Stephens ex rel. Houston v. Childers, 236 N.C. 348 (1952)

Oct. 29, 1952 · Supreme Court of North Carolina

236 N.C. 348

FRANCES HOUSTON STEPHENS, a Minor, by Next Friend, FLORENCE HOUSTON, v. ROBERT D. CHILDERS.

(Filed 29 October, 1952.)

1. Judgments § 27a—

In order to be entitled to have a default judgment set aside under G.S. 1-220, movant must show excusable neglect and also that he has a meritorious defense.

2. Same—

Where the insurance carrier has all the papers sent to it and undertakes with the knowledge and consent of insured to defend a suit against insured, insurer is insured’s responsible agent and its neglect to file answer in time will be imputed to insured, and the court’s findings to the effect that insurer was guilty of neglect and that such neglect was inexcusable sustains judgment refusing to set aside the judgment by default and inquiry. G.S. 1-220.

3. Same—

Upon motion to set aside judgment under G.S. 1-220, the absence of a sufficient showing of excusable neglect renders the question of meritorious defense immaterial.

Appeal by defendant from Sink, J., at June Term, 1952, of Bueke.

Civil action to recover damages for personal injuries sustained by the plaintiff in an automobile wreck alleged to have been caused by the negligence of the defendant, heard below on motion of the defendant to set aside judgments by default and inquiry on the ground of excusable neglect.

The record indicates the action was properly instituted in the Superior Court of Burke County, and summons with copy thereof and copy of the verified complaint were duly served upon the defendant on 31 January, 1952. G.S. 1-89; G.S. 1-121. The defendant having failed to file answer or other pleading within the statutory time, the plaintiff obtained judgment by default and inquiry before the Clerk of the Superior Court on 3 March, 1952. Then on 5 March, by supplemental judgment of the Clerk reciting that if because of leap year the former judgment was prematurely entered, it was thereby ratified and confirmed, and the Clerk readjudicated that the plaintiff have and recover of the defendant in manner and form as set out in the former judgment of 3 March, 1952.

Thereafter, at the March Term, 1952, of Burke County Superior Court, which convened on 10 March, counsel for the defendant moved the court, under G.S. 1-220, to vacate the judgments on the ground of excusable neglect of the defendant.

The motion ivas continued until the June Term, 1952, when it was heard by consent before Judge Sink on affidavits filed by both parties.

Tbe pertinent facts disclosed by tbe defendant’s affidavits are these: Tbe day following service of suit papers upon tbe defendant notice thereof was given by telephone to bis liability insurer’s agent in Hickory, North Carolina. In tbe telephone conversation tbe insurance agent requested that tbe suit papers be forwarded to him by mail, and this was done tbe next day, 2 February. Tbe insurance agent, under date of 4 February, forwarded tbe papers by mail to tbe Besident Adjuster of tbe defendant’s liability insurance carrier, at bis office in Charlotte. Tbe Resident Adjuster contacted tbe defendant and assured him that tbe insurance company would undertake tbe defense of tbe litigation and would take all necessary steps to employ counsel and protect the interest of tbe defendant, and that it would not be necessary for tbe defendant to employ legal counsel. Tbe suit papers were forwarded by tbe Resident Adjuster to tbe Greensboro, North Carolina, Divisional Office of tbe insurance company “for processing,” with direction “to employ as counsel to defend tbe action tbe firm of Mull, Patton & Craven.” Tbe “date stamp” indicates that the suit papers were received at tbe Greensboro Divisional Office on 29 February, 1952. Tbe papers were forwarded from that office to Messrs. Mull, Patton & Craven, Morganton, North Carolina, with letter of transmittal posted at 6 :30 p.m. 4 March, 1952. It is conceded in brief that tbe papers were not received by tbe attorneys until 6 March, tbe day following tbe entry of tbe supplemental j^^dgment.

