Toylar J. CRAWFORD, a minor, by and through her mother and next friend Carolyn J. Crawford, and Carolyn J. Crawford, individually, Appellees, v. Lee Otis GIPSON, Appellant, and State Farm Mutual Automobile Insurance Company, Intervenor.
No. 52267.
Supreme Court of Oklahoma.
March 2, 1982.
As Corrected March 3, 1982.
The majority clearly misapprehends the holding of Allen. That case is not, in any manner, a condemnation of compulsory reference in divorce actions - in a proper case. It holds simply that in divorce, as in all other actions, the power to refer is statutory and the provisions of the statute (
The divorce actions before us were not properly the subject of compulsory reference to anyone - a special judge or any other person. The accounting contingencies authorizing compulsory reference are set forth in
I am authorized to state that Justice HODGES and Justice LAVENDER join with me in this opinion.
Foliart, Mills & Niemeyer, Oklahoma City, for appellees.
Proctor, Fleming & Speck, Richard A. Proctor and Scott M. Rhodes, Oklahoma City, for appellant and intervenor.
PER CURIAM:
Toylar J. Crawford filed this action against Lee Otis Gipson for personal injuries and property damage resulting from an automobile collision that occurred in Oklahoma City. Defendant Gipson was personally served with summons. No pleading or answer was filed and on June 27, 1977, a default judgment was taken against Gipson for $25,000.
On November 29, 1977, defendant‘s insurer, State Farm Mutual Automobile Insurance Company, without the consent of defendant, filed a Petition to Vacate Judgment. The petition alleged that the insurer received no notice of the lawsuit and was denied its right to present a good and valid defense. On February 9, 1978, a second Petition to Vacate was filed by State Farm “on behalf of” defendant. The facts as to when or if the insurer received notice of Gipson‘s pending lawsuit before default was taken are highly disputed.
On March 2, 1978, a hearing was held on State Farm‘s Petition to Vacate. Thereaft-
State Farm (with Gipson as named appellant) appealed. The Court of Appeals vacated the default judgment, concluding that the order overruling State Farm‘s petition was clearly against the weight of the evidence and that the trial court abused its discretion in refusing to vacate on the ground of unavoidable casualty or misfortune. The Court of Appeals realigned the parties and remanded the case for trial on the merits.
We Grant Certiorari to review two major issues: (1) The standing of an insurance company not a party to the suit below to petition to set aside a judgment; (2) Whether the trial court abused its discretion in overruling State Farm‘s petition because of the company‘s failure to prove that the action of its insured constituted an unavoidable casualty or misfortune under
I.
Oklahoma‘s statutory provisions for vacation of judgments,
The general rule that only parties to a judgment have standing to set it aside has long been recognized. 1 Freeman on Judgments, 5th ed. § 260; 49 C.J.S. Judgments, § 293 b. The law also recognizes exceptions to that rule:
“The rule that none but parties to the judgment are permitted to interfere admits of exceptions, excluding from its operation persons not nominal parties to the action, but who are necessarily affected by the judgment, and who have equities entitled to be protected from its operation.” 1 Freeman on Judgments, § 260.
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“One who is ultimately liable as indemnitor of the judgment debtor may seek relief.” Id.
We find the line of cases allowing an insurance company to petition to set aside a default judgment against its insured to be well reasoned.4
The reasoning of Kollmeyer v. Willis, Mo. App., 408 S.W.2d 370 (1966) is especially applicable to the case at bar:
“The general rule, upon which plaintiff relies, is that a stranger to the record has no right to move for a vacation of a judgment . . . But plaintiff overlooks the limitation that, in some instances, one not a party to the record, whose rights are injuriously affected by a judgment as the rights of an indemnitor may be, will be heard upon his motion to set aside a judgment.” At 382.
Cases disallowing the vacation of a judgment on the insurer‘s petition frequently do so ostensibly on the insurer‘s lack of standing; however, the insurer‘s negligence in defending the insured forms the basis of the opinions. In Foos v. Tripet Construction Co.,5 for example, the court (considering the motion to have been made in the interest of the insurer) reversed an order granting the insured‘s motion to reopen a default judgment. The court said that the summons had come into the possession of the claims office manager who neglected to give it to an attorney. The court concluded that the insurer “by its gross negligence has forfeited its right to affirmative relief.” In other words, the court held that one who is negligent will not be allowed relief from a default judgment, not that an indemnitor per se will not be allowed relief.
