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Full Opinion
Melvin James SPRUNG, Jr., Respondent,
v.
NEGWER MATERIALS, INC., Appellant.
Supreme Court of Missouri, En Banc.
Albert E. Schoenbeck, Brent W. Baldwin, St. Louis, for appellant.
Charles L. Merz, St. Louis, for respondent.
Dissenting Opinion of Justice Blackmar's Opinion Corrected September 8, 1989.
*98 BILLINGS, Judge.
This is Sprung II—a petition in equity to set aside a default judgment after remand by this Court in Sprung I. Following an evidentiary hearing the trial court denied relief. The Missouri Court of Appeals, Eastern District, affirmed the order of the lower court but ordered the case transferred to this Court. Affirmed.
The principal opinion of Judge Gary M. Gaertner for the court of appeals, with minor modification, and without quotation marks, is adopted as the opinion of this Court, and is as follows:
Appellant, Negwer Materials, Inc., appeals the order of the trial court overruling appellant's petition in equity to set aside a default judgment for $1,500,000.00 in favor of respondent, Melvin James Sprung, Jr., and against appellant. On appeal appellant raises four issues: (1) The trial court incorrectly declared and applied the law in determining that appellant did not have good reason or excuse for the default[1]; (2) The failure of respondent's attorney to advise appellant's attorney that a default judgment had been entered requires the judgment be set aside; (3) Imputing the conduct of appellant's attorney and insurer to appellant violates due process of law; and (4) Respondent's petition fails to state a cause of action. Finding appellant's contentions to be without merit, the judgment is affirmed.
The evidence reveals respondent filed a petition on December 27, 1984, for damages sustained when a cart, which was rented from the appellant, tipped over and threw drywall on the respondent; appellant received personal service on January 11, 1985. Appellant proceeded to deliver the petition to its insurance company which then delivered it to a law firm. On January 31, 1985, an attorney in the firm dictated an entry of appearance and a request for extension of time to plead. Appellant asserts that, upon the documents being signed by the lawyer, a secretary mailed them to the insurance company. Neither the clerk of the circuit court nor respondent's attorney received appellant's entry of appearance and request for an extension of time to plead.
The trial court entered an interlocutory judgment of default against appellant on February 28, 1985. On March 11, 1985, the trial court entered a final judgment by default in the amount of $1,500,000. Further facts will be adduced concerning the circumstances occasioning the default judgment as they become warranted by our discussion of the issues.
On April 22, 1985, respondent's attorney informed appellant's attorney that a final judgment had been entered. Appellant filed on May 3, 1985, two motions to set aside the default judgment. The trial court overruled appellant's motion to set aside the judgment for irregularity and sustained appellant's motion to set aside the default judgment on equitable grounds pursuant to Rule 75.01. The court of appeals reversed the trial court's order setting aside the judgment on equitable grounds and affirmed the order denying the motion to set aside the judgment for irregularity.
This Court in Sprung I decided the motion to set aside the judgment for irregularity was properly denied. Further, that the cause should be remanded to the trial court with directions to treat appellant's motion to set aside the final default judgment as an independent suit in equity. The Court ruled the trial court lacked jurisdiction to set aside the judgment through the exercise of its discretionary powers conferred by Rule 75.01, where the thirty days provided by Rule 75.01 had expired prior to the filing of appellant's motion; instead, an independent petition in equity was required. Sprung v. Negwer Materials Inc., 727 S.W.2d 883, 886 (Mo. banc 1987). Upon remand, and following the evidentiary hearing, the trial court entered an order in which it overruled appellant's petition in equity to set aside the judgment. It is from this order that appellant appeals.
At the outset, the Court recognizes the appropriate standard of review. The trial court's decree is to be sustained unless there is no substantial evidence to support *99 it, it is against the weight of the evidence, or it erroneously declares or applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). Further, as noted in Sprung I, that, as appellant's motion is to be accorded the status of a petition, "[Appellant] is required not only to plead its cause, but also to prove it." Sprung, 727 S.W.2d at 889.
In its first point, appellant claims the trial court erred in refusing to set aside the default judgment on equitable grounds. In order for one to prevail in setting aside a default judgment on equitable grounds, he must show a meritorious defense, good reason or excuse for the default and that no injustice will accrue to the party who obtained the default judgment as a result of setting aside the judgment. Sprung, 727 S.W.2d at 889.
