Price v. Skylstead

MR. JUSTICE HOLLOWAY

delivered the opinion of the court.

This action was instituted to remove a cloud from the title to real property.

Aside from mere formal allegations, the complaint charges that plaintiff Harvey D. Price ivas at all times mentioned the owner, in possession and entitled to the possession of. certain lands (particularly described) situated in Liberty county; that prior to June 9, 1920, plaintiffs executed and delivered to the Farmers’ State Bank of Havre a mortgage upon the lands mentioned, which mortgage was duly recorded; that prior to the maturity of the debt secured by the mortgage the Havre bank sold, assigned, transferred and conveyed the mortgage and debt to the Fidelity National Bank of Spokane; that after the maturity of the debt the Spokane bank commenced an action in the district court of Liberty county to foreclose the mortgage; that such proceedings were taken therein that on September 22, 1920, the court rendered and had entered a judgment of foreclosure, under which the lands were sold, and a sheriff’s certificate of sale was issued and recorded; that after the expiration of the period of redemption the sheriff executed and delivered to the purchaser a deed, which was also duly recorded. After' the entry of judgment and before the sale O. G\ Skylstead, became receiver of the Havre bank, and in that capacity purchased the lands at the sheriff’s sale.

It is alleged further that, although the certificate as well as the deed is regular on its face, each instrument is in fact void, and the invalidity is predicated upon the following allegations: (1) That in the foreclosure suit the defendants therein (plaintiffs herein) “were in fact never served with process in said action as provided and required by the laws of the state of Montana”; that they did not appear in the action, but, notwithstanding, their default was entered; (2) that after their default had been entered, without notice to either of them, the complaint was amended by substituting the name of the Havre bank for the Spokane bank as party plaintiff upon a showing that the mortgage and debt had been retransferred by the Spokane bank to the Havre bank; that the judgment was entered in favor of the Havre bank; and that the complaint as so amended was never served upon either of the defendants therein (plaintiffs herein).

A general demurrer to the complaint was sustained, and plaintiffs, electing not to plead further, suffered a judgment of dismissal to be entered against them, and appealed therefrom.

1. It is insisted that the court did not acquire jurisdiction of the defendants in the foreclosure suit, but the pleading fails to disclose the fact, if it be a fact. The statement that defendants were not served with process as provided and required by the laws of the state of Montana is only the bare, legal conclusion of the pleader. It is pregnant with the admission that they were served, and at most indicates that there was some irregularity in the manner of service. In the sentence above the word “as” means “in the manner.”

The district court of Liberty county is a court of general jurisdiction, hence it had jurisdiction of the subject matter— the foreclosure of a mortgage upon lands situated in that county — and likewise it had authority to render a judgment of foreclosure.

We think there cannot be any serious controversy over the proposition that the present action is a collateral attack upon the judgment in the foreclosure suit. In Burke v. Inter-State S. & L. Assn., 25 Mont. 315, 87 Am. St. Rep. 416, 64 Pac. 879, this court said: “By ‘collateral attack,’ as the expression is used in this opinion, is meant every proceeding in which the integrity of a judgment is challenged, except those made in the action wherein the judgment is rendered or by appeal, and except suits brought to obtain decrees declaring judgments to be void ab initio.”

In Jenkins v. Carroll, 42 Mont. 302, 112 Pac. 1064, that definition was amplified somewhat, and the text from 23 Cyc. 1062, was quoted with approval as follows: “If an action or proceeding is brought for the very purpose of impeaching or overturning the judgment, it is a direct attack upon it. * * ° On the other hand, if the action or proceeding has an independent purpose and contemplates some other relief or result, although the overturning of the judgment may be important or even necessary to its success, then the attack upon the judgment is collateral.”

Tested by that rule, the attack here made upon the judgment in the foreclosure action is collateral. No relief is sought against the judgment itself. The purpose of the action is to have the sheriff’s certificate and deed canceled of record and thereby remove the cloud from the title to the lands.

The rule is well settled in this state that, whenever the judgment of a domestic court of general jurisdiction acting within the ordinary scope of that jurisdiction is assailed collaterally, the presumption of jurisdiction over the person of the defendant is conclusive, unless upon the face of the judgment-roll a lack of jurisdiction appears affirmatively. (Haupt v. Simington, 27 Mont. 480, 71 Pac. 672; Henderson v. Daniels, 62 Mont. 363, 205 Pac. 964.)