In ruling that a liability insurer not a party to the suit below, who is injuriously affected by the judgment, will be heard on his petition to set aside a judgment, we in no way change the aforementioned general rule that a stranger to the record has no right to move for vacation. To disturb the general rule would encourage litigation, allowing third persons to intervene and overturn adjudications to which the original parties made no objection and disrupting the presumption that every litigant understands his own interests. 1 Freeman on Judgments, § 258.
II.
Granting, then, State Farm‘s standing, did the default result from an unavoidable casualty or misfortune as defined in
In Independent Sch. Dist. No. 1, Etc. v. Jackson, Okl., 608 P.2d 1153, we said:
“The general rule is that a provision in an automobile liability policy requiring that the insured forward to the insurer every demand, notice, summons or other process
received by the insured is unambiguous, reasonable, valid, and a condition precedent to recovery on the policy. The purpose of this policy provision is to enable the insured to inform the insurer of the lawsuit so that it may investigate the accident, and prepare a timely defense for the insured.”
In the instant case, defendant Gipson did not deliver the summons and petition to his insurance carrier until over six months after they were served on him, and that was approximately four months after he learned of the default judgment of which he told no one.6
In Burroughs v. Bob Martin Corporation, Okl., 536 P.2d 339, it was stated that:
“[m]embers of this Court have on occasion been more impressed with the need to grant relief to a defaulting litigant than the lower court believed the party deserved. In the following cases we reversed the lower court‘s refusal to vacate default judgments: Haskell v. Cutler, 188 Okl. 239, 108 P.2d 146; First Nat. Bank of Okmulgee v. Kerr, 165 Okl. 16, 24 P.2d 985; Shuler v. Viger, 103 Okl. 129, 229 P. 280; Hamburger v. Fry, Okl., 338 P.2d 1088.
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“[d]efault judgments are never viewed with favor; litigated questions should be tried on their merits; it is the policy of the law to afford every party to an action a fair opportunity to present his side of a cause; an application to vacate a judgment, under
12 O.S.1971, § 1031 , is addressed to the sound legal discretion of the trial court, and an order vacating said judgment will not be disturbed on appeal unless it clearly appears that the trial court has abused that discretion; such discretion should always be exercised so as to promote the ends of justice, and a much stronger showing of abuse of discretion must be made where a judgment has been set aside than where it has been refused.”
We conclude that the trial court abused its discretion in refusing to vacate the default judgment on the ground of unavoidable casualty and misfortune. We vacate the default judgment and remand for trial on the merits.
IRWIN, C. J., BARNES, V. C. J., and HODGES and LAVENDER, JJ., and CORNISH, Sp. J., and BRETT, Sp. J., concur.
SIMMS, DOOLIN and OPALA, JJ., concur in part, dissent in part.
DOOLIN, Justice, concurring in part, dissenting in part:
I find no fault with the majority opinion which affords standing to State Farm in seeking vacation of the default judgment. I concur in Part I.
I dissent to Part II of the majority opinion, when it holds the trial court abused its discretion in refusing to vacate the default judgment.
In affirming the decision of the trial court, we follow the general rule that where it is contended that the trial court abused its discretion in refusing to vacate a default judgment, and the question of such abuse depends on a disputed question of fact pertaining to the ground relied on for vacating the judgment, the presumption is that the finding of fact was consistent with the order denying the motion to vacate and, therefore, there was no abuse of discretion. Woodruff v. Moore, 182 Okl. 120, 77 P.2d 62 (1938.)
I am authorized to state that SIMMS and OPALA, JJ., support the views expressed in this opinion.
OPALA, Justice, concurring in part and dissenting in part:
The insurer - who was a stranger to the injured person‘s [plaintiff] tort action against the insured [defendant] - met with an adverse district court disposition of its
I
ISSUES ON CERTIORARI
The case presents two first-impression questions:
(1) Does a judgment-debtor‘s public liability indemnitor (insurer) have standing - independent of the insured - to prosecute a
(2) Assuming the insurer has such standing, does its alleged failure to receive from the insured a timely notice of the plaintiff‘s suit constitute “unavoidable casualty or misfortune, preventing . . . [one] from prosecuting or defending” within the meaning of Subdiv. 7 of
To the first question posed I would give an affirmative answer and to the second a negative one.
