State Bank v. Schultze

MR. JUSTICE GALEN

delivered the opinion of the court.

A rehearing was granted in this case, and in consequence a different view is entertained regarding the questions presented, though the result is the same in effect as to the appellant, Minnie Schultze. So as to avoid confusion and encumbrance of the record, the original opinion rendered herein May 18, 1922, is withdrawn and this one substituted.

It appears that the plaintiff, The State Bank of New Salem, a North Dakota corporation, brought suit against Max, Minnie and Fred C. R. Schultze, and one Oscar Goeschel, seeking recovery upon several promissory notes described, aggregating $11,940.67, and asking that decree be made adjudging that a conveyance of certain land described as section 34, township 2 north of range 29 east, made by the defendant Max Schultze and wife to the defendant Oscar Goeschel, and from the defendant Oscar Goeschel to the defendant Minnie Schultze, wife of the defendant Max Schultze, be declared fraudulent and void as against the plaintiff. Appearance was made by answer in this action by the defendants, Minnie Schultze and Oscar Goeschel, wherein the indebtedness was admitted, and the fraudulent character of the conveyance and insolvency of Max and Fred Schultze denied.

Thereafter, J. V. McCormick made timely filing of his complaint in intervention, as trustee in bankruptcy of Max Schultze, wherein he alleged in part that this action was begun on the 29th of September, 1917, and that on the twenty-fourth day of January, 1918, the defendant Max Schultze was adjudged a bankrupt upon his voluntary petition filed in the United States district court for the district of North Dakota. Further, that on the - day of ---, 1913, the defendant Max Schultze purchased from the United States government at public land sale four sections of land in Big Horn county, described; that at the time of making the purchase he procured the issuance of four certificates of sale having them “'run to the following named parties: Section 10, 1 north, 28, to Minnie Schultze, his wife; section 34, 2 north, 29, to Fred C. B. Schultze, his son; section 11, 1 north, 28 E., to himself.”

The intervener then alleges: “VI. That thereafter as subsequent payments became due for the purchase of the above-described lands, the defendant Max Schultze borrowed from the defendant Oscar Goeschel sums of money aggregating about $5,000, and as security for the money advanced by the said Goeschel the said defendant Schultze procured the execution and delivery to Goeschel, on November 30, 1914, of a deed to section 34, 2 north, 29 east; on October 20, 1915, of a deed to section 11, 1 north, 28 east; and upon the same date a deed from Minnie Schultze to section 10, 1 north, 28 east. That each of the deeds above mentioned were given only as security to the said Goeschel, and so accepted by him, and that the same were in truth and in fact mortgages.

“V. That thereafter the said Max Schultze sold the land in Big Horn county, described as section-, township-, range-, then standing in the name of his son Fred C. R. Schultze, the deed therefor having been executed by the defendant Goeschel to the purchaser, but the proceeds thereof being retained by the said defendant Max Schultze.

“VI. That the said Max Schultze became heavily involved, owing large amounts to his creditors, and was in fact insolvent, and for the purpose of hindering, delaying and defrauding his creditors the said defendant Max Schultze procured the execution, on the fifteenth day of September, 1917, of a deed from himself and wife, the defendant Minnie Schultze, to the defendant Oscar Goeschel, for section 11, 1 north, 28 east; and also of a deed from the defendant Minnie Schultze and himself to the defendant Oscar Goeschel for section 10, 1 north, 28 east, and thereafter, and on September 19, 1917, procured a deed from the said Goeschel to his wife, Minnie Schultze, of section 34, 2 north, 29 east. That the defendant thereby placed in the name of his wife the title to the said section 34, and in the defendant Goeschel the title to sections 10 and 11, and attempted to place beyond the reach of his creditors all of the land so purchased and owned by him.