Appellant's principal argument is that the trial court used the wrong standard for determining whether appellant had good reason or excuse for the default. Appellant maintains that a party who seeks to set aside a default judgment need only show "reasonable diligence or excuse for the default" citing Whitledge v. Anderson Air Activities, Inc., 276 S.W.2d 114, 116 (Mo.1955). Appellant further notes amended Rule 74.05(c), effective January 1, 1988, which states that "good cause includes a mistake or conduct that is not intentionally or recklessly designed to impede the judicial process." The Court in Sprung I unequivocally enunciated the criteria, at least in the context of an independent action in equity, for determining "good reason or excuse". Adopting the language contained in Hamm v. Hamm, 437 S.W.2d 449, 453 (Mo.App.1969), the court declared that "good reason or excuse" exists when the default occurs "by reason of accident, mistake, inadvertence, mischance or unavoidable circumstances unmixed with neglect or inattention...." (emphasis in original). See also Patterson v. Fitzgibbon Discount Corporation, 339 S.W.2d 301, 306 (Mo. App.1960). The opinion in Sprung I specifically defined the issue for the trial court's determination by stating:
[Appellant] claims that its failure to answer resulted from mistake, inadvertence, mischance, or accident. [Respondent] does not concede that [appellant's] failure to answer proceeded from `accident, mistake, inadvertence, or unavoidable circumstances unmixed with neglect or inattention.' ... whether [appellant] had a good cause or excuse for its inattention is a factual matter not fully addressed in the proceedings before the trial court. Further proceedings are required.
Sprung, 727 S.W.2d at 890 (emphasis in original).
Thus, the dispositive issue is whether or not there was sufficient evidence for the trial court to conclude that appellant's conduct, be it considered accident, mistake, inadvertence, or mischance, was not unmixed with neglect or inattention.
Appellant admits that its entry of appearance and proposal for an extension of time to plead were never received by respondent's attorney or filed with the trial court. Both the original and the copy of the documents were apparently sent to appellant's insurance company. Appellant's law firm utilized an internal system to alert an attorney if an order mailed to the court was not granted. A receptionist reviewed the Daily Record each day to determine whether requests by the law firm for extensions of time had been granted; if the Daily Record did not reflect that a request had been granted within a reasonable time, the mechanism called for the attorney to be notified. However, although no entry reflecting the granting of an extension of time ever appeared in the Daily Record, no inquiry was made by the law firm to determine the status of the case, and no further action was taken until approximately fortynine days after the law firm had prepared the proposed order. In addition to the preceding safeguard, the law firm also had a system whereby a printout of all court actions relating to its cases was placed daily on the desk of each attorney. The judgment in the present case was reflected on the March 15, 1985, printout.
*100 Conduct on the part of the appellant's insurance company also contributed to the default. Both appellant's attorney and his secretary testified that copies of court documents requesting time to plead and entries of appearance were not routinely sent to the insurance company. The claims manager at the insurance company, who was charged with monitoring the file in the present case, testified that she had not seen a yellow original court memorandum requesting time to plead before she received the one in the present case. She acknowledged that it would have been apparent from a cursory examination of the documents she received from the law firm that at least some of them were intended for the court. Nonetheless, the claims manager placed the documents in the insurance company's file and advised no one. These facts indicate that the default judgment was the result of possible neglect and inattention by appellant's law firm and in particular the insurance company.
Much authority supports the denial of relief when a default judgment is the result of mishandling of documents. In Jones v. Chrysler Corp., 731 S.W.2d 422 (Mo.App. 1987), which was decided after Sprung I, the court states, "[M]isrouting of papers within an organization does not constitute good cause for default nor does it show excusable neglect." Id. at 427. In Jones, a secretary for the defendant inadvertently delayed sending a letter, timely dictated, to the defendant's law firm until after a default had been entered; the court refused to set aside the judgment. Id. at 425. Further, where the default is caused by the mishandling of documents by defendant's legal department, Hughes v. Christian, 586 S.W.2d 788, 792 (Mo.App.1979), or by the defendant's insurance company, Luce v. Anglin, 535 S.W.2d 504, 507 (Mo.App. 1976), the trial court's denial of relief to the defaulting party has been upheld. As noted in Barney v. Suggs, 688 S.W.2d 356, 362 (Mo. banc 1985) (Welliver, J., dissenting):
Default judgments are the result of either the intentional omission or negligence of clients or the omission or negligence of attorneys, or both.
