No. 79-80
IN THE SUPREME COURT OF THE STATE OF MONTANA
1980
A U D I T SERVICES, I N C . , a Montana C o r p . ,
P l a i n t i f f and R e s p o n d e n t ,
KRAUS CONSTRUCTION, I N C . , a c o r p . ,
and JAMES KRAUS, SR., d / b / a KRAUS
CONSTRUCTION
D e f e n d a n t s and A p p e l l a n t s .
Appeal from: District Court of t h e Eighth J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f C a s c a d e , The H o n o r a b l e
J o e l G. Roth, J u d g e p r e s i d i n g .
C o u n s e l o f Record:
For Appellant:
B a r r y T. O l s o n , G r e a t F a l l s , Montana
F o r Respondent :
Cure and Borer, G r e a t F a l l s , Montana
Submitted on B r i e f s : May 27, 1980
Decided: J u l y 22, 1980
Filed: JUL 2 3 1980
Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of
t h e Court.
A p p e l l a n t s Kraus C o n s t r u c t i o n , I n c . , and James Kraus,
S r . , a p p e a l from a n e n t r y of a d e f a u l t judgment and a n o r d e r
r e f u s i n g t o v a c a t e t h e judgment. The o r d e r of d e f a u l t w a s
e n t e r e d by t h e t r i a l c o u r t due t o a p p e l l a n t s ' f a i l u r e t o
comply w i t h e a r l i e r d i s c o v e r y o r d e r s . The s o l e i s s u e b e f o r e
t h i s C o u r t i s whether t h e t r i a l c o u r t e r r e d i n f a i l i n g t o
s e t a s i d e t h e d e f a u l t judgment e n t e r e d a g a i n s t a p p e l l a n t s
f o r f a i l u r e t o answer t h e i n t e r r o g a t o r i e s under t h e circum-
s t a n c e s s e t f o r t h below.
Respondent A u d i t S e r v i c e s , I n c . , i s a c o l l e c t i o n agency
f o r a u n i o n t r u s t fund. A s such, it brought t h i s a c t i o n t o
e n f o r c e a p p e l l a n t s ' a l l e g e d o b l i g a t i o n t o make c o n t r i b u t i o n s
t o t h e t r u s t fund under a c o l l e c t i v e b a r g a i n i n g compliance
agreement.
Although t h e judgment h e r e was e n t e r e d on March 5 ,
1979, t h i s l a w s u i t was i n i t i a t e d o v e r t h r e e and one-half
y e a r s e a r l i e r i n O c t o b e r 1975. The f a c t s r e v e a l t h a t t h i s
a p p e a l i s n o t concerned w i t h t h e t y p i c a l " f i r s t a p p e a r a n c e "
d e f a u l t judgment i n which a d e f e n d a n t i s s e r v e d w i t h summons
and a c o m p l a i n t b u t f a i l s t o a p p e a r w i t h i n twenty d a y s a s
a l l o w e d by law. Rather, here t h e record i n i t i a l l y p r e s e n t s
a p i c t u r e of a v i g o r o u s l y c o n t e s t e d l a w s u i t . The r e c o r d
i n d i c a t e s t h a t a p p e l l a n t s w e r e r e p r e s e n t e d by t h r e e con-
s e c u t i v e law f i r m s . It further reveals t h a t appellants
s u b s e q u e n t l y abandoned t h e i r d e f e n s e s , and o n l y a f t e r
s e v e r a l u n s u c c e s s f u l a t t e m p t s by t h e D i s t r i c t C o u r t t o have
a p p e l l a n t s reinvolve themselves d i d t h e c o u r t f i n a l l y e n t e r
a default. Now, f o l l o w i n g t h e e n t r y of t h e d e f a u l t by t h e
D i s t r i c t C o u r t , a p p e l l a n t s a t t a c k t h e d e f a u l t judgment
e s s e n t i a l l y on p r o c e d u r a l , r a t h e r t h a n s u b s t a n t i v e , grounds.
I n i t s o r i g i n a l c o m p l a i n t f i l e d October 6, 1975, r e s p o n -
d e n t s o u g h t t o c o l l e c t $5,095.03 i n d e l i n q u e n t c o n t r i b u t i o n s
owed by a p p e l l a n t Kraus C o n s t r u c t i o n , I n c . , t o respondent's
a s s i g n o r s , t r u s t e e s of a c e r t a i n Montana c o n s t r u c t i o n i n -
d u s t r y employee b e n e f i t t r u s t fund, t o g e t h e r w i t h r e a s o n a b l e
attorney fees. Having been s e r v e d w i t h p r o c e s s , a p p e l l a n t s
f a i l e d t o a p p e a r w i t h i n twenty d a y s of t h e s e r v i c e . A
" f i r s t appearance" d e f a u l t judgment was e n t e r e d . Execution
i s s u e d and a judgment was c o l l e c t e d by t h e Cascade County
sheriff. The e x e c u t i o n by t h e s h e r i f f on f u n d s of Kraus
Construction, Inc., prompted a p p e l l a n t s t o t a k e a c t i o n .
A p p e l l a n t s moved t o s e t a s i d e t h e d e f a u l t judgment, and
f o l l o w i n g a h e a r i n g on December 11, 1975, t h e D i s t r i c t C o u r t
g r a n t e d t h e motion. On December 1 6 , 1975, a p p e l l a n t s f i l e d
t h e i r answer and added a c o u n t e r c l a i m f o r a r e f u n d of $477.09
f o r a l l e g e d overpayments t o r e s p o n d e n t ' s a s s i g n o r s .
