No. 13632
I N THE SUPREME C U T O THE STATE O M N A A
O R F F OTN
19 77
MICHAEL PURINGTON,
P l a i n t i f f and Respondent,
-vs-
S U D WEST, A C o r p o r a t i o n ,
O N
Defendant and A p p e l l a n t .
Appeal from: District Court of t h e Fourth J u d i c i a l D i s t r i c t ,
Honorable Edward T , D u s s a u l t , J u d g e p r e s i d i n g .
Counsel o f Record:
For A p p e l l a n t :
J o r d a n , S u l l i v a n and B a l d a s s i n , M i s s o u l a , Montana
Lee A. J o r d a n a r g u e d , M i s s o u l a , Montana
F o r Respondent :
Worden, Thane and H a i n e s , M i s s o u l a , Montana
Ronald A. Bender a r g u e d , M i s s o u l a , Montana
Submitted: K 26 1977
AY
Decided: JUN 2 9 1977
Filed: FN
JU 2 9 1n
9
M r . J u s t i c e Frank I. Haswell delivered the Opinion of the Court.
This i s an appeal from t h e d i s t r i c t c o u r t ' s d e n i a l of
defendant's motion t o s e t a s i d e a d e f a u l t judgment entered i n
Missoula County.
P l a i n t i f f i s Michael Purington, a professional musician
with the Lost Highway Band, who purchased a sound system f o r
$1,350 from defendant Sound West, a corporation,in the summer
of 1975. I n t h e f a l l of 1975 t h e sound system ceased t o work
properly and eventually ceased functioning altogether. According
t o t h e complaint, defendant assured p l a i n t i f f t h e malfunction
would be repaired,but p l a i n t i f f was compelled t o obtain a s u b s t i -
t u t e sound system. P l a i n t i f f alleged t h a t on November 3, 1975,
defendant represented t o him t h a t i f he would r e t u r n the sound
system, defendant would refund the purchase p r i c e . Plaintiff
alleged he returned t h e sound system, but no refund was made.
On April 20, 1976 p l a i n t i f f f i l e d a complaint against de-
fendant i n t h r e e counts: Count I sought refund of the $1,350
purchase p r i c e with i n t e r e s t a t 6% from November 3, 1975 t o
d a t e of judgment; Count I1 sought damages of $10,000 f o r breach
of implied warranties of merchantability and f i t n e s s f o r a
p a r t i c u l a r use; and, Count 1 1 sought $10,000 compensatory damages
1
d
and $10,000 punitive damages f o r f a l s e repres&ations by defendant
inducing p l a i n t i f f t o r e t u r n the sound system t o defendant.
The s h e r i f f ' s r e t u r n showed personal service was made
on J i m Rhines, president of defendant corporation, on A p r i l 21,
1976. On M y 20 d e f a u l t of defendant was entered by t h e c l e r k
a
of court. On June 10 p l a i n t i f f t e s t i f i e d i n support of h i s com-
p l a i n t , but h i s testimony was not reported and i s not before us.
O n June 24 a d e f a u l t judgment was entered by t h e d i s t r i c t court
awarding p l a i n t i f f $1,350 with i n t e r e s t a t 8% from July 1, 1975
t o d a t e of judgment; damages of $3,000 f o r l o s s of wages, use and
reputation; andplnitive damages of $1,500. Notice of e n t r y of
judgment was mailed t o defendant on June 25.
O July 1 defendant f i l e d a w r i t t e n motion t o s e t a s i d e t h e
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judgment on t h e grounds defendant was never served i n t h e a c t i o n
and had no n o t i c e of t h e a c t i o n a t any time. The motion a l s o sought
a hearing and a s t a y of execution pending hearing. On t h e same
day, t h e d i s t r i c t court s e t a hearing f o r J u l y 1 2 and stayed
execution on t h e judgment.
On July 12 a s u b s t i t u t i o n of attorneys f o r defendant occurred.
A t the commencement of the hearing on t h a t d a t e , defendant's
new attorney moved t h e d i s t r i c t court t o add two a d d i t i o n a l
grounds t o i t s motion t o s e t a s i d e t h e d e f a u l t judgment: (1) Inad-
vertence and excusable negligence of defendant, and (2) t h a t t h e
d e f a u l t judgment d i f f e r s s u b s t a n t i a l l y from the prayer of the
complaint. A a f f i d a v i t of merits was f i l e d together with a
n
proposed answer t o p l a i n t i f f ' s complaint. The substance of these
documents was t h a t defendant had not been served i n the a c t i o n and
defendant had a meritorious defense t o the a c t i o n , v i z . the mal-
functioning of the sound system was caused e n t i r e l y by p l a i n t i f f ' s
misuse of the equipment.
