Case Name: SCHIELE & KRIGSHAKER v. NORTH STATE FIRE INSURANCE COMPANY et al.
Court: Supreme Court of North Carolina
Jurisdiction: North Carolina
Decision Date: 1916-05-03
Citations: 171 N.C. 426
Docket Number: 
Parties: SCHIELE & KRIGSHAKER v. NORTH STATE FIRE INSURANCE COMPANY et al.
Judges: 
Reporter: North Carolina Reports
Volume: 171
Pages: 426–435

Head Matter:
SCHIELE & KRIGSHAKER v. NORTH STATE FIRE INSURANCE COMPANY et al.
(Filed 3 May, 1916.)
1. Judgments, Set Aside — Meritorious Defense.
Upon a motion to set aside a judgment for excusable neglect, etc., it is only necessary to prima facie show a good defense, which is sufficient when it appears that the plaintiff had intervened in an action in another State for the purpose of attaching the debt therein alleged to be due by the defendant, resulting in a judgment which defendant paid into court, and was released from further liability, and thereafter, without further notice, judgment was taken against him.
2. Same — Excusable Neglect.
Where a judgment has been obtained upon a judgment which had been rendered in another State, and upon motion made to set it aside for excusable neglect it appears that plaintiff’s attorneys had been informed by the defendant’s attorneys that the judgment had been paid, the action was commenced twenty months afterwards, and eight months later the complaint was filed; that after several subsequent terms of the court the plaintiff’s attorney indicated he would not set the case for trial, while the bar was setting' the calendar for the term, but notified the clerk of the defendant’s attorneys he would insist on judgment that day unless answer was filed, was informed by the clerk that he could not communicate with defendant’s attorneys and advised plaintiff’s attorney to do so, which they did not do, this being Wednesday of the third week of the term, on which the judge finished up the business of the court, including signing the said judgment, but left the term to expire by limitation at the end of the week, in which remaining time the defendant filed an answer setting up a meritorious defense: Helé, excusable neglect is shown, and the action of the trial judge in setting aside the judgment is sustained on appeal.
8. Same — Attorney and Client — laches.
Where a defendant has employed local attorneys to represent him, and made them aware of his defense to the action, so that there is nothing more for him to do personally to put the action at issue, the neglect of his attorneys in not filing an answer, nothing else appearing, will not be attributable to him; and when he has shown a meritorious defense, the judgment should be set aside without regard to whether his attorneys are solvent.
Clark, C. J., dissenting.
Appeal by plaintiff from Justice, J., at December Term, 1915, of Guilfoed.
Civil action to set aside a judgment by default final, on tbe ground of surprise and excusable neglect, and at tbe bearing tbe court found tbe following facts:
“That suit is brought upon a judgment alleged to have been obtained by tbe plaintiffs against A. J. Dillard and tbe defendant North State Eire Insurance Company in July, 1909, at Hot Springs, Arkansas, and tbe same was placed in tbe bands of Messrs. Douglas & Douglas, attorneys practicing at tbe Greensboro bar, for collection. That in June, 1913, Messrs. Douglas & Douglas wrote a letter to tbe Dixie Eire Insurance Company, which company bad merged with tbe North State Eire Insurance Company and assumed its liabilities, notifying it of this claim. That tbe last named company advised Messrs. Douglas & Douglas that they bad referred tbe. matter to their counsel, Mr. Brooks, of Brooks, Sapp & Williams. That thereafter Mr. Brooks met Mr. Martin Douglas, of tbe firm of Douglas & Douglas, and stated to -him that tbe Dixie Eire Insurance Company was not indebted to tbe plaintiff, and that it bad twice paid the obligation which tbe plaintiff was now seeking to recover, and that be would like to show him some time in bis office tbe data to satisfy him of this fact. That no further action was taken in tbe matter until February, 1915, when summons was issued and served in tbe case. That no complaint was filed in tbe case until 18 October, 1915. That on the same day Messrs. Douglas & Douglas sent a copy of said complaint to counsel for defendant, and wrote counsel for defendant as follows:
18 October, 1915.
Schiele v. Dixie Fire.
Messbs. BrooKS, Sapp & Williams,
Attorneys at Law, Greensboro, N. G.
GeNtlemeN: — We take pleasure in herewith inclosing copy of the complaint filed in the action therein stated; and ask that you will kindly send us a copy of your answer when filed.
