DocketNumber: No. 8,227.
Citation Numbers: 117 P.2d 494, 112 Mont. 458
Judges: MR. JUSTICE ANGSTMAN delivered the opinion of the court.
Filed Date: 10/2/1941
Status: Precedential
Modified Date: 1/12/2023
I dissent. The opinion of the majority is so revolutionary, that I am impelled to express my views at length.
The writ is sought to prohibit the district court of the First Judicial District in and for Lewis and Clark county, and the Honorable R.E. McHugh of the Third Judicial District, called in to try the case, from proceeding to set or try case No. 15,862 in the district court without a jury, and that a certain order made and entered therein under date of May 29, 1941, wherein Judge McHugh set the case for hearing as an equity case, he vacated and set aside and the relator accorded a jury trial.
The controversy involves the handling of the affairs of the Beaverhead Ranch Company by the four individual defendants as statutory trustees after the expiration of the company's corporate charter in September, 1927. A number of actions involving some phase of the matter has preceded this. The cases litigated are in two branches, one commenced by the Union Bank Trust Co. for the appointment of a receiver, and one by Augusta J. Word for damages to her holdings in the ranch company arising out of the alleged illegal and fraudulent acts of the defendant bank and four of the trustees. I will first take up and follow to conclusion the action commenced by the bank.
The ranch company was engaged in the ranching and livestock business in Beaverhead county; the three individual defendants and R. Lee Word, husband and chief counsel for the plaintiff, composed the board of directors of the company during its *Page 462 corporate existence, and Word was its vice president and its counsel. R. Lee Word will hereafter be referred to as Word and Augusta J. Word as the plaintiff.
It appears that during the administration of the trust by the trustees a majority deemed it advisable to restock the ranch and borrow money from the Union Bank Trust Company of Helena to purchase sheep. Such arrangement was perfected, the trustees giving notes for the money borrowed which were secured by a mortgage on the sheep and other trust property. Word, it is alleged, opposed putting the corporation back into the sheep business and advised against the trustees doing anything except to liquidate the trust as provided by statute. It is alleged in the pleadings, however, that Word signed the notes and mortgage given for the money borrowed to restock the ranch. This allegation was denied by plaintiff's reply in action numbered 15,862, supra.
In January, 1934, the Union Bank Trust Company commenced an action in the district court praying for the appointment of a receiver to liquidate the affairs of the trust. That action resulted in the appointment of H.H. Pigott, one of the trustees, as receiver of the trust. He qualified and entered upon the duties of his office in May, 1934. Word filed notice of appeal on behalf of himself and the other trustees. That action in this court was entitled Union Bank Trust Company of Helena v.Penwell,
Litigation relative to the second branch of the controversy arose December 22, 1935, when Word, as attorney for the plaintiff, commenced action number 15,862, mentioned above, in the district court. A second amended complaint was filed November 28, 1938. The complaint alleges the plaintiff is the owner of 50 shares of stock of the Beaverhead Ranch Company and the holder of certain bonds issued by the corporation, while it was a going concern, secured by real estate mortgage on the ranch lands.
