1949)). However, 
appellant fails to do more than assert that the default judgment should have 
been vacated in the interest of justice. In the absence of some cogent argument 
supported by pertinent authority, and in view of our holding in the previous 
issue, we will not decide the question presented in this issue. Reno Livestock 
Corp. v. Sun Oil Co. (Delaware), Wyo., 638 P.2d 147 
(1981).

[¶24.]    
Affirmed.

FOOTNOTES

1 Rule 55(a), W.R.C.P., 
provides:

"(a) Entry. - When a party against whom a 
judgment for affirmative relief is sought has failed to plead or otherwise 
defend as provided by these rules and that fact is made to appear by affidavit 
or otherwise, the clerk shall enter his default."

2 Rule 4(d), W.R.C.P., provides in 
pertinent part:

"(d) Personal service. - The summons and 
complaint shall be served together. The plaintiff shall furnish the person 
making service with such copies as are necessary. Service shall be made as 
follows:

* * * * * *

"(4) Upon a corporation, by delivery 
of copies to any officer, manager, general agent, or agent for process. If no 
such officer, manager or agent can be found in the county in which the action is 
brought such copies may be delivered to any agent or employee found in such 
county. If such delivery be to a person other than an officer, manager, general 
agent or agent for process, the clerk, at least 20 days before default is 
entered, shall mail copies to the corporation by registered mail, with return 
receipt requested, at its last known address."

3 The relevant statutes are §§ 
17-1-109, 17-1-111, and 17-1-613, W.S. 1977. Section 17-1-109 provides in 
pertinent part:

"(a) Each corporation shall have and 
continuously maintain in this state:

"(i) A registered office which may 
be, but need not be, the same as its place of business;

"(ii) A registered agent, which 
agent may be either an individual resident in this state whose business office 
is identical with such registered office, or a domestic corporation, or a 
foreign corporation authorized to transact business in this state, having a 
business office identical with such registered office."

Section 17-1-111 provides in 
pertinent part:

"(a) The registered agent so 
appointed by a corporation shall be an agent of such corporation upon whom any 
process, notice or demand required or permitted by law to be served upon the 
corporation may be served.

"(b) Whenever a corporation shall 
fail to appoint or maintain a registered agent in this state, or whenever its 
registered agent cannot with reasonable diligence be found at the registered 
office, then the secretary of state shall be an agent of such corporation upon 
whom any such process, notice, or demand may be served. Service on the secretary 
of state of any such process, notice, or demand shall be made by delivering to 
and leaving with him, or with any clerk having charge of the corporation 
department of his office, duplicate copies of such process, notice or demand. In 
the event any such process, notice or demand is served on the secretary of 
state, he shall immediately cause one (1) of the copies thereof to be forwarded 
by registered mail addressed to the corporation at its registered office. Any 
service so had on the secretary of state shall be returnable in not less than 
thirty (30) days."

Section 17-1-613 provides in 
pertinent part:

"If any corporation has failed for 
thirty (30) days to appoint and maintain a registered agent in this state, or 
has failed for thirty (30) days after change of its registered office or 
registered agent to file in the office of the secretary of state a statement of 
such change, it shall be deemed to be transacting business within this state 
without authority, and to have forfeited any franchises, rights or privileges 
acquired under the laws thereof, and such forfeiture shall be made effective in 
the following manner. * * *"