You may recollect that on 16 June, 1913, you wrote to us, stating that our letter of the 11th inst. had been turned over to Mr. Brooks, and that Mr. Brooks would soon take up this matter with us. Having waited a reasonable time, we issued summons and a few days ago filed complaint.
Our clients are desirous of a speedy termination of this matter, and we would be obliged if you can be ready to try this case at the next term of court. Yery truly yours.
(Signed) Douglas & Douglas.
“That an order was made at the October term allowing time to file pleadings, and that a similar order was made at each term thereafter, including the last term of this court.
“That the case has never been calendared for trial, and at the meeting of the bar to prepare a calendar for last week’s term of court, Mr. Martin Douglas, of the firm of Douglas & Douglas, was present, and when this case was called upon the clerk’s docket, Mr. Martin Douglas indicated in the usual way not to put the case in question on the calendar for trial. That on Wednesday of last week, during the session of court, Mr. Douglas stated to Mr. Shuping, who is employed in the office of Brooks, Sapp & Williams, that he was going to take judgment at that term in this case unless an answer was filed, and requested that he advise Mr. Brooks of that fact. Mr. Shuping replied that he was engaged in the healing of a case in another court, and asked Mr. Douglas if he would phone Mr. Brooks or Mr. Sapp to this effect. That no notice was given to either Brooks, Sapp, or Williams of the purpose to take judgment on that day of court. That on Friday of last week answer was filed. That the judge opened court at noon on Monday of last week and left the bench at noon on Wednesday of last week, but did not adjourn court, but allowed same to expire by limitation of law. That before the expiration of said term the answer in this case was filed. That by inspection of the answer, which is duly verified, it appears that the defendant has a complete and meritorious defense to the cause of action sued upon by the plaintiff. The plaintiff procured a judgment to be signed by tbe judge on Wednesday of last week.
“That at tbe bar meeting to set tbe next calendar after tbe complaint was filed, Douglas & Douglas asked to bave tbe case put on tbe calendar for trial; but Mr. Sapp, of tbe firm of Brooks, Sapp & Williams, asked tbem to let it go over, as tbe answer bad not been filed; tbis was agreed to, but told tbem that the answer would have to be filed by next term.
“Tbe court further finds that one term of court bad passed after tbe filing of tbe complaint and before tbe term at which judgment was taken.”
Tbe motion was allowed, and tbe plaintiffs excepted and appealed.
Douglas & Douglas for plaintiffs.
S. Glay Williams for defendant.

Opinion:
AlleN, J.
Tbe court finds as a fact that tbe defendant has a meritorious defense, and if tbe allegations of tbe answer are true, it was justified in so doing.
It appears from tbe answer and tbe findings of fact that an action was instituted in tbe courts of Arkansas in 1907 by one Dillard against tbe defendant insurance company; that tbe plaintiffs in tbis action intervened in said action for tbe purpose of attaching tbe debt due from tbe insurance company to Dillard; that tbe defendant answered in said action; that thereafter Dillard recovered judgment; that tbe defendant paid tbe full amount of tbis judgment into court, and an order was entered in said action, to which tbe present plaintiffs were parties, releasing tbe defendant from further liability and discharging it from tbe claims of attaching creditors; that thereafter and without further notice to tbe defendant tbe judgment on which tbis action is brought was taken in said action, and tbis establishes tbe defense of payment prima facie, which is all that is required on motions for relief for excusable neglect.
Has "mistake, inadvertence, surprise, or excusable neglect" been shown within tbe meaning of section 513 of tbe Eevisal?
Tbe judgment upon which tbe plaintiffs sue was obtained in Arkansas in 1909, and four years thereafter, in June, 1913, it was sent to attorneys at Greensboro for collection.
These attorneys made demand upon tbe defendant and were informed that tbe judgment bad been paid, and were referred to tbe attorneys of tbe defendant, who were fully informed of tbe defense relied on.
Twenty months later tbis action was commenced, in February, 1915, and eight months later, in October, 1915, tbe complaint was filed.
An order was made at tbe October, November, and December Terms of 1915, extending tbe time for filing pleadings, and when tbe calendar was being set for December Term, 1915, tbe attorneys for tbe plaintiff indicated tbat tbey would not ask to have tbis action set down for trial. Tbe December term lasted only two and a balf days, tbe judge presiding leaving tbe court at noon Wednesday.
