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Newbern v. Gas-Ice Corp.

October 19, 1972

NEWBERN ET AL, RESPONDENTS,
v.
GAS-ICE CORPORATION, APPELLANT



Appeal from Circuit Court, Multnomah County. Richard J. Burke, Judge.

Kenneth M. Novack, Portland, argued the cause for appellant. With him on the briefs were Rives, Bonyhadi & Hall and Bruce M. Hall, Portland.

Nels Peterson, Portland, argued the cause for respondent. With him on the brief were Jack H. Cairns, Portland, and Peterson, Chaivoe & Peterson, Portland.

Tongue, Justice. O'Connell, Chief Justice, and McAllister, Denecke, Holman and Howell, Justices.

Tongue

This is an action for payments allegedly due under a lease of a so-called "Tank Farm" owned by plaintiff and leased to defendant. Defendant appeals from an adverse judgment. We affirm. This case is a companion case to the case of Gas-Ice Corporation v. Newbern, 263 Or 263, 501 P2d 1288 (1972).

One of the contentions by the corporation as the plaintiff and appellant in that case was that the trial court erred in "not determining that the Tank Farm was acquired by defendants [Newbern] and leased to plaintiff [Gas-Ice Corporation] in breach of defendants' fiduciary duties to plaintiff" as an officer and trustee of plaintiff corporation. Although the trial court rejected the contention that the lease was invalid "ab initio" for those reasons, it cancelled that lease for other reasons as of May 1, 1970. We affirmed that determination by the trial court in that case by decision bearing this same date.

In this case the defendant corporation, by its answer, denied any obligation for payment of rent under the lease and alleged that it was invalid for the same reasons as urged by it in the other case. On oral argument before this court, however, it was conceded by defendant that an affirmance of the trial court on this same issue in that case would be dispositive of that issue, as a matter of res judicata or collateral estoppel, and that, in such an event, plaintiff Newbern would be entitled to the rental payments claimed by him in this case for the period April 1, 1969 to March 31, 1970, in the sum of $14,868, subject, however, to the contention by the defendant corporation that the trial court erred in setting aside a previous judgment on the pleadings in favor of it as the defendant in this case.

It appears from the record that after the failure of plaintiff to file a timely reply to the equitable defenses as alleged in defendant's answer and after a "Rule 4" notice was sent to plaintiff by the trial court, defendant filed a motion for judgment on the pleadings, which was served on plaintiff's attorneys of record, together with a praecipe setting that motion for hearing on December 2, 1970. Plaintiff's attorneys did not appear at that time, but one of them, Mr. Peterson, advised the court by telephone that they would not contest that motion. Accordingly, the court granted the motion and entered such a judgment on the pleadings.

Shortly thereafter, on January 6, 1971, plaintiff's counsel filed a motion to set aside the judgment on the pleadings, with an affidavit by Mr. Peterson stating that by mistake and inadvertence he believed, when informed of defendant's motion and of the hearing on that motion, that it involved still a third lawsuit between the same parties, rather than this case. On January 26, 1971, the trial court granted that motion and entered an order setting aside its previous judgment on the pleadings.*fn1 The case was then tried and a judgment was entered in favor of plaintiff in the sum of $14,868, together with $6,000 in attorney fees.

Defendant contends on this appeal that the trial court erred in setting aside the judgment on the pleadings. In support of that contention defendant urges that the judgment on the pleadings was not taken through mistake, inadvertence, surprise or excusable

neglect, at least "of the type contemplated by ORS 18.160"; that the judgment was also consented to by plaintiff, and thus could not be set aside unless procured through fraud; that the court erred in "applying the same standard of discretion to plaintiffs in default as to a defendant in default," ...


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