Court Opinion

ID: 9776500
Source: CourtListenerOpinion
Date Created: 2023-08-29 19:38:05.130117+00
Date Added: 2024-06-11T07:32:39.303551
License: Public Domain

*104ROBERTSON, Judge,
dissenting.
A fundamental tension exists in the law relating to default judgments. The law favors resolution of conflicts; it also seeks after justice. It is from the failure of the law to do justice in every circumstance that equity has emerged. From the fourth century B.C., the words of the philosopher describe equity’s purpose. “For that which is equitable seems to be just, and equity is justice that goes beyond the written law.” Aristotle, Rhetoric, 1374 Loeb Classical Library (1935).
In 1985, this Court decided Barney v. Suggs, 688 S.W.2d 356 (Mo. banc 1985). Prompted by that decision, which demonstrated that “Missouri courts have overemphasized the importance of efficiency and finality and have demonstrated an increasing disregard for the importance of the judicial system’s mission to seek the truth,” Professor Nanette K. Laughrey authored two articles, which led to the reform of Rule 74 and the adoption of Rule 74.06 relating to default judgments. Laughrey, Default Judgments in Missouri, 50 Mo.L. Rev. 841, 844 (1985) (Laughrey I), and Lau-ghrey, Balancing Finality, Efficiency, and Truth: A Proposed Reform of the Missouri Default Judgment Provisions, 51 Mo.L.Rev. 63 (1986) (Laughrey II).
In this case, the circuit judge found that defendant’s failure to answer in a timely fashion was the product of mistake. Rule 74.06(b) does not employ the language found in the cases, “unmixed with neglect or inattention” and permits the court to relieve a party of a default judgment entered under these circumstances. Under the new Rule 74.06(b), defendant in this case would be entitled to have the default judgment set aside upon motion averring “mistake, inadvertence, surprise, or excusable neglect” filed within one year after the entry of the judgment. See Rule 74.06(c).
I do not argue however that Rule 74.-06(b) controls this case; it had neither been adopted nor become effective at the time the circuit court issued its decision. Nevertheless, two considerations militate in favor of setting aside the default judgment in this case.
I.
First, case law prior to Suggs is consistent with Rule 74.06(b) in permitting a court sitting in equity to set aside a final default judgment on the basis of the defendant’s mistake provided that that mistake is not the product of neglect or inattention. Neither “neglect” nor “inattention” have been defined in the context of default judgments. As the discussion which follows shows, for purposes of suits in equity to set aside default judgments, neglect is not simply a careless act as the majority assumes; it is inattention. The majority’s conclusion, therefore, proceeds from a failure to understand clearly the test upon which it relies to decide the case.
Sprung v. Negwer Materials, Inc., 727 S.W.2d 883 (Mo. banc 1987) (Sprung I), held that the defendant’s motion to set aside the default judgment established equitable grounds for relief. The case came to this Court after the circuit judge set aside the default judgment “on equitable grounds” and the Court of Appeals, Eastern District, reversed. The issues before the Court were limited in Sprung I to “the jurisdiction of the circuit court to set aside the default judgment on equitable grounds and the propriety of the procedures employed by the circuit court in setting the default judgment aside.” Id. at 884. The Court’s mandate remanded the case with directions to the circuit court to treat that motion as a petition in equity and to proceed on that basis. It is improper to read the Court’s holding in Sprung I any more broadly than that mandate.
On remand, the trial court found that the attorney for defendant prepared an entry of appearance and a proposed order extending the time in which to plead within three days of his receipt of the summons and petition from the defendant and within twenty days of service on defendant. Originals and copies of these documents were sent to the defendant’s insurance carrier along with the original of the attorney’s letter to the circuit clerk requesting that the proposed order be presented to the judge for signature. The circuit judge also *105found that defendant filed its answer on March 23, 1985. The circuit judge found further that defendant’s attorney mailed a notice to take deposition and a certificate of mailing interrogatories March 29, 1985. All of this took place more than three weeks before plaintiffs counsel informed defendant’s counsel that he had obtained a default judgment, which was, by then, final.
The trial court characterized three events — the mismailing of the original entry of appearance and time to plead memorandum, the failure of an employee of the insurance company to realize the significance of the receipt of the original entry and memorandum, and the failure of defendant’s attorney’s receptionist to notify the attorney of the report noting the default in the legal newspaper — as constituting “neglect and inattention....” The majority seizes this conclusion and, without burdening itself with an analysis of the meaning of “neglect” or “inattention” within an equity context, affirms the trial court.