To this observation, insurance carriers should be added.
The law is well-settled that the neglect of a defendant's attorney or his insurer which results in a default judgment is imputable to the defendant. Ward v. Cook United, Inc., 521 S.W.2d 461, 472 (Mo.App.1975). See also Luce, 535 S.W.2d at 508. Appellant places much reliance on the decision in Whitledge v. Anderson Air Activities, 276 S.W.2d at 114. The Court in Whitledge reaffirmed the general rule that negligence by an attorney in permitting a default judgment is imputable to the client. Id. at 116. However, the decision states, "[I]t does not necessarily follow that the rule is applicable to a case where defendant has retained counsel, and counsel abandons the defense of the case without notice to his client-defendant...." The holding in Whitledge has been consistently restricted to cases in which an attorney abandons his client. See Rucker v. Thrower, 559 S.W.2d 40, 41-42 (Mo.App.1977). The present case involves no claim or suggestion of abandonment.
A lawyer is charged during the progress of a cause with the duty, and in fact presumed, to know what is going on in his case. Vaughn v. Ripley, 446 S.W.2d 475, 480 (Mo.App.1969). He must vigilantly follow the progress of a case in which he is involved. Id. See also Dodge v. Safe-Guard Sales, Inc., 356 S.W.2d 101 (Mo. App.1962). And, although the law favors a trial on the merits, such a generalization must be carefully applied to the facts of each case in the interest of justice; for, the law defends with equal vigor the integrity of the legal process and procedural rules and, thus, does not sanction the disregard thereof. Luce, 535 S.W.2d at 507. This point is denied.[2]
In its second point, appellant claims the failure of respondent's attorney to advise appellant's attorney that a default judgment had been entered until after its *101 entry provides a basis for setting aside the judgment. It is undisputed that respondent's attorney was unaware that appellant was represented by counsel or intended to defend the claim until fourteen days after final judgment had been entered. The judgment was entered on March 11, 1985. Respondent received appellant's answer on March 23 or 25, 1985, and requests for discovery on March 29, 1985. Respondent's attorney did not contact appellant's attorney until over thirty days after the judgment was entered. There is no contention that the conduct of appellant's attorney had any bearing on the entry of the default judgment itself.
In rejecting a contention that a plaintiff should notify a defaulting defendant after obtaining an interlocutory judgment of default, this Court in Barney v. Suggs, 688 S.W.2d at 359-60 stated:
The procedure plaintiff utilized followed our rules, the statutes, and decisional law....
* * * * * *
... [D]efendant was personally served with summons and petition and was put on notice of every stage of the proceeding (citations omitted).
* * * * * *
Defendant negligently disregarded legal process. Once he was validly served he was charged with notice and in court for all subsequent proceedings. Plaintiff proceeded properly under the rules. Defendant ignored them. If judgments are properly rendered they should not be disturbed by loose interpretations of cases and newly created and imposed rules. Dereliction by a defendant should not be so rewarded. No additional notice was required under the law.
In Friedman v. The Caring Group, Inc., 750 S.W.2d 102, 103-04 (Mo.App.1988), the issue of the conduct of a plaintiff's attorney as to the entry of a default judgment was squarely before the appellate court.[3] The court refused to hold that the failure of plaintiff's attorney to notify defendant's attorney, who had entered his appearance in the case but not filed an answer, that plaintiff's attorney intended to take a default judgment provided a basis for setting aside the judgment. In the present case, respondent's attorney did not know that appellant was represented by an attorney until after the default judgment was entered. The Court concludes plaintiff's attorney had no duty to inform the defendant or its attorney that a judgment had been entered.
In its third point, appellant claims that imputing the conduct of appellant's attorney and insurer to appellant denied appellant due process of law. The United States Supreme Court holds that it is not unjust for a client to be bound by the acts of his attorney. Link v. Wabash Railroad Co., 370 U.S. 626, 634, 82 S.Ct. 1386, 1390, 8 L.Ed.2d 734 (1962). We discern no rationale for distinguishing between an attorney and an insurance company in this context. This point is denied.
