Bailey v. Gooding

263 S.E.2d 634 (1980)

Patricia T. BAILEY and Ebert L. Bailey, Jr.
v.
Marvin C. GOODING, Seashore Transportation Company and Carolina Coach Company.

No. 798SC538.

Court of Appeals of North Carolina.

March 4, 1980.

Freeman, Edwards & Vinson by George K. Freeman, Jr., Goldsboro, and Narron, Holdford, Babb, Harrison & Rhodes by William H. Holdford, Wilson, for plaintiffs appellants.

Young, Moore, Henderson & Alvis by B. T. Henderson, II and Robert C. Paschal, Raleigh, for defendants appellees.

VAUGHN, Judge.

This appeal arises out of the attempt by plaintiffs to obtain a default judgment. On 17 October 1977, they obtained an entry of default before the clerk of superior court.

Entry.—When a party against whom a judgment for affirmative relief is sought has failed to plead or is otherwise subject to default judgment as provided by these rules or by statute and that fact is made to appear by affidavit, motion of attorney for the plaintiff, or otherwise, the clerk shall enter his default.

G.S. 1A-1, Rule 55(a). The entry of default by the clerk was properly taken and entered. The entry of default is an interlocutory, ministerial duty looking towards the final entry of judgment by default. It is merely a matter of form. Whaley v. Rhodes, 10 N.C.App. 109, 177 S.E.2d 735 (1970). Plaintiffs through an affidavit made it appear that defendants had not answered their complaint within the time required by the Rules of Civil Procedure. G.S. 1A-1, Rules 6, 7, 12(a)(1). Plaintiffs properly demonstrated they were entitled to an entry of default.

The clerk of superior court could not, however, enter default judgment. The clerk can enter default judgment only when (1) plaintiff's claim is for a sum certain or for a sum that can be made certain by computation and (2) the defendant is defaulted for failure to appear and is not an infant or incompetent person. G.S. 1A-1, Rule 55(b)(1); Roland v. Motor Lines, 32 N.C.App. 288, 231 S.E.2d 685 (1977). This personal injury suit does not present a claim for a sum certain and plaintiff's complaint expressly requests that a jury determine the amount of the claim. Thus, plaintiff properly applied to a judge of the superior court.

(b) Judgment.—Judgment by default may be entered as follows:

(2) By the Judge.—In all other cases the party entitled to a judgment by default shall apply to the judge therefor; but no judgment by default shall be entered against an infant or incompetent person unless represented in the action by a guardian ad litem or other such representative who has appeared therein. If the party against whom judgment by default is sought has appeared in the action, he (or, if appearing by representative, his representative) shall be served with written notice of the application for judgment at least three days prior to the hearing on such application. If, in order to enable the judge to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to take an investigation of any other matter, the judge may conduct such hearings or order such references as he deems necessary and proper and shall accord a right of trial by jury to the parties when and as required by the Constitution or by any statute of North Carolina.

G.S. 1A-1, Rule 55(b)(2). Plaintiffs properly moved for default judgment on 20 October 1977. It was thus before a superior court judge to hear the application for judgment. Proper notice was given to defendants. See Sawyer v. Cox, 36 N.C.App. 300, 244 S.E.2d 173, cert. den., 295 N.C. 467, 246 S.E.2d 216 (1978).

The case was before the trial court on a motion by defendants to set aside the entry of default and on plaintiffs' motion for judgment of default. "For good cause shown the court may set aside an entry of default . . .." G.S. 1A-1, Rule 55(d). The motion to set aside the entry of default was addressed to the sound discretion of the trial judge. Privette v. Privette, 30 N.C. App. 41, 226 S.E.2d 188 (1976); Acceptance Corp. v. Samuels, 11 N.C.App. 504, 181 S.E.2d 794 (1971). Judge Friday heard the two motions on 9 November 1977 and deferred action. Before the matter was again heard, defendants filed their unverified answer and deposed the plaintiff driver.

On 6 February 1978, the matter came on before Judge Smith. He denied defendants' motion to set aside the entry of default and ordered a jury trial to determine the amount of damages. The order refusing to set aside the entry of default was interlocutory and unappealable. Appeals at this stage have been dismissed. Acoustical Co. v. Cisne and Associates, 25 N.C.App. 114, 212 S.E.2d 402 (1975); Trust Co. v. Construction Co., 24 N.C.App. 131, 210 S.E.2d 97 (1974); see also Waters v. Personnel, Inc., 294 N.C. 200, 240 S.E.2d 338 (1978). The matter should have gone on for trial on damages and then defendants could have presented their exceptions to the entry of default and the default judgment after the jury trial on damages. Under our former procedure, the action of Judge Smith would have been a judgment of default and inquiry. A final judgment of default was not entered. See G.S. 1-212 (repealed effective 1 January 1970). Under the new rules, there is no intermediate judgment by default and inquiry. A default judgment, however, can be entered only after everything required to its entry has been done. See Official Commentary to Rule 55. In this case, everything required for its entry had not been done. A jury trial to determine damages was still needed. A final judgment is one which disposes of the cause. "`An interlocutory order is one made during the pendency of an action, which does not dispose of the case, but leaves it for further action by the trial court in order to settle and determine the entire controversy.'" Tridyn Industries v. American Mutual Insurance Co., 296 N.C. 486, 488, 251 S.E.2d 443, 445 (1979); Veazey v. Durham, 231 N.C. 357, 362, 57 S.E.2d 377, 381 (1950). In Tridyn, the Court held that summary judgment on the issue of liability, leaving for trial the issue of damages was merely an interlocutory order from which appeal would not lie. Judge Smith's judgment on the issue of liability which ordered that the case be placed on the calendar for trial on the issue of damages is also merely an interlocutory order. It is not a final judgment entered by default which is subject to a Rule 60(b) motion.

