Case Title: PURINGTON v SOUND WEST

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1977-06-29T00:00:00Z

Document:
N o . 13632 I N THE SUPREME C O U R T O F THE STATE O F M O N T A N A 19 77 MICHAEL PURINGTON, P l a i n t i f f and Respondent, -vs- S O U N D WEST, A Corporation, Defendant and Appellant. Appeal from: District Court of t h e Fourth J u d i c i a l D i s t r i c t , Honorable Edward T,Dussault, Judge presiding. Counsel of Record: For Appellant: Jordan, Sullivan and Baldassin, Missoula, Montana Lee A. Jordan argued, Missoula, Montana For Respondent : Worden, Thane and Haines, Missoula, Montana Ronald A. Bender argued, Missoula, Montana Submitted: K A Y 26 1977 Decided: JUN 2 9 1977 Filed: F J U N 2 9 1 9 n M r . Justice Frank I. Haswell delivered the Opinion of the Court. This is an appeal from the d i s t r i c t court's denial of defendant's motion t o set aside a default judgment entered i n Missoula County. Plaintiff is Michael Purington, a professional musician with the Lost Highway Band, who purchased a sound system for $1,350 from defendant Sound West, a corporation,in the summer of 1975. In the f a l l of 1975 the sound system ceased to work properly and eventually ceased functioning altogether. According t o the complaint, defendant assured plaintiff the malfunction would be repaired,but plaintiff was compelled t o obtain a substi- tute sound system. Plaintiff alleged that on November 3, 1975, defendant represented t o him that i f he would return the sound system, defendant would refund the purchase price. Plaintiff alleged he returned the sound system, but no refund was made. On April 20, 1976 plaintiff filed a complaint against de- fendant i n three counts: Count I sought refund of the $1,350 purchase price with interest a t 6% from November 3, 1975 t o date of judgment; Count I1 sought damages of $10,000 for breach of implied warranties of merchantability and fitness for a particular use; and, Count 1 1 1 sought $10,000 compensatory damages d and $10,000 punitive damages for false repres&ations by defendant inducing plaintiff t o return the sound system to defendant. The sheriff's return showed personal service was made on J i m Rhines, president of defendant corporation, on April 21, 1976. On M a y 20 default of defendant was entered by the clerk of court. On June 10 plaintiff testified i n support of h i s com- plaint, but h i s testimony was not reported and is not before us. O n June 24 a default judgment was entered by the d i s t r i c t court awarding plaintiff $1,350 with interest a t 8% from July 1, 1975 to date of judgment; damages of $3,000 for loss of wages, use and reputation; andplnitive damages of $1,500. Notice of entry of judgment was mailed t o defendant on June 25. O n July 1 defendant filed a written motion to set aside the judgment on the grounds defendant was never served i n the action and had no notice of the action a t any time. The motion also sought a hearing and a stay of execution pending hearing. On the same day, the d i s t r i c t court s e t a hearing for July 1 2 and stayed execution on the judgment. On July 12 a substitution of attorneys for defendant occurred. A t the commencement of the hearing on that date, defendant's new attorney moved the d i s t r i c t court t o add two additional grounds to its motion t o set aside the default judgment: (1) Inad- vertence and excusable negligence of defendant, and (2) that the default judgment differs substantially from the prayer of the complaint. A n affidavit of merits was filed together with a proposed answer to p l a i n t i f f ' s complaint. The substance of these documents was that defendant had not been served i n the action and defendant had a meritorious defense to the action, viz. the mal- functioning of the sound system was caused entirely by p l a i n t i f f ' s misuse of the equipment. J i m Rhines, president of defendant corporation, testified i n support of the motion t o s e t aside the default judgment. The g i s t of his testimony was that he had never been served i n the action; that had he been served, he would never have permitted the default; and that he had a meritorious defense to the action, The d i s t r i c t court continued the hearing for the purpose of locating the sheriff's deputy who signed the certificate of service, O n September 27 plaintiff filed a motion to dissolve the stay order and permit execution on the judgment. Attached to t h i s motion was the affidavit of the sheriff's deputy, who had been located by p l a i n t i f f ' s attorney in the state of Utah, that she personally served J i m Rhines, the president of defendant corporation, with a copy of the summons and complaint i n the action on April 21, 1975, in the offices of defendant a t 2701 Brooks Street i n Missoula, Montana. A further hearing was held on September 30. A t t h i s hearing Rhines testified again. H e again denied he had been served and indicated only two other suits against the corpora- tion had gone by default, one for $300.60 and one for $133. H e testified that these defaults were permitted on advice of counsel as the costs of defense would exceed the amounts sued for. A t the conclusion of the hearing, defendant's motion to set aside the judgment was denied. Plaintiff's motion to dissolve the stay of execution was denied. On October 28, defendant filed its notice of appeal from the order of the d i s t r i c t court, Missoula County, denying de- fendant's motion to set aside the default judgment. Defendant alleges an abuse of discretion by the d i s t r i c t court i n four particulars: 1) Refusing t o s e t aside the default judgment on the grounds of defendant's inadvertence o r excusable neglect. 