In its fourth point, appellant claims that respondent's petition does not state a cause of action. In remanding the present case, Sprung I did not direct or suggest that the trial court consider this issue, although the issue was before the court, thus implicitly rejecting the claim. This Court will nonetheless consider whether the petition states a cause of action.
Initially, this Court notes the sufficiency of a petition may be raised at any stage of a proceeding, including on appeal after judgment. Sumpter v. J.E. Sieben Construction Co., 492 S.W.2d 150, 153 (Mo. App.1973).
But when the attack on the sufficiency of the petition is made for the first time on appeal, the pleading will be held good unless it it [sic] wholly fails to state a cause of action, and in this determination, the petition will be given its fullest intendment as a claim for relief. Ellyson *102 et ux v. Missouri Power & Light Co., Mo.App., 59 S.W.2d 714, 717. A petition will be found sufficient after judgment if, after allowing those reasonable inferences and matters necessarily implied from the facts stated, there [are] sufficient [allegations] to advise the defendant with reasonable certainty as to the cause of action it is called upon to meet and bar another action for the same subject-matter. Barber v. Allright Kansas City, Inc., Mo.App., 472 S.W.2d 42, 44.
Sumpter, 492 S.W.2d at 153.
Applying these principles to respondent's petition, the Court finds that the petition states a valid claim for damages which were the result of appellant's negligence. The petition alleges by clear implication that appellant had a duty to provide a reasonably safe cart. It further states that appellant breached this duty by supplying a cart which was not reasonably safe. Specifically, the petition alleges that the wheels on the cart were in a poor state of repair and not safe when used on uneven ground. The petition further states that the cart, as rented, was not safe for the use intended in that it could not hold a load of drywall without tipping over. The petition concludes that as a proximate result of the breach the respondent was damaged. All the elements of negligence— duty, breach, proximate cause and damage—are sufficiently stated, American Mortgage Investment Co. v. Hardin-Stockton Corp., 671 S.W.2d 283, 292-93 (Mo.App.1984), to advise appellant as to the cause of action and to bar another action on the same subject matter. Sumpter, 492 S.W.2d at 153.
The respondent chose to base his claim against appellant upon a general negligence theory. Appellant's assertion that the petition states a cause of action for negligently furnishing a dangerous instrumentality is without merit. The term "dangerous" or "dangerous condition" does not appear in the petition. Accordingly, appellant's reliance on Ridenhour v. Colson Caster Corp., 687 S.W.2d 938 (Mo.App. 1985) is misplaced. Ridenhour was a wrongful death action involving a gratuitous bailment; the present action involves a non-gratuitous bailment. This point is denied.
The judgment of the trial court is affirmed.
COVINGTON, J., concurs in separate opinion filed.
RENDLEN, J., concurs in separate opinion filed and concurs in separate concurring opinion of COVINGTON, J.
HIGGINS, J., concurs and concurs in separate concurring opinion of COVINGTON, J.
ROBERTSON, J., dissents in separate opinion filed.
BLACKMAR, C.J., dissents in separate opinion filed and concurs in separate dissenting opinion of ROBERTSON, J.
WELLIVER, J., dissents in separate opinion filed and concurs in separate dissenting opinions of BLACKMAR, C.J., and ROBERTSON, J.
COVINGTON, Judge, concurring.
Although one is naturally inclined to be sympathetic to permitting relief from the judgment in this case, to characterize the attorney's conduct as excusable neglect or mistake unmixed with neglect ignores settled precedent and threatens to upset the stability of the Court's final judgment rule. Litigation must end and parties to litigation must have an ability finally to conclude a matter however much decisions on the merits of a case are preferred.
It makes little sense to try to define in a vacuum such subjective terms as "mistake," "inadvertence," "mistake unmixed with neglect." These words have meaning only in a specific factual context. The most that the Court could do, therefore, is to decide whether sending a request for an extension of time to plead to a client instead of the court is a mistake unmixed with neglect. Prior case law seems already to have resolved that issue; any neglect on the part of the lawyer will prevent vacating *103 the default judgment except where the attorney has completely abandoned the client.
Since the hearing after remand of this case the Court has adopted a new default judgment rule, Rule 74.05, which contains a more liberal approach to setting aside a default judgment when the motion to do so is made within one year. If the problems in Sprung I, 727 S.W.2d 883 (Mo. banc 1987), and Barney v. Suggs, 688 S.W.2d 356 (Mo. banc 1985), could have been resolved by a petition in equity, there would have been no need to adopt a new default judgment rule. It would be a distortion of precedent now to say that these problems could all along have been resolved by a separate petition in equity. That was not the teaching of Suggs.
