No. 86-198 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

FIRST NATIONAL BANK OF CUT BANK, 

P1ainti.f f and Respondent, 

ROBERT C. SPRINGS and JENELL D. SPRINGS, 

his wife; INTERNAL REVENUE SERVICE, UNITED 

STATES DEPARTMENT OF TREASURY, INDUSTRIAL 

FINANCIAL CORPORATION and SEARS ROEBUCK 

and COMPANY, 

Defendants and Appellant. 

APPEAL FROM: The District Court of the Ninth Judicial District, 

In and for the County of Glacier, 

The Honorable R.D. McPhillips, Judge presidi-nq. 

COIJNSEL OF RECORD: 

For Appellant: 

Cannon & Sheehy; Edmund F. Sheehy, Jr., Helena, 

Montana 

For Respondent : 

Peterson, Peterson, Burns & Shors; Richard A. ~hors, 

Cut Bank, Montana 

Submitted on Briefs: Oct. 23, 1986 

Decided: January 6, 1987 

- -- 

Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

The District Court of the Ninth Judicial District for 

the County of Glacier entered a default judgment and a deficiency judgment against Robert Springs in a foreclosure 

action. Dr. Springs then filed motions to set aside the 

default judgment and stay the deficiency judgment. The 

District Court denied these motions and Dr. Springs appealed. 

We affirm. 

The issue is whether the District Court erred in denying 

the motion to set aside the default judgment or erred in 

denying the motion to stay the deficiency judgment. 

In early 1985, Dr. Springs was mailed a notice of default, pursuant to a trust indenture agreement, by First 

National Rank of Cut Bank (Rank) requesting past due house 

payments. Dr. Springs did not respond or cure the default 

within the 30 days allowed by the notice, and the Bank filed 

a foreclosure action on his home. The Bank's complaint 

requested a deficiency judgment if the foreclosure sale bid 

did not cover the Bank's judgment and costs of the sale. Dr. 

Springs was personally served in Glacier County with process, 

but did not appear in the foreclosure action. 

A default judgment was entered against Dr. Springs and 

the District Court ordered foreclosure of the property. A 

sheriff's sale was held, but the sale did not cover the total 

debt owed to the bank so the District Court entered a deficiency judgment against Dr. Springs. 

About five months after the deficiency judgment was 

entered, Dr. Springs filed motions to set aside the default 

judgment, to stay execution of the deficiency judgment, and 

to produce documents. The motion to set aside the default 
judgment was based on Rules 55(c) and 60(b) (6), M.R.Civ.P. 

The District Court denied Dr. Springs motions and stated: 

"Defendant Springs has inexcusably slumbered on his rights 

and ignored the judicial machinery established by law." Dr. 

Springs appealed. 

Did the District Court err in either denying the motion 

to set aside the default judgment or in denying the motion to 

stay the deficiency judgment? 

A court may relieve a party from a final judgment or 

order pursuant to Rule 60 (b) , M. R.Civ. P. which 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: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly 

discovered evidence which by due diligence could 

not have been discovered in time to move for a new 

trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; 

(4) the judgment is void; (5) the judgment has been 

satisfied, released, or discharged, or a prior 

judgment upon which it is based has been reversed. 

or otherwise vacated, or it is no longer equitable 

that the judgment should have prospective application; or (6) any other reason justifying relief 

from the operation of the judgment. The motion 

shall be made within a reasonable time, and for 

reasons (I), (2), and (3) when a defendant has been 

personally served, whether in lieu of publication 

or not, not more than 60 days after the judgment, 

order or proceeding was entered or taken, or, in a 

case where notice of entry of judgment is required 

by Rule 77(d), not more than 60 days after service 

of notice of entry of judgment. When from any 

cause the summons in an action has not been person.- 

ally served on the defendant, the court may allow, 

on such terms as may be just, such defendant or his 

legal representative, at any time within 180 d.ays 

after the rendition of any judgment in such action, 

to answer to the merits of the original action. A 

motion under this subdivision (b) does not affect 

the finality of a judgment or suspend its operation. This rule does not limit the power of a 

court to entertain an independent action to relieve 

a party from a judgment, order, or proceeding, or 

to grant relief to a defendant not actually personally notified as may be required by law, or to set 

aside a iudgment for fraud upon the court. 
This Court has previously stated tha.t: 

A manifest abuse of discretion must be shown before 

this Court will interfere with the trial court's 

discretion on a motion to set aside a default 

judgment. (Citations omitted.) 

Schmidt v. Jomac, Inc. (1982), 196 Mont. 323, 328, 639 P.2d 

517, 520. Therefore, our discussion will center on whether 

Dr. Springs has shown a manifest abuse of discretion by the 

District Court which requires reversal. 

Essentially, Dr. Springs argues that the order denying 

the motion to set aside the judgments should be overturned 

for four reasons. First, Dr. Springs maintains that he 

failed to make a timely appearance because he did not believe 

there would be any possibility of a deficiency judgment 

against him so he did not believe he would have to appear in 

the foreclosure action. Second, Dr. Springs maintains that 

if he had. a.nswered the complaint he would have had several 

meritorious defenses to the complaint. Third, Dr. Springs 

maintains that even if this Court does not set aside the 

default judgment, we should set aside the deficiency judgment 

because the fair market value of the property foreclosed upon 

is in excess of the amount bid at the foreclosure sale. And 

fourth, because the District Court did not have a hearing on 

the underlying motions, it could not have been fully informed. 

on the motions it was deciding, so this case should be remanded and a full hearing required. 