J i m Rhines, president of defendant corporation, t e s t i f i e d
i n support of the motion t o s e t aside the d e f a u l t judgment. The
g i s t of h i s testimony was t h a t he had never been served i n t h e
a c t i o n ; t h a t had he been served, he would never have permitted the
d e f a u l t ; and t h a t he had a meritorious defense t o t h e a c t i o n ,
The d i s t r i c t court continued the hearing f o r the purpose of
locating the s h e r i f f ' s deputy who signed the c e r t i f i c a t e of service,
O September 27 p l a i n t i f f f i l e d a motion t o dissolve
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t h e s t a y order and permit execution on the judgment. Attached
t o t h i s motion was t h e a f f i d a v i t of t h e s h e r i f f ' s deputy, who
had been located by p l a i n t i f f ' s attorney i n the s t a t e of Utah,
t h a t she personally served J i m Rhines, the president of defendant
corporation, with a copy of the summons and complaint i n the
a c t i o n on April 21, 1975, i n the o f f i c e s of defendant a t 2701
Brooks S t r e e t i n Missoula, Montana.
A f u r t h e r hearing was held on September 30. A t this
hearing Rhines t e s t i f i e d again. H again denied he had been
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served and indicated only two other s u i t s against the corpora-
t i o n had gone by d e f a u l t , one f o r $300.60 and one f o r $133.
H t e s t i f i e d t h a t these d e f a u l t s were permitted on advice of
e
counsel a s the c o s t s of defense would exceed the amounts sued f o r .
A t the conclusion of the hearing, defendant's motion t o s e t
a s i d e the judgment was denied. P l a i n t i f f ' s motion t o dissolve
the s t a y of execution was denied.
On October 28, defendant f i l e d i t s n o t i c e of appeal from
t h e order of the d i s t r i c t c o u r t , Missoula County, denying de-
fendant's motion t o s e t a s i d e the d e f a u l t judgment.
Defendant a l l e g e s an abuse of d i s c r e t i o n by the d i s t r i c t
court i n four p a r t i c u l a r s :
1) Refusing t o s e t aside the d e f a u l t judgment on the
grounds of defendant's inadvertence o r excusable neglect.
2) Awarding i n t e r e s t g r e a t e r than prayed f o r i n t h e
complaint.
3) I n granting any judgment on Counts I1 and 1 1
1 .
4) I n awarding punitive damages i n an a c t i o n upon a
contract.
Rule 55(c), M.R.Civ.P., provides i n p e r t i n e n t p a r t :
"For good cause shown t h e court may s e t a s i d e an
e n t r y of d e f a u l t and, i f a judgment by d e f a u l t
has been entered, may likewise s e t it a s i d e i n
accordance with Rule 60(b) ** *.I1
Rule 60(b), M.R.Civ.P., provides i n relevant p a r t :
"* * * upon such terms a s a r e j u s t , t h e court may
r e l i e v e a party *** from a f i n a l judgment ***
f o r t h e following reasons: (1) mistake, inadvertence,
s u p r i s e , o r excusable neglect * * *."
A motion t o s e t a s i d e a d e f a u l t judgment i s addressed t o
the sound d i s c r e t i o n of t h e t r i a l court and t h i s Court w i l l not
i n t e r f e r e except upon a showing of manifest abuse. Keller v.
Hanson, 157 Mont. 307, 485 P.2d 705; Johnson v. Matelich, 163
Mont. 329, 517 P.2d 731.
Here the only showing of inadvertence o r excusable neglect
was the testimony of J i m Rhine t h a t he had never been served
i n t h e action. To the contrary was t h e c e r t i f i c a t e of s e r v i c e of
t h e deputy s h e r i f f and t h e absence of any evidence t h a t defendant
attempted t o l o c a t e h e r , depose h e r , o r secure her testimony i n
person. It i s axiomatic t h a t the burden of proof i s on t h e
moving p a r t y , here t h e defendant, t o e s t a b l i s h inadvertence o r
excusable neglect. The testimony of J i m Rhines created no more
than a c o n f l i c t i n t h e evidence on t h e i s s u e of service which
was resolved against defendant by t h e t r i a l judge. Under such
circumstances, w find no abuse of d i s c r e t i o n by the t r i a l judge
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i n refusing t o s e t a s i d e the d e f a u l t judgment on t h i s ground.
