Nevada Industrial Guaranty Co. v. Sturgeon
Nevada Industrial Guaranty Co. v. Sturgeon
Opinion of the Court
OPINION
By the Court,
Respondent caused a default judgment to be entered against appellant upon respondent’s complaint for damages for breach of contract. The only question presented to this court is whether the court below abused its discretion in denying appellant’s motion to set aside the default judgment.
Personal service was made on defendant May 7, 1963, by service on its resident agent, Howard Babcock, in Clark County, Nevada. Babcock, on that date, forwarded the summons and complaint to the appellant and informed it that it had 20 days within which to answer the complaint.
“This will confirm our telephone conversation of this date, concerning the above matter, at which time I advised that on May 7, 1963 the United States District Court for the District of Nevada entered it’s Order approving the petition of Nevada Industrial Guaranty Co. Enclosed please find thermofax copy of said Order.
“As you know, the entry of this Order stays all pending litigation affecting the debtor.”
It is immediately apparent that the letter contained no mention of any representation by Martillaro that respondent would prosecute her claim in the federal court.
Although Babcock’s affidavit stated that Martillaro had said on the phone on May 28 that nothing was on file with the exception of the complaint and summons and that no default had been taken, this is likewise flatly denied by Martillaro. Babcock says that he further advised Martillaro that he had been retained for the purpose of the Chapter X proceedings, and further that the defendant corporation had a branch office in Reno and retained counsel for certain purposes in the conduct of its business in the northern part of the state. Martillaro’s affidavit states that Babcock “informed me that
The corporation’s default was entered May 28, 1963, and judgment was entered July 2, 1963, and notice of judgment served on Babcock August 5, 1963. On August 12, 1963, appellant moved to set aside the default judgment upon the grounds of “mistake, inadvertence, surprise and excusable neglect of counsel for said defendant as provided for in Rule 60(b) (1)” NRCP. It was supported by Babcock’s affidavit as heretofore recited, and by submission on September 6,1963 (the day the motion was heard), of an answer and cross-complaint. Martillare, in addition to his affidavit, testified that the full extent of the conversation was Babcock’s information that he was attorney for the defendants; that on May 7 he had received the summons and complaint and filed a petition in bankruptcy and advised that the entry of the May 7 order by the federal court stayed all state litigation affecting the debtor; that “there was no talk at all concerning the taking of a default or the non-taking of a default. He merely informed me he had filed the bankruptcy petition and under the law all proceedings were stayed. If he was under this impression I was not going to disenchant him, Your Honor.” The court, in denying the motion, said: “Counsel delayed for over a month after entering the default before bringing the matter on for hearing. It was only after judgment and sometime after that, that either counsel or the defendant attempted to do something. In other words they just sat back and sweat it out until execution was issued. I don’t think that is a mistake, inadvertence, surprise or excusable neglect. The motion to set aside the default judgment is denied.”
In denying the motion to set aside the default judgment the trial court necessarily based this on implied factual determinations of the disputed facts as above recited. Such factual determinations would include the following: that Martillare did not represent to Babcock that he, Martillare', would prosecute plaintiff’s claim in
These facts, in our opinion, distinguish the case of Hotel Last Frontier v. Frontier Properties, 79 Nev. 150, 380 P.2d 293, relied upon by appellant. In that case this court said:
“The record shows that defense counsel had prepared an answer to plaintiff’s complaint but had withheld filing it because another case was pending between the same parties involving other provisions of the same lease and agreement, and discussions as to all matters in dispute had been carried on. Consequently counsel assumed that a default would not be taken.”
Such situation is entirely absent from the present case. In Hotel Last Frontier we said: “The showing required by NRCP 60(b) (1), formerly NCL 8640, of mistake, inadvertence, surprise, or excusable neglect, singly, or in combination, must, of course, be made.”
We must agree with the trial court’s conclusion that no showing was made of mistake, inadvertence, surprise, or excusable neglect. There was neglect of the appellant but it was not excusable.
Appellant contends that the trial court abused its discretion in refusing to vacate the default judgment because appellant’s attorney made an honest mistake of law, ;namely, Babcock’s assumption that the federal court’s order approving the petition of appellant in a Chapter X Bankruptcy Act Reorganization stayed all proceedings at law against appellant. Such order, however, stayed only proceedings to enforce liens against the debtor’s property, bankruptcy and receivership proceedings, and mortgage foreclosures. 11 U.S.C.A. § 548. There are many instances in which courts have held that counsel’s mistake of law, and particularly his failure to look up the law, was not considered excusable
No costs are allowed.
One Robert McSherry was named as an additional defendant in the complaint. The record does not disclose that he was ever served and he is not involved in the judgment entered against the corporate defendant, the appellant herein. He has no place in this appeal.
Concurring Opinion
concurring:
I concur, but wish specifically to direct attention to Canon 25 of the Canons of Professional Ethics. It reads in part: “A lawyer should not ignore known customs or practice of the Bar * * * even when the law permits, without giving timely notice to the opposing counsel.”
I do not suggest that Mr. Martillaro was obliged to
The Canons were adopted by the Nevada State Bar Association (Rule 20, Rules of the Nevada State Bar), effective February 12, 1962, by order of the Supreme Court.
Reference
- Full Case Name
- NEVADA INDUSTRIAL GUARANTY CO., a Nevada Corporation, Appellant, v. LINDA STURGEON, Dba the MOTOR MART, Respondent
- Cited By
- 9 cases
- Status
- Published