At tbe close of tbe bearing judgment was dictated and entered by Judge Sink. Tbe pertinent findings and conclusions contained in tbe judgment are as follows :

“. . . Tbe Court is of tbe opinion that tbe negligence complained of— and patently tbe negligence that occurred — arose by tbe conduct of tbe defendant (defendant’s) Insurance Carrier, Iowa Mutual Insurance Company. Tbe Court is therefore of tbe opinion that tbe record discloses no evidence or testimony that would warrant any court in finding excusable neglect. Tbe Court is of tbe opinion and does find that tbe defendant is in position to set up a plausible defense. In view of tbe fact that tbe Statutes of North Carolina provide tbe procedure in such cases such as that now under consideration by tbe Court, and tbe further fact heretofore found by tbe Court that the Insurance Carrier was negligent in not rendering tbe duty it owed to tbe insured within tbe statutory period, does not warrant this Court in disturbing tbe judgment by default and inquiry; therefore, tbe motion is denied — to which tbe movant in apt time notes bis exception. Tbe Court takes tbe view that to recognize tbe right of tbe insurer in instances such as this would be tantamount to permitting Insurance Carriers and others to dictate their own terms with respect to time, and that this would result in delay of tbe acts of tbe court and would be an utter lack of regard for it.”

Tbe defendant in apt time gave notice of appeal from the findings of fact and conclusions of law and the judgment. The notice recites that the defendant “specifically excepts to the findings of fact that the evidence discloses no testimony that would warrant any court in finding excusable neglect and excepts to the failure of the court to find that the negligence of Iowa National Mutual Insurance Company constituted excusable neglect on the part of the defendant, . . . and excepts to the apparent conclusion of law that the court was without discretionary power under the Statute to set aside the default judgment, and excepts to the Judgment . . ., and gives notice of appeal to the Supreme Court.” The exceptions so noted were grouped and brought forward in the defendant’s assignments of error.

0. David Swift for plaintiff, appellee.

Mull, Patton •& Craven for defendant, appellant.

JOHNSON, J.

It is established by the decisions of this Court that a party moving under the provisions of G.S. 1-220 to set aside a judgment rendered against him on the ground of excusable neglect not only must show excusable neglect but also must make it appear that he has a meritorious defense to the plaintiff’s cause of action. Perkins v. Sykes, 233 N.C. 141, 63 S.E. 2d 133; Hanford v. McSwain, 230 N.C. 229, 53 S.E. 2d 84; Whitaker v. Raines, 226 N.C. 526, 39 S.E. 2d 266; Johnson v. Sidbury, 225 N.C. 208, 34 S.E. 2d 67; Parnell v. Ivey, 213 N.C. 644, 197 S.E. 128; Dunn v. Jones, 195 N.C. 354, 142 S.E. 320.

The defendant urges that the court erred in finding (1) “that the record discloses no evidence or testimony that would warrant any court in finding excusable neglect,” and (2) in failing to find “that the negligence of Iowa National Mutual Insurance Company constituted excusable neglect on the part of the defendant.”

Here the defendant takes the position that the court made no specific finding as to neglect, whether excusable or not, of the defendant, and urges that the court in effect was saying that on the facts presented it had no discretion to set aside the judgments. These contentions are untenable. Negligence of the insurance carrier was conceded. The mooted question was whether its negligence was imputed to the defendant. The clear import of the judgment is that the court found the negligence of the insurance carrier inexcusable and that it was imputed to the defendant. These findings are sustained by the record. All the evidence tends to show that the insurance company assumed the responsibility of defending the action for the defendant with his full knowledge and consent, under circumstances which constituted the insurance company the agent of the defendant for the purpose of employing counsel and arranging for the defense of the action. On this record the negligence of the insurance company was inexcusable and clearly imputable to the defendant.

The rule is established with us that ordinarily the inexcusable neglect of a responsible agent will be imputed to the principal in a proceeding to Set aside a judgment by default. Stallings v. Spruill, 176 N.C. 121, 96 S.E. 890. See also Kerr v. Bank, 205 N.C. 410, 171 S.E. 367; Morris v. Ins. Co., 131 N.C. 212, 42 S.E. 577; Norwood v. King, 86 N.C. 80; Pate v. Hospital, 234 N.C. 637, 68 S.E. 2d 288.

The decisions cited and relied on by the defendant are distinguishable.

In the absence of sufficient showing of excusable neglect, the mooted question of meritorious defense becomes immaterial. Pate v. Hospital, supra; Whitaker v. Baines, supra.

Upon the record as presented reversible error has not been made to appear.

Affirmed.