I n J a n u a r y 1976 a p p e l l a n t moved f o r a r e t u r n of t h e
f u n d s c o l l e c t e d under t h e s h e r i f f ' s l e v y . On F e b r u a r y 4 ,
1976, t h e D i s t r i c t C o u r t o r d e r e d t h e r e t u r n of a p o r t i o n of
those funds with t h e balance being deposited with t h e c l e r k
of t h e c o u r t . On A p r i l 29, 1976, a n a f f i d a v i t of d i s q u a l i -
f i c a t i o n was f i l e d by P a t Kraus. P a t Kraus i s t h e w i f e of
James Kraus, S r . , b u t t h e a f f i d a v i t f a i l e d t o a l l e g e any
r e l a t i o n t o t h e t h e n s o l e d e f e n d a n t , Kraus ~ o n s t r u c t i o n ,
Inc. P u r s u a n t t o t h e a f f i d a v i t , t h e d i s t r i c t judge d i s q u a l i -
f i e d h i m s e l f and t h e Honorable R . J. Nelson assumed j u r i s -
diction.
Discovery was i n i t i a t e d on J u n e 2 5 , 1976, w i t h a p p e l -
l a n t s ' f i r s t i n t e r r o g a t o r i e s and r e q u e s t s f o r a d m i s s i o n s .
The b a l a n c e of 1976 and t h e f i r s t t e n months of 1977 were
consumed by r e p e a t e d a p p e a r a n c e s b e f o r e t h e ~ i s t r i c C o u r t
t
o v e r t h e s u f f i c i e n c y of r e s p o n d e n t ' s answers t o t h o s e re-
q u e s t s and i n t e r r o g a t o r i e s , and by amending and supplement-
i n g v e r s i o n s of t h e i n t e r r o g a t o r i e s profounded by a p p e l l a n t s
and r e s p o n d e n t ' s s u b s e q u e n t r e s p o n s e s t o them. During t h i s
t i m e , Judge Nelson r e t i r e d from t h e bench and was succeeded
by t h e Honorable H. William Coder i n J a n u a r y 1977. Because
Judge C o d e r ' s former law f i r m was r e p r e s e n t i n g a p p e l l a n t s ,
h e d i s q u a l i f i e d h i m s e l f , c a l l i n g i n f i r s t t h e Honorable W .
W. L e s s l e y and s u b s e q u e n t l y , t h e Honorable J o e l G . Roth. It
w a s n o t u n t i l November 1, 1977, t h a t a p p e l l a n t s had f i l e d
and A u d i t S e r v i c e s had answered f o u r sets of i n t e r r o g a t o r i e s .
I n t h e i n t e r i m , t h e r e had been two h e a r i n g s c a l l e d by a p p e l -
l a n t s t o q u e s t i o n t h e s u f f i c i e n c y of t h o s e r e s p o n s e s .
R e s p o n d e n t ' s d i s c o v e r y began w i t h t h e d e p o s i t i o n of
James Kraus, S r . , t a k e n November 1 7 , 1977. H e was t h e
p r i n c i p a l i n Kraus C o n s t r u c t i o n , I n c . , and a n o r i g i n a l l y -
named d e f e n d a n t . ( I t s h o u l d be n o t e d t h a t t h e Kraus Con-
s t r u c t i o n , Inc., w a s n o t organized a s a corporation u n t i l
F e b r u a r y 1976, some f i v e months a f t e r t h e l a w s u i t began.)
A l s o i n November 1977, a r e p r e s e n t a t i v e of r e s p o n d e n t con-
d u c t e d a new a u d i t of a p p e l l a n t s ' r e c o r d s c o v e r i n g t h e
p e r i o d of May 1, 1975 t o J u n e 3 0 , 1977.
Following t h e d e p o s i t i o n of James Kraus, S r . , r e s p o n -
d e n t moved t o amend i t s c o m p l a i n t t o combine t h e amounts
claimed i n t h e o r i g i n a l complaint with t h e delinquencies
r e v e a l e d by t h e a u d i t conducted i n November 1977. The
amended c o m p l a i n t a l s o s o u g h t t o h o l d James Kraus, S r . ,
p e r s o n a l l y l i a b l e f o r t h e d e b t s of Kraus C o n s t r u c t i o n , I n c .
A h e a r i n g on t h e r e q u e s t t o amend t h e c o m p l a i n t was s e t
f o r December 2 1 , 1977. However, one day b e f o r e t h a t h e a r -
i n g , a p p e l l a n t s ' a t t o r n e y s moved e x p a r t e t o withdraw. The
motion i n d i c a t e d t h a t a copy had been s e r v e d on a p p e l l a n t s .
On t h e same day, t h e c o u r t o r d e r e d t h a t t h e a t t o r n e y s c o u l d
withdraw. The c o u r t ' s o r d e r s t a t e d t h a t a copy was t o be
s e r v e d by t h e s h e r i f f on James Kraus, S r . , and t h a t a p p e l -
l a n t s were t o a p p e a r t h r o u g h new c o u n s e l w i t h i n twenty d a y s .
Respondent, i n t u r n , v a c a t e d i t s December 21, 1977, h e a r i n g .
