No. 83-523
IN THE SUPREME COURT OF THE STATE OF MONTANA
1984
HILDA M. PETERSON,
Plaintiff and Appellant,
MONTANA BANK OF BOZEbIAN, N.A.
as personal representative of
the Estate of GEORGE J. STUBLAR,
deceased, and WARREN A. McMILLAN,
Defendants and Respondents.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Robert Boyd, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Bolinger & Conover, Richard C. Conover and Hal Bolinger
argued, Bozeman, Montana
For Respondents:
Nash & Nash; Donald A. Nash argued for Stublar,
Michael Nash argued for Montana Bank and Stublar,
Bozeman, Montana
Wellcome & Frost; Albert Frost argued for !lcMillan,
Bozeman, Montana
Submitted: June 4, 1984
Decided: August 16, 1984
Filed: AC;S I ' 1984
-
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Hilda M. Peterson brought an action under Rule 60 (b),
M.R.Civ.P., in the District Court, Eighteenth Judicial
District, Gal.]atin County, for declaratory relief from a
default judgment and subsequent sheriff's sale of Peterson's
property. The District Court entered summary judgment
against Peterson on the grounds that the default jud-gmentwas
res judicata, and that Peterson's independent action was a
collateral attack upon the default judgment.
We hold on appeal that the pri-nciples of res judicata
and collateral attack do not apply to the default judgment
obtained against Peterson because that judgment has never
become final; that an independent action under Rule 60(b),
M.R.Civ.P., lies to afford declaratory relief to Peterson in
the circumstances described here; and, we remand this cause
to the District Court for further proceedings with
instructions to grant declaratory relief to Peterson.
On October 14, 1976, Hilda M. Peterson as seller entered
into a contract for sale of real property with Warren A.
McMillan as buyer. On November 1, 1981, the principal
balance due on the contract to Peterson was approximately
$99,000. The contract was duly recorded. Also on November
1, 1981, McMillan was required to pay to Peterson an annual
payment of $9,912.
The real property which Peterson had agreed to sell to
PlcMillan under the contract for sale was subject to a
mortgage to George J. Stuhlar, now deceased, who had loaned
Peterson $26,000. Peterson signed a promissory note payable
to Stublar which recited that the loan was secured by a
mortgage on the real estate which was the subject of the
contract of sale between Peterson and. McMillan. The mortgage
was duly recorded. Its existence was recognized in
McMillan's contract to purchase the real estate.
On June 18, 1981, Stublar filed a complaint in District
Court against Peterson, cause no. 27580, alleging nonpayment
of the promissory note. Stublar did not in that action seek
forecl.osure of the mortgage, although the note set forth in
his complaint contains a reference to the fact that it is
secured by a mortgage on real property.
On July 24, 1981, default judgment on the note was
entered by the District Court aga-instPeterson in the sum of
$26,000 plus related attorneys fees of $3,500 and costs.
On August 5, 1981, a writ of execution was issued on the
July 24, 1981 judgment. No return of that writ of execution
has been made to the District Court.
On September 1, 1981, an alias summons in cause no.
27580 was issued by the clerk of the court and on November
23, 1981, a~other judgment by default was entered by the
District Court in cause no. 27580 in favor of George J.
Stublar and. against Peterson, this time for $28,919.48, which
included accrued interest, plus related attorneys fees of
$3,500 and costs.
When the alias summons of September 1, 1.981 had been
served on Peterson, she consulted with a Bozeman attorney,
and he entered an appearance on her behalf in cause no. 27580
by filing a motion to dismiss. The motion to d.ismiss was
overruled, and Peterson was given 20 additional days to plead
beginning October 5, 1981. On October 26, 1981, Stublar
filed an affidavit of ill health, requesting that the cause
be expedited. On November 2, 1981, Peterson's attorney not
appearing, the court granted the motion for expedition and
ordered that Peterson's answer be filed within three days.
The court set trial for November 20, 1981.
On November 20, 1981, Peterson's counsel appeared before
the District Court. He indicated that Peterson had no
defense to the action, since the amount was due and unpaid.
At that time, the District Court asked why Stublar was not
proceeding to foreclose on the mortgage, and Peterson's
counsel stated "That's what I am wondering." The District
Court entered a second default judgment against Peterson on
November 23, 1981.
