Rieckhoff v. Woodhull ( 1937 )

Under section 9187, Revised Codes, the court has power to relieve a party from a judgment obtained against him through his mistake, inadvertence and excusable neglect, and plaintiff sought to correct the errors leading to the judgment obtained against him by moving to set aside the decree upon the statutory grounds. The remedy to correct the mistake of plaintiff under this section is exclusive in cases of this kind as has been pointed out in the case of Meyer v. Lemley, 86 Mont. 83,282 P. 268.

Relief should be granted as a matter of equity. The supreme court of Minnesota has approved the doctrine that equity should afford relief when the circumstances are of such a nature that an adverse party is seeking to avail itself of the opportunities afforded by the mistake and attempting to enforce an unconscionable advantage. (Corson v. Shoemaker, 55 Minn. 386,57 N.W. 134; Benson v. Markoe, 37 Minn. 30, 33 N.W. 38, 5 Am. St. Rep. 816; Parchen v. Chessman, 49 Mont. 326,142 P. 631, 146 P. 469, Ann. Cas. 1916A, 681.) "Relief will be granted when, in view of all the circumstances, to deny it would permit one party to suffer a gross wrong at the hands of the other." InMonroe National Bank v. Catlin, 82 Conn. 227, 73 A. 3, it is said: "When one has obtained such an advantage over another by reason of the other's mistaken view of his legal rights that it would, under the circumstances, be unconscionable for him to retain it, equity will not allow him to do so." (See, also,Pearce v. Buell, 22 Or. 29, 29 P. 78.)

Plaintiff's mistake was a mistake of foreign law and, therefore, a mistake of fact, for which relief should be granted. In this action the mistake of the plaintiff was a mistake in determining the import of the laws of Montana relating to real estate mortgages. Plaintiff had filed his affidavit of renewal of the real estate mortgage involved herein, and from the filing of such affidavit felt secure in collecting the indebtedness involved. He assumed that the mortgage being extended by the filing of said affidavit, for a period of eight years, the debt was secure during that period and enforceable against the lands covered by the mortgage. His error was a mistake in interpretation of the law of a foreign state, he being a resident of the state of Iowa, and the lands covered by his mortgage being in Montana. The rule is generally recognized that ignorance or mistake as to the law of a country or state other than that where one resides is to be treated as a mistake of fact, from which equity will grant relief. (Sampson v. Mudge, 13 Fed. 260; Haven v. Foster, 9 Pick. 112, 19 Am. Dec. 353; Morgan v. Bell, 3 Wash. 554,28 P. 925, 16 L.R.A. 614; Patterson v. Bloomer, 35 Conn. 57, 95 Am. Dec. 218; Miller v. Beighler, 123 Ohio St. 227,174 N.E. 774; 73 A.L.R. 1257 and note at p. 1260.)

The rule, therefore, seems to rest upon a broad foundation, the basis of which is that negligence cannot be implied from ignorance of the law of a foreign state, as the duty of every person of sound and mature mind to know the law is limited to the law of the state of his residence. (Williams v. Merriam,72 Kan. 312, 83 P. 976; Vinal v. Continental Const. Co., 53 Hun, 247, 6 N.Y. Supp. 595; Rosenbaum v. United States CreditSystem Co., 64 N.J. Eq. 34, 44 A. 966.)

The trial court denied plaintiff's motion upon the erroneous belief that the real ground for relief was not a mistake of fact but a mistake of law, consisting in the plaintiff's believing the law to be one thing when, in truth and in fact, it was another. From the foregoing it clearly appears that even under the trial court's theory of mistake of law, it seems conclusive that the relief prayed for should be granted. Relief is generally granted by the courts for mistakes of fact.

The statute is one of remedy and should be liberally construed. (Brothers v. Brothers, 71 Mont. 378, 230 P. 60;Melde v. Reynolds, 129 Cal. 308, 61 P. 932; GriswoldLinseed Oil Co. v. Lee, 1 S.D. 531, 47 N.W. 955, 36 Am. St. Rep. 761; Collier v. Fitzpatrick, 22 Mont. 553, 57 P. 181.)