A p p e l l a n t s f a i l e d t o comply w i t h t h e c o u r t ' s o r d e r and
d i d nothing. On J a n u a r y 3 0 , 1978, r e s p o n d e n t r e n o t i c e d i t s
h e a r i n g on t h e motion f o r l e a v e t o amend t h e c o m p l a i n t .
Hearing on t h e motion was s e t f o r F e b r u a r y 1 5 , 1978. Since
a p p e l l a n t s had f a i l e d t o r e t a i n new c o u n s e l , a copy o f t h e
n o t i c e was s e r v e d upon t h e i r former a t t o r n e y s and upon James
Kraus, S r . , p e r s o n a l l y .
On F e b r u a r y 1 5 , 1978, a p p e l l a n t s r e t a i n e d new c o u n s e l
and a p p e a r e d a t t h e h e a r i n g on t h e motion f o r l e a v e t o amend
t h e c o m p l a i n t . On F e b r u a r y 23, 1978, t h e c o u r t g r a n t e d
r e s p o n d e n t S e r v i c e s l e a v e t o f i l e a p o r t i o n of i t s amended
complaint. A p p e l l a n t s f i l e d t h e i r answer on March 1 4 , 1978.
On A p r i l 27, 1978, r e s p o n d e n t f i l e d i t s f i r s t r e q u e s t s
f o r admissions. These r e q u e s t s s e t f o r t h r e s p o n d e n t ' s
t h e o r y of i t s c a s e , a s k i n g Kraus C o n s t r u c t i o n , I n c . , to
a d m i t t h a t i t was a p a r t y t o v a r i o u s c o l l e c t i v e b a r g a i n i n g
agreements and t r u s t agreements u n d e r l y i n g r e s p o n d e n t ' s
claim. A p p e l l a n t s w e r e f u r t h e r asked t o a d m i t t h e a c c u r a c y
o f t h e a u d i t s u n d e r l y i n g t h e d o l l a r amount of t h e amended
complaint. Copies of t h e s e a u d i t s w e r e a t t a c h e d t o t h e
e x h i b i t s f o r t h e r e q u e s t s f o r admission. Appellants f i l e d a
timely response t o t h e requests. They d e n i e d t h e a c c u r a c y
of t h e a u d i t s , s p e c i f i c a l l y denying f i r s t t h a t a l l of t h e
p e r s o n s l i s t e d i n t h e a u d i t were employees and second, t h a t
t h e p e r s o n s l i s t e d t h e r e i n performed work coming under t h e
s c o p e of r e l e v a n t c o l l e c t i v e b a r g a i n i n g agreements.
Based on t h o s e d e n i a l s , r e s p o n d e n t f i l e d i t s f i r s t
i n t e r r o g a t o r i e s on J u n e 2 , 1978. Those i n t e r r o g a t o r i e s
sought s p e c i f i c information underlying a p p e l l a n t s ' denial--
a s k i n g which of t h e p e r s o n s l i s t e d i n t h e a u d i t s of a p p e l -
l a n t s ' p a y r o l l r e c o r d s were n o t i n f a c t i t s employees, and
which of them d i d n o t perform work coming w i t h i n t h e scope
of t h e c o l l e c t i v e b a r g a i n i n g agreements. Appellants f a i l e d
t o answer t h o s e i n t e r r o g a t o r i e s o r t o t e n d e r any o b j e c t i o n s
t o them.
Having r e c e i v e d no answers t o t h e i n t e r r o g a t o r i e s , on
October 3, 1978, r e s p o n d e n t moved f o r a n o r d e r c o m p e l l i n g
a p p e l l a n t s under Rule 37, M.R.Civ.P. A h e a r i n g on t h i s
motion was s e t f o r October 25, 1978. One day b e f o r e t h e
h e a r i n g , on October 2 4 , 1978, a p p e l l a n t s ' a t t o r n e y s made a n
e x p a r t e a p p l i c a t i o n t o t h e D i s t r i c t C o u r t t o withdraw as
counsel. T h i s a p p l i c a t i o n was g r a n t e d , and a n o t h e r of
r e s p o n d e n t ' s motions t o b r i n g t h i s l a w s u i t t o f r u i t a t i o n had
t o be p u t o f f . A s w i t h t h e w i t h d r a w a l of a p p e l l a n t s ' first
c o u n s e l , t h e D i s t r i c t C o u r t o r d e r e d a copy of t h e o r d e r
a l l o w i n g t h e w i t h d r a w a l of a p p e l l a n t s ' second c o u n s e l and
r e q u i r i n g new c o u n s e l t o a p p e a r w i t h i n twenty d a y s t o be
s e r v e d upon James Kraus, S r . Once a g a i n , a p p e l l a n t s f a i l e d
t o obey t h e c o u r t ' s o r d e r .