Hamm v. Hamm, 437 S.W.2d 449, 453 (Mo.App.1969), cited in Sprung I and upon which the majority relies, tells us that “[ejquity will relieve against a judgment for extrinsic fraud, accident and mistake [citation omitted], and where a defendant is denied the occasion to present a meritorious defense by reason of accident, mistake, inadvertence, mischance or unavoidable circumstances unmixed with neglect or inattention,” a court of equity will vacate a default judgment and give the injured party an opportunity to present his defense to the trier of the facts. (Emphasis in original.) Hamm cites Patterson v. Fitzgibbon Discount Corp., 339 S.W.2d 301, 306 (Mo.App.1960), as authority for the quoted statement without further analysis. Patterson in turn cites Cherry v. Wertheim, 25 S.W.2d 118, 121 (Mo.App.1930), likewise without analysis. Cherry cites Jackson v. Chestnut, 151 Mo.App. 275, 131 S.W. 747, 749 (1910), and McElvain v. Maloney, 186 S.W. 745, 749 (Mo.App.1916). Jackson states: “That an accident, preventing defense, unmixed with any fault or negligence of a party litigant, will sustain a bill of equity for relief against a judgment by default and which has become final by adjournment of the term, is well established.” 131 S.W. at 748. Jackson also quotes 2 Story Equity Jurisprudence, § 885. “In all cases when by accident, mistake, or fraud or otherwise a party has an unfair advantage in proceedings in a court of law, which must necessarily make the court an instrument of injustice, and it is, therefore, against conscience that he should use that advantage, a court of equity will interfere and restrain him from using the advantage.” .
McElvain cites Smoot v. Judd, 161 Mo. 673, 61 S.W. 854, 857 (1901), as authority for the “unmixed with neglect or inattention” language. Smoot quotes Pomeroy’s Equity Jurisprudence § 836.
“Where the defendant in an action at law has a good defense on the merits, which he is prevented by accident from setting up or making available, without any negligence or inattention on his part, and a judgment is rendered against him, equity will exercise its jurisdiction on his behalf by enjoining further proceedings to enforce the judgment, or by setting it aside, so that a trial may be had on the merits.” [citation to Pomeroy omitted]. And what is there said of accident is repeated by the same author concerning mistake and fraud. (Emphasis added.)
At last we find the origin of the language found in Hamm. The phrase “unmixed with neglect or inattention” is a paraphrase of § 836 of Pomeroy’s treatise on Equity Jurisprudence. I do not find a Missouri case which defines “neglect” or “inattention.” Undoubtedly, the courts felt no need to define the phrase because Pomer-oy’s treatise does so. Pomeroy states:
accident is an unexpected occurrence external to the party affected by it.... Mistake, on the other hand, is internal; it is a mental condition, a conception, a conviction on the understanding, — erroneous, indeed, but none the less a conviction, — which influences the will and leads to some outward physical manifestation. ... It is also distinguished from that inattention or absence of thought which are inherent in negligence.... *106Mistake, therefore, within the meaning of equity, and as the occasion of jurisdiction, is an erroneous mental condition, conception, or conviction, induced by ignorance, misapprehension, or misunderstanding of the truth, but without negligence, and resulting in some act or omission done or suffered erroneously by one or both the parties to a transaction, but without its erroneous character being intended or known at the time.
Pomeroy, Equity Jurisprudence § 839 (emphasis added). For Pomeroy, neglect and inattention are essentially synonymous; mistake results from doing an act erroneously not from the failure to act which constitutes neglect or inattention. In equity, a mistake is not simply a careless act for purposes of setting aside default judgments; it is an act thought correct when done, but which is ultimately shown to be erroneous.
In this case, the trial judge's findings of fact, to which we generally accord great deference, show that defendant’s attorney’s action and the default judgment that followed were not the product of “inattention or neglect”, as Pomeroy and appellate decisions intend the phrase to be employed, but of a belief, though erroneous, that the answer had been filed. This is exactly the sort of mistake for which equity historically provides relief in matters relating to default judgments.
II.
Second, the policy considerations favoring finality are three: “(1) there is no assurance that relitigation will produce any different result; (2) judicial economy demands that there be an end to litigation ...; (3) finality produces the certainty of the law that is necessary to promote confidence in the judicial system.” Laughrey II at 71. Of the three policy considerations, “only certainty seems compelling in the context of default judgments. ‘A default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party.’ [H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C.Cir.1970) ].” Laughrey II at 73. Rule 74.06(b), if applied to this case, would permit the default judgment to be set aside.
The new rule recognizes that a balance must be cast between finality and the search for justice. In my view, the new rule is entirely consistent with precedent properly understood and the rule attempts to restore justice to the law’s policy regarding default judgments. If justice is the focus of our system of laws, and particularly of a system which acknowledges the need for equity to correct the injustices of harsh applications of rules, the result in this case ought to be the product of that concern for justice, not a mechanical and punitive application of now-abandoned rules and misinterpretation of precedent. Equity demands justice, not incantation.
I would reverse the trial court’s decision and remand this case for a trial on the merits. I respectfully dissent.