“VII. That the defendant Minnie Schultze gave no consideration whatever for the conveyance to her of the land above set forth, nor did she have any money, in fact, invested in any of the lands hereinbefore described; the purchase of said' section 10 having been made nominally in her behalf, but in truth and in fact for the benefit of the defendant Max Schultze. That the said Minnie Schultze had knowledge of the insolvent condition of her said husband and the fraudulent intention and purpose on his part to hinder, delay and defraud his creditors, and accepted the title thereto with the intention and for the purpose of assisting the said defendant Max Schultze in so defrauding his creditors.

“VIII. That the making of the aforesaid conveyances and the transfer of the title to section 34, 2 north, 29 east, to the defendant Minnie Schultze did in fact defraud the creditors of the said Max Schultze, and intervener now alleges that the said Minnie Schultze holds the said title to said section 34, in trust of the benefit of her husband and his said creditors.

A decree is prayed adjudging that the conveyance executed to the defendant, Minnie Schultze, be declared fraudulent and void as against creditors of the defendant Max Schultze.

Thereafter it appears that the cause came on for hearing before the court without a jury, upon the complaint in intervention, the default of the defendants Max, Minnie and Fred C. R. Schultze, Oscar Goeschel, and of the plaintiff, having been entered for failure to answer the complaint in intervention. Decree was made and entered September 15, 1919, in favor of the intervener, wherein it is recited:

“The court further finds that the defendant Max Schultze was in fact the owner of section ten (10) in township one (1) north, range twenty-eight (28) east, and for the purpose of defrauding his creditors caused the same, by conveyance which he procured to be made, to be transferred to the defendant Minnie Schultze, his wife; that the said Minnie Schultze paid no consideration for the said land, and that she holds the same for the benefit of the said Max Schultze.

“The court further finds that this action was begun by the plaintiff on the twenty-ninth day of September, 1917, and that on the twenty-fourth day of January, 1918, the defendant Max Schultze was adjudicated a bankrupt upon his voluntary petition by the United States district court for the district of North Dakota.

“It is therefore hereby considered, adjudged and decreed by the court that the defendant Minnie Schultze, at the time of the bringing of this action, held the title to section ten (10), in township one (1) north, range twenty-eight (28) east in Yellowstone county, Montana, in trust for the benefit of her husband, the defendant Max Schultze,- and that by reason of the .adjudication in bankruptcy of the said Max Schultze the title to said real estate is held in trust by her for the benefit of the creditors of the said Max Schultze, and that the conveyance made to her by the defendant Oscar Goesehel was made for the purpose and with the intention of defrauding the creditors of the said Max Schultze.

“It is further considered, adjudged and decreed that the intervener J. Y. McCormick, trustee in bankruptcy of Max Schultze, bankrupt, is entitled to hold the said real estate as against all of said defendants, and especially the defendant Minnie Schultze, for the benefit of the creditors of Max Schultze, bankrupt, and the said Minnie Schultze is hereby ordered and directed to convey to the said J. Y. McCormick said section ten (10), township one (1) north, range twenty-eight (28) east, in Yellowstone county, Montana, within thirty days from this date, and upon her failure to make such conveyance, this decree shall be held and considered to be a conveyance and transfer of the legal title to said real estate from the said Minnie Schultze and Max Schultze, her husband, to the said J. V. McCormick, intervener.”

This decree was signed by A. C. Spencer, District Judge. Thereafter, on November 25, 1919, a “supplemental and amended decree” was made and entered by Chas. A. Taylor, District Judge, as follows:

“Be it remembered, that on this twenty-fifth day of November, 1919, the intervener herein advises the court that an error exists in the description of the real estate in the original decree herein, and now asks that the same be amended and corrected to conform to the true and correct description as shown by the petition in intervention and the proof offered upon the trial.

