*1 Margaret ROBERT L. V. Cribb, CRIBB and husband and Wright wife; Wright, and and M. Bruce Susan husband wife; Helland, and Ron Helland and Joan husband and wife, on behalf of all other stockholders Company, a Montana Plaintiffs COMMUNICATIONS, v. MATLOCK Respondents, Glasgow Publishing INC., corporation; Company, an Idaho Oregon corp., inc., Coospapers, corp.; Montana Idaho banking Stephen Company, corp.; Bank and Trust J. individually Matlock, and as President of Matlock Com Glasgow Publishing munications, Inc., Company, De Appellants. fendants No. 88-304.
Submitted on
Nov.
Briefs
1988.
Decided Jan.
MR. JUSTICE McDONOUGH delivered District, for the appeal in and This from the Seventeenth Judicial Valley, to a motion County of the District Court’s denial of concerns 55(c), only The under M.R.Civ.P. set aside an of default Rule denying the is whether court its discretion issue the lower abused motion. We reverse. Cribbs, Wrights, respondents
The relevant facts are as follows: (Cribbs) Company, agreed to their sell stock Communications, Inc., by Stephen a owned Matlock company’s promissory J. exchanged Matlock. Cribbs for stock parties placed notes and other consideration from Matlock. The stock in escrow to secure the debt on the notes. owed
Cribbs regained company control of the when Matlock Communi- required cations failed payments. to make the Cribbs sued then money Matlock and Matlock for Communications still due under agreement. the sales (I.B.& T.) joined appellant Company Bank Idaho and Trust
because Matlock had secured a loan from I.B.& T. with assets by Glasgow Publishing owned Company. complaint Cribbs’ con- assets, tended authority that Matlock had no to encumber the sought judgment voiding security I.B.& interest claimed T. 22, 1986,
On complaint December Cribbs served summons and on Boise, I.B.& T.’s main downtown office in I.B.& Idaho. T. failed to appear 5, answer days. 1987, or February within 20 On the clerk entered against default I.B.& On March before Cribbs any had taken judgment, final I.B.& T. set filed a motion to aside default, crossclaim, counterclaim, and a third complaint.
I.B.& T. also submitted explaining affidavits their failure to re- spond complaint. employee to Cribbs’ in An I.B.& T.’s branch office swore he papers that employee delivered the to another for transfer to the I.B.& through system. main T. office the Bank’s courier The employee other papers receiving remembered the with instructions delivery, for their verify pa- but could if the not she had channeled pers system. complaint into the courier The summons and never ar- rived at the main office.
I.B.& T approximately discovered their appear failure to answer or one week after the clerk entered the after default. One month the entry motion, answer, crossclaim, of default I.B.& T. filed its coun- terclaim complaint. and third
I.B.& T. contends that the in District Court abused its discretion refusing entry set the to aside of I.B.& T. made the default because showing good required by 55(c), of cause M.R.Civ.P. Cribbs Rule respond 55(c)’s good equated that Rule cause “excus- should be with 60(b), neglect” M.R.Civ.P., able in Rule and I.B.& T. has failed that response. parties disagree to excuse its late The also on whether tardy I.B.& response T.’s prejudiced Cribbs.
First, 55(c), mistakenly good under Rule contend cause 60(b), M.R.Civ.P., equates neglect Rule under excusable 55(c), M.R.Civ.P., provides Rule that: M.R.Civ.P. entry of may default good
“For court set aside cause shown the entered, it and, may likewise set if has judgment a default been 60(b).” in accordance with Rule aside majority The view holds that: entry more setting default is ‘good cause’ for aside a
“the standard 60(b) setting a aside than Rule for flexible and lenient the standard Moore, paragraph Federal Practice judgment. 6 J. Moore’s default 55.10[1] interlocutory and [2] (2d ed. 1983); . . . The default is simply an remedies, rights no or order than in itself determines judgment terminates judgment the is final that whereas default litigation dispute.” the and decides the (Alaska 1985), agree We that Hertz v. Berzanske 704 P.2d 55(c), M.R.Civ.P., ap- good be the cause under Rule should standard neglect flexibly leniently stan- plied more than the excusable 60(b), dard under Rule M.R.Civ.P. showing Second, good of we the T. hold I.B.& sufficient made cause, good in the existence of
cause lower court. To determine the courts should consider: (2)
“(1) willful, plaintiff the whether the was whether default (3) aside, prejudiced if be set would be the default should plain- presented whether the a meritorious defense to defendant has The of the defend- tiffs claim. court must also balance the interests merits, in- against adjudication ant of on his defense timely orderly public terests of the and the court justice.” administration of Moore, 55.10[2], at 55-50 paragraph Moore’s Federal Practice
6 J. Electronics, (2d 1988), Inc. Sony Corp. ed. see v. Elm State (in (2nd 1986), factors Cir. to three 800 F.2d addition mistake, above, good faith may courts there consider whether was result, strong prefer- large judgment whether a harsh or would merits, of in favor adjudication of doubts ence on the and resolution aside). granting motion to set respond re failure to I.B.& submitted affidavits that its facts, U.S. District Facing one sulted from clerical error. similar *4 entry stating: agree Court to set aside an of default answer, Court, course, filing late condoning of a “The of is not the here, where, as there yet judgment it is reluctant to enter a default the process apparent prejudice to nor was not willful abuse of its plaintiff”
31 v. (D.V.I. 1969), is Wallace De Werd F.R.D. 5. Here there also ap- process a lack of a lack of willful abuse of the lower court’s parent prejudice. argue prejudice reversal Cribbs that exists because delay reject Prejudice will case. from further the We this contention. delay the to set aside should be measured at the time moves of default. difficulty.
Weighing presents case more the third factor this Cribbs contend I.B.& has failed show a meritorious defense authority the because Matlock could not have had to encumber as- Glasgow Publishing Company. sets of creating security I.B.& T. contends that the documents the interest face, regular provided are on their and that Matlock documentation demonstrating that he was Glasgow authorized to borrow for Pub- lishing Company Corporation’s as the sole director. I.B.& T. also security may by contends the agreement that alle- be validated the gation Glasgow Publishing that Company monetary received a bene- fit by from loans authorized Matlock. responded by
Cribbs have arguing to these contentions Mat- that lock properly never became sole director of proceeds that none of of the loans Glasgow benefited Company. presented have supporting position. evidence their
However, finding resolution of doubt in case be meritorious should (2nd v. 1981), T. Meehan Snow resolved favor of I.B.& Cir. which, F.2d I.B. & T alleged proven, provide has if facts defense.
Appellate courts reverse refusals to set aside entries of default on a showing by Moore, slight of of abuse discretion the lower 6J. court. Moore’s Federal Practice paragraph 55.10[2], at 55-59. Given the willfulness, prejudice, presence lack of allegations and the factual defense, supporting a we hold that abused its dis- the District Court in denying cretion the motion. We reverse and for further remand proceedings. SHEEHY,
MR. JUSTICES WEBER and HUNT concur. GULBRANDSON, dissenting. MR. JUSTICE my view, In appellant present failed to a meritorious defense. cursory Even appellant examination of the documentation provided by Matlock, purported as the sole director of the Publishing Company, non-compliance would have revealed with *5 statues, 35-1-413 including pertinent requirements § Montana 35-1-08, MCA. § order. I the District Court’s would affirm