On J a n d a r y , 3 , 1979, r e s p o n d e n t , a f t e r w a i t i n g a p p r o x i -
m a t e l y two months f o r a p p e l l a n t s t o do something, r e n o t i c e d
i t s r e q u e s t f o r a h e a r i n g on t h e long-pending motion t o
compel answers t o t h e i n t e r r o g a t o r i e s s u b m i t t e d some s e v e n
months e a r l i e r . Hearing w a s s e t f o r J a n u a r y 1 7 , 1979. Once
a g a i n , a copy w a s s e n t t o James R r a u s , S r . , and t o h i s
former a t t o r n e y s . The D i s t r i c t C o u r t on i t s own i n i t i a t i v e
r e s e t t h e h e a r i n g from J a n u a r y 1 7 , 1979 t o J a n u a r y 25, 1979,
b e c a u s e of a c o n f l i c t i n i t s c a l e n d a r . An o r d e r f o r t h e
change of t h i s d a t e was s e r v e d on James Kraus, S r . , and
t h e r e i s no d e n i a l t h a t h e r e c e i v e d it.
P u r s u a n t t o t h e c o u r t ' s o r d e r , a h e a r i n g on r e s p o n d e n t ' s
motion t o compel answers t o i n t e r r o g a t o r i e s was f i n a l l y h e l d
on J a n u a r y 25, 1979. N a p p e a r a n c e w a s made by o r on b e h a l f
o
of a p p e l l a n t s . However, t h e r e l i e f awarded by t h e D i s t r i c t
C o u r t w a s s t r i c t l y i n a c c o r d w i t h t h a t p r o v i d e d by Rule 37,
M.R.Civ.P. A p p e l l a n t s were g i v e n a n a d d i t i o n a l twenty d a y s
t o answer t h e i n t e r r o g a t o r i e s , o r i n l i e u t h e r e o f , t h e i r
answer was deemed s t r i c k e n such t h a t t h e i r d e f a u l t c o u l d be
entered. A copy of t h i s o r d e r d a t e d J a n u a r y 29, 1979, was
s e r v e d on James Kraus, S r . , and he d o e s n o t deny r e c e i v i n g
it. A p p e l l a n t s f a i l e d t o obey t h e f i n a l o r d e r of t h e c o u r t
by answering t h e i n t e r r o g a t o r i e s , and no new c o u n s e l a p p e a r e d
f o r them r e g a r d i n g t h i s l i t i g a t i o n .
On F e b r u a r y 26, 1979, r e s p o n d e n t f i l e d a n o t i c e of i t s
i n t e n t i o n t o a p p l y f o r a judgment of d e f a u l t on March 5 ,
1979, a t t h e Cascade County Courthouse. Kraus w a s s e r v e d
w i t h a copy of t h i s n o t i c e a l s o , and h e d o e s n o t deny re-
c e i v i n g it.
The h e a r i n g on r e s p o n d e n t ' s a p p l i c a t i o n f o r d e f a u l t
judgment was h e l d on March 5, 1979. N one a p p e a r e d on
o
b e h a l f of a p p e l l a n t s . R e s p o n d e n t ' s a t t o r n e y s were sworn and
t e s t i f i e d concerning a t t o r n e y f e e s . A judgment i n con-
formance w i t h t h e d e f a u l t was e n t e r e d on arch 7, 1979.
N o t i c e of i t s e n t r y was m a i l e d by t h e c l e r k of t h e c o u r t t o
James Kraus, S r . , and he d o e s n o t deny r e c e i v i n g i t .
Following e n t r y of t h e d e f a u l t , a p p e l l a n t s d i d n o t h i n g .
On March 8 , 1979, on a p p l i c a t i o n of r e s p o n d e n t , t h e D i s t r i c t
C o u r t s i g n e d a n o r d e r r e l e a s i n g t h e f u n d s which had been
h e l d by t h e c l e r k of t h e c o u r t s i n c e t h e i r o r i g i n a l d e p o s i t
i n 1975 when t h e f i r s t d e f a u l t judgment was s e t a s i d e . A
copy of t h a t o r d e r was f i l e d on James Kraus, S r . , and he
d o e s n o t deny r e c e i v i n g i t . On March 1 4 , 1979, a w r i t of
e x e c u t i o n was i s s u e d , and l e v y w a s made by t h e Cascade
County s h e r i f f ' s o f f i c e on March 1 9 , 1979, which r e s u l t e d i n
s e c u r i n g $2,100 on d e p o s i t i n a bank a c c o u n t o f one of
appellants. This execution apparently brought a p p e l l a n t s
around t o d o i n g something, and on t h e same day James Kraus,
S r . , d e l i v e r e d f i l e s t o a new a t t o r n e y .
Immediately a f t e r and e a r l y i n A p r i l 1979 a number of
p l e a d i n g s were f i l e d by a p p e l l a n t s ' new c o u n s e l . A notice
of a p p e a l was f i l e d and l a t e r withdrawn. Then a motion f o r
a new t r i a l was f i l e d , even though t h e r e had n e v e r been a
trial. T h e r e a f t e r , a p p e l l a n t s f i l e d a motion t o s e t a s i d e
t h e w i t h d r a w a l of t h e i r second c o u n s e l a l o n g w i t h a motion
t o s e t a s i d e t h e d e f a u l t judgment s u p p o r t e d by an a f f i d a v i t
o f James Kraus, S r . A p p e l l a n t s t h e n e x p a r t e s o u g h t and
o b t a i n e d a s t a y of e x e c u t i o n .
The motion c o n c e r n i n g t h e w i t h d r a w a l of a p p e l l a n t s '
second a t t o r n e y s w a s h e a r d on A p r i l 2 0 , 1978. Based on t h e
a f f i d a v i t of James Kraus, S r . , and on t h e f a c t t h a t t h e
motion of t h e law f i r m d i d n o t i n d i c a t e t h a t a p p e l l a n t s had
a s s e n t e d t o o r acknowledged t h e w i t h d r a w a l of t h e f i r m , t h e
~ i s t r i c Court determined t h a t t h e order p e r m i t t i n g t h e
t
w i t h d r a w a l of c o u n s e l was improper and s e t t h e same a s i d e .