In the meantime, on November 1, 1981, an annual payment
on the contract for sale of real estate of $9,912 was due
from McMillan to Peterson. McMillan did not make the
payment, hut instead telephoned Peterson and asked permission
to hold off on the payment for a period of time.
On November 23, 1981, a second writ of execution was
issued out of the District Court. The second writ refers to
the judgment of July 24, 1981, and not to the judgment of
November 23, 1981. The second writ directed the sheriff to
levy and execute upon property of the defendant on a judgment
of $28,919.48, plus interest and costs to the total amount of
$38,993.86. The second writ of execution was not returned to
the District Court by the sheriff until after this action for
declaratory relief had been filed.
Apparently under the second writ of execution, a
sheriff's sale was held on or about December 1, 1981. At the
sheriff ' s sa 1.e , Warren McMillan , the purchaser under the
contract with Peterson, purchased Peterson's seller's
interest in the contract for deed for the sum of $39,000.
McMillan thus became the owner of the contract for sale to
himself and for the sum of $39,000 bought the seller's rights
to a contract on which he at the time owed approximately
$99,000.
On December 29, 1981, Montana Rank of Bozeman was
appointed the personal representative of the estate of George
J. Stublar. We do not find in this record the date of
Stu-blar's death.
On February 19, 1982, Peterson filed this action against
Montana Bank of Bozeman, as a personal representative of the
estate of George J. Stublar, and Warren A. McMill-an, for
declaratory relief under Rule 60(h), M.R.Civ.P. Peterson, in
this separate independent action, demanded judgment against
the defendents (1) declaring the sheriff's sale of December
1, 1981 to be void; (2) declaring the McMillanls payment to
the sheriff was voluntary; (3) declaring the writ of
execution to be satisfied; (4) for compensatory damages of
$10,000 and punitive damages of $50,000; (5) declaring the
McMillan contract for sale terminated; and, ( 6 ) for costs and
disbursements including attorneys fees.
It is from the judgment of District Court denying
declaratory relief that this appeal ensued.
As we indicated earlier, the District Court in granting
summary judgment determined that the default judgment in
District Court cause no. 27580 was res judicata, and that
Peterson's independent action for relief under Rule 60(b),
M.R.Civ.P., constituted a collateral attack against the
judgment in cause no. 27580. These grounds are incorrect,
because on the record here, the default judgment against
Peterson has never become final.
The default judgment in cause no. 27580 was entered
against Peterson after she had appeared in the action by
counsel. Entry of default iudgments is controlled in Montana
by Rule 55(b), M.R.Civ.P. If a defendant has not appeared in
an. action, the clerk of the court is empowered, upon request
of the plaintiff, and upon affidavit of the amount due, to
enter judgment for that amount and costs against the
defendant after his defaul-t for failure to appear. Rule
55(b) (1). If, however, the party has appeared in the action,
then the judgment of default must be entered by the court
under Rule 55 (b)(2) . When the defendant has appeared either
in person or by counsel, additional duties then devolve upon
the party entitled to the judgment:
"An appearance does not prevent a party from
becoming in default. But under the rules a party
who enters a proper appearance, although he may
become in default because of failure to plead or
otherwise defend within the time required by the
rules, is entitled to the same notice of the
proceedings taken and the acts done as a party who
is not in default. The rules make no distinction
between a general and special appearance. Thus a
party, who makes an appearance but defaults, is
entitled to notice of all proceedings taken and
acts done in the action. But a party who is in
default for failure to appear is not entitled to
notice of any proceeding taken or act done. The
provisions of Rule 5(a), requiring the service of
pleadings and other pa.pers upon every party not in
default for failure to appear, are reinforced and
supplemented by the provisions of two other rules
covering situations in which notice is important.
Thus Rule 55 (b)(1) permits the clerk, upon the
request of the plaintiff and without notice to the
defendant, to enter a judgment by default against a
defendant (not an infant or incompetent person) who
has been defaulted - failure to appear, when the
for
plaintiff's claim is for a sum certain or for a sum
which can by computation be made certain. Rule
55(b) (2) covers all other cases in which a judgment
by default is entered. It requires service of a
written notice of the application for jud-gment by
default upon the party against whom the judgment is
sought - - - appeared - - action; and that
if he has in the
the default judgment be entered by the court. And
Rule 77(d) requires the clerk to mail a notice of
the entry of an order or judgment to every party
who is not in default for failure to appear. A
party who makes an appearance thus receives notice
of the progress of the action.. I'. .