It is further alleged that counsel, on request, advised the trustees and the bank in 1929 and again in 1930 that the trustees could not lawfully put the dissolved corporation into any new business but should confine their acts to such as were provided by statute for liquidating the affairs of the dissolved corporation; that certain of the defendant trustees, notwithstanding such advice by counsel, in secret conference with officials of the defendant bank, arranged the loans mentioned, bought sheep and continued in business, and that such acts resulted in loss and damage tending to and did destroy the value of plaintiff's stock and bonds in the dissolved corporation; that one of the bands of sheep bought by the trustees to restock the ranch was bought from an officer of the creditor bank; that the defendant bank is the owner of 1,378 shares of the dissolved corporation and, in fact, that such bank owns all the shares that are on the records of the trust in the names of the four defendant trustees; admits that the bank owns or controls more than 1,400 shares of stock of the defunct corporation and that the plaintiff owns 50 shares; that in the year 1932 the bank took possession of the property and records of the trust and has since, up to the time the receiver was appointed, managed and handled the business and affairs of the trust as though the property involved were its own; paragraph XXIV of the complaint is in these words:
"Plaintiff alleges that each and all of the acts of said defendants above recited and alleged, had for their ultimate purpose the destruction of the value of said bonds and of said stock of *Page 464 plaintiff, and that each and all of said acts above alleged to have been done and performed by said defendants were each and all done wilfully, wrongfully, fraudulently, maliciously, and unlawfully, and that as a direct result of said acts of said defendants alleged and set out in this complaint the value of said stock and of said bonds of plaintiff has been destroyed, and that neither said bonds nor said stock of plaintiff now has any sale value or loan value." In paragraph XXV it is alleged that the action is one in tort against the bank and the four defendant trustees, and that plaintiff does not ask for any relief against the dissolved corporation or its assets. Six thousand dollars actual and twelve thousand dollars punitive damages are prayed for.
Defendants jointly demurred to the second amended complaint, first, on the ground that it did not state a cause of action, and, second, that such an action could not be maintained except by or on behalf of all the stockholders of the dissolved corporation.
The demurrer to the complaint was sustained, and the action dismissed May 27, 1939, and judgment entered accordingly on May 31, 1939. On the same date plaintiff filed notice of appeal.
In the meantime counsel for plaintiff in action 15,862 of the district court, on January 17, 1938, filed a motion in that court to "abrogate the order appointing Pigott receiver." It will be remembered that the order appointing Pigott was made and entered in May, 1934. This motion to "abrogate" therefore was made more than three years and eight months after the order the motion sought to abrogate was made. The motion to abrogate was denied May 23, 1938, but January 12, 1939, it appears that the court, on its own motion, by a minute entry, annulled the order of May 23, 1938, which would, if it were a proper minute entry and not made too late, leave plaintiff's motion of January 17, 1938, to abrogate, not determined. Shortly after the order of January 12, 1939, was entered, or on January 18, 1939, the Union Bank Trust Company filed a petition in this court praying for a writ of certiorari to review the acts of *Page 465
the district court by which that court attempted to abrogate its order appointing the receiver. An alternative writ and order to show cause was issued, and, the hearing in that proceeding resulted in the decision entitled State ex rel. Union Bank Trust Co. v. District Court,
Adverting now to the proceedings had in the controversy, punctuated on its tortuous way by the proceeding by certiorari just mentioned, and the proceedings had in the district court that gave rise to the proceedings by certiorari, when the trial judge sustained the demurrer and entered judgment of dismissal under date of May 31, 1939, the plaintiff gave notice of appeal from that decision and thereafter perfected such appeal, and the matter was heard by this court May 28, 1940, decision rendered therein July 8, 1940; that opinion was withdrawn after further consideration of the case on motion for rehearing and in lieu thereof the opinion of December 7, 1940, reported as case number 8,065 was filed. The substituted opinion, as reported, appears asWord v. Union Bank Trust Company,
Briefly the foregoing is the background of the controversy.
When the matter came up before the trial court on the remittitur, in case 8,065, supra, the action was set for trial with a jury for May 15, 1941. May 29, 1941, the trial judge, the Hon. R.E. McHugh of the Third Judicial District, made a *Page 466 minute entry mentioning the fact that the plaintiff contended for a jury trial and the defendants for a trial before the court without a jury, recited the fact that rule XIII of that court provides that causes to be tried without a jury shall be set when a jury is not in attendance, and it appearing to the trial judge from the pleadings in the case that the action was of equitable nature and should be tried by the court, ordered the cause stricken from the trial calendar and set for trial before the court when a jury was not in attendance. Thereupon the plaintiff commenced the proceeding mentioned in the first paragraph of this dissent.