Defendants, however, filed a motion on 2 June 1978, pursuant to Rule 60(b), to set aside the default judgment. This is the proper procedure if there is a final default judgment. G.S. 1A-1, Rule 55(d). In this case, no final default judgment had yet been entered. It was necessary to resolve the damage issue before judgment could be entered. Judge Stevens, however, went on to hear the motion, found facts and entered an order removing the nonexistent default judgment on grounds of "mistake, inadvertence, surprise and excusable neglect." He considered nothing more than the matters previously considered by Judge Smith who ruled just the opposite in refusing to set aside the entry of default. Generally, one superior court judge cannot overrule another. In re Burton, 257 N.C. 534, 126 S.E.2d 581 (1962). This is applicable even in a case involving an interlocutory order such as the present case where there is no showing of changed circumstances since the entry of the interlocutory order. Defendants presented nothing new for Judge Stevens to hear that Judge Smith had not already heard. Thus, the order by Judge Stevens granting the Rule 60(b) motion is vacated.

Although an order refusing to set aside an entry of default is interlocutory, consideration will, nevertheless, be given to whether Judge Smith was in error in refusing to set aside the entry of default in this case. In our discretion, we have previously elected to hear other cases on appeal at this stage. See, e. g., Miller v. Miller, 24 N.C.App. 319, 210 S.E.2d 438 (1974); Howell v. Haliburton, 22 N.C.App. 40, 205 S.E.2d 617 (1974); Crotts v. Pawn Shop, 16 N.C. App. 392, 192 S.E.2d 55, cert. den., 282 N.C. 425, 192 S.E.2d 835 (1972); Hubbard v. Lumley, 17 N.C.App. 649, 195 S.E.2d 330 (1973); Whaley v. Rhodes, 10 N.C.App. 109, 177 S.E.2d 735 (1970).

There are distinctions between setting aside an entry of default and setting aside a default judgment. The former is governed by the first clause of Rule 55(d) (emphasis added) which requires that "[f]or good cause shown, the court may set aside an entry of default." The latter is governed "in accordance with Rule 60(b)." Id. In setting aside a default judgment, "Mistake, inadvertence, surprise, or excusable neglect," G.S. 1A-1, Rule 60(b)(1), for example, must be present but not in the setting aside of an entry of default. Both are, however, within the sound discretion of the trial judge. Thus, the standard in this case is whether good cause is shown and whether the trial judge abused his discretion in his decision. The defaulting party does not have to show excusable neglect. The standard is more lax than that required for setting aside a default judgment pursuant to Rule 60(b). Crotts v. Pawn Shop, 16 N.C.App. 392, 192 S.E.2d 55, cert. den., 282 N.C. 425, 192 S.E.2d 835 (1972).

In this case we do not reach the issue of whether the trial judge abused his discretion in refusing to set aside the entry of default. From the face of the order, it is apparent that Judge Smith was operating under a misapprehension of the law. He denied defendants' motion to set aside entry of default stating that

it appear[ed] to the Court . . . that the failure of the defendants to file answer or otherwise plead or appear in this action was not due to any of the reasons justifying relief set out in Rule 60(b) and good cause has not been shown for the setting aside of said entry.

Judge Smith was applying the more strict standards of Rule 60(b) and this was error. He was only to determine if good cause was shown to set aside the entry of default. This case will, therefore, be remanded to determine whether good cause is shown to set aside the entry of default.

On remand, we note that the trial judge in the exercise of his discretion should be guided by the following principles. Default judgments are not favored in the law. While litigants should not be able to disregard process or rules of procedure without impunity, any doubt in such cases should be resolved in favor of having cases decided on their merits. "[A] court might feel justified in setting aside an entry of default on a showing that would not move it to set aside a default judgment." Whaley v. Rhodes, 10 N.C.App. 109, 111, 177 S.E.2d 735, 736-37 (1970). Further, in determining whether good cause to set aside an entry of default exists, the trial judge should examine the pleadings, including the proposed answer defendants would file, if permitted, any competent affidavits, and any depositions available. If good cause is shown, then the entry of default should be set aside.

The order of Judge Stevens is vacated.

The orders of Judge Smith are reversed and the case is remanded.

CLARK, J., concurs in the result.

HEDRICK, J., dissents.