The D i s t r i c t C o u r t d e f e r r e d a h e a r i n g on a p p e l l a n t s ' p o s t -
judgment motions pending t h e i r d e c i s i o n as t o who was g o i n g
t o r e p r e s e n t them t h e r e a f t e r . A p r o p e r s u b s t i t u t i o n of
c o u n s e l was s i g n e d on May 1 7 , 1979, and s e r v e d on a l l concerned
on May 2 3 , 1979.
D e s p i t e t h e t i m e l i m i t s s e t i n Rule 60, M.R.Civ.P., for
t h e d e t e r m i n a t i o n of motions t o v a c a t e d e f a u l t judgments,
a p p e l l a n t s d i d n o t h i n g r e g a r d i n g t h e i r pending post-judgment
motions u n t i l J u l y 11, 1979, when t h e y n o t i c e d them f o r
h e a r i n g on August 9, 1979. A t t h a t t i m e a hearing w a s held
i n c o u r t chambers. N t e s t i m o n y was t a k e n ; t h e h e a r i n g
o
c o n s i s t e d s o l e l y of a p p e l l a n t s ' arguments. After hearing
t h e arguments, t h e D i s t r i c t C o u r t r e f u s e d t o g r a n t any o f
a p p e l l a n t s ' motions, and t h e d e f a u l t judgment was a l l o w e d t o
stand. A p p e l l a n t s t h e r e a f t e r f i l e d t h i s a p p e a l from t h e
D i s t r i c t C o u r t ' s o r d e r of August 9, 1979.
The s o l e i s s u e f o r r e v i e w i s whether t h e t r i a l c o u r t
e r r e d i n f a i l i n g t o s e t a s i d e t h e d e f a u l t judgment and
d e f a u l t e n t e r e d a g a i n s t a p p e l l a n t s f o r f a i l u r e t o answer i n -
t e r r o g a t o r i e s under t h e c i r c u m s t a n c e s of t h i s c a s e .
A p p e l l a n t s make two arguments f o r s e t t i n g a s i d e t h e
d e f a u l t judgment. The f i r s t i s t h a t t h e D i s t r i c t C o u r t
abused i t s d i s c r e t i o n i n imposing s u c h a h a r s h s a n c t i o n .
Second, a p p e l l a n t s c o n t e n d t h a t t h e w i t h d r a w a l of t h e i r
second c o u n s e l r e t r o a c t i v e l y s e t a s i d e a s improper, " t a i n t e d "
a l l s u b s e q u e n t p r o c e e d i n g s and, t h e r e f o r e , the default
judgment must be s e t a s i d e . W f i n d n e i t h e r argument t o
e
have m e r i t .
A p p e l l a n t s r e l y s t r o n g l y on t h e g e n e r a l r u l e t h a t
d e f a u l t judgments a r e n o t f a v o r e d and no g r e a t a b u s e of
d i s c r e t i o n need b e found by t h i s C o u r t t o s e t a s i d e such a
judgment. A p p e l l a n t s r e l y p r i n c i p a l l y on t h e f o l l o w i n g
cases: Kootenai Corp. v. Dayton ( 1 9 7 9 ) , Mont. I
601 P.2d 47, 36 St.Rep. 1785, 1790-1791; L i t t l e Horn S t a t e
Bank v . R e a l B i r d ( 1 9 7 9 ) , - Mont. -, 598 P.2d 1109, 36
St.Rep. 1495; S h i e l d s v . P i r k l e R e f r i g e r a t e d F r e i g h t l i n e s ,
Inc. (1979), - Mont. -, 591 P.2d 1120, 1125, 36 St.Rep.
472. W e have reviewed t h e s e a u t h o r i t i e s and f i n d them n o t
i n p o i n t with t h i s case. Each of them d e a l w i t h " f i r s t
appearance" d e f a u l t judgments. Another c a s e c i t e d and
r e l i e d upon by a p p e l l a n t s , Simpkins v . Simpkins ( 1 8 9 4 ) , 1 4
Mont. 386, 36 P. 759, d e a l s w i t h a d e f a u l t o t h e r t h a n t h e
" f i r s t appearance" d e f a u l t . However, Simpkins can e a s i l y b e
distinguished. There t h e l i t i g a t i o n was s t i l l i n i t s p r e -
l i m i n a r y s t a g e s and t h e d e f a u l t e n t e r e d was s o l e l y due t o
t h e n e g l i g e n c e of a n o u t - o f - s t a t e attorney. Such i s n o t t h e
case here.