“The court having listened to the proof and being now fully advised, finds that an error was made in the description contained in the decree as originally signed, and that the same should now be corrected;

“It is therefore now considered, adjudged and decreed that the original decree herein filed on the fifteenth day of September, 1919, be, and the same is hereby, amended in the following respect:

“That the words ‘section ten (10), in township one (1) north, range twenty-eight (28) east,’ be stricken out, and that the words ‘section thirty-four (34), in township two (2) north, range twenty-nine (29) east,’ be inserted in lieu thereof.”

As appears from the notice of appeal, this appeal is taken “from the judgment made and entered in said cause in said court on the twenty-fifth day of November, 1919, * * * the judgment being designated ‘supplemental and amended decree,’ and reference is hereby particularly made to the portion of said judgment rendered and entered in said cause as of the fifteenth day of September, 1919.” This appeal was attempted to be prosecuted to this court by the defendant Minnie Schultze, based upon this notice.

Three questions are presented decisive of the case, namely: 1. Is the appeal properly before this court? 2. Did appellant’s answer to the original complaint on file in the action constitute an answer to the complaint in intervention, so far as it traverses the allegations thereof, thus precluding the entry of appellant’s default and of judgment against her? 3. Was it within the province of the court to correct a clerical mistake in its judgment?

The record comprises the judgment-roll only, and it looks to us as though there have been omissions therefrom; but as no objection is made as to the sufficiency of the record, we offer none.

1. The notice of appeal. appears to have been served and filed November 22, 1920, sixty-seven days more than one year after the entry of the original decree (after September 15, 1919), although three days before the expiration of one year from the entry of the judgment, in the event computation is made from the date of entry of the “supplemental and amended decree” (November 25, 1919).

Section 7099 of the Revised Codes of 1907, in effect at the time this appeal was perfected, reads in part as follows: “An appeal may be taken: 1. From a final judgment in an action or special proceeding * * * within one year after the entry of the judgment. * # * 3. From any special order made after final judgment * * * within sixty days * * * after the order or interlocutory judgment is made and entered in the minutes of the court filed with the clerk.” A judgment is defined as a final determination of the rights of the parties. (Sec. 9313, Bev. Codes, 1921.)

The right of appeal is a privilege accorded, and in order for a person to obtain the benefits thereof, the statute must be complied with. A limitation is fixed by the law so as to bring litigation to an end, and define the limits of this court’s jurisdiction. (Gallagher v. Cornelius, 23 Mont. 27, 57 Pac. 447; Ramsey v. Burns, 24 Mont. 234, 61 Pac. 129; Jackway v. Hymer, 42 Mont. 168, 111 Pac. 720; Wilson v. Norris, 43 Mont. 454, 117 Pac. 100.)

In the case of Jackway v. Hymer, supra, this court speaking through Mr. Justice Holloway, has laid down the hard-and-fast rule applicable, as follows: “While the Constitution secures to a litigant the right of appeal, it does so only on condition that he complies with ‘such regulations as may be prescribed by law.’ (Const., Art. VIII, sec. 15.) The Codes having prescribed the time within which an appeal may be taken, a compliance with the statutory provisions is necessary to give this court jurisdiction of the appeal. (Ogle v. Potter, 24 Mont. 501, 62 Pac. 920; Wright v. Mathews, 28 Mont. 442, 72 Pac. 820; Featherman v. Granite County, 28 Mont. 462, 72 Pac. 972; State ex rel. City of Walkerville v. District Court, 29 Mont. 176, 74 Pac. 414; Vreelamd v. Edens, 35 Mont. 413, 89 Pac. 735; Hopkins v. Kitts, 37 Mont. 26, 94 Pac. 201; Kaufman v. Cooper, 38 Mont. 6, 98 Pac. 504, 1135; Reynolds v. Fitzpatrick, 40 Mont. 593, 107 Pac. 902.)”