The judgment-roll in the foreclosure suit is not made a part of the complaint in this action, neither is there any reference to it; hence the complaint fails to disclose a want of jurisdiction over the defendants in that suit.

In passing we may observe that, if plaintiffs’ contention that this is a direct attack upon the judgment in the foreclosure suit were granted, the complaint would still be insufficient under the rule laid down in Burke v. Inter-State S. & L. Assn., above.

2. The other contention made is that the court was without jurisdiction to render judgment against the defendants in the foreclosure proceeding, because the complaint in that action, as amended, was not served upon either of the defendants ; and because the effect of the amendment was to set aside the default which had been entered, and Ben Kress Nursery Co. v. Oregon Nursery Co., 45 Mont. 494, 124 Pac. 475, is cited in support of that position. But counsel fail to distinguish between amendments made before appearance or before the time for appearance has expired, and amendments made aftei the defendant is in default; and also fail to distinguish between material amendments and immaterial or merely formal amendments. In the Nursery Case above the complaint was amended before the defendant had appeared and before the time for its appearance had expired. Plaintiff therein invoked the provisions of section 9186, Revised Codes, and was required to serve the complaint as amended because the statute so provides. But that statute applies only to amendments made as a matter of right, and has no application to amendments which require permission of the court to make. (Holter Hardware Co. v. Ontario Mining Co., 24 Mont. 184, 61 Pac. 3; Meredith v. Roman, 49 Mont. 204, 141 Pac. 643.)

Conceding, for the purposes of this appeal only, that the substitution of one party for another as plaintiff is an amendment of the complaint within the meaning of section 9187, Revised Codes of 1921, such amendment can be made only by leave of court. It is the general rule that an amendment of the complaint made after default operates to open the default, provided it introduces a new cause of action or goes to the substance of the pleading (Witter v. Bachman, 117 Cal. 318, 49 Pac. 202; 23 Cyc. 741), otherwise it does not (Boisse v. Langham, 1 Mo. 572; Ellis v. Mabry, 25 Tex. Civ. App. 164, 60 S. W. 571; Southern Bell Tel. & Tel. Co. v. Parker, 119 Ga. 721, 47 S. E. 194; 23 Cyc. 741). The amendment now under consideration, if such it may be called, was merely formal, and the act of making it an entirely idle and useless one.

Section 9086 provides: “In case of any transfer of interest, the action or proceeding may be continued in the name of the original party, or the court may allow the person to whom the transfer is made to be substituted in the action or proceeding. ’ ’ The second alternative was chosen in the foreclosure suit, but that action might have continued to judgment in the name of the Spokane bank as plaintiff, notwithstanding it had transferred its interest to the Havre bank pending litigation. (Anglo-Californian Bank v. Field, 146 Cal. 644, 80 Pac. 1080.)

It is suggested that defendants in the foreclosure suit may have had a good defense against the Havre bank, but no defense whatever against the Spokane bank. Nothing of the kind appears in the complaint herein. The argument can be predicated only upon the assumption that the mortgage debt was represented by a promissory note, and that the Spokane bank ivas the holder thereof in due course, for section 9068, Revised Codes of 1921, provides that the assignment of a thing in action is without prejudice to any set-off or other defense existing at the time of or before notice of the assignment. But, if we assume that the debt was represented by a promissory note, there is not anything to disclose that it was negotiable, and, even if it were negotiable in the first instance, the allegations of this complaint disclose that it lost its negotiable character when it was sold, assigned, transferred and conveyed to the Spokane bank (First Nat. Bank of New Castle v. Grow, 57 Mont. 376, 188 Pac. 907), so that, if the note were nonnegotiable, or if negotiable and it was transferred to the Spokane bank by assignment, the defendants in the foreclosure suit could have interposed any defense against the Spokane bank which they or either of 'them had against the Havre bank.

It is argued further that in Vassau v. Northern Pacific Ry. Co., ante, p. 305, 221 Pac. 1069, this court in effect held that the substitution of one party for another as defendant constitutes the commencement of a new action, but counsel are in error. What the court did decide in that ease was that, where the complaint as originally filed did not state a cause of action, and it was necessary to substitute a new party defendant in the place of the one originally designated as such, in order that a cause of action be stated, so far as the new party defendant was concerned the action against him commenced when the substitution was made. The decision in that case has no application to the facts before us in this one.

The complaint fails to state a cause of action for equitable relief and the demurrer was properly sustained. The judgment is affirmed.

Affirmed.

Mr. Chief Justice Callaway and Associate Justices Cooper, Galen and Stark concur.