Milks ex rel. Milks v. Clark's Greensboro, Inc., 260 N.C. 676 (1963)

Dec. 11, 1963 · Supreme Court of North Carolina

260 N.C. 676

BETTY LOUISE MILKS, by her Next Friend, LLOYD E. MILKS, JR v. CLARK’S GREENSBORO, INC. and M. W. BAILEY.

(Filed 11 December 1963.)

Judgments § 22—

-Evidence .-tdiart; tbe individual defendant relied upon, assurances by tbe corporate defendant and- tb-a/t itb-e corporate idefemdant relied on its insurance agent and insurance carrier, who failed to forward tbe papers to an attorney until after a default .-judgment bad been taken, held not to establish. excusable neglect, since ordinarily tbe neglect of a responsible agent will be imputed to tbe principal.

Appeal by .defendants from Shaw, J., Regular March 4,1963, Session Of ROCKINGHAM.

Action to- recover damages for -alleged malicious prosecution aod faitee ¡arrest, heard below on defendants’ motion under G.S. 1-220 -to- set aside ¡a judgment by default and inquiry on the ground o-f mistake, in-advertanoe, surprise and excusable neglect. Judge Shaw’s -order, biased on- findings o-f fact and coocluis-ions o-f law to- -the effect defendants’ neglect w'as -inexcusable, -denied defend'amtis’ ¡said motion. Defendants excepted aod -appealed.

Scott, Folger, Ellington & Webster and Jordan, Wright, Henson & Nichols for plaintiff appellee.

Smith, Moore, Smith, Schell ■& Hunter for defendant appellants.

PeR Cueiam.

The essential facts, .-according to- the court’s unchallenged findings, may be summarized as follows:

The summons and -complaint were duly served on each defendant on November 13, 1962. No answer, demurrer or other pleading having been filed by either defendant, judgment by default and inquiry was entered December 19, 1962, by the Clerk of the Superior Court of Rockingham County.

The copy of summons and complaint served on the corporate defendant was mailed November 13, 1962, by its Greensboro manager to the company’s “New York office.” The said Greensboro manager assured the individual defendant that the case would be handled in his behalf by the corporate defendant’s .insurance carrier or attorneys. In New York, the suit papers were delivered by the corporate defendant to Jay B. Rapp apart, Inc., the corporate defendant’s insurance agent, which mailed them to Trans-World Excess, Inc. South American Managers, Inc., received the suit papers from Trans-World Excess, Inc., on November 20, 1962. The suit papers were not received by attorneys until December 20, 1962, the day -after the judgment by default and inquiry had been entered.

The court found that defendants have a meritorious defense. However, “ (i)n the absence of a showing of excusable neglect, the question as to whether or not the defendant has a meritorious defense becomes immaterial.” Greitzer v. Eastham, 254 N.C. 752, 755, 119 S.E. 2d 884, and 'oases cited.

The gist of the findings of fact is that the corporate defendant relied on its insurance agent and insurance carrier and that the individual defendant relied upon assurances by the corporate defendant that its insurance carrier or attorneys would act in apt .time in his behalf. The finding that defendants1’ neglect is inexcusable 'is based on the fact that the defense of the action was not placed in the hands of any attorney by either defendant or iby anyone acting in behalf of either defendant until after the judgment by default and inquiry had 'been entered. The factual situation is quite different from that considered in Brown v. Hale, 259 N.C. 480, 130 S.E. 2d 868.

“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.” Stephens v. Childers, 236 N.C. 348, 351, 72 S.E. 2d 849, and cases cited; Greitzer v. Eastham, supra; Jones v. Fuel Co., 259 N.C. 206, 209, 130 S.E. 2d 324.

It is noted that Abernethy v. Nichols, 249 N.C. 70, 105 S.E. 2d 211, and the decisions on which it is based, relate to a factual situation quite different from that under 'consideration on this appeal.

Under our decisions, tibe facts set forth in the ©ourt's foldings dio- not establish excusable neglect. Hence, the order denying defendants’ motion must be and is affirmed.

Affirmed.