Clark v. Rosenwald , 31 N.M. 443 ( 1925 )

Lucien Rosenwald and Emma Rosenwald commenced suit June 7, 1923, in the district court of San Miguel county against the Rosenwald Realty Company, a corporation, upon the promissory notes of the latter, given to the former, aggregating more than $40,000. Process was served upon Cecilio Rosenwald, president of the corporation, but the corporation never appeared or answered, and judgment for the full amount claimed was taken against it by default September 1, 1923.

[1] Prior to the rendtion of judgment, John S. Clark, trustee in bankruptcy, applied to be allowed to intervene and answer the complaint, which application was denied by order entered in the cause August 18, 1923. By his petition and proposed answer, he alleged, in substance, that he was duly appointed, qualified, and acting trustee in bankruptcy of Cecilio Rosenwald, David E. Rosenwald, and Gilbert E. Rosenwald, individually, and as composing the copartnership of E. Rosenwald Son, and that as such trustee he held title to 713 of the 750 shares of the capital stock of the defendant corporation. As a proposed defense to the complaint, he alleged that the promissory notes in question were given, not for the benefit of the defendant corporation, but for the benefit of, and that the proceeds were distributed among, the said Cecilio Rosenwald, David E. Rosenwald, and Gilbert E. Rosenwald, the said bankrupts, who were and had been the directors of the defendant corporation, and that the giving of said notes was ultra vires the corporation. Justifying his application to intervene and answer, he alleged, in substance, that he had made demand upon said Cecilio Rosenwald, president of said corporation; that the corporation interpose its defense in said suit; that the said corporation had failed, neglected, and refused so to do; and that the said Cecilio Rosenwald, being the only officer or director of said corporation within the state of New Mexico, had connived with plaintiffs to permit and procure a collusive judgment to be rendered in favor of the plaintiffs against the corporation without any defense being made.

In the judgment rendered against the corporation, there was incorporated an order allowing an appeal to said trustee and a provision staying execution upon said judgment pending appeal. The trustee having failed to file a cost bond within the time prescribed by law, said appeal was docketed in this court and dismissed upon motion of the appellees, Lucien Rosenwald and Emma Rosenwald, and the cause remanded to the district court, with instructions to enforce its judgment. Thereafter said trustee sued out of this court two writs of error, the one, No. 2934, upon the money judgment against the corporation, and the other, No. 2935, upon the order denying the intervention. For convenience, the parties will be hereinafter referred to as plaintiffs, defendant, and trustee, respectively.

After the allowance of said writs of error, and after the expiration of the time for the taking of appeal or suing out of writ of error, the trustee moved in this court that the defendant be made a party defendant to said writs, and the defendant itself petitioned for leave to join as a party plaintiff in such writs. Both the motion and the petition were denied. John S. Clark, Trustee in Bankruptcy, v. Lucien Rosenwald and Emma Rosenwald,230 P. 378, 30 N.M. 175. The cause was then submitted upon plaintiffs' motions, which were argued together, to dismiss the two writs. We handed down an opinion November 6, 1925, denying both of these motions, but reserving certain of the questions raised for consideration when the cause should be heard on the merits. A motion for rehearing was then made, during the consideration of which the trustee consented to the dismissal of writ of error No. 2934, directed to the money judgment. An order was thereupon made in this court dismissing the said writ of error, and granting rehearing upon the motion to dismiss writ of error No. 2935, directed to the order denying intervention.

The dismissal of the one writ of error renders unnecessary and inapplicable much that was said in our former opinion, and the same will therefore be withdrawn.

A number of interesting and important questions are raised in the briefs. One of them seems to be decisive of the motion, and the others need not be decided.

It is conceded by all that, if any effective or substantial relief is to be had by the trustee from this court, it must be such as will result in the reversal of the money judgment. A reversal of the order sought to be reviewed by the writ remaining before us would be futile, unless it carries with it the right to be instated in the case and to litigate the question of defendant's liability upon the notes. Plaintiffs contend that the judgment adjudiciating the question of liability has passed beyond the jurisdiction of the courts, and that no power resides anywhere to reverse, vacate, or modify it.