At the beginning of our discussion of this case, we 

emphasize that we are bound by the record. We may not decide 

a case on the basis of unsubstantiated statements in the 

briefs. Dr. Springs has failed to show by affidavit or other 

appropriate means a basis for many of the facts he relies on 

in his brief. Accordingly, some of the arguments concerning 
his appeal should be denied summarily. We will consider his 

arguments based only on the facts supplied in the District 

Court's order and transcript of the proceeding below. 

Although Dr. Springs based his motions to vacate the 

judgments on Rule 60(b) (6), M.R.Civ.P., we conclude that his 

motions more properly should have been based upon Rule 

60 (b) (1) , M.R.Civ.P. His reasons cited for his failure to 

appear clearly fall into the "mistake" and "inadvertence" 

category. Wright and Miller cite several federal cases 

construing Federal Rule (60) (b), which is almost identical to 

the Montana Rule, and state: 

These cases certainly seemed to establish that 

clause (6) and the first five clauses are mutually 

exclusive and that relief cannot be had under 

clause (6) if it would have been available under 

the earlier clauses. This reading seems required 

also by the language of the rule. 

11 Wright and Miller, Federal Practice and Procedure, Civil 

Section 2864, p. 217. 

We agree with Wright and Miller's interpretation that 

relief cannot be obtained under Rule 60 (b) (6) , M. R.Civ.P., if 

that relief is available under Rule 60 (b) (1) to 151, 

M.R.Civ.P. Accordingly, Dr. Springs' motions could have been 

denied based on his failure to present those motions within 

the 60 day time limits set out in Rule 60(b), M.R.Ci.v.P. 

However, we will address Dr. Springs' arguments. 

Dr. Springs' first argues that he failed to make a 

timely appearance because he did not believe a deficiency 

judgment could be obtained against him. We have addressed 

similar arguments and concluded: 

The contention that counsel did not file an answer 

because he mistakenly relied on the automatic stay 

provision of the Bankruptcy Code is insufficient 

under the law. 
Schmidt, 639 P.2d at 519. 

In Schmidt, this Court refused to set aside a default judgment concluding that neither Rule 60 (b) (1) or Rule 60 (b) (6) , 

M.R.Civ.P., mandated the setting aside of the judgment. The 

Schmidt's attorney believed that no answer or appearance was 

necessary because the automatic stay provisions of the Bankruptcy Code operated as a bar to the lawsuits filed against 

the Schmidts. Therefore, no appearance was made in the 

lawsuits by the Schmidts and default judgments were entered 

against them. Just as in Schmidt, Dr. Springs is not entitled to relief from the default judgment because he reached 

an incorrect legal conclusion. 

Second, Dr. Springs c1aj.m~ several defenses which he 

believes are meritorious in support of his motion to set 

aside the default judgment. Dr. Springs is correct in stating the rule that the party seeking to set aside an entry of 

default must establish good cause for his failure to appear 

and the existence of a meritorious defense to the action. 

McClurg v. Flathead County Commissioners (19801, 188 Mont. 

20, 610 P.2d 1153. Dr. Springs states in his brief that he 

"reasonably believed that he did not have to appear in this 

litigation because no personal judgment could he taken 

against him." We note that this belief is not established by 

affidavit. We also point out that a mistake as to his necessity to appear does not warrant setting aside the default 

judgment. The rule enunciated in McClurg states two conditions, both of which must be met to set aside an entry of 

default. Because Dr. Springs has failed to meet the first 

condition by establishing a good cause for his failure to 

appear, we need not rule on the second condition regarding 

his defenses. 
Third, Dr. Springs maintains that we should set aside 

the deficiency judgment because the fair market value of the 

foreclosed property is in excess of the foreclosure sale bid. 

There is nothing in the record which supports Dr. Springs' 

contention that the fair market value of his house exceeds 

the foreclosure sale bid. This Court has stated many times 

that we can only consider evidence in the record. Great 

Northern Railway Co. v. Hatch (1934), 98 Mont. 269, 38 P.2d 

976. We conclude that because there is no evidence in the 

record supportinq Dr. Springs' argument, he is not entitled 

to relief based upon this argument. 

Last, Dr. Springs argues that the District Court denied 

the various motions without holding a hearing or reviewing 

the parties' arguments, thus the District Court's order 

should be reversed and a hearing ordered. We point out that 

neither Rule 55(c) nor Rule 60(b), M.R.Civ.P., provides a 

right to an evidentiary hearing. In addition, Dr. Springs 

did not request a hearing from the District Court until after 

his motion had been denied. As to the reviewing of the 

parties' arguments, nothing in the record suggests the District Court did not properly receive each parties' motions 

and briefs before enterino the order denying the motion to 

set aside the judgments. 

Dr. Springs filed his motion to set aside the default 

judgment and supporting memorandum on February 13, 1986. The 

Rank filed their memorandum opposing Dr. Springs' motion on 

February 19, 1986. The District Court's order denying Dr. 

Springs' motion was filed February 20, 1986. Dr. Springs 

then filed his motion to set aside the order on February 26, 

1986, and his memorandum in support of that motion on February 28, 1986. The Rank filed its reply brief on March 4, 
1986, and the District Court entered the order denying the 

motion to set aside the order on March 6, 1986. We hold that 

the record does not demonstrate a lack of review of either 

party's arguments by the District Court. 

Therefore, we conclude that Dr. Springs has not shown a 

manifest abuse of discretion by the District Court on any 

issue and affirm the District Court in full. 

We Concur: