No. 92-111 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1992 

NORTHWEST FARM CREDIT SERVICES, ACA, 

Successor by Merger to INTERSTATE 

PRODUCTION CREDIT ASSOCIATION, 

Plaintiff and Respondent, 

-vsDALE G. LUND and YVONNE LUND, 

Defendants and Appellants. 

APPEAL FROM: District Court of the 17th Judicial District, 

In and for the County of Valley, 

The Honorable Leonard H. Langen, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Mary L. Zemyan, Attorney at Law, Wolf Point, Montana 

For Respondent: 

A. Lance Tonn, Lucas & Monaghan, Miles City, Montana 

For Amicus: 

D. Michael Eakin, Montana Legal Services Assn., 

Billings, Montana 

Submitted on Briefs: August 27, 1992 

NOW 5 - I Decided: November 5, 1992 

Filed: 

GLE:ZA .SF SUPREME COUR'I 

STATE OF MOI'JTAMA 
Justice John Conway Harrison delivered the Opinion of the Court. 

This is an appeal from the District Court of the Seventeenth 

Judicial District, Valley County, the Honorable Leonard H. Langen 

presiding. Appellants Dale and Yvonne Lund (the Lunds) appeal from 

the Judgment, Decree of Foreclosure and Order of Sale entered 

against them by default on February 3, 1992. We affirm. 

The issues are: 

1. Do the provisions of 5 25-10-404, MCA, impose a duty on 

the clerk of court to inform parties that the statute exists? 

2. Did the clerk's failure to inform Dale Lund of the 

necessity of filing an affidavit in order to proceed in forma 

pauperis deny the Lunds their opportunity to defend? 

3. Should the default judgment be set aside? 

Respondent Northwest Farm Credit Services, ACA, (Northwest) is 

a lending corporation organized under the Federal Farm Loan Act. 

On April 5, 1990, Northwest loaned $99,923 to the Lunds for 

operating capital. This note was due and payable on November 1, 

1990. The Lunds executed a promissory note as evidence of this 

loan. On March 1, 1991, Northwest loaned $2,500 to the Lunds as 

operating capital to plant their crops. This note was due on 

demand. The Lunds executed a second promissory note as evidence of 

this loan. 

As security for the repayment of these loans and previous 

loans, together with interest and any costs and attorney's fees 

Northwest might incur, the Lunds executed and delivered a mortgage 
on certain lands located in Valley County. The mortgage was dated 

October, 12, 1988, but it secured future loans within a five year 

period from that date. As further security, the Lunds executed a 

security agreement pledging various items of personal property as 

collateral. 

The Lunds failed to repay the promissory notes according to 

their terms, so on October 15, 1991, Northwest filed its Complaint 

to Foreclose Real Estate Mortgage and Security Agreement. The 

Lunds were served with the complaint on October 21, 1991. Dale 

Lund received help from an attorney, Mr. Martell, in drafting an 

answer, but Mr. Martell did not sign the answer. He did inform 

Dale Lund that he could ask the court to waive the filing fee but 

did not explain the procedure. 

Dale Lund attempted to file his answer on November 12, 1991. 

He did not present the $100 filing fee. As a result, the clerk 

date-stamped the answer but did not file it. It is unclear from 

the record exactly what exchange occurred between Dale Lund and the 

clerk at that time. It appears Mr. Lund neither asked about the 

procedure for filing as a pauper under 5 25-10-404, MCA, nor did 

the clerk inform him of the procedure. On November 25, 1991, the 

clerk returned the answer along with a letter stating, ''1 am 

returning your Answer forthwith, as I have yet to receive $100.00 

for filing the same. Upon receiving the fee, I will at that time 

file the same. I' 

On December 9, 1991, the clerk entered the Lunds' default for 

failing to plead, answer, or otherwise defend. On January 15, 
1992, Northwest filed its Motion for Entry of Judgment, Decree of 

Foreclosure and Order of Sale and for Award of Attorney's Fees. 

Northwest also filed its Notice of Hearing and sent a copy of both 

documents to the Lunds. Northwest's attorney, A. Lance Tonn, also 

enclosed a letter in which he urged the Lunds to seek legal counsel 

in this matter. Mr. Tonn also spoke with the Lunds by telephone on 

January 30, and once again advised them to seek counsel. He also 

told them that he would agree to a continuance if the Lunds hired 

an attorney and wished to put some defenses before the court. The 

Lunds failed to enlist counsel, however, and the hearing proceeded 

on February 3, 1992. 