W c a n , however, f i n d c a s e s from o t h e r j u r i s d i c t i o n s
e
a n a l o g o u s t o t h e c i r c u m s t a n c e s of t h i s c a s e , p a r t i c u l a r l y
where t h e a p p e l l a n t d e l i b e r a t e l y r e f u s e d t o p a r t i c i p a t e i n
d i s c o v e r y o r t o comply w i t h a n o r d e r of t h e c o u r t i s s u e d
p u r s u a n t t o Rule 37 of t h e Rules of C i v i l P r o c e d u r e and
whose a t t o r n e y withdraws d u r i n g t h e c o u r s e of t h i s noncom-
pliance. Most a n a l o g o u s i s G a l l e g o s v . F r a n k l i n ( 1 9 7 6 ) , 89
N.M. 118, 547 P.2d 1160, c e r t . den. 549 P.2d 284. There t h e
a p p e l l a t e c o u r t c a r e f u l l y reviewed t h e r e c o r d which i n d i c a t e d
t h a t t h e a p p e l l a n t s had f a i l e d t o answer i n t e r r o g a t o r i e s o r
otherwise cooperate with p r e t r i a l discovery. I n t h a t case
a p p e l l a n t s t a t t o r n e y s withdrew d u r i n g t h e p r o c e e d i n g s .
T h e r e a f t e r t h e p l a i n t i f f s s e r v e d upon t h e a p p e l l a n t s a
n o t i c e of a p p l i c a t i o n f o r a d e f a u l t judgment. The d e f a u l t
was based on t h e a p p e l l a n t s t noncompliance w i t h t h e r u l e s of
d i s c o v e r y and t h e e x p l i c i t a u t h o r i z a t i o n f o r e n t r y o f s u c h a
d e f a u l t under Rule 37. I n G a l l e g o s t h e d e f a u l t judgment was
allowed t o stand, w i t h t h e c o u r t s t a t i n g a s a u t h o r i t y lan-
guage f r o m H. F. Livermore Corp. v. ~ k t i e n g e s e l l s c h a f t
Gebruder Loepfe ( D . C . Cir. 1 9 7 0 ) , 432 F.2d 689, where t h e
c o u r t held:
"Given t h i s approach, t h e d e f a u l t judgment must
n o r m a l l y b e viewed a s a v a i l a b l e o n l y when t h e
a d v e r s a r y p r o c e s s h a s been h a l t e d b e c a u s e of
an e s s e n t i a l l y unresponsive party. In that
i n s t a n c e , t h e d i l i g e n t p a r t y must be p r o t e c t e d
l e s t he be f a c e d w i t h i n t e r m i n a b l e d e l a y and
continued u n c e r t a i n t y as t o h i s r i g h t s . The
d e f a u l t judgment remedy s e r v e s a s s u c h a pro-
t e c t i o n . F u r t h e r m o r e , t h e p o s s i b i l i t y of a
d e f a u l t i s a d e t e r r e n t t o t h o s e p a r t i e s who
choose d e l a y a s p a r t o f t h e i r l i t i g a t i v e s t r a t e -
gy* " 432 F.2d a t 691.
A f t e r q u o t i n g Livermore, t h e c o u r t i n G a l l e g o s went on t o
say:
"From J a n u a r y 29, 1974, t o November 1 8 , 1974,
a p e r i o d o f t e n months, t h e d e f e n d a n t s f a i l e d
t o comply w i t h t h e R u l e s of C i v i l P r o c e d u r e .
A d e f a u l t judgment may be e n t e r e d . See Rules
5 5 ( a ) and 3 7 ( d ) of t h e Rules of C i v i l P r o c e d u r e .
"In addition, defendants f i l e d a consent t o the
w i t h d r a w a l o f a t t o r n e y s a f t e r t h e d e f a u l t judg-
ment was e n t e r e d . Defendants, having n o t i c e
of t h e motion f o r w i t h d r a w a l , f a i l e d t o o b t a i n
o t h e r a t t o r n e y s , f a i l e d t o appear a t t h e hear-
i n g on t h e motion f o r d e f a u l t judgment, and
f a i l e d t o show any c a u s e , o r a l o r w r i t t e n , why
t h e d e f a u l t judgment s h o u l d n o t be e n t e r e d .
"To g r a n t t h e d e f e n d a n t s a r e v e r s a l now means
t h a t w e would g i v e c r e d e n c e t o e s s e n t i a l l y
u n r e s p o n s i v e p a r t i e s , and c o n s e n t t h a t t h e y may
h a l t t h e a d v e r s a r y p r o c e s s and e n d l e s s l y d e l a y
t h e r i g h t s o f p l a i n t i f f . The p h i l o s o p h y of
t h e l a w of c i v i l p r o c e d u r e m i l i t a t e s a g a i n s t
t h i s p r o t r a c t e d wearisome c o n d u c t . " Gallegos,
547 P.2d a t 1164-1165.
The same r e a s o n i n g c a n be a p p l i e d t o a p p e l l a n t s h e r e .
See a l s o Johnson v . M a t e l i c h ( 1 9 7 1 ) , 165 Mont. 329, 517 P.2d
A s t o t h e second p a r t of a p p e l l a n t s ' argument, i n t h e
a f f i d a v i t f i l e d w i t h t h e motion t o s e t a s i d e t h e d e f a u l t
judgment, James Kraus, S r . , s t a t e d t h a t he thought t h a t h i s
second c o u n s e l was s t i l l r e p r e s e n t i n g a p p e l l a n t s u n t i l
J a n u a r y 29, 1979, even though t h e D i s t r i c t C o u r t had p e r -
m i t t e d t h e i r w i t h d r a w a l on October 2 4 , 1978. Appellants
make much of t h e argument t h a t t h e r e w e r e no c o u n t e r a f f i -
d a v i t s and s o K r a u s ' s a f f i d a v i t was t h e o n l y e v i d e n c e upon
which t h e D i s t r i c t C o u r t s h o u l d have based i t s d e c i s i o n . We
f i n d t h i s argument w i t h o u t m e r i t .