A e r r o r i n awarding i n t e r e s t on t h e purchase p r i c e of the
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sound system i s c l e a r on t h e face of t h e record. The prayer i n
p l a i n t i f f ' s complaint asks f o r i n t e r e s t a t t h e r a t e of 6% per year
on $1,350 from November 3, 1975 t o d a t e of judgment. The judgment
awards i n t e r e s t a t t h e r a t e of 8% per year on $1,350 from July 1,
1975 t o d a t e of judgment. Rule 54(c), M.R.Civ.P., provides:
"A judgment by d e f a u l t s h a l l not be d i f f e r e n t
i n kind from o r exceed i n amount t h a t prayed f o r
i n the demand f o r judgment. ** *I1
Accordingly, the i n t e r e s t award i s ordered amended i n conformity
with the prayer i n t h e complaint.
The t h i r d claim of e r r o r i s t h a t Counts I1 and I11 f a i l t o
a l l e g e any damass o r cause of action. I n our view Count 11
c l e a r l y s t a t e s a claim f o r breach of implied wananties and seeks
$10,000 damages by reason thereof. W a l s o f i n d Count I11 s t a t e s
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a claim f o r r e l i e f based on f a l s e representations by defendant
and seeks $10,000 campensatory and $10,000 punitive damages
therefor. However, w find t h a t on i t s face t h e judgment awarding
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damages on those counts i s beyond the power of the d i s t r i c t court
t o award.
On Count 11 t h e d i s t r i c t court made a s p e c i f i c finding
t h a t "the P l a i n t i f f has been damaged i n t h e amount of Three
Thousand and ~ o / 1 0 0Dollars ($3,000.00) f o r l o s s of wages, use,
and reputation" and awarded damages i n t h a t amount. Such damages
f o r breach of warranties a r e defined a s i n c i d e n t a l and consequen-
t i a l damages i n the Uniform Commercial Code. Section 87A-2-715,
R.C.M. 1947. Also see sections 87A-2-11 and 87A-2-714, R.C.B.
1947. They a r e s p e c i a l damages, not general damages. The
d i s t i n c t i o n is---special damages a r e t h e n a t u r a l but not necessary
r e s u l t of the wrong o r breach; whereas general damages
a r e damages the law would impute a s t h e n a t u r a l , necessary and
l o g i c a l consequence of t h e wrong o r breach. 25 C.J.S. Damages
5 131.
Special damages must be s p e c i f i c a l l y pleaded t o be recover-
able. Rule 9(g), M.R.Civ.P. Here, these items of s p e c i a l
damages were not pleaded, defendant had no n o t i c e t h a t s p e c i a l
damages were claimed, and t h e d i s t r i c t court had no power o r
a u t h o r i t y t o award s p e c i a l damages i n i t s d e f a u l t judgment. The
award of $3,000 damages f o r these items i s ordered s t r i c k e n from
the judgment .
The f i n a l claim of e r r o r concerns t h e award of $1,500
punitive damages on Count 1 1 Defendant contends punitive
1.
damages a r e not recoverable i n an a c t i o n a r i s i n g from c o n t r a c t ,
c i t i n g s e c t i o n 17-208, R.C.M. 1947. W have no q u a r r e l with
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t h i s general proposition o r t h i s s t a t u t e . However, Count 1 1
1
i s based on t o r t , n o t c o n t r a c t , being a claim f o r damages based
on f a l s e representations of a refund of t h e purchase p r i c e , i f
p l a i n t i f f would r e t u r n t h e sound system. See Paulson v. Kustom
Enterprises, Inc., 157 Mont. 188, 483 P.2d 708. Again, however,
we find t h a t the judgment on i t s face i s beyond the power and
a u t h o r i t y of the court t o the extent it awards p l a i n t i f f punitive
damages.
Punitive damages cannot be awarded where t h e r e a r e no
a c t u a l damages. Gilham v. Devereaux, 67 Mont. 75, 214 P. 606.
Here t h e judgment denied p l a i n t i f f ' s claim of a c t u a l o r compen-
satory damages on Count 1 1 so an award of punitive damages
1 ,
was beyond t h e power o r a u t h o r i t y of the d i s t r i c t court. The
award of $1,500 punitive damages i s ordered s t r i c k e n from t h e
judgment .
This cause i s remanded t o the d i s t r i c t court f o r e n t r y
of judgment i n accordance with t h i s opinion; o r a t the e l e c t i o n
of p l a i n t i f f , within 15 days of t h e d a t e hereof f o r vacation of
t h e e n t i r e judgment, the f i l i n g and s e r v i c e of an amended com-
p l a i n t and adversary r e t r i a l . Each party s h a l l bear i t s own
costs.
Justice