2 Moore's
Federal Practice 1337-8 (1964) 9 5.05, (footnotes
omitted.) (Emphasis in original.)
The rules in Montana follow the federal counterparts in
these respects. Rule 5 (a), M.R.Civ.P., provides that no
service need be made on parties in default for failure to
appear, but otherwise a party who appears is entitled to all
the requirements of service set out in the rules. Rule
55(b)(2), as does the federal counterpart, requires a written
notice of the application for judgment by default to be
served three days prior to the hearing on the application.
That notice may have been given here by the order of the
District Court dated November 17, 1981, setting trial three
days later. Rule 77 (d), M.R.Civ.P., requires that
immediately upon the entry of an order or judgment, the clerk
shall serve a notice of the entry "upon each party who is not
in default for failure to appear." In Big Spring v.
,
Blackfeet Tribe of the Blackfeet Indian Reservation (1-978)
175 Mont. 258, 573 P.2d 655, we stated that if a party
appears by filing a motion, he is entitled to a notice of all
subsequent proceedings.
Respondents in this case claim that the judgment against
Peterson in cause no. 27580 has become final and the time for
filing an appeal has expired. However, the clerk of the
District Court has not mailed a notice of entry of the
default judgment as required by Rule 77(d), nor have the
respondents caused the clerk to send such notice; nor have
the respondents served notice of entry of judgment
themselves. In that situation, the default judgment is still
open to appeal, Pierce Packing Company v. District Court
(1978), 177 Mont. 50, 579 P.2d 760, and the judgment is not
final for the purposes of filing a motion for relief from
iudgment under Rule 60 (b) .
Since in the default judgment case notice of entry of
judgment has not been served, the time for appeal is still
open, as is the time for post-trial motion (Rule 59(b)), and
the default judgment is not final. Res judicata applies only
to final judgments or to orders which are intended to be
final in their nature. Lien v. Murphy Corporation (Mont.
1982), 656 P.2d 804, 39 St.l?ep. 2252; Boucher v. Dramstad
(D.C. Mont. 1981), 522 F.Supp. 604; Western Kontana
Production Credit Association v. Hydroponics, Inc. (1966),
1-47 Mont. 157, 410 P.2d 937.
For the same reason the defense of collateral attack is
not available to the respondents to prevent relief to
Peterson under Rule 60(b).
In its memorandum of decision supporting its summary
judgment, the District Court recognized that the issue of law
posed by Peterson in her independent action was whether the
sheriff's sale and execution of December 1, 1981, was void
and of no force and effect. The District Court never came to
consider that issue because of its opinion that res judicata
and the principle of collateral attack applied.
We proceed now to consider the second problem in this
case, whether an action lies under Rule 60 (b), M.R.Civ.P., to
set aside the sheriff's sale in the circumstances described
in this case.
Rule 60 was adopted in the federal court system, and by
us, in order that substantial justice might be accomplished.
We find in Rule 60(b), in the early part of its language, six
different grounds upon which a court ma-y relieve a party from
a judgment, order or proceeding. There is a stricture,
however, in that the judgment, order or proceeding must be
final, to justify relief under the six grounds then set out.
However, Rule 60(b) does not end there. There is a residual
clause which is a broad recognition of the power inherent to
a court. It contains this provision:
". . . This rule does not I-imit the power of the
court to entertain an independent action to relieve
a party from a yudgment, order, or proceeding, or
to grant relief to a defendant not actually
personally notified as may be required by law, or
to set aside a judgment for fraud upon the court."
The broad residual clause does not i-nclude the word
"final" before "judgment, order, or proceeding" and by its
own language, the relief is not limited simply to a judgment.
We determine that a sheriff's sale on execution is a
"proceeding," for which under proper circumstances, a court
may "grant relief" under Rule 60(b). Such relief may be
granted under the residual clause on the basis of equitable
principles. 7 Moore's Federal Practice 60-371, (1983), 9
60.37.
The record indicates that Peterson was not "actually
personally notified as may be required by law" either of the
default judgment, or of the sheriff's sale.