As t o the f i r s t point, t h e a f f i d a v i t h a s t o be a c c e p t e d
f o r what i t a c t u a l l y i s - - a s e l f - s e r v i n g document drawn by
appellants1 attorney. The g e n e r a l r u l e i s t h a t a f f i d a v i t s
" a r e commonly r e g a r d e d a s weak e v i d e n c e , t o b e r e c e i v e d w i t h
c a u t i o n , " and t h a t " t h e y a r e n o t c o n c l u s i v e of t h e f a c t s
s t a t e d t h e r e i n even though n o t c o n t r a d i c t e d by c o u n t e r -
affidavits." 32A C.J.S. Evidence 81032 a t 706. See a l s o
Lohman v. Lohman ( 1 9 4 6 ) , 29 Cal.2d 1 4 4 , 173 P.2d 657, 660.
Here t h e r e c o r d b e f o r e t h e t r i a l c o u r t b e l i e d t h e
t e s t i m o n y of K r a u s l s a f f i d a v i t , even though t h e t r i a l c o u r t
l a t e r n u l l i f i e d t h e withdrawal order. T h e r e i s no q u e s t i o n
t h a t a copy of t h e ' o r d e r a l l o w i n g t h e w i t h d r a w a l of t h e f i r m
was s e r v e d on James Kraus, S r . A r e c e i p t was a t t a c h e d t o
t h e o r d e r of w i t h d r a w a l i n d i c a t i n g t h a t t h e Cascade County
s h e r i f f s e r v e d Kraus w i t h a copy of t h e o r d e r p e r m i t t i n g
w i t h d r a w a l on October 28, 1978. While a p p e l l a n t s claim t h a t
t h e y had no " n o t i c e " o f t h e October 24 o r d e r , t h e y d i d n o t
c o u n t e r t h e f a c t t h a t i t was s e r v e d upon Kraus and t h a t he
was p e r s o n a l l y s e r v e d w i t h a l l t h e m o t i o n s , n o t i c e s and
o r d e r s subsequently f i l e d . There i s no q u e s t i o n t h a t Kraus,
a n e x p e r i e n c e d , c a p a b l e businessman, had s u f f i c i e n t n o t i c e
t o know what was g o i n g on and y e t c h o s e t o i g n o r e i t a t
c o n s i d e r a b l e r i s k t o h i m s e l f and h i s c o r p o r a t i o n .
I n Johnson v. M a t e l i c h , s u p r a , i n r e f u s i n g t o s e t a s i d e
a d e f a u l t judgment a g a i n s t a n o t h e r d e l i b e r a t e l y u n r e s p o n s i v e
l i t i g a n t , t h i s Court noted:
"Defendant h a s made no showing of why h e f a i l e d
t o f i l e an answer w i t h i n t h e t i m e g r a n t e d by
the d i s t r i c t court. Defendant now asserts t h a t
h e w i l l be p r e j u d i c e d b e c a u s e he h a s a good de-
f e n s e t o t h e c l a i m s and now w i l l b e u n a b l e t o
assert the defense. If defendant is in any
way prejudiced, the record clearly shows that
it is by his own failure and disregard to as-
sert his rights when available to him." 163
Mont. at 335, 517 P.2d at 734.
We note particularly the trial court's order of January
29, 1979. Noncompliance with it formed the basis of the
default judgment under Rule 37. That order required appel-
lants to answer interrogatories served eight months earlier
on June 2, 1978. As of the date of respondent's brief
before us, some twenty-two months after the interrogatories
were filed, appellants made no attempt to answer the inter-
rogatories or conform in the slightest with the trial court's
order. On this record we cannot find an abuse of discretion
in the refusal of the trial court to set aside the default
judgment. Appellants did not offer proper answers to the
interrogatories at any time or explain or justify their
refusal to comply. Such matters, in our opinion, would be
a prerequisite to establishing an abuse of discretion.
Given the length of time involved, appellants' default
coupled with their ongoing refusal to rectify it, we are
convinced that appellants failed to meet a showing required
under Rule 60(d), M.R.Civ.P., and the District Court was
correct in refusing to set aside its default judgment.
The next issue raised was whether the withdrawal of
appellants' second set of attorneys voided all subsequent
proceedings. Appellants rely upon McPartlin v. Fransen
(1978) - Mont. , 582 P.2d 1255, 35 St.Rep. 1191. In
McPartlin this Court ruled under section 93-2104, R.C.M.
1947, now section 37-61-405, MCA, that when an attorney
withdraws without consent of his client, the opposing party
must "notify" the unrepresented party to have counsel appear
before the former may proceed with the action. Appellants
now c l a i m t h a t r e s p o n d e n t d i d n o t m e e t t h a t r e q u i r e m e n t . We
disagree.