On Wednesday, tbe day tbe judge left, counsel for plaintiff notified a young gentleman employed in tbe office of tbe attorneys for defendant tbat tbey would take judgment by default unless an answer was filed during tbe term, and were requested to notify counsel for defendant, wbicb was not done, and on the same day judgment by default was taken. Tbe judge presiding did not adjourn court when be left on Wednesday, but permitted it to expire by limitation, and tbe answer was filed on Friday after tbe judgment was entered on Wednesday.
On a similar state of facts, except tbey were not so favorable to tbe defendant, tbis Court refused to interfere with an order setting aside a judgment upon .the ground of surprise and excusable neglect in Foley v. Blank, 92 N. C., 476, tbe Court saying: "Tbe judge left tbe term open — to expire by its own limitation. Tbe defendants may, therefore, bave thought,, and not unreasonably, tbat tbey bad tbe right to file their answer at any time during tbe last day of tbe term, although tbe judge was not present. But a pleading placed on tbe files of tbe court in tbe absence of tbe judge, after be has left for tbe term, is not filed in contemplation of law, and we repeat, tbe judge ought never to leave tbe term open to take care of itself. Such practice has no legal sanction, and it gives rise to misapprehension, confusion, and wrong. Leaving tbe term of court open, to expire by its own limitation, may bave led tbe defendants to mistake their right to file their answer at tbe time -they undertook to do so. As tbey could not properly file it in tbe absence of tbe judge, tbey may bave been surprised. Such mistake or surprise would not be unreasonable, and it would be such as would authorize tbe judge in a proper case, in tbe exercise of bis sound discretion, to set a judgment aside."
After tbe long delay in prosecuting tbe action and in filing tbe com- plaint, and when counsel bad been informed tbat tbe defense of payment would be relied on, and bad indicated tbat tbey did not expect tbe action to be tried at tbe term at wbicb judgment by default was taken, and with an order in force made at tbat term extending tbe time to file pleadings, tbe defendants' counsel could reasonably expect tbat no advantage would be taken of their failure to answer before tbe end of tbe week.
Tbe plaintiffs' counsel seem to bave felt tbat tbe circumstances required them to give notice before demanding judgment, but tbey did not attempt to do so before Wednesday, wbicb left little if any time for preparing and filing tbe answer before tbe judge left at noon.
If, however, the counsel were negligent, there is no negligence on the part of the defendant, and there is ample authority that when a defendant employs local counsel and informs him of his defense, so that there is nothing more for the defendant to do to put the action at issue, he will be relieved against a judgment taken for want of an answer. Griel v. Vernon, 65 N. C., 76; Bradford v. Coit, 77 N. C., 76; Ellington v. Wicker, 87 N. C., 16; Gwathney v. Savage, 101 N. C., 107; Taylor v. Pope, 106 N. C., 271; Gaylord v. Berry, 169 N. C., 733.
The Court said in the first of these cases: "In this case the party retained an attorney to enter a plea for him; that an attorney should fail to perform an engagement to do such an act as that we think may fairly be considered a surprise on the client, and that the omission of the client to examine the records in order to ascertain that it had been done was an excusable neglect"; and this is quoted in the other authorities cited; and in Gwathney v. Savage, supra: "The distinction between the neglect of parties to an action and the neglect of counsel is recognized in our courts, and except in those cases in which there is a neglect or failure of counsel to do those things which properly pertain to clients and not to counsel, and in which the attorney is made to act as the agent of the client to perform some act which should be attended to by him, the client is held to be excusable for the neglect of the attorney to do those things which the duty of his office of attorney requires. It was the duty of the attorney to file the defendant's answer; if it required verification, as it did, it was his duty to inform his client of the fact. The client is not presumed to know what is necessary. 'When he employs counsel and communicates the merits of his ease to such counsel, and the counsel is negligent, it is excusable on the part of the client, who may reasonably rely upon the counsel's doing what may be necessary on his behalf.' Whitson v. R. R., 95 N. C., 385. The distinction between neglect of counsel taken in Griel v. Vernon, 65 N. C., 76, has been followed by a number of cases since, and may be regarded as settled." And in the last case: "If the defendant retained a reputable attorney, who regularly practiced in Brunswick Superior Court; paid him $35 as his fee; apprised him of the facts, and the attorney promised to attend court and look after the defendant's interests, all of which he says was done, and the attorney failed to file an answer, and the defendant was not in fault himself, but acted with ordinary prudence, this would constitute excusable neglect. Francks v. Sutton, 86 N. C., 78; English v. English, 87 N. C., 497; Wiley v. Logan, 94 N. C., 564."
