Starks v. North Little Rock Policemen's Pension

Conley Byrd, Justice. Appellee, North Little Rock, Arkansas Policemen’s Pension and Relief Fund, brought an action against appellant Billy Dean Starks alleging: “Billy Dean Starks had numerous dealings with Plaintiff from July of 1971 through October of 1972. Billy Dean Starks, as a bond broker, bought and sold securities for Plaintiff. Billy Dean Starks defrauded Plaintiff of a sum of not less than Six Hundred and Thirty Thousand Dollars ($630,000.00). During the period in which Billy Dean Starks committed the acts of fraud he was acting in a fiduciary capacity.” The prayer of appellee’s complaint, so far as applicable to appellant, was as follows: “Wherefore, Plaintiff prays that it have a judgment against Billy Dean Starks for an amount not less than Six Hundred and Thirty Thousand Dollars ($630,000.00); ...” Thereafter, the trial court found the appellant in default and ordered “that a default judgment in favor of plaintiff be entered against him after a hearing to determine damages.” At the hearing to determine damages appellant was present through his counsel. Upon the proof there presented, the trial court entered judgment for $934,915.61. For reversal appellant contends that the trial court erred in rendering judgment for a sum in excess of the $630,000.00 set forth in the declaration and prayer. Appellee acknowledges our prior cases, Hudspeth v. Gray, 5 Ark. 157 (1843), Pleasants v. State Bank, 8 Ark. 456 (1848), and Arkansas Power & Light Co. v. Murry, 231 Ark. 559, 331 S.W. 2d 98 (1960), which limit the amount of damages to the amount laid in the declaration, but contends that the result of those cases has been altered by the enactment of Act 205 of 1971 which provides: “SECTION 1. Subsection Fourth of Section 109 of the Civil Code, the same being Arkansas Statutes (1947) Section 27-1113 (Fourth), is hereby amended to read as follows: ‘Fourth. A demand for the relief to which the plaintiff considers himself entitled. In complaints for unli-quidated damage, a prayer containing no specified amount in money, shall limit recovery to an amount less than required for Federal Court jurisdiction in diversity of citizenship cases, unless language of the prayer indicates that the recovery sought is in excess of such amount.’ SECTION 2. A maximum amount of recovery prayed may be required by motion, pre-trial conference or interrogatories.” Appellee contends that the purpose of Act 205, supra, is to allow a plaintiff to file his complaint for unliquidated damages in an unspecified amount. It also contends, without citation of authority, that a court of equity should have inherent power to allow a victim of fraud to recover judgment against an admitted wrongdoer for the full amount of the fruits of his fraudulent activity. We disagree with both contentions. It should here be pointed out that we are not dealing with a trial of this case upon the merits, because in those instances the trial courts are given the discretion of permitting the pleadings to be amended to conform to the proof, Ark. Stat. Ann. § 27-1160 (Repl. 1962). We are here dealing with a judgment by default which is a type of forfeiture because of a defendant’s failure to plead within the time allowed. See Walden v. Metzler, 227 Ark. 782, 201 S.W. 2d 439 (1957). In Kerr v. Kerr, 234 Ark. 607, 353 S.W. 2d 350 (1962), we pointed out that the latitude ordinarily allowed in pleading upon a trial on the merits is not allowed in the instance of a judgment by default. In doing so we stated the applicable law in this language: “A judgment for plaintiff by default must strictly conform to, and be supported by, the allegations of the petition or complaint, a closer correspondence between pleading and judgment being necessary than after a contested trial. Defendant’s default does not enlarge or broaden plaintiff’s claim and rights under the allegations of the petition; nor may the allegations of the petition be enlarged by any evidence offered or introduced as confirmation of the default judgment.” Furthermore, in Lowery, Administrator v. Yates, 212 Ark. 399, 206 S.W. 2d 1 (1947), we pointed out that before an original complaint could be amended in a matter of substance it would be necessary for the plaintiff to obtain a second service upon the defendant to afford him an opportunity to answer and make defense. Other courts take substantially the same view. See Pruitt v. Taylor, 247 N.C. 380, 100 S.E. 2d 841 (1957). In the last mentioned case, the North Carolina Supreme Court said: “It would do violence to one’s sense of justice to say that defendant, having consented to the assessment of damages not in excess of a stipulated amount, had, by that consent, agreed that larger damages might be assessed.” When the declaration of the complaint alleging that “Billy Dean Starks defrauded plaintiff of a sum not less than Six Hundred and Thirty Thousand Dollars ($630,000.00)” is considered under the rule requiring strict conformity to the allegations of the pleadings as our cases hold that it must be in awarding a default judgment, it at once becomes obvious that the complaint cannot be construed as one asking for a judgment in excess of $630,000.00. Act 205, supra, certainly did not affect the construction that should be given to a complaint upon the entry of a default. Furthermore, we do not construe Act 205, supra, as authorizing a default judgment to be entered upon a complaint for unliquidated damages in an unspecified amount. After all, Ais;t 205, supra, does still require “a demand for the relief to which the plaintiff considers himself entitled.” Courts of equity are usually accorded a great deal of leniency in matters of procedure or discretion when a trial is had upon the merits, however, as can be seen from Kerr v. Kerr, supra, and Lowery, Administrator v. Yates, supra, courts of equity have no greater power in awarding default judgments upon amended complaints than does a court of law. From the foregoing discussion, it follows that the trial court erred in awarding a judgment against appellant in excess of $630,000.00. If appellee wishes to enter a remittitur within 15 days for the amount in excess of $630,000.00 the judgment will be affirmed as modified. Otherwise, the judgment will be reversed and remanded to permit the pleadings to be amended as desired. Affirmed as modified on condition of remittitur. Harris, C.J., and Fooi.kman and Hoi.t, JJ., dissent.