Question arises at once as to whether the original judgment, or the amendment thereof, is to be considered as the final judgment in this action, in making computation of the time allowed the appellant within which to perfect her appeal. No attempt was made by her to appeal from the order directing the amendment of the judgment, the appeal having been taken from the judgment as amended. Should the amendatory decree be' considered as a special order made after final judgment, within the meaning of the statute, then she is without standing in this court, not having appealed within sixty days from its entry. (Nelson v. Donovan, 14 Mont. 78, 35 Pac. 227; Powell v. May, 29 Mont. 71, 74 Pac. 80; Jackway v. Hymer, supra.) However, if the amendatory decree in this case is properly considered as the final judgment, as respects the right of appeal of .the appellant Minnie Schultze, then the appeal was perfected within one year and is properly before us for review.

In this instance, we are constrained to the opinion that the right of appeal dated from the date of entry of the amendatory judgment, notwithstanding the fact that it is a general rule that an order amending a judgment already entered is considered as a special order made after final judgment. (State ex rel. Boston & M. etc. Min. Co. v. District Court, 32 Mont. 20, 79 Pac. 410.) At the time of entry of the original judgment, September 15, 1919, her property rights were thereby unaffected. The judgment was not such as to give her standing on appeal, because the record as then made disclosed that the lands (sec. 34) alleged to stand of record in her name, and as respects which the conveyance to her was sought to be set aside as fraudulent, were unaffected by the judgment of the court. It was not. until the entry of the so-called “supplemental and amended decree” on November 25, 1919, that her property rights became involved; it was1 then, and not until then, that the original judgment became determinative of appellant’s rights and final in character. We adhere to our views expressed with respect to the right of the court within a reasonable time to make correction of a manifest clerical error, so that the judgment shall correctly recite that which was in fact adjudicated; but where, as in this instance, the correction changes the judgment as respects the substantial rights of the parties,, we think in fairness the computation of time allowed within which to perfect an appeal from the judgment (see. 7099, Rev. Codes 1907) should date from the time of the entry of such amendment. Any other holding might in such a case lead to the grossest injustice.

2. The next question presented is as to whether it was proper for the trial court to enter a default judgment against the appellant. As to parties who have appeared in an action, the statute directs service of a copy of the complaint in intervention upon their attorneys, and requires them to answer or demur thereto, the same as in the case of an original complaint. (See. 9088, Rev. Codes 1921.)

Counsel for the appellant argues that since the appellant, Minnie Schultze, had already appeared in the action and filed her answer to the plaintiff’s complaint, she was not required to again specially answer the allegations of the complaint in intervention; that such answer should also be taken and considered as an answer to the complaint in intervention in so far as it traverses the allegations thereof. He contends that her answer met each and every issue tendered by the complaint in intervention, and that it was not necessary for her to repeat her denial of such allegations simply because a new party had been added, in this connection contending that a denial once made in refutation of an allegation, and a fact once alleged, is sufficient to make or tender an issue. That appellant’s argument is fallacious clearly appears from the following considerations: Prior to the filing of the complaint in intervention, the issues presented were, (a) plaintiff’s right of recovery against the defendant Max Schultze upon the promissory notes described, and (b) its rights to have the land alleged to have been fraudulently transferred to the appellant applied in satisfaction of the judgment. The complaint in intervention presented an entirely new issue, namely: whether the intervener as the successor in interest of Max Schultze, bankrupt, was entitled to the land involved for the benefit of the creditors of the estate of Max Schultze.

A new issue thus injected in the case required an answer on the part of the original parties to the action, and their failure to answer justified the entry of their default and of judgment in favor of the intervener after the introduction of satisfactory proof. "While it is true that an intervener must accept the action pending as he finds it at the time of intervention (11 Ency. of Pl. & Pr., p. 509; Emerson v. Fox, 3 La. 178; Cordill v. McCullough, 20 La. Ann. 174; Cahn v. Ford, 42 La. Ann. 965, 8 South. 4; Hanchett v. Gray, 7 Tex. 549; Standard I. Co. v. Lansing Wagon Works, 58 Kan. 125, 48 Pac. 638; Fletcher v. Bennett, 36 Vt. 659), yet thereafter his rights are as broad as those of the other parties to the action.