I n M c P a r t l i n we n o t e d t h a t t h e r e was no h a r d - a n d - f a s t
r u l e on how t h e s t a t u t o r y " n o t i c e " must be g i v e n t o t h e
u n r e p r e s e n t e d p a r t y and s t a t e d :
"We do n o t b e l i e v e a c t u a l n o t i c e must be p e r -
s o n a l l y s e r v e d on t h e u n r e p r e s e n t e d p a r t y op-
ponent. But w e do h o l d t h e r e p r e s e n t e d p a r t y
must make a p o s i t i v e showing h e h a s a t t e m p t e d
t o communicate a d e q u a t e n o t i c e t o t h e u n r e p r e -
sented party. I f t h e r e p r e s e n t e d p a r t y can
show he made a g o o d - f a i t h e f f o r t t o n o t i f y
t h e u n r e p r e s e n t e d p a r t y and a d v i s e him h e
should s u b s t i t u t e counsel o r appear i n person,
and t h e n o t i c e a l s o s e t s f o r t h t h e d a t e of t h e
n e x t h e a r i n g o r a c t i o n i n t h e m a t t e r pending,
t h e n t h e r e p r e s e n t e d p a r t y w i l l be deemed t o
have s a t i s f i e d t h e r e q u i s i t e s of s e c t i o n 93-
2104, R.C.M. 1947." 582 P.2d a t 1259.
Here, a p p e l l a n t s w e r e s e r v e d w i t h a n o r d e r of t h e c o u r t
r e q u i r i n g them t o do what t h e " n o t i c e " a s k s them t o do. In
a d d i t i o n , t h e October 25, 1978 o r d e r was p e r s o n a l l y s e r v e d
on a p p e l l a n t s , even though i n M c P a r t l i n t h i s C o u r t deemed
s u c h a s e r v i c e n o t r e q u i r e d by t h e s t a t u t e . The o r d e r of
t h e c o u r t e x c e e d s i n i m p a c t t h e " n o t i c e " from opposing
c o u n s e l where b o t h t h e n o t i c e and t h e o r d e r convey t h e same
information. I n t h i s case, f u r t h e r n o t i c e of c o u n s e l would
have been r e d u n d a n t and s e r v e no u s e f u l p u r p o s e .
I n a r g u i n g t h a t t h e c o u r t ' s o r d e r of October 25, 1978,
was i m p r o p e r l y s e r v e d s o a s t o r e t r o a c t i v e l y make v o i d a l l
i n t e r v e n i n g p r o c e e d i n g s , t h e a f f i d a v i t of James Kraus, S r . ,
f i l e d on J a n u a r y 25, 1979, i n d i c a t e s t h a t he knew he was n o t
r e p r e s e n t e d by c o u n s e l . H e r e , a p p e l l a n t s had f u l l knowledge
on J a n u a r y 25, 1979. I n a d d i t i o n , t h e y had f u l l n o t i c e of
t h e c o u r t ' s o r d e r of t h a t d a t e g i v i n g them twenty d a y s t o
f i l e answers t o t h e i n t e r r o g a t o r i e s . They c h o s e t o do
nothing. Indeed, t h e y d i d n o t even move t h e c o u r t f o r
r e c o n s i d e r a t i o n of t h a t o r d e r d u r i n g t h e twenty d a y s between
t h e s e r v i c e of t h e o r d e r upon them and t h e s e r v i c e o f r e s p o n -
d e n t ' s a p p l i c a t i o n f o r a d e f a u l t judgment. They c h o s e n o t
t o appear a t the t i m e set f o r hearing t h e a p p l i c a t i o n f o r
d e f a u l t judgment, even though r e s p o n d e n t ' s n o t i c e was s e r v e d
upon them seven d a y s b e f o r e t h e h e a r i n g r a t h e r t h a n merely
t h e t h r e e d a y s r e q u i r e d by Rule 55, M.R.Civ.P. Following
t h a t , they d i d nothing f o r over t h i r t y days a f t e r r e c e i p t
from t h e c l e r k of t h e c o u r t of a n o t i c e of e n t r y of judg-
ment, a p r o c e d u r a l c o u r t e s y n o t p r o v i d e d i n t h e c a s e o f
" f i r s t appearance" d e f a u l t . They d i d n o t h i n g f o l l o w i n g
t h e i r r e c e i p t of t h e c o u r t o r d e r a l l o w i n g t h e c l e r k t o
r e l e a s e t h e i r monies t o r e s p o n d e n t . Under t h e s e circum-
s t a n c e s , we can s e e no r e a s o n t o a f f o r d them t h e r e l i e f
requested.
The D i s t r i c t C o u r t awarded r e s p o n d e n t $3,150 f o r a t t o r -
ney f e e s where t h e amended c o m p l a i n t o n l y asked f o r $3,000.
T h i s was n o t o b j e c t e d t o a t t h e D i s t r i c t C o u r t l e v e l . Now
on a p p e a l , a p p e l l a n t s o b j e c t t o t h e a d d i t i o n a l $150. A t the
h e a r i n g on t h e a p p l i c a t i o n f o r a d e f a u l t d a t e d March 1,
1979, r e s p o n d e n t ' s a t t o r n e y o f f e r e d t e s t i m o n y t o i n d i c a t e
t h a t a r e a s o n a b l e a t t o r n e y f e e would b e $3,150. I n view of
t h i s f a c t w e f i n d no r e a s o n t o r e d u c e t h e amount awarded a s
being excessive.
The judgment of t h e D i s t r i c t C o u r t i s a f f i r m e d w i t h t h e
a d d i t u r of $150 f o r a t t o r n e y f e e s f o r d e f e n d i n g t h e same.
We concur:
Chief Justice
P ~
J & Justices