Stublar is guilty of a number of procedural errors in
connection with the default judgment and subsequent sheriff's
sale. Stublar failed to serve a written notice of
application for default judgment at least three days prior to
the hearing on such applica-tion. Rule 55 (b) . In addition to
the 3-day notice provided in Rule 55(b), if the service
was by mail, Peterson's counsel was entitled to an additional-
3 days notice under Rule 6 (e), M.R.Civ.P. Failure to give
the required notice is generally regarded by the courts as a
serious procedural irregularity, though at times the error
is held to be harmless when considered in conjunction with
other circumstances. 6 Moore's Federal Practice 55-57
(1972), F 55-05 [3].
There are further problems with the proceedings taken by
Stublar in the sheriff's sale itself. The original writ of
execution, issued on the judgment of July 24, 1981, wss never
returned. The writ of execution issued after the judgment of
November 23, 1981, does not refer to the second judgment, but
rather to the judgment of July 24, 1981. Again the return of
the sheriff as to the second writ of execution was not made
to the court within the 60 days required by section
25-13-404, MCA. If the sheriff's sale is to be regarded as a
sale of an interest in real property, the clerk of the
District Court here does not have a returned execution to
record in connection with the real property interest as
required in section 25-13-405, MCA. Although counsel for
Stublar maintains that Peterson's interest as a seller of a
contract for deed is personal property, he nevertheless
prepared a certificate of sale for real property under
section 25-13-711, MCA.
The second default judgment of November 23, 1981, taken
by Stubl-ar, improperly compounded the interest due on the
promissory note.
The extension of note and mortgage executed by Filda M.
Peterson and George J. Stublar on January 22, 1980, included
the provision that Hilda would pay to George interest in the
sum of $2,210 until November 1, 1979, and then an additional
sum of interest of $709.48 until January 22, 1980.
Thereafter the note and mortgage was to bear interest at 12%
per annum on the $26,000.
The total of those two interest sums, $2,919.48, was
added to the judgment obtained by Stublar on November 23,
1981. At the time of the sale on execution by the sheriff,
Stublar collected interest on the full amount due and owing,
including the $2,919.48 which represented an accrual of
interest. This was contra to the provision of section
25-9-205, MCA, that interest must not be compounded in any
manner or form when judgments are calculated.
Our review of the District Court file in cause no. 27580
reveals that the judgment which was obtained by Stublar on
July 24, 1981, for $26,000, plus $3,500 in attorneys fees,
has never been vacated. It is still docketed as a judgment
in the District Court. In addition, the second judgment
obtained by Stublar in cause no. 27580 on November 23, 1981,
for the sum of $28,919.48 is docketed and remains in full
force and effect. Although Peterson's interest in the
mortgaged property has been sold by Stublar at sheriff's
sale, no partial or full satisfaction of judgment has been
entered in cause no. 27580. Thus the judgment lien remains
outstanding against any property that Peterson may hold at
the present time.
On March 22, 1982, after Peterson had begun her
independent action for relief from default judgment on
February 19, 1982, the writ of execution issued. on November
23, 1981 was filed in the District Court in cause no. 27580.
Attached to the writ of execution is a certificate of sale to
Warren McMillan dated December 2, 1981; a sheriff's sale
notice dated November 24, 1981, setting execution sale on
December 1, 1981; and a return of sale by the sheriff dated
December 2, 1981, but not filed with the clerk of the
District Court until March 22, 1982.
The return of the sale by the sheriff that was
eventually filed is deficient in several respects. It
contains no recitation of what the sheriff did in preparing
for the sale on execution. Although a notice of sheriff's
sale is attached, there is not.hing in the return of sale or
in any court record in cause no. 27580 that would indicate
when and where notice was given by the sheriff of the sale as
required in section 25-13-701, MCA. Thus, if a at.torney were
asked to give an opinion as to the merchantability of the
property purchased by McMill-an at the sale and execution., the
attorney would be unable to determine from an abstract of
title based on court documents that the statutory notice of
the sheriff's sale had been given in the manner required by
law, and in the course of good practice would determine the
title to be unmerchantable.
We note also that the return of execution by the sheriff
recites that the money he collected for the sale was paid
over, not to the judgment creditor, but to McMillan, the
purchaser at the sheriff's sale.