CLARK, Judge, concurring:

I concur in the result because it more closely approximates the result that would be reached if the appeal should be dismissed. If dismissed, the case would return to the trial court unobstructed by the "judgment of default"; and if there is a trial and final judgment, the appellant could then appeal and challenge the various rulings of the trial court where exceptions have been made and preserved on appeal. The judgment appealed from is interlocutory and not appealable. I would not elect to consider the case on its merits. This Court should pursue a policy of strict adherence to the Rules of Appellate Procedure which are designed to prevent premature and fragmentary appeals.

HEDRICK, Judge, dissenting:

I respectfully disagree with the results reached by the opinions of the majority. Since my colleagues have reached the same spurious result by travelling in opposite directions, I must treat each opinion separately.

First, I do agree with Judge Vaughn that the order of Judge Stevens dated 9 May 1979 setting aside the judgment of default dated 6 February 1978 must be vacated. The judgment of default entered by Judge Smith on 6 February 1978 was not a "final judgment" within the meaning of G.S. § 1-277 or G.S. § 1A-1, Rule 60(b). Thus, defendants had no right of immediate appeal from the judgment of default which determined the issue of liability only. The judgment of default entered by Judge Smith, although it precluded the defendants from defending the case on the issue of liability, was an interlocutory judgment, and was not immediately appealable. Tridyn Industries, Inc. v. American Mutual Insurance Co., 296 N.C. 486, 251 S.E.2d 443 (1979). The proper procedure for defendants was to except to the entry of the default judgment, as they did, and use such exception as the basis of an assignment of error to be presented for review, when and if the case was appealed after the jury determined the issue of damages. Rule 60(b), by its express terms, applies only to final judgments. O'Neill v. Bank, 40 N.C. App. 227, 252 S.E.2d 231 (1979). Rule 60(b) has no application to a default judgment entered pursuant to G.S. § 1A-1, Rule 55(a), where the issue of damages has not been determined. Judge Stevens, therefore, had no authority to consider defendants' motion to set aside the default judgment entered by Judge Smith, and his order entered pursuant to such motion setting aside the default judgment is a nullity and should be vacated. O'Neill v. Bank, supra.

Judge Vaughn's decision vacates Judge Stevens' order, and remands the proceeding to the Superior Court for another Superior Court judge "to determine whether good cause is shown to set aside the entry of default." Judge Vaughn exercises the "discretion" of this Court to reverse the "orders" of Judge Smith and to remand the case to the Superior Court on the premise that Judge Smith was "operating under a misapprehension of the law . . . [in] applying the more strict standards of Rule 60(b)" in not setting aside the "entry of default." While Judge Smith did recite in his order denying defendants' motion to set aside the entry of default that their failure to appear or plead "was not due to any of the reasons justifying relief set out in Rule 60(b)", he plainly stated that he was acting "in the discretion of the Court", and that the defendants had not shown "good cause" for setting aside the entry of default. Obviously, Judge Smith was not "operating under a misapprehension of the law" and was not applying the stricter standards of Rule 60(b) since he made no findings of fact which would have been necessary to support a conclusion of "mistake, inadvertence, surprise, or excusable neglect."

Although this Court may have discretionary authority to rule in some matters, it is, in my opinion, an improper exercise of that discretion for this Court to review and reverse interlocutory and discretionary rulings of the trial court unless or until such matters are before this Court on appeal or by appropriate writ, and the parties have had an opportunity to brief and argue their respective positions. The majority has remanded this case for another Superior Court judge to exercise his discretion with respect to whether defendants' motion to set aside the entry of default should be denied, and plaintiff's motion for the entry of judgment by default should be allowed. In other words, the majority would have another Superior Court judge either affirm or overrule Judge Smith, in violation of the rule aptly stated by Judge Vaughn that "[g]enerally, one superior court judge cannot overrule another." [Citing In re Burton, 257 N.C. 534, 126 S.E.2d 581 (1962).] If, upon remand, the next Superior Court judge, oblivious to Judge Vaughn's admonition that "[d]efault judgments are not favored in the law", in the exercise of his discretion again denies the defendants' motion to set aside the entry of default, and allows plaintiffs' motion for a default judgment, would this Court again, ex mero motu, exercise its "discretion" to review and reverse such orders, and remand for still another hearing before another judge, until the result desired by the majority has been reached?

Judge Clark would dismiss the appeal from Judge Stevens' order setting aside the default judgment on the theory that such order was interlocutory and not immediately appealable. The problem with this ruling is that it leaves standing an order which is void. Judge Clark has in effect allowed one Superior Court judge to overrule another Superior Court judge on essentially the same evidence. While stating that "[t]his Court should pursue a policy of strict adherence to the Rules of Appellate Procedure which are designed to prevent premature and fragmentary appeals", Judge Clark has, in my opinion, ignored not only the Rules of Appellate Procedure, but the Rules of Civil Procedure as well, in dismissing the appeal from Judge Stevens' void order, when it should be vacated, and in reviewing and reversing Judge Smith's orders, and in remanding the case to be considered by another Superior Court judge.

I vote simply to vacate Judge Stevens' order and to remand the proceeding to the Superior Court for trial on the issue of damages.