The more serious problem, however, is that this case will be precedent for other cases—those filed as separate petitions in equity as well as those filed under Rule 74.06, which permits a final judgment to be set aside for mistake, inadvertence, surprise, or excusable neglect. Neither a petition in equity nor a Rule 74.06 proceeding is limited to default cases. Each applies equally to cases decided on the merits. A liberal interpretation of "excusable neglect" or "mistake unmixed with neglect" will undermine both default judgments and judgments in cases decided on the merits. The more liberal approach of Rule 74.05 may be appropriate for defaults but not for cases decided on the merits. Notably, the more liberal approach is not applied to defaults after one year, and, notably, there are no time limitations on the petition in equity except for laches.
I concur.
RENDLEN, Judge, concurring.
At the outset, we should be mindful that ours is an adversary system and it is in this context that we evaluate the case sub judice.
When, during the course of this litigation, respondent's attorney received information indicating appellant was represented by counsel, he promptly communicated this fact to his client as required by Rule 4, Rules of Professional Conduct, where it is stated in the preamble:
In all professional functions a lawyer should be competent, prompt and diligent. A lawyer should maintain communication with a client concerning the representation.
It was the attorney's responsibility as an advisor of his client in our adversary system to do what he did:
As a representative of clients, a lawyer performs various functions. As advisor, a lawyer provides a client with an informed understanding of the client's legal rights and obligations and explains their practical implications.
Id. (Emphasis added.)
He was, of course, more than an advisor—he was an advocate:
As advocate, a lawyer zealously asserts the client's position under the rules of the adversary system.
Id. (Emphasis added.)
After communicating with the client and explaining the situation in explicit terms, they shared the decision as to the course of action to follow, all consistent with the provisions of Rule 1.2 of Rule 4 which indicates that, except in certain specified instances, an attorney shall abide by the client's decisions concerning the objectives of representation. Though in the case at bar we need not decide whether he was obligated absolutely to follow the client's direction, it is clear that plaintiff's counsel made a good faith, albeit difficult, decision which we cannot say was unethical. Assuming arguendo respondent's counsel had chosen to disregard his client's direction and the judgment had been vacated at his behest, or as a result of his conduct, clearly he would risk a charge of failing to comply with an obligation imposed by the Rules of Professional Conduct, to say nothing of malpractice claims by his client that could flow from the formidable choice he was required to make.
For these reasons too, I concur in the majority opinion of the Court.
*104 ROBERTSON, Judge, dissenting.
A fundamental tension exists in the law relating to default judgments. The law favors resolution of conflicts; it also seeks after justice. It is from the failure of the law to do justice in every circumstance that equity has emerged. From the fourth century B.C., the words of the philosopher describe equity's purpose. "For that which is equitable seems to be just, and equity is justice that goes beyond the written law." Aristotle, Rhetoric, 1374 Loeb Classical Library (1935).
In 1985, this Court decided Barney v. Suggs, 688 S.W.2d 356 (Mo. banc 1985). Prompted by that decision, which demonstrated that "Missouri courts have overemphasized the importance of efficiency and finality and have demonstrated an increasing disregard for the importance of the judicial system's mission to seek the truth," Professor Nanette K. Laughrey authored two articles, which led to the reform of Rule 74 and the adoption of Rule 74.06 relating to default judgments. Laughrey, Default Judgments in Missouri, 50 Mo.L. Rev. 841, 844 (1985) (Laughrey I), and Laughrey, Balancing Finality, Efficiency, and Truth: A Proposed Reform of the Missouri Default Judgment Provisions, 51 Mo.L.Rev. 63 (1986) (Laughrey II).
In this case, the circuit judge found that defendant's failure to answer in a timely fashion was the product of mistake. Rule 74.06(b) does not employ the language found in the cases, "unmixed with neglect or inattention" and permits the court to relieve a party of a default judgment entered under these circumstances. Under the new Rule 74.06(b), defendant in this case would be entitled to have the default judgment set aside upon motion averring "mistake, inadvertence, surprise, or excusable neglect" filed within one year after the entry of the judgment. See Rule 74.06(c).