A final judgment by default may be set aside upon good cause shown upon motion filed within 60 days after its entry. Code 1915, § 4227. A final judgment may be set aside for irregularity, on motion filed within one year after its rendition. Code 1915, § 4230. It may be set aside within 30 days after its entry under the general statutory control reserved to the district courts by Laws 1917, c. 15, § 1. A trial court, except in cases included within the foregoing statutory provisions, is without jurisdiction to entertain a motion directed to a final judgment. Queen v. McKissor, 193 P. 72, 26 N.M. 404. This court is without jurisdiction over judgments except in case of appeal taken, or writ of error sued out, within the statutory time. Jordan v. Jordan, 218 P. 1035, 29 N.M. 95. How, then, is the money judgment to be made to yield to a possible reversal of the order denying intervention? Counsel for the trustee say that the court can "adjust its decree so as to do justice to all," but he fails to point out in what manner this may be done, or by what authority.

Counsel for the trustee contend that plaintiffs are in no position to complain if in some manner the money judgment is made to yield to a reversal of the order denying intervention, because they "proceeded to take this judgment against Rosenwald Realty Company in the face of a possible appeal from the judgment denying the trustee leave to intervene without waiting for the time to expire within which such appeal could be taken." The implication is that plaintiffs, after the denial of the intervention, were compelled to sit by for six months before taking judgment against the defendant, awaiting the decision of the trustee as to whether he would appeal. Supersedeas is provided for by Laws 1917, c. 43, § 17. In the absence of supersedeas, we know of nothing to prevent the plaintiffs from proceeding to judgment and execution. If it were admitted, however, that plaintiffs were not in a position to complain, it must still be admitted that, if it is a jurisdictional matter, as it seems to be, even ther acquiescence would be unavailing.

Counsel for the trustee also urge that the plaintiffs proceeded at their peril to take judgment against the corporation. No doubt they did. But it seems to us that, when jurisdiction to vacate, modify, or reverse the judgment ceased, the peril ceased. In contending thus, counsel doubtless had in mind interventions of a somewhat different sort. If one sought and were denied the right to intervene to lay claim to specific property or funds, the subject-matter of litigation between other parties, the plaintiff in such a case would, thereafter, during the time allowed for the appeal, probably proceed at his peril to dispose of the property, and a third person would doubtless purchase at his peril. But this case is different. There is but one question of substance — the liability of the corporation on the plaintiffs' notes. The trustee sought to step into the shoes of the corporation and defend against that asserted liability. This question of liability was adjudicated. Judgment against defendant on the notes could not be rendered while the petition to intervene was pending. That petition having been disposed of, there was no obstacle to proceeding to final judgment. If the trustee desired to preserve his right to review the order denying intervention, he should in some manner have stayed the entry of final judgment; or, if final judgment was entered irregularly or erroneously, he should have taken such steps that jurisdiction might have continued in some court to vacate, modify, or reverse it.

Whether the order sought to be reviewed was final or interlocutory, and whether the defendant was a necessary party in this court, are questions ably and exhaustively discussed by counsel. In our view their consideration is unnecessary. The fatal weakness of the trustee's situation is that the money judgment against the defendant corporation, which it was his ultimate and sole purpose to avoid, has been allowed to pass beyond the jurisdiction of the courts. His petition to intervene once stood as a bar to the rendition of such a judgment. The bar was let down when the lower court finally denied the petition, and the way was thus cleared for the judgment against the defendant. He then had presented to him the question whether he should seek review of the order denying intervention or whether he should merely except to it and seek review of the judgment against the defendant corporation. Which course was proper practice, or whether both were open to him, we do not decide. He is in the position of having chosen the former. To make that course effective he required a supersedeas of the order denying intervention in order that it might be continued or restored as a bar to the rendition of the judgment against the defendant. Without supersedeas, we see nothing to prevent the rendition of the judgment and nothing to prevent its passing with time beyond control of the courts.

Concluding that the money judgment against defendant corporation is now beyond the reach of the courts, and that, under that condition, a reversal of the order denying intervention would constitute no substantial or effective relief to the trustee, we sustain the motion to dismiss the writ of error, and it is so ordered.

PARKER, C.J. and BICKLEY, J., concur.

On Motion for Second Rehearing.