J.G. HILDEN v. FIRST NATIONAL BANK OF JACKSON KENTUCKY
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RENDERED: October 23, 1998; 10:00 a.m.
NOT TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
1997-CA-002135-MR
J.G. HILDEN
APPELLANT
APPEAL FROM BREATHITT CIRCUIT COURT
HONORABLE LARRY MILLER, JUDGE
ACTION NO. 95-CI-0379
v.
FIRST NATIONAL BANK OF
JACKSON KENTUCKY
APPELLEE
OPINION
VACATING AND REMANDING
* * * * * * *
BEFORE:
KNOPF, KNOX, and MILLER, Judges.
KNOPF, JUDGE:
J.G. Hilden appeals from a final judgment of the
Breathitt Circuit Court awarding First National Bank the sum of
$133,210.15 and ordering the foreclosure of certain real property
in order to satisfy this judgment.
Although multiple issues are
presented on appeal, only one is dispositive of this case: Did
the trial court give the appellant reasonable notice of the trial
date?
Finding that the trial court failed to give the appellant
reasonable notice of the final trial date, we vacaate and remand
for a new trial.
This case presents a complex factual and procedural
history.
For business and personal reasons, Dwight Raines took
out a series of loans from the First National Bank of Jackson,
Kentucky (First National), the appellee.
are particularly relevant to this case:
1990, and one in 1992.
Three (3) such loans
one in 1987, one in
As security for the 1987 and 1990 loans,
Raines pledged some of his business equipment.
Raines' friend,
J.G. Hilden, the appellant, also mortgaged two (2) tracts of real
property in Breathitt County in order to secure the loans.
The
1987 and 1990 loan agreements contained language purporting to
give First National the authority to use Hilden's property as
security for any future loans made to Raines.
Based on this language, First National issued another
loan to Raines in 1992. [Record on Appeal (ROA), p. 7].
Once
again, the Hilden property and Raines' business equipment served
to secure the debt, which totalled approximately $170,500.00.
Apparently, Raines stopped making payments sometime later and
First National sold his machinery to offset the balance.
On
October 24, 1995, First National brought an action against Raines
and Hilden in Breathitt Circuit Court for the unpaid balance,
including interest, on the 1992 loan. (ROA, p. 1).
commenced in February 1996 after several delays.
Discovery
In November
1996, the trial court scheduled a pretrial conference for May 9,
1997 and a trial for May 29, 1997. (ROA, p. 81).
The record
reveals that the court sent a copy of its scheduling order to
Hilden at his Florida mailing address.
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Hilden and Raines filed a motion for summary judgment
on April 25, 1997. (ROA, p. 101).
On the same day, they also
made a motion entitled "Defendants' Motion to Hold in Abeyance",
which asked the court to suspend the pretrial conference and the
trial until it ruled on their motion for summary judgment. (ROA,
p. 99).
Both defendants then filed a notice with the court on
May 2, 1997, asking for a hearing on both motions on May 29,
1997. (ROA, p. 163).
For unknown reasons, Hilden was not present
for the hearing on May 29th.
On that day, First National filed a
response to the summary judgment motion and asked the court for
permission to amend its pleadings to clarify an earlier
admission. (ROA, p. 171).
While the record does not contain the
trial court's response to any of these motions, the court
apparently denied the defendants' motion for summary judgment and
rescheduled trial for June 14, 1997. (ROA, p. 177).
Although Raines and Hilden had worked together on their
case without counsel until this time, Raines hired an attorney to
represent him separately.
On June 3, 1997, Raines' attorney
filed an entry of appearance and a motion for a continuance with
the court.
The certificates of service on both documents made no
mention of Hilden. (ROA, pp. 176-78).
On June 6, 1997, the court
heard Raines' motions, granted him a continuance, and rescheduled
trial for July 26, 1997. (ROA, pp. 179-80).
It also scheduled a
hearing for July 11, 1997, to rule on First National's motion to
amend its pleadings.