Plaintiff's mistake and neglect were excusable. Plaintiff knew that the laws of Montana controlled his rights, duties and liabilities under the mortgage. He had knowledge of all facts with respect to the note and mortgage, but misinterpreted the Montana law with respect to renewal of lien and, therefore, did not disclose all of the facts surrounding the mortgage and note transaction to his attorneys. Courts of equity have aided mistaken parties because of the demands of justice. When injustice would be done by enforcing the rule that equity will not relieve against mistakes of law, such injustice is avoided by declaring the mistake to be a mistake of fact and not one strictly of law, and so not to constitute an insuperable bar to relief. (Reggio v. Warren, 207 Mass. 525, 93 N.E. 805, 20 Ann. Cas. 1244, 32 L.R.A. (n.s.) 340; 2 Pomeroy's Equity Jurisprudence, 3d ed., sec. 849; Moore v. Shook, 276 Ill. 47, 114 N.E. 592; Benson v.Bunting, 127 Cal. 532, 59 P. 991, 78 Am. St. Rep. 81; Rauen v. Prudential Ins. Co., 129 Iowa, 725, 106 N.W. 198; Jeakins v. Frazier, 64 Kan. 267, 67 P. 854; 10 R.C.L. 308, sec. 51.)

We wish to draw the court's attention to Mr. Justice Stone's learned opinion in the case of Peterson v. First Nat. Bank,162 Minn. 369, 203 N.W. 53, 42 A.L.R. 1185: "There is much authority for the proposition that no relief can be had from mistakes of law, but that doctrine has yielded much to the demand that justice be not obstructed by obsolete and baseless distinctions — useless duffle of an older and more arbitrary day. * * * The distinction so often made between mistakes of fact and those of law is artificial because, whatever its genesis, mistake is relieved against, not because of what it is, but what it does." There is no doubt that courts of equity have power to grant relief for mistakes of law. (Hunt v. Rousmanier, 8 Wheat. 174, 5 L. Ed. 589; Freichnecht v. Meyer, 39 N.J. Eq. 551;Spurlock v. Brown, 91 Tenn. 241, 18 S.W. 868; Snell v.Atlantic F. M. Ins. Co., 98 U.S. 85, 25 L. Ed. 52.) Citing: Meyer v. Lemley, 86 Mont. 83, 282 P. 268;Mantle v. Casey, 31 Mont. 408, 78 P. 591; Donlan v.Thompson Falls Copper etc. Co., 42 Mont. 257, 112 P. 445;Council Imp. Co. v. Draper, 16 Idaho, 541, 102 P. 7;Robinson v. Peterson, 63 Mont. 247, 206 P. 1092; Chambers v. City of Butte, 16 Mont. 90, 40 P. 71; Thomas v.Chambers, 14 Mont. 423, 36 P. 814; Scilley v. Babcock,39 Mont. 536, 104 P. 677; Smallhorn v. Freeman, 61 Mont. 137,201 P. 567; Grant v. Hewitt, 63 Mont. 422, 208 P. 887;Middle States O. Corp. v. Tanner-Jones Drilling Co., 73 Mont. 180,235 P. 770; Edwards v. Hellings, 103 Cal. 204, 37 P. 218; Federal Land Bank v. Gallatin County,84 Mont. 98, 274 P. 288; Clark v. Perry, 17 Colo. 56,28 P. 329; Stites v. McGee, 37 Or. 574, 61 P. 1129; 34 C.J. 305, sec. 525 and cases cited. Plaintiff has appealed from an order denying his motion to set aside a judgment.

This action was brought to foreclose a real estate mortgage securing a note for $2,000. Both note and mortgage were executed in October, 1916, and matured on January 7, 1922. All of the defendants defaulted except the Standard Oil Company. In its answer the bar of the statute of limitations, as to the debt or note, was affirmatively pleaded.

After the case was at issue, the cause was submitted for judgment and decision upon an agreed statement of facts. The essential facts as disclosed thereby are as follows: The defendant W.H. Woodhull, the mortgagor, failed to make any payments on the note after January 7, 1927. An affidavit to extend the life of the mortgage, in compliance with section 8267, Revised Codes, was filed on January 13, 1930. For some time prior to September 15, 1931, Mark L. Lovell was the owner and in possession of the real estate, on which date the Standard Oil Company attached it in an action against Lovell; a judgment was recovered in the attachment action and the property was sold to that company. Thereafter a sheriff's deed was issued to the purchaser at this sale; no extension agreement of either the note or mortgage was entered into in accordance with the provisions of section 8264. The agreed statement recites that "no payment has been made nor acknowledgment of the said debt, nor any promise to make any payments upon the principal or interest of the promissory note owned and held by the plaintiff secured by the real estate mortgage involved herein has been made subsequent to January 7, 1927, by any of the parties defendant to this action or by any other person or persons whomsoever save and except" the affidavit of renewal.

The court found that the debt secured by the mortgage was barred and, hence the lien of the mortgage had expired. Judgment was entered for the defendant Standard Oil Company on December 18, 1936. On April 29, 1937, plaintiff filed a motion to vacate and set aside the judgment under the provisions of section 9187, Revised Codes. The motion was supported by affidavits.