This case addresses the equity jurisdiction of this
Court. We have a duty to determine all of the issues of this
case and to do complete justice. Hames v. City of Polson
(1950), 123 Mont. 469, 477, 215 P.2d 950, 955. We could at
this point remand the cause to the District Court for further
proceedings, since the judgment obtained here is not final,
that the District Court could determine relief
granted under Rule 60(b). Our duty in this matter, however,
is defined. in section 3-2-204(5), MCA, which states:
"In equity cases and in matters and proceedings of
an equitable nature, the supreme court shall review
all questions of fact arising upon the evidence
presented in the record, whether the same be
presented by specifications of particulars in which
the evidence is alleged to be insufficent or not,
and determine the same, as well as questions of
law, unless for good cause a new trial or the
taking of further evidence in the court below be
ordered.. . ."
In Stevens v. Trafton (1908), 36 Mont. 520, 93 P. 810,
we stated the purpose of that enactment was to expedite final
judgment in cases where the parties were not entitled to
trial by jury, to put an end to litigation, and to avoid the
necessity of new trials.
As we stated earlier, under Rule 60 (b), M.R.Civ.P., an
execution sale is a "proceeding" for which a court may grant
relief to a defendant in an independent action. We find
reason to grant such relief here where the proceedings to
obtain the default judgment are faulty, Peterson was not
given actual notice of the sheriff's sale, the purchase price
at the sheriff's sale is inadequate, and other circumstances
justify relief.
From the time that Peterson's counsel appeared at the
default judgment hearing on November 20, 1981, neither he nor
Peterson had any further notice from Stublar as to what was
happening in the case. No notice of application for default
judgment was served upon Peterson or her counsel. Although
counsel for Peterson on oral argument indicated that notice
of the sheriff's sale was posted in three separate places in
Gallatin County, no court record indicates this as a fact.
When the sheriff's sale was conducted, the contract for sale
of real estate was treated as personal property. It had a
balance due upon it of nearly $99,000, but was sold for the
sum of $39,000 to the contract buyer who owed the $99,000 in
the first place. These factors are enough, considering the
ina.dequacy of the purchase price at the sheriff's sale, to
set aside the execution sale.
The Court of Appeals of Arizona noted in Mason v. Wilson
(1977), 116 Ariz. 255, 568 P.2d 1153, 1155:
"A court may order an execution sale set aside on
the basis of two grounds: First, the purchase
price received at the sheriff's sale may be so
inadequate as to shock the conscience of the court
and justify setting aside the sale, (Citing
authority). Second, where there is an inadequacy
of price which in itself might not be grounds for
setting aside the sale, slight additional
circumstances or matters of equity may so
justify.. . ."
In Mason, the Arizona court set aside an execution sale
when it appeared the proper notice had not been given to the
judgment debtor of the upcoming sheriff's sale. In this
ca-se, although Stublar's attorney sent a letter to Peterson
advising her that a sheriff's sale would be held in
connection with the first writ of execution, no second letter
or notice was given personally either to Peterson or her
attorney respecting the sheriff's sale set for December 1,
3.981. The situation here, in the interests of due process,
required actual notice to Peterson. As the Arizona court
said in Mason:
"Whether notice was required to be given in spite
of the statute is a matter of constitutional law.
The U.S. Supreme Court has held that notice and
opportunity to be heard are fundamental requisites
of due process. Mullane v. Central Hanover Bank
and Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L . E d .
865, (1950). The general rule that emerges from
Mullane is that notice by publication is not enough
with respect to a person whose name and address are
known or very easily ascertainable and whose
legally protected interests are directly affected
hy the proceedings in question. Under the
circumstances here, we disagree with appellee that
a right to notice is a 'frivolous' claim.
Appellants, as well as the Pekruls, by virtue of
their respective interests in the property were
directly affected by the proceedings and should
have received actual notice. (Citing authority. 1'
568 P.2d at 1155-1156.
And, in respect to inadequacy of price as a basis for
setting aside execution of sheriff's sale, see cases
collected in 5 A.L.R.4th 794. See also McCartney v. Frost
(1978), 282 Md. 631, 386 A.2d 784.
In fashioning a remedy in this appeal-, we take into
account that McMillan, in making the purchase at the
sheriff's sale, borrowed from the hank in order to meet the
purchase price. We can adjust the matters between the
parties here, since all are before the Court. It seems
proper to say that no party in this case is entitled to
recover attorneys fees from any adverse party.
It also seems proper to state that on this record we
find no ground for recovery by Peterson against the adverse
parties on her several claims. In addition to declaratory
relief, Peterson seeks recovery of $10,000 in compensatory
damages and $50,000 exemplary damages, and an order that
McMillan's contract for sale be terminated by reason of his
default. Although it appears that at times Peterson's
adversaries, the parties and counsel, acted erringly, we find
nothing in the record to indicate they did not believe they
were acting in accordance with their legal rights to collect
a judgment that had been obtained by Peterson, and on
McMillan's part, to purchase the contract for sale which was
offered by the sheriff at the execution sale.
The principal issue argued by Peterson on appeal was
that the default judgment was void and on that ground the
sheriff's sale must be set aside. Peterson contended that
the default judgment was void because the default judgment
action was not prosecuted as an action foreclosing the
mortgage on the real property. Peterson contended that under
section 71-1-222, MCA, there is only one action for the
collection of a debt secured by a mortgage and that is by
foreclosure. It is not necessary for us to reach that issue
in this case, however, because of our determination here that
the judgment in any event has not become final and that the
sheriff's sale should be set a-side.
There would be little purpose, moreover, in our setting
asid-e the default judgment against Peterson. Her counsel
a-dmitted to the District Court at the time that she owed the
money on the note, and had no defense to the amount thereof.
We take that into account in fashioning the remedy in this
case.
Accordingly, summary judgment granted by the District
Court against Peterson in this cause is vacated and reversed;
the cause is remanded to the District Court for entry of a
declaratory judgment in favor of Peterson with these
instructions:
(3.) The sheriff's certificate of sale dated December 2,
1981 and any other document of the sheriff selling Peterson's
interest in the contract for deed to McMillan are annulled
and vacated.
(2) The contract for sale of real estate between
Peterson and McMillan is reinstated.
(3) Peterson shall credit McMillan with payment on the
principal due on November 1, 1981, on the contract for sale
of real estate in the sum of $35,500 ($39,000, less the
'$3,500, awarded as attorneys fees).
(4) After the credit is applied by Peterson to the
McMillan contract, the remaining principal balance due on
said contract shall accrue interest payable by McMillan at
7%
the rate of +8* per annum f r ~ m and after the date of
remittitur of this cause from this Court to the Gallatin
County District Court. McMillan shall make annual payments
under the contract of $9,912 beginning November 1, 1984 and
continuing thereafter as provided in the contract for sale of
real estate until the balance of the purchase price together
with a.11 accrued interest shall have been fully paid by him
on or before November 1, 1990. All remaining terms of the
sa.id contract for sale of real estate shall be and remain in
full force and effect as between Peterson and McMillan, and
subject to the provisions thereof.
(5) Summary judgment shall be entered by the District
Court in favor of the Montana Bank of Rozeman and the Estate
of George J. Stublar deceased, and Warren A. McMillan, and
against Hilda M. Peterson on her remaining claims in this
action.
(6) The judgments outstand.ing against Peterson a.nd in
favor of George J. Stublar in civil cause no. 27580 in the
Gallatin County District Court shall be satisfied by the
parties or by order of the District Court.
(7) No costs shall be awarded in this action.
We Concur:
2 ~ 4~~4
4
Chief Justice
Justices
- 17 -
I respectfully dissent from the majority opinion.
At the outset it must be made clear that the plaintiff
here, Hilda M. Peterson, did not file a motion seeking relief
under Rule 60 (b) M.R.Civ.P., in the case of George J.
Stublar vs. Hilda M. Peterson, District Court of the
Eighteenth Judicial District of the State of Montana in and
for the County of Gallatin, cause no. 27580. In that case
Stublar obtained a judgment against Peterson for $26,000
together with accrued interest in the amount of $2,919.48
plus 12% interest on the sum of $28,919.48 from January 22,
1980, to date, together with costs of $22.80 and attorney's
fees in the sum of $3500. The findings of fact, conclusions
of law, and judgment of the court were contained in one
document and were mailed to Peterson's counsel. Counsel's
deposition, part of the record in that case, showed that the
document was received by counsel. Thereafter, the judgment
beca.me final for purposes of satisfaction. No appeal was
taken. No supersedeas was filed. Therefore, the sheriff's
sale which followed could be held.
An execution was issued which incorrectly identified the
date of judgment as 24th day of July, 1981. This was simply
a clerical mistake. The judgment referred to above, entered
by Judge Gary on November 20, 1981, was clearly the judgment
upon which the execution, dated November 23, 1981, was
issued. Thereafter, the appropriate notice of sheriff's sale
was posted. The personal property, in the form of the
contract of sale of real estate dated October 14, 1976,
between Peterson and McMillan, was sold to McMillan for the
sum of $39,000. A return of sale was made by the deputy
sheriff dated December 2, 1981, one day following the sale on
December 1, 1981. No relief from these proceedings was
instituted in cause no. 27580.