2) Awarding interest greater than prayed for i n the complaint. 3) In granting any judgment on Counts I1 and 1 1 1 . 4 ) I n awarding punitive damages i n an action upon a contract. Rule 55(c), M.R.Civ.P., provides i n pertinent part: "For good cause shown the court may s e t aside an entry of default and, i f a judgment by default has been entered, may likewise set it aside i n accordance with Rule 60(b) * * *.I1 Rule 60(b), M.R.Civ.P., provides i n relevant part: "* * * upon such terms a s are just, the court may relieve a party * * * from a final judgment * * * for the following reasons: (1) mistake, inadvertence, suprise, or excusable neglect * * *." A motion to s e t aside a default judgment is addressed t o the sound discretion of the t r i a l court and t h i s Court w i l l not interfere except upon a showing of manifest abuse. Keller v. Hanson, 157 Mont. 307, 485 P.2d 705; Johnson v. Matelich, 163 Mont. 329, 517 P.2d 731. Here the only showing of inadvertence or excusable neglect was the testimony of J i m Rhine that he had never been served i n the action. To the contrary was the certificate of service of the deputy sheriff and the absence of any evidence that defendant attempted t o locate her, depose her, or secure her testimony i n person. It is axiomatic that the burden of proof i s on the moving party, here the defendant, to establish inadvertence or excusable neglect. The testimony of J i m Rhines created no more than a conflict i n the evidence on the issue of service which was resolved against defendant by the t r i a l judge. Under such circumstances, w e find no abuse of discretion by the t r i a l judge i n refusing to set aside the default judgment on t h i s ground. A n error i n awarding interest on the purchase price of the sound system is clear on the face of the record. The prayer i n p l a i n t i f f ' s complaint asks for interest a t the rate of 6% per year on $1,350 from November 3, 1975 to date of judgment. The judgment awards interest a t the rate of 8% per year on $1,350 from July 1, 1975 t o date of judgment. Rule 54(c), M.R.Civ.P., provides: "A judgment by default shall not be different i n kind from or exceed i n amount that prayed for i n the demand for judgment. * * *I1 Accordingly, the interest award is ordered amended i n conformity with the prayer i n the complaint. The third claim of error is that Counts I1 and I11 f a i l t o allege any damass or cause of action. I n our view Count 11 clearly states a claim for breach of implied wananties and seeks $10,000 damages by reason thereof. W e also find Count I11 states a claim for relief based on false representations by defendant and seeks $10,000 campensatory and $10,000 punitive damages therefor. However, w e find that on its face the judgment awarding damages on those counts i s beyond the power of the d i s t r i c t court to award. On Count 11 the d i s t r i c t court made a specific finding that "the Plaintiff has been damaged i n the amount of Three Thousand and ~ o / 1 0 0 Dollars ($3,000.00) for loss of wages, use, and reputation" and awarded damages i n that amount. Such damages for breach of warranties are defined as incidental and consequen- t i a l damages i n the Uniform Commercial Code. Section 87A-2-715, R.C.M. 1947. Also see sections 87A-2-11 and 87A-2-714, R.C.B. 1947. They are special damages, not general damages. The distinction is---special damages are the natural but not necessary result of the wrong or breach; whereas general damages are damages the law would impute as the natural, necessary and logical consequence of the wrong or breach. 25 C.J.S. Damages 5 131. Special damages must be specifically pleaded t o be recover- able. Rule 9(g), M.R.Civ.P. Here, these items of special damages were not pleaded, defendant had no notice that special damages were claimed, and the d i s t r i c t court had no power or authority to award special damages in i t s default judgment. The award of $3,000 damages for these items is ordered stricken from the judgment . The f i n a l claim of error concerns the award of $1,500 punitive damages on Count 1 1 1 . Defendant contends punitive damages are not recoverable i n an action arising from contract, citing section 17-208, R.C.M. 1947. W e have no quarrel with this general proposition or this statute. However, Count 1 1 1 is based on t o r t , not contract, being a claim for damages based on false representations of a refund of the purchase price, i f plaintiff would return the sound system. See Paulson v. Kustom Enterprises, Inc., 157 Mont. 188, 483 P.2d 708. Again, however, w e find that the judgment on i t s face is beyond the power and authority of the court t o the extent it awards plaintiff punitive damages. Punitive damages cannot be awarded where there are no actual damages. Gilham v. Devereaux, 67 Mont. 75, 214 P. 606. Here the judgment denied p l a i n t i f f ' s claim of actual or compen- satory damages on Count 1 1 1 , so an award of punitive damages was beyond the power or authority of the d i s t r i c t court. The award of $1,500 punitive damages is ordered stricken from the judgment . This cause i s remanded t o the d i s t r i c t court for entry of judgment i n accordance with t h i s opinion; or a t the election of plaintiff, within 15 days of the date hereof for vacation of the entire judgment, the f i l i n g and service of an amended com- plaint and adversary r e t r i a l . Each party shall bear i t s own costs. Justice