D.C. Warren, one of plaintiff's counsel, made affidavit that on January 22, 1936, he received from plaintiff's attorneys, Keohane Kuhfeld, of Beach, North Dakota, the note, mortgage, and affidavit of renewal, together with the statement "nothing has been paid on the principal and interest has been paid up to January 7, 1927"; that he prepared the complaint and agreed statement of facts based upon the information so obtained; that he had no information from plaintiff or his attorneys that any other payments had been made on the mortgage indebtedness, or that the indebtedness had been extended by written acknowledgment of the debt by Mark L. Lovell; that because of the lack of information the statement of facts prepared by him was not a true and correct statement of the facts; that it was made through mistake, inadvertence, and excusable neglect of the plaintiff in failing to advise his attorneys of payments made in 1929, and of acknowledgment of the indebtedness made by Lovell in that year; that affiant first learned of the mistake on March 25, 1937, and forthwith took steps to prepare the necessary affidavits in support of the motion to set aside the judgment.

Plaintiff made affidavit to the effect that he sent the mortgage to his attorneys at Beach, North Dakota, stating in his letter: "As requested I am herewith enclosing you the following papers" (describing the note), "principal $2,000. Interest on this note has been paid to January 7, 1927. Nothing else paid on account of principal or interest." Affiant stated that the agreed statement of facts was erroneous, in that it recited that no payment had been made and no acknowledgment of the debt, nor any promise to pay the principal and interest on the note secured by the mortgage subsequent to January 7, 1927. He stated further that he did not see the agreed statement of facts before its execution. He set forth documentary evidence which establishes that this statement is erroneous. The last payment of interest was actually made in 1929 by Lovell, although it only paid up the interest to January 7, 1927. Lovell, by affidavit, corroborated the plaintiff in this respect. Letters signed by him dated as late as December, 1929, wherein he acknowledges the indebtedness, were produced. The question before us is whether the court was in error in denying plaintiff's motion.

The pertinent part of section 9187 here applicable reads as follows: "The court may, in furtherance of justice, * * * upon such terms as may be just, relieve a party * * * from a judgment, * * * taken against him through his mistake, inadvertence, surprise, or excusable neglect," provided the application be made within a reasonable time and in no case exceeding six months. The application here was within time.

An application to set aside a judgment on motion is addressed[1] to the discretion of the trial court, and its action thereon, in the absence of manifest abuse of discretion, will not be disturbed on appeal. (Hegaas v. Hegaas, 28 Mont. 266,72 P. 656; Robinson v. Petersen, 63 Mont. 247, 206 P. 1092;Kosonen v. Waara, 87 Mont. 24, 285 P. 668.) Each application to set aside a judgment must be determined by its own facts. (Robinson v. Petersen, supra; Pacific AcceptanceCorp. v. McCue, 71 Mont. 99, 228 P. 761.) Hence the question is fairly presented: Did the plaintiff establish that by his mistake, excusable neglect, or inadvertence this judgment was taken against him?

It is said that the showing made establishes a mistake, in[2] that plaintiff believed so long as the mortgage was not barred by the statute of limitations (sec. 8267), due to the filing of the renewal affidavit, the debt which it secured was not barred by the general statute. Plaintiff was in error in this assumption, for a mortgage cannot exist beyond the life of the debt or obligation it is given to secure. (Jones v. Hall,90 Mont. 69, 300 P. 232; Humbird v. Arnet, 99 Mont. 499,44 P.2d 756.) This was a mistake on the part of plaintiff as to what the law was in this state on this subject.

It is said that section 9187 does not attempt to limit its[3, 4] provisions to any particular classes or kinds of mistake. Hence without regard to whether mistakes of fact or law are involved, relief may be granted. California has announced and followed a rule in accord with this contention, as is illustrated by the case of Douglass v. Todd, 96 Cal. 655, 658,31 P. 623, 31 Am. St. Rep. 247. This court has long been committed to the rule that, under section 9187, relief may not be granted, speaking generally, where the mistake is one of law. (Mantle v.Casey, 31 Mont. 408, 78 P. 591; Donlan v. Thompson FallsCopper Milling Co., 42 Mont. 257, 112 P. 445; Canning v.Fried, 48 Mont. 560, 139 P. 448; Federal Land Bank v.Gallatin County, 84 Mont. 98, 274 P. 288; Meyer v.Lemley, 86 Mont. 83, 282 P. 268.)