Hilda M. Peterson instituted a declaratory judgment
action in the Eighteenth Judicial District of the State of
Montana, in and for the County of Gallatin, District Court
cause no. DV-82-132 making a collateral attack upon the
judgment entered in cause no. 27580. This collateral attack
was premised upon the idea that Peterson could not waive her
right to insist upon foreclosure. This of course is not the
law. Peterson could have set forth as a matter of defense,
the "single action" statute and by failing to do so cannot be
,--
heard to complain. VandeVeegaete v. VandeVeegaete,, 243 P.
1083, 75 Mont. 52; State Savings Bank v. Albertson, 102 P.
This is not a case where relief from a judgment can be
accorded on the basis of fraud on the court or lack of
jurisdiction over the person or subject matter. Peterson was
before the court in cause no. 27580, Stublar v. Peterson,
represented by counsel. Counsel advised the court there was
no defense and therefore the court entered judgment.
Judgment was served upon Peterson's counsel. The judgment
was final. No appeal was taken from the judgment. No motion
for Rule 60(b) relief was filed in that case.
The majority raises the issue of lack of finality
apparently relying upon authority that failure to serve
notice of entry of judgment stays the time for filing a
notice of appeal. However, that issue is not before this
Court. The issue here is whether the sale which followed
the entry of a judgment was a valid sale and whether the sale
can, in any event, be attacked in this proceeding.
The majority opinion seems to turn upon the idea that an
independent action can attack technical defects in an
execution sale on the basis of language quoted from Rule
60(b) which states, in relevant part:
". . . This rule does not limit the power of a
court to entertain an independent action to relieve
a party from a judgment, order, or proceeding, or
to grant relief to a defendant not actually
personally notified as may be required by law, or
to set aside a judgment for fraud upon the court."
First, it should be noted that this language does not
grant a.ny rights to the court in an independent action. The
language simply states nothing in the rule shall limit the
power of a court to entertain an independent action.
An independent action clearly can attack a "proceeding"
where the law required that an aggrieved party be notified of
the "proceeding" and was not or where there was a fra.ud on
the court.
This is not a case for an independent action as
indicated in the majority opinion because (1) the law did -
not
require that Peterson be personally notified of the sale
which was an in rem proceeding and (2) there was no fraud.
Worse yet this new law was made without benefit of briefs or
argument as the Court raised the issue.
This action is, pure and simple, a collateral attack
upon a judgment in another case. There is absolutely no
basis for the relief granted by the majority. This is simply
another indication of this Court ignoring the law to achieve
wha.t the Court members conscientiously believe to be an
equitable result. There is great risk in taking this action
because there is no opportunity for counsel to brief and
argue the Court invented theory granting relief. Again, I
find the majority acting as "philosopher kings" at great risk
Justice John C. Sheehy, specially concurring:
I am pl.eased to accept the accolade of "philosopher
king" conferred by our fellow jurist. My Irish father always
maintained he was descended from the kings of Kerry. He
would be pleased to know we now again supersede the peerage,
and can sit above the salt.
I like being a. philosopher also. He is one who by
Greek definition is a lover of wisdom. The task of wise
judges is always to make the law what it ought to be--the
servant of, and not the tyrant of, humans.
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IN TI!E SUPREME COURT OF THE STATE OF MONTANA
No. 8 3 - 5 2 3
HILDA M. PETERSON,
Plaintiff and Appellant,
MONTANA RANK OF ROZEMAN, N.A.
as Personal Representative of
the Estate of George J. Stublar,
deceased and WARREN A . McMILLAN,
Defendants and Respondents.
ORDER ON PETITION FOR REHEARTNG
On consideration of McMillan's petition for rehearinq,
and the replies of Montana Bank of Rozeman and Peterson
thereto,
IT IS ORDERED:
1. The ra.te of interest on the reinstated contract
between Peterson and McMillan shall be seven percent (7%) per
annum, and not 8% percent per annum (paragraph (41, p. 16,
slip opinion).
2. The petition for rehearing is otherwise denied.
3. Copies to counsel of record.
DATED this*J'/ ti1 day of September, 1984.
&hie; Justice
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