NO. 94-279
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
IN RE THE MARRIAGE OF
CATHARINE GAY GROUNDS
f/k/a CATHARINE GAY COWARD,
Petitioner and Respondent,
and
HAROLD MARK COWARD
Respondent and Appellant.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Ed McLean, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Timothy J. Lape, Missoula, Montana
For Respondent:
Kerry Ann Newcomer, Missoula, Montana
Submitted on Briefs: February 9, 1995
Decided: June 15, 1995
Filed: JUN15 13%
Justice James C. Nelson delivered the Opinion of the Court.
Harold Mark Coward (Mark) appeals from two post-dissolution
orders of the District Court for the Fourth Judicial District,
Missoula County. In those orders, the court denied Mark's motion
to modify maintenance payments and granted the motions of Catharine
Gay Grounds (Catharine) to join Mark's professional corporation as
a party and to disregard the professional corporation for purposes
of enforcing the judgment. We vacate the orders of the District
court, based upon failure to serve process upon the professional
corporation.
The dispositive issue is whether the District Court's orders
must be vacated because of Catharine's failure to serve the
professional corporation. Because we conclude both orders must be
vacated for that reason, we do not address the other issues raised
in this appeal.
The parties' marriage was dissolved by order of the District
Court in March 1991. Mark, a physician, was ordered to pay
Catharine maintenance of $2,150 per month for seven years, to allow
her to pursue a law degree.
Mark soon fell into arrears on the maintenance payments, and
Catharine's efforts to collect through writs of execution were
unsuccessful. In July 1993, Catharine obtained a 65% income
withholding order for maintenance, directed to Mark's professional
corporation, Mark Coward, M.D., P.C. When the corporation failed
to withhold income as ordered, Catharine moved to disregard the
corporate entity and to join the corporation as a party.
2
Mark was the corporation's sole shareholder and corporate
president, and that, at the hearing, his counsel opposed the motion
to join the corporation. She argues that a requirement of service
upon the corporation would honor form over substance and should be
rejected.
The nature of service of process is twofold: it serves notice
to a party that litigation is pending, and it vests a court with
jurisdiction. Fonk v. Ulsher (19931, 260 Mont. 379, 383, 860 P.Zd
145, 147. Service of process rules are mandatory and must be
strictly followed. Knowledge of the action is not a substitute for
valid service. -r 860 P.Zd at 147.
Fonk
Service upon a Montana corporation may be accomplished in
several ways described in Rule 4D(2) (e), M.R.Civ.P. They include
delivering a copy of the document to an officer, director,
superintendent or managing or general agent, or partner, or
associate for the corporation; leaving a copy at the place of
business of the corporation; or delivering a copy to the
corporation's registered agent.
This Court has held that service of process was adequate to
confer jurisdiction over a defendant corporation when only one copy
of the documents was served upon a defendant corporate officer as
both an individual and defendant corporate officer. Richland Nat'1
Bank & Trust v. Swenson (1991), 249 Mont. 410, 422, 816 P.Zd 1045,
1053-54. In the present case, however, no effort whatsoever was
made to serve the corporation. The motion to join Mark Coward,
M.D., P.C., and to disregard the professional corporation was
merely served by mail upon Mark's attorney, as part of the ongoing
4
action. We therefore conclude that Richland National does not
control here.
We cannot disregard the Rules of Civil Procedure and
jurisdictional prerequisites, even when faced with blatant attempts
to circumvent the law by individuals such as Mark. Actual
knowledge by Mark did not substitute for valid service upon his
professional corporation. We hold that, without valid service, the
court did not possess jurisdiction to enter orders directed to the
professional corporation.
Because the District Court asserted jurisdiction over Mark
Coward, M.D., P.C., in both orders from which this appeal is taken,
both orders are vacated. This matter is remanded to the District
Court for further proceedings co
Justices
5
Justice Terry N. Trieweiler dissenting.
I dissent from the majority opinion.
This case is the clearest example I have seen of a husband's
total contempt and disregard for the maintenance obligations
imposed upon him by a lawful order of a district court. It is no
wonder that at the conclusion of the testimony on which the
District Court based its order disregarding the corporate entity,
the District Judge made the following observation:
Dr. Coward, I want to make something clear to you
here. I have been sitting on the bench for close to six
years; prior to that I was a prosecutor for 17 years, and
I have never encountered anybody who has such a total
disregard and [dislrespect for other people as you do.
The appellant has used the legal process and abused the
corporate fiction successfully since 1991 to avoid his maintenance
obligation to his former spouse, and as of April 1, 1994, was
$80,328.90 in arrears on his debt to her.
By exalting form over substance, this Court's current opinion
has prolonged the tortuous procedural history which has served the
appellant so well. And, to what purpose?
Mark Coward, M.D., P.C., the shell of a corporate entity in
which the appellant now hides and protects his income, is nothing
more than Harold Mark Coward, the individual. He is the president
of the corporation; he owns all of its shares; he operates all of
its business; he performs all of its services; and he makes every
single decision that can be made for the corporation's operation
and existence.
6
Rule 4D(e), M.R.Civ.P., is not a demanding rule when it comes
to service of process on corporations. It provides that service
can be accomplished in various ways. Among them is service on any
officer of the corporation. In this case, the document with which
the majority is concerned was served on the attorney for the
president of the corporation, who in turn appeared in court to
oppose the relief sought in the motion. Nothing could more
effectively notify the corporation's only officer of the relief
being sought than service on his attorney. Furthermore, because of
the appearance of the president's attorney, jurisdiction over the
corporation was accomplished, whether or not the president was
personally served. Rule 4B(2), M.R.Civ.P., provides as follows:
(2) Acquisition of jurisdiction. Jurisdiction may
be acquired by our courts over any person through service
of process as herein provided; or bv the voluntarv
aonearance in an action bv anv person either personally,
or through an attornev, or throush any other authorized
officer, acient or emwlovee.
(Emphasis added.)
In this case, Harold Mark Coward was the president and
authorized agent for Mark Coward, M.D., P.C. He appeared in this
action in response to his former spouse's motion through his
attorney. Therefore, pursuant to the specific terms of Rule 4B,
the District Court had jurisdiction to enter the order that it
entered. To ignore the syllogism which leads to this conclusion is
to ignore reality in favor of an artificial distinction based on a
corporate fiction. The District Court, after listening to the
total lack of any distinction between Harold Mark Coward and his
7
pseudo-corporation, and the length to which Coward was willing to
go in order to avoid his obligation to his former spouse, refused
to do so. After reviewing the record, I agree with the District
court.
For these reasons, I dissent from the majority opinion. I
would affirm the orders of the District Court.