First Security Bank of Bozeman v. J ( 1991 )

NO. 91-136
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
MILTON E. JONES and HELEN C. JONES,
Defendants and Appellants,
V.
FIRST SECURITY BANK OF BOZEMAN,
Plaintiff and Respondent.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Leif B. Erickson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gerald B. Murphy and Thomas E. Smith, Moulton,
Bellingham, Longo & Mather, P.C., Billings, Montana
For Respondent:
Calvin L. Braaksma, Landoe, Brown, Planalp
f E, Kommers, P.C., Bozeman, Montana
Submitted on Briefs: June 6, 1991
Decided: July 2, 1991
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
Milton and Helen Jones appeal from the order of the District
Court for the Eleventh Judicial District in Flathead County,
granting First Security Bank of Bozeman summary judgment in a
foreclosure action. We affirm the District Court.
The issue raised by the defendants is whether the doctrines
of merger or res judicata, or public policy prevent the Bank from
obtaining a judgment in Flathead County after already obtaining a
judgment in Gallatin County on the same promissory note.
This case has been before this Court previously. In First
Security Bank of Bozeman v. Jones, 243 Mont. 301, 7 9 4 P.2d 679(1990), (Jones I), we considered essentially the same facts. We
will briefly summarize the proceedings in Jones I.
The defendants executed a promissory note to the Bank and
pledged five parcels of property as security. Four of the parcels
were located in Gallatin County and one was located in Flathead
County. The defendants defaulted on the promissory note, and the
Bank instituted this foreclosure action. The Bank filed two
complaints--one in Flathead County and one in Gallatin County.
Each complaint made reference to the other, and it was made clear
that the Bank sought a single integrated foreclosure proceeding and
a single judgment.
The defendants raised as affirmative defenses Montana's
one-action rule, waiver, and estoppel. The District Court of
Gallatin County granted the Bank's motion for summary judgment, and
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the defendants appealed. On appeal, this Court determined that the
granting of summary judgment was proper. We found that the Bank
did not violate the purpose of 5 71-1-222, MCA, (the one-action
rule) by filing simultaneous foreclosure proceedings in both
Gallatin and Flathead Counties, and stated that the Bank was
attempting to comply with § 25-2-123(1)(d), MCA, which determines
the proper place of trial for foreclosure actions.
On November 6, 1990, the Bank renewed its motion for summary
judgment in Flathead County District Court. The defendants opposed
the motion, arguing the doctrines of merger and res judicata prohibited
the bank from acquiring a second judgment on the same promissory
note. On January 28, 1991, the Flathead County District Court
granted the Bank summary judgment. The defendants did not seek a
stay, and both the Flathead and Gallatin properties have since been
purchased by the Bank. The defendants appeal the summary judgment
entered in the Flathead County District Court.
The defendants state that the doctrine of merger prohibits the
Bank from acquiring a judgment in Flathead County on the same
promissory note that was the basis for a judgment in Gallatin
County. They contend that the note was merged into the judgment
in Gallatin County, and is thereby extinguished. They cite Lepper
v. Jackson, 102 Mont. 259, 57 P.2d 768 (1936), in which this Court
stated:
When the statute is followed and the court has secured
jurisdiction over the person of the debtor, or debtors,
and the property, the debt is merged in the judgment and
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decree rendered, and though the property may not bring
[a sum] sufficient to satisfy the judgment, no further
action can be brought on the debt evidenced by the note.
The defendants contend that the merger doctrine is recognized
by many of Montana's judicial districts, which have adopted rules
or policies requiring the creditor to surrender the original
promissory note at the time judgment is entered. They argue that
a final judgment was rendered upon the promissory note by the
Gallatin County District Court, and that the subsequent Flathead
County District Court judgment, relying on the same note, violates
the merger doctrine.
The purpose of the merger doctrine is to compel the creditor
who has taken security for his debt to exhaust the security before
resorting to the general assets of the debtor. Lepuer, 102 Mont.
at 268. That is what the Bank attempted to do in this case. The
Bank strove to pursue its security in both Gallatin and Flathead
Counties at the same time. By integrating the proceedings in the
two counties, the Bank sought to exhaust its security in one
action, thereby avoiding multiple actions. A s the Court noted in
Jones I, the Gallatin and Flathead actions are not sequential
actions, but are, in essence, one action to seek a single recovery
by means of a single, integrated, coordinated foreclosure. The
Bank did not violate the merger doctrine, but in fact followed its
strictures by exhausting all security in one coordinated,
integrated effort.
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The defendants next contend that the doctrine of res judicata
precludes the Bank from obtaining a second judgment on the same
promissory note.
This Court stated in Brault v. Smith, 209 Mont. 21, 25, 679
P.2d 236, 238 (1984) *I[t]he basic proposition embraced by the
doctrine of res judicata has always remained the same: a party
should not be able to relitigate a matter he or she has already had
an opportunity to litigate." However, as noted by the District
Court and this Court in Jones I, the Bank is not relitigating the
issue or seeking an additional judgment, but a judgment on the same
obligation by means of an integrated proceeding.
The District Court found, and we agree, that:
This Judgment is not in addition to the Judgment in Cause
No. 89-298, Montana Eighteenth Judicial District Court,
Gallatin County, but represents Judgment on the same
obligation as described therein, it being of record in
Flathead County to allow foreclosure of Flathead County
real property .. . .
We conclude there is no merit to the defendants' claim that
the doctrine of res judicata is a bar to a judgment in the Flathead
County District Court.
Finally, the defendants contend that a multiple judgment on
a single promissory note would be contrary to public policy.
However, we have already determined in Jones I that the foreclosure
proceedings in the two counties constituted an integrated action
and a single deficiency judgment thereafter. The Bank did not
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attempt to circumvent the one-action rule, and therefore, did not
violate public policy.
We conclude that this case is a proper one for summary
judgment, there being no genuine dispute over material fact. We
affirm the judgment of the District Court.
We Concur: ,/
/
"
Chief Justice
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July 2, 1991
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
Gerald B. Murphy
MOULTON, BELLINGHAM, LONG0 & MATHER
P.O. Box 2559
Billings, MT 59103
Calvin L. Braaksma
LANDOE, BROWN, PLANALP & KOMMERS
P.O. Box One
Bozeman, MT 59771-0001
ED SMITH
EME COURT