In order to refresh our minds as to the appropriate functions of writs of supervisory control, prohibition, etc., we quote at length from the opinion of this court, speaking through Mr. Justice Holloway, in State ex rel. Bonners Ferry Lumber Co. v.District Court,
"In State ex rel. Moore v. District Court,
"In State ex rel. Hennessy v. District Court,
"In State ex rel. Harris v. District Court,
"In State ex rel. Shores v. District Court,
"In State ex rel. Clark v. District Court,
"In State ex rel. Heinze v. District Court,
"In State ex rel. Butte Land Investment Co. v. DistrictCourt,
"In State ex rel. Grogan v. District Court,
"In State ex rel. Nipp v. District Court,
"In State ex rel. Topley v. District Court,
"In State ex rel. Hubbert v. District Court,
"In State ex rel. Peel v. District Court,
"The foregoing cases will suffice to indicate the general character of the power of supervisory control and the limitations *Page 471 upon its exercise. If the present application be granted, no valid excuse could be offered for refusing a like application to review any alleged erroneous ruling of a trial court from the time an action is instituted until the final judgment is rendered, and, if such procedure were once adopted and followed, the time of this court would be consumed in hearing and determining such applications, with the result that the appellate jurisdiction would be destroyed for all practical purposes."
I think a review of this very able opinion is particularly advisable at this time in view of the fact that there is an ever increasing tendency to seek redress in litigation by coming to this court without seeking remedies available in the tribunals, the district courts, designed by the Constitution and statutes as courts of original jurisdiction for the trial of both legal and equitable actions. This court, in reality, is vested with no powers of original jurisdiction to try or to control litigation between private parties. Both its appellate powers and its powers of supervisory control are confined to the review of the decisions and rulings of "inferior" courts, in the manner and only to the extent prescribed by law.
In my opinion it would be premature and clearly erroneous for this court in this proceeding to deny the right of the district court to proceed with the trial in cause number 15,862, supra, in such manner as the trial judge, in his discretion may choose, for the reason that two important rules of law are involved here, the determination of which should govern our decision in the action. Neither of these questions have been brought in issue here but they involve jurisdiction and may not be ignored. First, the statutes and numerous decisions of this court deny plaintiff's right to the writ of prohibition, and such a writ is what, in part, plaintiff seeks. Section 9861, Revised Codes, provides: "Prohibition defined. The writ of prohibition is the counterpart of the writ of mandate. It arrests the proceedings of any tribunal, corporation, board, or person, whether exercising functions judicial or ministerial, when such proceedings are *Page 472 without or in excess of the jurisdiction of such tribunal, corporation, board, or person."
Mr. Justice Hunt, speaking for the court in State ex rel.Boston Montana Consolidated, etc., Mining Co. v. SecondJudicial District,
In the case of State ex rel. Myersick v. District Court, supra, Mr. Justice Holloway, speaking for the court, used this language: "The writ of prohibition is an extraordinary judicial writ which issues, not as a matter of right, but only in the sound legal discretion of the court. (State ex rel. Lane v.District Court,
In passing, the fact is noticed that the language of plaintiff's prayer indicates that both a writ of prohibition and a writ of mandamus is desired. In the first part a writ is prayed for prohibiting the trial judge from proceeding with the hearing of the action in the district court and relatrix further prays that the oder setting the case down as an equity case be annulled, and then prays that the court be directed to set the case and proceed to hear it with a jury. Thus the remedy asked for is a combination of a writ of prohibition and a writ of mandamus. It is doubtful about its being either correct or appropriate to direct both negative and affirmative action in a proceeding such as this, but from my view of the case it is not necessary that that question be considered here.
