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Foster v. New Albany Machine & Tool Co.

Decided: October 17, 1960.


Goldmann, Freund and Kilkenny. The opinion of the court was delivered by Goldmann, S.j.a.d.


Defendants appeal from a county district court order denying their motion to vacate a default judgment entered against them in plaintiff's property damage action. They maintain that the trial court erred because plaintiff had failed to give them notice of the taking of default judgment as required by R.R. 7:9-4, and for the further reason that the judgment was entered in violation of an agreement between the parties.

The judgment arose out of an accident which occurred July 24, 1956 when defendant Case, president and general manager of defendant New Albany Machine & Tool Co., Inc., drove a company trailer-truck into plaintiff's gas station in such manner as to strike and damage an overhanging roof. Case wrote New Albany's insurance carrier the next day, admitting his negligence and requesting the

insurer to settle plaintiff's claim. There were apparently efforts at settlement, but the matter could not be adjusted.

Plaintiff instituted suit on August 5, 1959, some three years after the accident, service being effected upon the nonresident defendants on August 11, 1959 through the State Director of Motor Vehicles. N.J.S.A. 39:7-2. Defendants at once forwarded the suit papers to the Reading, Pa., office of Travelers Insurance Company, their insurance carrier. That office, in turn, sent them to the insurer's Newark, N.J., office. Upon receipt of the papers there, Supervising Adjuster LeRoy phoned plaintiff's attorney Breitkopf, and requested and obtained an extension of time to answer. On August 18 LeRoy wrote Breitkopf thanking him for "granting us an extension of time" and advising that he had requested the Reading office to give preferred attention to the claim. No formal consent to the extension was filed, as required by R.R. 4:12-1(c), made applicable to the county district court by reason of R.R. 5:2-1 and 7:1-3.

Defendants having failed to appear, plead or otherwise defend, the county district court clerk entered default on September 3, 1959 as a matter of course, pursuant to R.R. 7:9-1. Defendants were not aware of this entry of default, and plaintiff did nothing for the time being to obtain a default judgment under R.R. 7:9-2.

Travelers' Newark office wrote plaintiff's attorney on September 1, 1959 suggesting he forward the necessary copies of estimate and proof of loss. Such an estimate, dated May 10, 1958 and in the sum of $2,250, was submitted on October 29. LeRoy alleges in his affidavit that on November 5 F. J. Webb of his office discussed with plaintiff's attorney Breitkopf the fact that the file referred from Reading had very little information in it, and that Breitkopf agreed to continue the extension of time to answer. Breitkopf denies this and insists he gave only one, original, oral ten-day extension.

The Newark office continued in its efforts to obtain additional information regarding the accident and claim. It

finally received the complete file on January 13, 1960. Webb immediately advised plaintiff's attorney of this by phone, and was then informed that "judgment" had been obtained on September 3 preceding. LeRoy's affidavit alleges that Breitkopf was advised that Travelers' file indicated the damage suffered by plaintiff was done by other trucks as well as by defendants', and that Breitkopf said he would review the matter with plaintiff and get in touch with the Travelers office.

Without notice to defendants or Travelers, plaintiff proceeded to default judgment on February 25, 1960, pursuant to R.R. 7:9-2(b). Judgment was entered in the sum of $2,549.20.

Defendants moved to vacate the default judgment on the ground that it "was obtained after defendants had been granted an extension of time to answer the complaint, without notification to defendants, and that defendants, therefore, had no opportunity to defend; said defendants having a meritorious defense to the action." LeRoy's affidavit in support of the application, paragraph 13, states that Travelers was not advised that default judgment would be taken on February 25, 1960. That affidavit also alleges that defendants' appraisal of plaintiff's damages establishes a repair cost of $202.07. The affidavits on the motion to vacate also ...

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