An intervention may be, as in this case, adverse to- both the .plaintiff and defendants, in which instance all parties are considered as defendants as respects the intervener, and they must plead to the complaint in intervention as defendants in an ordinary action. (Wall v. Mines, 130 Cal. 27, 44, 62 Pac. 386; Clapp & Co. v. Phelps & Co., 19 La. Ann. 461, 92 Am. Dec. 545.) “The rules applicable to pleadings in general apply with equal force to pleadings in intervention.” (Hadsall v. Case, 15 Cal. App. 451, 115 Pac. 330; Kerr’s Pl. & Pr., sec. 670.) From a reading of the statute, it was clearly the legislative intent that the ordinary rules of pleading shall apply to a complaint in intervention; for after making provisions for the service thereof, it requires that parties to the original action may answer or demur to the intervener’s complaint as if it were an original complaint.

The answer to the original complaint on file could in no manner be considered as an answer to the allegations of the complaint in intervention. Although the allegations contained in the original complaint were similar to those contained in the complaint in intervention, yet the appellant was not relieved from the necessity of making specific answer to the complaint in intervention. Upon the filing of the complaint in intervention, the intervener became in truth and in fact the plaintiff in the case as against both the original plaintiff and all of the defendants. It was not filed until nearly four months after appellant’s answer to the original complaint, and was directed alone to the complaint at a time when an intervention was not, and could not have been, contemplated. She could not anticipate that intervention would be made in the action, nor the allegations to be made in the complaint in intervention; and even though she were to do so, her answer on file made to the complaint could in no sense be considered as serving the purpose of an answer to a complaint in intervention subsequently filed. The language of the statute with respect to parties to the action who have appeared, after service upon their attorneys, permitting them to answer or demur to the complaint in intervention, the same as if it were an original complaint, makes it plain that the general rules of pleading, are applicable. The sufficiency of the complaint in intervention may be tested to the same extent and in the same manner as other pleadings; and any of the parties wishing to controvert any of the allegations of the complaint in intervention must do so by answer, and failing in this, the allegations not denied must be taken as admitted. (20 R. C. L. 691, 692; 11 Ency. PI. & Pr., p. 508.) Though leave to intervene is granted ex parte, yet as the matters alleged may be ground of affirmative relief against the parties to the action, it is clear that there should be some step taken by the intervener answering the purpose of service of process, so that they shall be prepared to answer, and if necessary, disprove the allegations of the complaint in intervention. The record is silent as to whether the intervener applied for and was granted leave of court to file his complaint in intervention, and also as to whether or not an order was at that time or subsequently made by the court requiring the parties to the original action to appear and answer to the complaint in intervention within a specified time, which we believe to be the proper practice'; however, no error is predicated thereon nor argument presented with respect thereto, and we must and do assume that the proceedings were regular. We think the statute means just what it says: when service is made upon the attorneys for parties to the action, they must “answer or demur to the complaint in intervention” as if it were an original complaint—otherwise judgment will be taken ^against them by default.

3. As to the power of the court to enter the “supplemental and amended decree,” we are of opinion that in case of clerical errors, it is within the inherent power of the court to so amend its judgment that it will express that which was actually judicially determined at the hearing. (Power & Bro. v. Turner, 37 Mont. 521, 97 Pac. 950; State ex rel. McHatton v. Disrict Court, 55 Mont. 324, 176 Pac. 608. See, also, exhaustive notes in 10 A. L. R. 526.)

And among the errors in judgments which may be corrected nu/nc pro tunc are clerical mistakes in land descriptions, so long as the rights of strangers are not affected; such mistakes being viewed as clerical in character only.

While appellant made timely appeal from the judgment, as it appears that she was in default, the judgment is affirmed. Remittitur will issue forthwith.

Affirmed.

Associate Justices Farr, Cooper and Holloway concur."