I do not argue however that Rule 74.06(b) controls this case; it had neither been adopted nor become effective at the time the circuit court issued its decision. Nevertheless, two considerations militate in favor of setting aside the default judgment in this case.
I.
First, case law prior to Suggs is consistent with Rule 74.06(b) in permitting a court sitting in equity to set aside a final default judgment on the basis of the defendant's mistake provided that that mistake is not the product of neglect or inattention. Neither "neglect" nor "inattention" have been defined in the context of default judgments. As the discussion which follows shows, for purposes of suits in equity to set aside default judgments, neglect is not simply a careless act as the majority assumes; it is inattention. The majority's conclusion, therefore, proceeds from a failure to understand clearly the test upon which it relies to decide the case.
Sprung v. Negwer Materials, Inc., 727 S.W.2d 883 (Mo. banc 1987) (Sprung I), held that the defendant's motion to set aside the default judgment established equitable grounds for relief. The case came to this Court after the circuit judge set aside the default judgment "on equitable grounds" and the Court of Appeals, Eastern District, reversed. The issues before the Court were limited in Sprung I to "the jurisdiction of the circuit court to set aside the default judgment on equitable grounds and the propriety of the procedures employed by the circuit court in setting the default judgment aside." Id. at 884. The Court's mandate remanded the case with directions to the circuit court to treat that motion as a petition in equity and to proceed on that basis. It is improper to read the Court's holding in Sprung I any more broadly than that mandate.
On remand, the trial court found that the attorney for defendant prepared an entry of appearance and a proposed order extending the time in which to plead within three days of his receipt of the summons and petition from the defendant and within twenty days of service on defendant. Originals and copies of these documents were sent to the defendant's insurance carrier along with the original of the attorney's letter to the circuit clerk requesting that the proposed order be presented to the judge for signature. The circuit judge also *105 found that defendant filed its answer on March 23, 1985. The circuit judge found further that defendant's attorney mailed a notice to take deposition and a certificate of mailing interrogatories March 29, 1985. All of this took place more than three weeks before plaintiff's counsel informed defendant's counsel that he had obtained a default judgment, which was, by then, final.
The trial court characterized three events—the mismailing of the original entry of appearance and time to plead memorandum, the failure of an employee of the insurance company to realize the significance of the receipt of the original entry and memorandum, and the failure of defendant's attorney's receptionist to notify the attorney of the report noting the default in the legal newspaper—as constituting "neglect and inattention...." The majority seizes this conclusion and, without burdening itself with an analysis of the meaning of "neglect" or "inattention" within an equity context, affirms the trial court.
Hamm v. Hamm, 437 S.W.2d 449, 453 (Mo.App.1969), cited in Sprung I and upon which the majority relies, tells us that "[e]quity will relieve against a judgment for extrinsic fraud, accident and mistake [citation omitted], and where a defendant is denied the occasion to present a meritorious defense by reason of accident, mistake, inadvertence, mischance or unavoidable circumstances unmixed with neglect or inattention," a court of equity will vacate a default judgment and give the injured party an opportunity to present his defense to the trier of the facts. (Emphasis in original.) Hamm cites Patterson v. Fitzgibbon Discount Corp., 339 S.W.2d 301, 306 (Mo. App.1960), as authority for the quoted statement without further analysis. Patterson in turn cites Cherry v. Wertheim, 25 S.W.2d 118, 121 (Mo.App.1930), likewise without analysis. Cherry cites Jackson v. Chestnut, 151 Mo.App. 275, 131 S.W. 747, 749 (1910), and McElvain v. Maloney, 186 S.W. 745, 749 (Mo.App.1916). Jackson states: "That an accident, preventing defense, unmixed with any fault or negligence of a party litigant, will sustain a bill of equity for relief against a judgment by default and which has become final by adjournment of the term, is well established." 131 S.W. at 748. Jackson also quotes 2 Story Equity Jurisprudence, § 885. "In all cases when by accident, mistake, or fraud or otherwise a party has an unfair advantage in proceedings in a court of law, which must necessarily make the court an instrument of injustice, and it is, therefore, against conscience that he should use that advantage, a court of equity will interfere and restrain him from using the advantage."