At the hearing, Mr. Tonn offered evidence on the legal fees 

incurred by Northwest in prosecuting this action. The court 

allowed Mr. Lund to give a statement in which he basically raised 

his defenses to the initial complaint, although the court refused 

to reopen the case or accept evidence as to those defenses. Those 

defenses raised issues as to whether the Lunds had been credited 

with all their payments and whether they were authorized by 

Northwest to use proceeds from the sale of two items pledged as 

security. At best, those defenses, even if valid, would only have 

gone to reduce the amount the Lunds owed Northwest. Mr. Tonn 

testified, however, that the foreclosure action would still have 

proceeded. Even if the statements made by Dale Lund were true, the 

Lunds would still have been in default on their loans. At the 

close of the hearing, the Judge signed the Judgment, Decree of 

Foreclosure and Order of Sale. The court made it clear that Mr. 
Lund was to have an opportunity to ensure that his account was 

properly credited. Mr. Tonn assured the court that he would 

promptly ask that the judgment be amended if there was an error. 

Do the provisions of S 25-10-404, MCA, impose a duty on the 

clerk of court to inform parties that the statute exists? 

The Lunds argue that 5 25-10-404, MCA, imposes a duty on the 

clerk of court to disclose its existence. That statute reads: 

25-10-404. Poor persons not required to prepay fees. 

Any person, who will file an affidavit stating that he 

has a good cause of action or defense and that he is 

unable to pay the costs or procure security to secure the 

same, may commence and prosecute or defend an action in 

any of the courts and administrative tribunals of this 

state; then it is hereby made the duty of the officers of 

the courts and administrative tribunals to issue all 

writs and serve the same and perform all services in the 

action without demanding or receiving their fees in 

advance. 

Although Dale Lund was aware that he could file his answer 

without paying the fee, it does not appear that he asked Mr. 

Martell or the clerk how to do so. The functions performed by the 

clerk must be demanded by law. See Platz v. Hamilton (1982), 201 

Mont. 184, 653 P.2d 144; Anderson v. Hinman (1960), 138 Mont. 397, 

357 P.2d 895. The only express duty found in this statute requires 

the clerk to perform all services requested once a party has filed 

the proper affidavit. This statute does not expressly impose a 

duty upon the clerk to disclose. Nor, as the Lunds admit, does any 

other statute impose a duty upon the clerk to disclose the 

existence of S 25-10-404, MCA. The legislature has not imposed a 

duty upon clerks to disclose. Although we sympathize with the 
Lunds and others similarly situated, we are unwilling to impose 

such a duty. We hold that g 25-10-404, MCA, does not impose a duty 

on the clerk. 

I I 

Did the clerk's failure to inform Dale Lund of the necessity 

of filing an affidavit in order to proceed in forma pauperis deny 

the Lund's their opportunity to defend? 

As we hold that the clerk had no duty to inform Dale Lund of 

the necessity of filing an affidavit in order to proceed in forma 

pauperis, her actions did not deny the Lunds their opportunity to 

defend. The Lunds must bear responsibility for not defending in 

this action. In Federal Land Bank of Spokane v. Gallatin County 

(1929), 84 Mont. 98, 274 P. 288, this Court held that ignorance of 

the law was no justification for relief from a default judgment. 

We followed that time-honored principle recently in Donovan v. 

Graff (1991), 248 Mont. 21, 808 P.2d 491. In Donovan, this Court 

found that the pro se plaintiffs were not entitled to relief from 

entry of summary judgment simply because they did not understand 

the law regarding the filing of papers in support of their motion 

for summary judgment. 

Not only is ignorance of the law not an argument for lack of 

opportunity to defend, but it was the Lunds' own inaction that 

caused them to lose their chance to defend. "Every person is bound 

to take care of his own rights, and to vindicate them in due 

season, and in proper order. This is a sound and salutary 

principle of law." Federal Land Bank at 111, 274 P. at 291 
(quoting Dunne v. Yund (1916), 52 Mont. 24, 33-34, 155 P. 273, 

276). We also have a maxim of equity that "the law helps the 

vigilant before those who sleep on their rights." Section 1-3-218, 

MCA. A review of the facts indicates that, aside from ignorance of 

the law, it was the Lunds8 own inaction that caused them to lose 

their chance to defend in this action. 