The foundation of the rule that relief will not be accorded where the mistake is one of law is the common-law maxim that ignorance of the law excuses no one. This rule is one of necessity, for if ignorance of the law be permitted to be pleaded, then there could be no security in legal rights, no certainty in judicial investigations, and no finality in litigations. (2 Pomeroy's Equity Jurisprudence, 4th ed., sec. 842, p. 1716.)

The rulings of this court announced in the foregoing cases have not been changed by legislative action, although many sessions of the legislature have been held since the earlier of these cases were decided. The fact that these decisions have stood so long would, perhaps, be a sufficient reason for not disturbing them. But when we consider certain other sections of our Code, we think they are in entire accord with the express legislative will.

Section 8776 declares: "Whenever the meaning of a word or phrase is defined in any part of this code, such definition is applicable to the same word or phrase wherever it occurs, except where a contrary intention plainly appears." The word "mistake" is found elsewhere in our Codes. "An apparent consent is not real or free when obtained through * * * mistake." (Sec. 7475.) "Mistakes may be either of fact or law." (Sec. 7484.) Mistakes of fact are defined by section 7485. Section 7486 declares that certain enumerated mistakes of law are mistakes within the meaning of the chapter in which these sections are found. The word "chapter" can only there apply to the word "mistake" as used in section 7475. Section 7487 provides that mistakes of foreign law are mistakes of fact. The effect of sections 7484, 7485, 7486, and 7487 is to limit the meaning of the word "mistake," as used in section 7475, to the provisions of these sections. In other words, these sections define the meaning of the word "mistake." The legislature in adopting these Codes had defined and limited the meaning of the word "mistake" so that, aside from the few exceptions mentioned in these sections, it excluded mistakes of law from its definition. When we come to determine the meaning of the word "mistake" found in section 9187, the legislature having once defined the word under the rule of section 8776, no contrary intention appearing, the word "mistake" in section 9187 must be held to have the same meaning as it has when used in section 7475. It is well to here observe that the California Codes contain no section corresponding to section 8776, and hence the courts there might well construe the statute as they did, but by reason of this section we are precluded from following their decisions.

It is argued that, since plaintiff was a resident of Iowa, his mistake as to the state of our law was one of fact, applying the rule of section 7487. Before the commencement of this action, plaintiff employed counsel in Montana, who have represented him throughout all the various proceedings. In this state of the record, this principle can have no application. (10 R.C.L. 316;Schaefer v. Wunderle, 154 Ill. 577, 39 N.E. 623; note in 55 Am. St. Rep. 50.)

It is clear from a reading of the agreed statement of facts that plaintiff's counsel here submitted for decision the question of the effect of the affidavit of renewal, taking the position that the mortgage was thereby vitalized for a statutory period without regard to the vitality of the debt secured by the mortgage. As we have demonstrated, to assume this position was to rely upon a mistaken notion of the law.

It is said that the attorneys were without, at least, implied[5-7] authority to stipulate as they did, namely, to ignore the facts which would establish plaintiff's right to recover, and accordingly it is argued that the relief should be granted.

Section 8974 provides: "An attorney and counselor has authority: 1. To bind his client in any steps of an action or proceeding by his agreement filed with the clerk or entered upon the minutes of the court and not otherwise." The agreed statement of facts was in writing. It was filed with the clerk of the court. This is one of the methods provided for the trial of causes. (Sec. 9372.) No one can well argue that the signing and filing of the agreed statement of facts is not the taking of one or more steps in an action or proceeding. Under this section, the attorneys had implied authority to do what they did.

However, independent of this statute, the contention cannot prevail. No one has attempted to state the scope of the express authority of the counsel for plaintiff. The presumption obtains, in the absence of a showing to the contrary, that the attorneys were acting within the scope of their authority in entering into this stipulation. (Davenport v. Davenport, 69 Mont. 405,222 P. 422; 5 Am. Jur. 307; see, also, Union Bank Trust Co. v.Penwell, 99 Mont. 255, 42 P.2d 457.)

It is argued that counsel neglected, upon the issue of the statute of limitations being pleaded, to make inquiry as to when the last payment of interest, and as to whether a new promise of payment, had been made. Assuming that this situation establishes neglect on the part of the attorneys, the record fails to show any excuse therefor. The neglect of his attorneys was the neglect of the plaintiff, and, unless excused, no relief may be granted under this section. (First State Bank v. Larsen, 72 Mont. 400,233 P. 960.)

Accordingly, we are unable to say that the trial court abused its discretion in refusing to set aside the judgment. Order affirmed.

MR. JUSTICE MORRIS and HONORABLE A.J. HORSKY, District Judge, sitting in place of MR. JUSTICE STEWART, disqualified, concur.