McElvain cites Smoot v. Judd, 161 Mo. 673, 61 S.W. 854, 857 (1901), as authority for the "unmixed with neglect or inattention" language. Smoot quotes Pomeroy's Equity Jurisprudence § 836.
"Where the defendant in an action at law has a good defense on the merits, which he is prevented by accident from setting up or making available, without any negligence or inattention on his part, and a judgment is rendered against him, equity will exercise its jurisdiction on his behalf by enjoining further proceedings to enforce the judgment, or by setting it aside, so that a trial may be had on the merits." [citation to Pomeroy omitted]. And what is there said of accident is repeated by the same author concerning mistake and fraud. (Emphasis added.)
At last we find the origin of the language found in Hamm. The phrase "unmixed with neglect or inattention" is a paraphrase of § 836 of Pomeroy's treatise on Equity Jurisprudence. I do not find a Missouri case which defines "neglect" or "inattention." Undoubtedly, the courts felt no need to define the phrase because Pomeroy's treatise does so. Pomeroy states:
accident is an unexpected occurrence external to the party affected by it.... Mistake, on the other hand, is internal; it is a mental condition, a conception, a conviction on the understanding,—erroneous, indeed, but none the less a conviction,—which influences the will and leads to some outward physical manifestation.... It is also distinguished from that inattention or absence of thought which are inherent in negligence....
*106 Mistake, therefore, within the meaning of equity, and as the occasion of jurisdiction, is an erroneous mental condition, conception, or conviction, induced by ignorance, misapprehension, or misunderstanding of the truth, but without negligence, and resulting in some act or omission done or suffered erroneously by one or both the parties to a transaction, but without its erroneous character being intended or known at the time.
Pomeroy, Equity Jurisprudence § 839 (emphasis added). For Pomeroy, neglect and inattention are essentially synonymous; mistake results from doing an act erroneously not from the failure to act which constitutes neglect or inattention. In equity, a mistake is not simply a careless act for purposes of setting aside default judgments; it is an act thought correct when done, but which is ultimately shown to be erroneous.
In this case, the trial judge's findings of fact, to which we generally accord great deference, show that defendant's attorney's action and the default judgment that followed were not the product of "inattention or neglect", as Pomeroy and appellate decisions intend the phrase to be employed, but of a belief, though erroneous, that the answer had been filed. This is exactly the sort of mistake for which equity historically provides relief in matters relating to default judgments.
II.
Second, the policy considerations favoring finality are three: "(1) there is no assurance that relitigation will produce any different result; (2) judicial economy demands that there be an end to litigation...; (3) finality produces the certainty of the law that is necessary to promote confidence in the judicial system." Laughrey II at 71. Of the three policy considerations, "only certainty seems compelling in the context of default judgments. `A default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party.' [H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C.Cir.1970) ]." Laughrey II at 73. Rule 74.06(b), if applied to this case, would permit the default judgment to be set aside.
The new rule recognizes that a balance must be cast between finality and the search for justice. In my view, the new rule is entirely consistent with precedent properly understood and the rule attempts to restore justice to the law's policy regarding default judgments. If justice is the focus of our system of laws, and particularly of a system which acknowledges the need for equity to correct the injustices of harsh applications of rules, the result in this case ought to be the product of that concern for justice, not a mechanical and punitive application of now-abandoned rules and misinterpretation of precedent. Equity demands justice, not incantation.
I would reverse the trial court's decision and remand this case for a trial on the merits. I respectfully dissent.
BLACKMAR, Chief Justice, dissenting.
The principal opinion, not composed in this Court, is faulty in at least three principal respects, as follows: (1) it departs from established principles of equity jurisprudence, citing cases which are clearly distinguishable and ignoring pertinent authority so as to deny relief from a judgment which, at the very least, became final only as the result of mutual mistake; (2) it sanctions the dilution of professional standards by condoning a lawyer's conduct in deliberately allowing his opponent to proceed under mistaken assumptions, correcting the assumptions only after the passage of a relatively short time had given him a decided advantage; and (3) it reaches a manifestly unjust result, not under the compulsion of precedent but in the face of authority, upholding a very large judgment without trial. I would vacate the judgment and remand with directions to set aside the default judgment and allow the trial to proceed.
1. The Facts
The facts detailed in the principal opinion are incomplete. The facts are uncontradicted, *107 and so Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976), presents no bar to our full review.
The defendant was served on January 11, 198