Scott v. FARMERS COOPERATIVE EXCHANGE, INC. , 274 N.C. 179 ( 1968 )

161 S.E.2d 473 (1968) 274 N.C. 179

Raymond A. SCOTT and wife, Doris C. Scott
v.
FARMERS COOPERATIVE EXCHANGE, INCORPORATED.

No. 361.

Supreme Court of North Carolina.

June 14, 1968.

Turner & Harrison, by Fred W. Harrison, Kinston, James R. Nance, Fayetteville, E. C. Thompson, III, Robert L. West, Warsaw, for plaintiff appellants.

Dees, Dees, Smith & Powell, by William L. Powell, Jr., Goldsboro, for defendant appellee.

PARKER, Chief Justice.

Plaintiffs assign as error the court's judgment sustaining the demurrer and striking the amended complaint.

In essence, plaintiffs have alleged that the judgment secured against them by the present defendant in the prior action was obtained through the use of a false statement of account which did not give the plaintiffs credit for payments made thereon. This allegation relates to the merits of the previous cause of action between the same parties. It is well settled in this and the vast majority of jurisdictions that in order to sustain a collateral attack on a judgment for fraud it is necessary that the allegations of the complaint set forth facts constituting extrinsic or collateral fraud in the procurement of the judgment, and not merely intrinsic fraud, that is, arising within the proceeding itself and concerning some matter necessarily under the consideration of the court upon the merits. Johnson v. Stevenson, 269 N.C. 200, 152 S.E.2d 214; Miller v. First Nat. Bank, 234 N.C. 309, 67 S.E.2d 362; Horne v. Edwards, 215 N.C. 622, 3 S.E.2d 1; McCoy v. Justice, 199 N.C. 602, 155 S.E. 452; Mottu v. Davis, 153 N.C. 160, 69 S.E. 63; United States v. Throckmorton, 98 U.S. 61, 25 L.Ed. 93.

In McCoy v. Justice, supra, the Court quoted with approval from Freeman on Judgments, § 1233 (5th Ed.):

"It must be borne in mind that it is not fraud in the cause of action, but fraud in its management, which entitles a party to relief. The fraud for which a judgment may be vacated or enjoined in equity must be in the procurement of the judgment. If the cause of action is vitiated by fraud, this is a defense which must be interposed, and unless its interposition is prevented by fraud, it cannot be asserted against the judgment; ``for judgments are impeachable for those frauds only which are extrinsic to the merits of the case, and by which the Court has been imposed upon or misled into a false judgment. They are not impeachable for frauds relating to the merits between the parties. All mistakes and errors must be corrected from within by a motion for a new trial, or to reopen the judgment, or by appeal.' The fraud must be in some manner other than the issue in controversy in the action. The rule that fraud, to be a ground for relief, must be extrinsic or collateral to the matter tried in the first action, is almost universally acquiesced in. It is merely an application of the general principle that equity will not interfere simply to give a second opportunity to relitigate that which has already been fully litigated."

The reason for this rule is expressed in the maxim interest reipublicae ut sit finis litium; that there should be an end of litigation for the repose of society. The Court said in Horne v. Edwards, supra:

"* * * This demand of public policy yields to the ends of justice where extrinsic fraud has been practiced only because it is the main characteristic of such fraud that it deprives the party of the opportunity of presenting his case, or his defense, upon the hearing, and renders the result as to him no trial at all in the legal sense. United States v. Throckmorton, supra; McCoy v. Justice, supra. Intrinsic fraud, as for example, perjury, or the use of false or manufactured evidence, has no such effect."

In Pico v. Cohn, 91 Cal. 129, 25 P. 970, 13 L.R.A. 336, cited with approval in McCoy v. Justice, supra, and Horne v. Edwards, supra, the Court said:

"* * * (I)t must be a fraud extrinsic or collateral to the questions examined and determined in the action. And we think it is settled beyond controversy that a decree will not be vacated merely because it was obtained by forged documents or perjured testimony. The reason of this rule is that there must be an end of litigation * * *. (W)hen he has a trial he must be prepared to meet and expose perjury then and there."

The facts alleged in the case at bar, if true, fall within the classification of intrinsic fraud, and are not sufficient grounds for equitable relief against the prior judgment in an independent action. An action for intrinsic fraud must be by motion in the cause in which the judgment was rendered. Johnson v. Stevenson, supra; Miller v. First Nat. Bank, supra; Horne v. Edwards, supra; McCoy v. Justice, supra. The plaintiffs are attempting to litigate again a matter which has been tried on the merits in the Superior Court, and heard on appeal by this Court. The fraud which they allege concerns the very instrument which was sued on in the prior action. In Thomason v. Thompson, 129 Ga. 440, 59 S.E. 236, 26 L.R.A.,N.S., 536, quoted with approval in McCoy v. Justice, supra, it is said:

"To set aside a verdict and judgment for fraud, where the particular fraud was in issue, because of the discovery of additional evidence to prove it, would deprive a judicial finality—a judgment—of its inherent and distinguishing characteristic."

Appellants also assign as error the court's entering a judgment sustaining the demurrer prior to a hearing on their motion to amend their complaint. The record indicates that the demurrer was filed over a month prior to the filing of plaintiffs' motion to amend the complaint. Plaintiffs filed their amended complaint without obtaining leave of the court and prior to filing their motion to amend. The record indicates that the amended complaint was filed on 9 August 1967, and that a motion to amend was filed on 10 August 1967. This Court has repeatedly held that after the time allowed for answering a pleading has expired, as in this instance, such pleading may not be amended as a matter of right, but only in the discretion of the court. Consolidated Vending Co. v. Turner, 267 N.C. 576, 148 S.E.2d 531, and cases cited therein. Be that as it may, the proposed amendment related only to the amount of damages, and would have been of no help to plaintiffs as against the demurrer.

The judgment sustaining the demurrer also dismissed the action. This was correct, since it appeared affirmatively from the facts alleged that the plaintiffs had no cause of action against the defendant which would invoke the equitable jurisdiction of the court. Perrell v. Beaty Service Co., 248 N.C. 153, 102 S.E.2d 785; Adams v. Flora Macdonald College, 247 N.C. 648, 101 S.E.2d 809. Equity will not interfere simply to give a second opportunity to relitigate that which has already been fully litigated. McCoy v. Justice, supra.

The judgment sustaining the demurrer and dismissing the action is

Affirmed.