(dissenting).
I respectfully dissent.
I believe the majority has restricted the application of Iowa Rule of Civil Procedure 236 by adopting an extremely narrow view of “good cause.” The spirit of this rule is not served by such judicial construction. The purpose of rule 236 is to permit a controversy to proceed to a determination on its merits rather than on the basis of nonprejudicial inadvertence or mistake. Whitehorn v. Lovik, 398 N.W.2d 851, 853 (Iowa 1987). We take a liberal approach in granting relief for defaults for the very sound and obvious reason that trial on the merits is favored. First Nat’l Bank v. Claiser, 308 N.W.2d 1, 3 (Iowa 1981) (Uhlenhopp, J., dissenting) (We, like the federal courts, under Federal Rule of Civil Procedure 60(b) should readily grant relief from defaults “in order to get to the merits and avoid harsh results.”).
Here, the appellants urge the reason they failed to appear is because of mistake and excusable neglect. I agree.
The district court found the following facts. Madsen filed his lawsuit against Litton Industries, Inc. and its subsidiaries *719on December 12, 1990, after a prolonged attempt to settle his claim with Litton’s insurance carrier Hartford Insurance Company. Madsen’s letter, dated December 12, 1990, to Hartford’s claim representative advising the insurance carrier that a petition had been filed by Madsen was not disseminated either to Litton and its subsidiaries, or to Hartford’s senior claims supervisor. After discussing the Madsen claim with Hartford’s senior claims supervisor, attorney Estabrook of Litton’s litigation department in Beverly Hills, California, opened, in January 1991, a file on the claim. The file was mistakenly labeled as a litigation file and a memo regarding the opening of this file was circulated to attorney Hilinski of Litton’s subsidiary in Kentucky. When Hi-linski received the Madsen original notices served on Litton’s subsidiaries in February and March of 1991, he assumed these matters were being handled by Estabrook and no action was taken. On March 27, 1991, an office administrator accepted service of the original notice on Litton in California and placed the notice and petition in the Madsen file without calling the notice to Estabrook’s attention. Default was taken by Madsen against Litton on April 27 and against Litton’s subsidiary on May 9. Default judgment in the sum of $137,173.75 was entered against the defendants on June 19, 1991.
These additional facts are undisputed in the record. On May 31, Estabrook received a letter, dated May 13, from Hartford asking that he review the Madsen file. Estabrook requested his secretary to locate the file. The file was not delivered to him before he left for San Francisco where he remained during the first three weeks in June. He was advised of the default judgment on June 27. He immediately employed Iowa counsel who promptly filed a motion to set aside the default. The file identification system used by Litton for receiving and handling original notices has worked successfully for nine years while handling over 500 claims. Under this system a “claim” file is changed to a “litigation” file once a lawsuit is filed and served.
The district court concluded that good cause had not been shown because:
Many trained professionals were presented with knowledge of the pendency of this lawsuit. No one took the initiative to communicate. There should have been no confusion and it was reasonable to expect that out of all of the various people involved, someone would have taken reasonable steps to make inquiry about the pendency of the lawsuit and its status. Nevertheless, no one chose to do so.
The Iowa Court of Appeals stated: “In general the failure to appear was caused by a lack of organization, a lack of coordination and a lack of communication. We simply do not find these factors constitute ‘good cause.’ ” The majority opinion suggests that the district court’s finding that Litton was negligent supports the conclusion that Litton had failed to show good cause.
I believe the record establishes that the failure of Litton to appear and defend was the result of mistake and excusable neglect. The district court and appellate courts agree the mislabeling of the Madsen claim file was a mistake. Excusable neglect is understood to encompass situations in which the failure to comply with a filing deadline is attributable to negligence or fault. Whitehorn, 398 N.W.2d at 854; see also Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. Partnership, — U.S. -, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993) (“excusable neglect” defined under bankruptcy rule 9006(b)(1) and as used in Federal Rule of Civil Procedure (60)(b)).
Many years ago our court recognized a system may fail as a result of a mistake in the office force. Reilley v. Kincaid, 181 Iowa 615, 165 N.W. 80 (1919). In Reilley, an office employee mistakenly filed a case under the wrong name. This caused the defendant’s counsel to fail to appear. The trial court refused to set aside the default. In reversing the trial court, this court stated:
The lawyer who has clientage of any considerable proportions and is engaged in a general practice may properly, and indeed must, depend to a large degree upon his office force to keep his work *720and his records systematized and his papers properly preserved and pigeonholed, and if as a term of court approaches and he lists the matters which require his attention therein, the misplacement of a paper or file leads him, without fault on his part, to overlook the necessity of an appearance in a new case with which he has not yet become thoroughly familiar, he ought not to be held chargeable with negligence, and his failure so caused is not to be imputed to his client as negligence.... It is, moreover, a rule of reason and fairness and in perfect harmony with the purposes for which courts of justice are established and maintained.
Reilley, 181 Iowa at 624, 165 N.W. at 83.
Counsel for Litton could reasonably rely on the office system for receiving and handling original notices as a means of avoiding a default judgment. Estabrook requested a claim file be opened. He did not know the Madsen suit had been filed. Hi-linski and other staff persons reasonably believed the Madsen claim was in litigation and that Estabrook was handling it. If their conduct was careless or negligent, it was excusable under the circumstances.
Here, as in most cases involving rule 236, the court makes findings of fact based upon the pleadings and affidavits filed by the parties. As in this case, most statements included in the affidavits are not disputed. The question then becomes what conclusions can be drawn from the undisputed facts and the disputed facts that the court finds believable. Here, the district court concluded that Litton had failed to establish “good cause.” This is not a finding of fact but is a legal conclusion drawn from the facts. We should not be bound by the district court conclusion that the affidavits were inadequate. I would vacate the court of appeals decision and reverse the district court ruling.
NEUMAN, J., joins this dissent.