The second question involves the power vested in, and the wisdom of, this court acting within its discretionary power to override the discretionary power of a district judge to manage, control and direct legal business in his own court, subject of course, always to a litigant's inherent right of appeal. I proceed on the assumption that no one will question the assertion that broad discretionary powers are vested in our district courts and that the judges thereof are subject to control under the supervisory powers of this court only when that discretion is exercised unlawfully, or is abused in some manner. *Page 474
In the case of State ex rel. Anaconda Copper Mining Co. v.District Court, supra, Mr. Chief Justice Brantly, speaking for the court on the question of the use of the writs of mandamus and certiorari, said at page 523 of 25 Mont., at page 1027 of 65 P.: "By the former this court may coerce into activity [a district judge], but it may not be used to control discretion,or correct errors. By the latter an order made without or in excess of jurisdiction may be annulled or modified when there is no appeal or other adequate remedy. It cannot be used to correct errors of judgment in the exercise of jurisdiction. It could not be invoked to annul the order in question, for the reason that the order was made in the exercise of jurisdiction."
While there are authorities to the contrary, I am satisfied beyond a reasonable doubt that the supervisory powers vested in this court by our Constitution were never intended to be exercised to override the broad discretionary powers of a district judge. While I think there is an abundant authority in decisions of this jurisdiction for this conclusion, I am particularly impressed with the reasoning employed in such cases as In re Louis A.M. Phelan,
The same view is expressed more at length in the case ofSwanson v. Alworth,
"Appellate courts exist for the purpose not of supervising and directing but of reviewing and correcting the work of the trial courts.
"Therefore, while the writ of mandamus is used to compel judicial action, it should refrain always from any attempt to direct the manner of such action. It is designed to compel the performance of duty. But where the officer or tribunal subjectedto the writ has any judgment or discretion with respect to themanner of performing a duty, the tribunal from which the writissues does not attempt to control the exercise of that judgmentor discretion. * * *
"In Ex parte Mason, [8 Cir.] 244 Fed. 154, 156 C.C.A. 582, where there was presented about the same situation that now confronts us, the Circuit Court of Appeals refused to issue a writ of mandamus directing the District Court to grant a jury trial, and said, inter alia:
"`A consideration of the function of the writ of mandamus and an examination of the authorities upon this subject leave no doubt that the established rules for its use are these: The writ issues to compel the performance of a plain duty. Where that duty is the exercise of judgment or discretion by an officer in the decision of a question of law or fact, or both, it may issue to compel a decision, but it may not command in what particular way that decision shall be rendered, or by what rules it shall be reached. When a question within his jurisdiction has been decided by the officer or person to whose judgment or discretion the law has intrusted its determination, the writ of mandamus may not issue to review or reverse that decision, or to compel another.'
"It follows that the writ must be discharged. No other result could be reached without a violation of rules of practice and of law long in vogue and uniformly followed. *Page 476
"The interlocutory orders of trial courts cannot be reversed by mandamus. `Mandamus is not available as a remedy in review.' (Mingo v. Holleran,
"It would be a frustration of the statute to substitute mandamus for the appeal thus denied. If here, or in any similar case, a jury trial is denied where the party seeking it is entitled to it under the Constitution, the error can be corrected by review on appeal. * * *
"Jurisdiction is the power to decide, and necessarily it confers the power to decide wrongly. It is the power so to decide `every issue of law and fact conditioning * * * ultimate adjudication.' United States v. Brown, [8 Cir.] 281 Fed. 657. Here, the issue as to the method of trial is preliminary.
"It has been decided below. If the decision be erroneous, it can be corrected on appeal."
On the authority of the various cases quoted from and our statutes the alternative writ should be quashed and the permanent writ denied and the matter remanded to the district court for such further proceedings as that court, in its discretion, may deem appropriate.
Rehearing denied October 20, 1941. *Page 477
State Ex Rel. Sands v. District Court , 95 Mont. 427 ( 1933 )
State Ex Rel. Putnam v. District Court , 109 Mont. 223 ( 1939 )
State Ex Rel. Mueller v. District Court , 87 Mont. 108 ( 1930 )
State Ex Rel. Hauswirth v. Beadle , 90 Mont. 24 ( 1931 )
Word v. Union Bank Trust Co. , 111 Mont. 279 ( 1940 )
Union Bank Etc. Co. v. Penwell , 99 Mont. 255 ( 1935 )