The record does not indicate what happened
at the July 11th hearing, but we presume that the court granted
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First National's motion to amend its pleadings. (ROA, p. 180).
The trial court's calendar for June 6th does not refer to Hilden,
nor does the record contain any indication that Hilden received
notice of the final trial date of July 26th.
Hilden did not appear for the bench trial on July 26th.
Although First National presented evidence, Raines closed without
offering any proof.
At the close of evidence on July 28th, the
court entered a final judgment awarding $133,210.15 to First
National. (ROA, p. 180).
This figure represents the principal
and interest alleged by First National to be owed on the 1992
loan.
The court also ordered the sale of the two (2) tracts of
real property Hilden had pledged as security for this debt.
Again, the judgment does not name Hilden and provides no
indication that the court served him with notice of its decision.
According to his brief, Hilden learned of the final judgment on
August 12, 1997, when an associate arrived in Breathitt County to
retrieve any documents that Hilden may have missed.
Hilden then
filed a timely notice of appeal on August 21, 1997, but he did
not name Raines as a party. (ROA, p. 181).
The only dispositive issue in this case is whether the
trial court gave Hilden reasonable notice of the final trial
date.
Hilden argues that although he did receive notice of the
tentative trial date of May 29th, he was not given notice of the
final trial date of July 26th.
Furthermore, he claims he was
never provided any formal notice that any final judgment had been
entered.
CR 40 requires the trial court to give reasonable
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notice to all parties not in default of the day on which a trial
date will be determined.
When this rule is violated, and the
party seeking relief was not in default, a new trial is the
proper remedy.
Combs v. Griffith, Ky., 429 S.W.2d 849, 851
(1968).
Because Hilden was not in default and because the
record contains no indication that Hilden received notice of the
final trial date, we conclude that the trial court failed to
comply with CR 40.
It is clear that Hilden received notice of
the tentative trial date of May 29th.
However, his absence on
that date does not excuse the failure to give him notice of the
final trial date of July 26th.
Prior notices of days on which
trial dates will be fixed are irrelevant when determining whether
a court has complied with CR 40. Id.
Had the trial actually
occurred on June 14th (the date it was initially rescheduled),
Hilden would have no grounds for arguing lack of notice.
His
failure to appear on May 29th would excuse the court from
providing him notice of the June 14th trial date.
Nonetheless,
on June 6th, the court rescheduled trial for July 26th.
This
constituted a violation of CR 40 because Hilden was not advised
of the change.
Consequently, the trial court failed to comply
with CR 40 and a new trial is required.
The procedural posture of this case limits the scope of
the proceedings on remand.
Because Hilden failed to name Raines
as a party to this appeal, all issues regarding Raines' liability
are res judicata.
Levin v. Ferrer, Ky., 535 S.W.2d 79, 82
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(1975).
Nonetheless, Raines is not a necessary party to a
determination of Hilden's liability as surety for the 1992 loan.
Land v. Salem Bank, Ky., 130 S.W.2d 818, 820 (1939).
The trial
court can resolve that issue on remand without Raines being a
party to that proceeding.
Accordingly, the judgment of the
Breathitt Circuit Court as it pertains to Hilden is vacated, and
this matter is remanded for further proceedings.
On remand, this
Court suggests that the trial court consider the following.
First, the trial court should determine whether Hilden's defense
concerns an issue of fraud, or an issue of contract formation.
Second, once the court frames the issue raised by Hilden's
defense, it should determine whether Hilden raised the defense in
a proper manner.
Third, assuming he raised a timely defense, the
court should determine whether Hilden is precluded from asserting
it because of his prior admissions in the pleadings.
Fourth,
assuming that the defense was timely and that Hilden is not
precluded from asserting it, the court should then conduct a
trial limited to the issue of Hilden's liability.
KNOX, JUDGE, CONCURS.
MILLER, JUDGE, CONCURS IN RESULT.
BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
J.G. Hilden, Pro Se
Deland, FL
Darrell A. Herald
Bryant, Herald & Herald
Jackson, Ky.
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