100 P. 930 | Utah | 1909
This is an appeal from an order or judgment refusing to set aside a default and to vacate the judgment entered thereon. The material facts, ini substance, are: That on February 24th, .1900, the appellants executed their promissory note for $2,300 due February 1st, 1905, and payable to the order of F. E. McGurrin & Co. The note bore interest at seven per cent., payable semiannually, evidenced by coupons attached to the principal' note payable on the 1st days of February and August of each year. The note was secured by a mortgage on real estate situated in. San Pete County, Utah. There was a provision in the note that if default were made in the payment of interest for the period of thirty days the holder might, at his option, declare the principal sum due and payable forthwith, and in such event the principal should thereafter bear interest at the r'ate of one per cent, per month, and the interest coupons due and unpaid should bear interest in double such sum. On February 1st, 1902, one of the interest coupons matured. At that time appellants had some trouble with one Jacobson, who preferred some claim against the mortgaged premises, which appellants disputed, but desired settled and adjusted. With this end in view, and for the purpose of inducing Jacobson to make an adjustment of his claim as favorable to appellants as possible, they decided not to pay the interest which became due (except' as hereinafter stated) on February 1st, 1902, and to have respondent, who in the meantime had become owner of the note and mortgage aforesaid, and for whom F. E. McGurrin acted as agent and trustee begin an action to foreclose the mortgage, which said McGurrin agreed to do if he could thereby assist ap>-
The money mentioned in the receipt represented the interest due on one of the interest coupons and was never returned to either Hanson or appellants. A short time after this receipt was given, to wit, on November 24th, 1902, an action was in fact begun by respondent, through E. E. Mc-Gurrin & Co. as his agents, in Salt Lake County, to foreclose the mortgage aforesaid, and the complaint alleged that appellants had made default in the payment of interest, and that respondent had therefore elected to declare the principal sum due, and claimed judgment therefor, together with the increased rate of interest, and also for an at-' torney’s fee of $400 which was alleged to be reasonable; the mortgage providing for a reasonable fee. Some question arose between appellants and E. E. McGurrin with regard to the propriety of bringing said action at the time. To this McGurrin, in substance, replied that he began the action in the interest of appellants as he understood it, but, if it were not satisfactory to them, to advise him of their wishes in the premises. The action was, however, per
Appellants continued to pay interest as aforesaid' on the principal sum, and received eight coupons evidencing the
"While it is true that, in view of the peculiar circumstances of this ease, both appellants and respondent were required to go into many of the facts which would be competent evidence upon a hearing on the merits, still these facts could
But it is asserted by counsel for respondent that, in any event, the matter of setting aside defaults is a matter largely wthin the discretion of the trial court, and that in no event will its ruling be disturbed either in granting or refusing a motion to set aside a default by a reviewing court, unless- it is clearly made to appear that the trial court abused this discretion. This is no doubt the general rule, and is the one adopted by this court as appears from the case of Cutler v. Haycock, supra; but the very reason which places the matter within the sound legal discretion of the trial
Then again, as in this case, the action may have been instituted as a friendly suit, and may have been begun for a special purpose, and not for the purpose of either directly enforcing or vindicating the plaintiff’s rights. Ordinarily an action to foreclose a mortgage is begun for the purpose of obtaining a judgment with a view of enforcing it against the mortgage property by a sale thereof, and thus to pay the debt with the proceeds derived from the sale of the property. It is clear, however, that this action was not primarily begun for such a purpose, but it seems it was begun to. aid the appellants in some way to force a settlement of some claim preferred by a third person against the mortgaged property. This purpose seems manifest when the subsequent conduct of both parties is considered. Appellant paid eight interest coupons, the last of which became due February 1st, 1904, about fifteen months after the action was commenced, and at about the same time paid the principal, amounting to $2,300. The intervening coupons between August, 1902, and February, 1904, were paid from time to time, not precisely as they fell due, but they were paid, and the amounts thereof were received when paid and the coupons surrendered to appellants. So far therefore as the obligation to pay was concerned, it seems the conditions imposed by the original note and mortgage were reinstated, and appellants undertook to discharge the debt in accordance with the terms of the note and mortgage, and not upon the theory that the whole debt was due and payable forthwith as stated in the complaint. The only question of difference that seems to have arisen between the parties was not with respect to when and how payments should be made, but whether the appellants should pay the attorney’s fee claimed by respondent alleged to be due from appellants for services of the attorney in’ commencing the action, and, in connection with
When respondent thus concedes, as appears from the letters written by his.- agent a.nd trustee, that the action was begun for appellants’ benefit, and that payment of all the interest coupons falling due after the commencement of the action and up to the time when the principal was paid was permitted, and under those circumstances the action was permitted to lie dormant for nearly six years, it seems appellants had at least a good reason to believe that the action, if not discontinued and abandoned in a legal sense, would, nevertheless, not he.pressed to judgment without giving appellants at least a reasonable opportunity to make a defense thereto. Respondent, through his agent and trustee, knew that appellants disputed his right to the amount claimed by him as attorney’s fee and as accumulated interest in excess of that stipulated in the note and mortgage.' He further knew that whatever claims they had all arose out of transactions occurring after the action was commenced, and to all of which he was a party; and further knew that Hanson, dui’-ing all the time, represented appellants as their attorney. He further knew that the action was commenced for a purpose other than to merely foreclose the mortgage and thus to obtain a judgment for a debt, past due, and that appellants had the right to assume that the action would not be used for the purpose of settling the disputed matters which arose subsequent to the action. Yet, notwithstanding all this, respondent asked and obtained a judgment in the original- action by default and without giving appellants any opportunity to be heard, except that they had six years in which to file an answer to the original action. So far as the real merits of the controvérsy are concerned, the effect of the
We think the facts and circumstances, fairly demonstrate that if Mr. McGurrin had at any time indicated to appellants, or to their attorney, that the judgment of the court would be invoked in the pending action with regard to the disputed interest and attorney’s fee, the attorney would have asked leave of court to file an answer in which the facts would have been made to appear. If such an application had been made at any time after a default had been entered by the clerk, and before the court had rendered judgment thereon, and the court had refused to set aside the default, in view of the facts as they are made to appear, the refusal of the court would have amounted to a clear case of abuse of discretion. Why is the refusal to set aside the judgment, under the same facts and circumstances, not likewise an abuse of discretion ?
Whether respondent is entitled to the increased interest and the amount of the attorney’s fee allowed by the court are questions upon which appellants are entitled to special findings of fact and conclusions of law in accordance with the facts as they shall be made to appear when considered
The court also erred in holding that, in view of the facts and circumstances in this ease, appellants were guilty of inexcusable neglect. Such a ruling practically gave appellants no opportunity to even file an answer with respect to the only matters in dispute, unless we shall assume that, regardless of any facts or circumstances that may arise after a suit is begun, the plaintiff may at any time, and without notice of any hind, go into court and take a default judgment against his adversary. That this may be done in a strict legal sense may be true, but that it is an abuse of sound legal discretion not to set aside a default judgment obtained under the circumstances disclosed in this case, when the facts are made to appear to a court, is, to our minds, not open to any reasonable doubt. Especially is this so where, as in this case, there is no question concerning respondent’s ability to present all the evidence pertaining
The judgment or final order of the district court refusing: to set aside the default and to vacate the judgment is therefore reversed, and the cause remanded to the district court, with directions to set aside the default of appellants and to vacate the judgment entered against them, to permit appellants to file their answer, and to proceed to hear the case upon the merits. Appellants to recover costs.