II
INSURER‘S STANDING TO INVOKE THE § 1031 REMEDY IS INDEPENDENT OF THE INSURED
In every action arising from negligent use of the insured vehicle, a judgment against the insured subjects the insurer-qua contractual indemnitor under public liability coverage of an automobile policy - to at least potential exposure. On any such suit‘s termination adverse to the insured, the insurer has a legally recognized interest of its own to protect and is deemed “injuriously” or “prejudicially” affected. Even though the insurer be a stranger to the judgment roll, emerging case law confers on him standing independent of the insured to invoke available post-judgment vacation remedies.2 I accede to this doctrine and join the court in its adoption.
III
ALTHOUGH INSURER‘S STANDING TO PROSECUTE A § 1031 PROCEEDING IS DOUBTLESS INDEPENDENT OF THE INSURED, ITS CLAIM FOR RELIEF IS VICARIOUS AND HENCE NOT BROADER THAN THAT OF THE INSURED
The framework of remedies created by
The very ground invoked for vacation in this case - Subdiv. 7 of
The insurer‘s claim to
A different statutory rule applies when the judgment sought to be vacated is alleged to be void. Under the provisions of
IV
THE INSURER‘S VICARIOUS CLAIM TO SUBDIV. 7 RELIEF WAS CORRECTLY DENIED
(a)
The record on appeal discloses two
(b)
The proof adduced in support of the insurer‘s Subdiv. 7 plea came in two contradictory versions. While the insurer‘s agent who had dealt with the insured testified that the company had received no notice of the plaintiff‘s suit, the insured insisted he had personally conveyed to the agent actual knowledge of the suit‘s commencement and had provided him with the suit‘s case number in ample time for the company to undertake his defense.
It matters not which of these versions be true. If we assume the insured told the truth, the insurer is not entitled to Subdiv. 7 relief because once given notice the insurer had the duty to defend. Its negligence is imputable to the insured.5 Were we, on the other hand, to accept the insurer‘s version, it follows that the insured was himself neg-
Negligence of an insured defendant, or of insurer as his legally recognized agent, in failing to prevent the entry of a default judgment is not unavoidable casualty.6 The Subdiv. 7 claim before us is vicarious. The insurer cannot prevail under either version of the testimony proffered. It simply failed to show facts consistent with the exercise of proper diligence or care on the part of the insured - the person in whose shoes it must stand here.
“Unavoidable casualty or misfortune” refers to events which human prudence or foresight cannot prevent. Negligence by the defendant or his agent is the very antithesis of an event or happening against which Subdiv. 7 was intended to guard.7 In the final analysis, the plaintiff should not suffer the loss of her default judgment because the insured defendant failed in his efforts to procure effective legal defense services from his insurer.
It is immaterial how this failure came about. The insured defendant‘s non-performance of his contractual obligation to the insured or vice versa, whether defensible or not, is not ground for vacation under Subdiv. 7, although a breach by the insured in not delivering a summons may afford the insurer a shield from liability in a garnishment or in a declaratory judgment proceeding.
This case is distinguishable from Burroughs v. Bob Martin Corporation8 and Latson v. Eaton.9 There is no proof here that some untoward event - occurring after the service of summons - prevented the defendant from launching his defense. Because this is a vicarious Subdiv. 7 claim, the cited cases are clearly inappropriate.
The insured defendant‘s legal duty to defend or suffer default is - from the plaintiff‘s point of view - indivisible and cannot be shared with the insurer. The breach of this legal duty cannot be exonerated, in a Subdiv. 7 claim, by the insurer‘s failure to do its contractual duty to defend. Nor can the insured defendant‘s neglect of contract duty timely to deliver notice of the suit to the insurer exonerate the insured of his legal duty to defend.
Since it is clear that the insured could not claim Subdiv. 7 relief either on the basis of his own breach of contract duty to the insurer or on the insurer‘s breach of contract duty to him, neither can the insurer prevail on these grounds in its vicarious
V
SUMMARY
The plaintiff should not have to lose her judgment because either the insurer failed to defend or the insured failed to give the insurer timely notice of the suit. In this vicarious vacation claim there is simply no proof of casualty or misfortune that prevented the defendant himself from defending. The bottom line is this: since the defendant himself could not have prevailed by shifting the blame for the default to the insurer, neither can the insurer extinguish the plaintiff‘s judgment by attributing the legal fiasco to the insured defendant‘s fault. Fault allocation between the insured and his insurer inter se cannot be the gravamen of a Subdiv. 7 proceeding. It is an issue to be litigated in a garnishment proceeding or in a declaratory judgment suit.
The trial judge correctly refused to grant Subdiv. 7 relief.