Norton v. McLaurin, 125 N. C., 185, is an illustration of the distinction between the negligence of the party and of his counsel. The action was to recover land, and a motion to set aside a judgment taken by default for want of an answer was denied because of failure of tbe defendant to file a bond, wbicb is a duty devolving on tbe party.
Tbis statement of tbe law contained in tbe cases cited was made without'regard to tbe solvency or insolvency of tbe attorney, and it bas remained unchallenged for near balf a century.
And wby is not this tbe wise and just rule and in accordance with tbe letter and spirit of tbe statute?
Tbe attorney is an officer of tbe court, and acts under its direction and control, and tbe client employs him, because of bis learning and skill, to do something be cannot do for himself, and bis fitness for tbe duty is certified to by tbe courts who. have licensed him.
If so, and tbe client bas been guilty of no neglect, and a valuable right bas been lost by tbe failure of tbe attorney to file an answer, wby should be not be relieved under a statute (Rev., sec. 513) which gives authority to tbe court to relieve a "party" on account of "bis" surprise, etc., and wbicb "is not restricted to cases of 'excusable neglect/ but embraces cases where tbe judgment or other proceeding bas been taken 'through bis mistake, inadvertence, or surprise'? These words are not mere surplusage, but mean entirely different things, though, of course, tbe most common instance in wbicb tbis section bas been invoked bas been in cases of excusable neglect." Mann v. Hall, 163 N. C., 53.
Tbe party who bas employed local counsel, and who bas given him all tbe information necessary for filing bis answer, and who bas omitted no duty wbicb tbe law imposes on him may well claim surprise that bis attorney bas failed in bis duty and bas permitted a judgment to be taken against him for want of an answer.
It is urged, however, that tbis rule will encumber tbe dockets with motions and will delay tbe proceedings in tbe courts.
If true, this would not furnish a reason for writing into tbe statute what cannot be found there, that a party, who is in no default, can have no relief provided bis counsel is solvent; but tbe danger from tbe adoption and enforcement of tbe rule is more imaginary than real.
Tbe instances in wbicb relief is invoked under tbe statute are not of frequent occurrence, and as it would be based on tbe neglect of counsel, involving professional character and standing, it would not open up an inviting field to attorney or client.
Tbe rule also leads to tbe determination of causes upon their merits, as a judgment cannot be set aside under tbe statute unless a meritorious defense is shown to exist.
It is no sufficient answer to say that if tbe attorney is solvent tbe party is not hurt, because be can recover tbe amount of bis loss from tbe attorney.
Tbe party may be made a bankrupt by tbe payment of tbe judgment, or be. may lose bis borne before he can sue bis attorney, and when be sues be must take tbe chance of tbe jury finding tbe issues against him or reducing tbe amount of bis recovery, or, if be recovers judgment, of tbe attorney becoming insolvent during tbe progress of tbe action.
Tbe three cases in our Reports which give color to tbe contention that tbe party is not entitled to relief if bis .attorney is solvent (University v. Lassiter, 83 N. C., 38; Chadbourn v. Johnston, 119 N. C., 282; Ice Co. v. R. R., 125 N. C., 17) are not in conflict with tbe views we have expressed.
In tbe Lassiter case tbe defendant, who moved to set aside tbe judgment, did not employ counsel, and be paid no attention to an action commenced in 1876 until after final judgment in 1879, and relief was denied upon tbe ground of tbe negligence of tbe party, and not of tbe attorney.
In tbe Ghadbourn case tbe summons was returned served, an order of sale made, a sale bad thereunder, a report of sale, and a decree of confirmation, and tbe motion to set aside tbe orders and decree was not made on tbe ground of surprise or excusable neglect, but because it was contended by tbe defendant that tbe summons was not in fact served, and that tbe appearance by attorney was without authority; and in tbe Ice Go. case stress was laid on tbe fact of tbe insolvency of tbe attorney as a reason for tbe exercise of tbe discretionary power of issuing tbe writ of certiorari in lieu of an appeal, lost by tbe failure of tbe attorney to serve case on appeal within tbe statutory time.
We, therefore, conclude that tbe order of bis Honor should be sustained.
Affirmed.