As noted above, when the clerk failed to receive the filing 

fee from the Lunds, she sent a letter on November 25, 1991, 

stating, "I am returning your Answer forthwith, as I have yet to 

receive $100.00 for filing the same. Upon receiving the fee, I 

will at that time file the same." The Lunds do not deny receiving 

the letter. However, they did not respond to the letter or take 

any other action. Two weeks later, on December 9, 1991, the clerk 

entered their default. The Lunds did nothing in response to the 

entry of default. When Mr. Tonn sent a copy of his motion and a 

Notice of Hearing to the Lunds on January 14, 1992, he included a 

letter in which he urged the Lunds to seek legal advice. Mr. Tonn 

stated (capitalized in original): 

YOU ARE IN GRAVE JEOPARDY OF A JUDGMENT, DECREE OF 

FORECLOSURE AND ORDER OF SALE BEING ENTERED AGAINST YOU. 

IF YOU HAVE ANY QUESTIONS ABOUT YOUR LEGAL RIGHTS, YOU 

SHOULD IMMEDIATELY CONTACT AN ATTORNEY OF YOUR CHOOSING. 

ONCE AGAIN, IF YOU FAIL TO TAKE ANY ACTION, A JUDGMENT, 

DECREE OF FORECLOSURE AND ORDER OF SALE WILL BE ENTERED 

AGAINST YOU. 

Although the Lunds received this letter, they did not respond or 

take any action. 

Also, Mr. Tonn spoke with Dale Lund on the telephone on 

January 30, 1992. During that conversation he encouraged Mr. Lund 
at least three times to contact an attorney because he felt the 

court would enter the decree. Mr. Tonn offered, however, to 

stipulate to a continuance if the Lunds hired an attorney and 

wished to put forth some defenses. Mr. Lund did nothing in 

response to this offer either. Under these facts, the Lunds were 

clearly aware of the realities of the situation and were given an 

opportunity to defend should they choose to. The Lunds, not the 

clerk, must bear responsibility for losing their opportunity to 

defend. We hold the clerk's failure to inform the Lunds was not 

error. 

I11 

Should the default judgment be set aside? 

The Lunds neither requested the District Court to set aside 

the default under Rule 55(c), M.R.Civ.P., nor made a motion for 

relief from the default judgment under Rule 60(b), M.R.Civ.P. We 

need only determine whether the District Court acted properly when 

it initially entered the default judgment under Rule 55(b). See 

Johnson v. Murray (1982), 201 Mont. 495, 656 P.2d 170. Rule 55(b), 

M.R.Civ.P. governs the entry of a default judgment by the court. 

In pertinent part it reads: 

Rule 55 (b) . Judgment. Judgment by default may be entered 

as follows: 

(2) By the court. In all other cases the party 

entitled to a judgment by default shall apply to the 

court therefor; . . . If the party against whom judgment 

by default is sought has appeared in the action, the 

party (or, if appearing by representative, the party's 

representative) shall be served with written notice of 
the application for judgment at least 3 days prior to the 

hearing on such application. If, in order to enable the 

court to enter judgment or to carry it into effect, it is 

necessary to take an account or to determine the amount 

of damages or to establish the truth of any averment by 

evidence or to make an investigation of any other matter, 

the court may conduct such hearings or order such 

references as it deems necessary and proper and shall 

accord a right of trial by jury to the parties when and 

as required by any statute of the state of Montana. 

In this case, the clerk entered the Lunds* default on December 

9, 1991. On January 15, 1992, Mr. Tonn filed his Motion for Entry 

of Judgment, Decree of Foreclosure and Order of Sale and For Award 

of Attorney's Fees. At that time he also sent proper notice to the 

Lunds that he would bring his motion on February 3, 1992. This is 

far more advance notice than the three required days. The court 

held a hearing at which it took evidence from Mr. Tonn on the legal 

fees incurred by Northwest. It also gave Dale Lund an opportunity 

to make a statement. He did not dispute the amount of attorney's 

fees and costs testified to by Mr. Tonn. 

We note that in order to make a prima facie case for 

foreclosure Northwest was required to show three elements: (1) the 

debt of the borrowers; (2) nonpayment of the debt; and (3) present 

ownership of the debt by the lender. First National Bank of 

Albuquerque v. Quinta Land & Cattle Co. (l989), 238 Mont. 335, 339, 

779 P.2d 48, 50. In support of its motion, Northwest submitted the 

affidavit of Wayne Erlenbush, an authorized agent of Northwest, as 

evidence of the foregoing. Based on this and a sufficient showing 

of attorney's fees, the District Court entered a Judgment, Decree 

of Foreclosure, and Order of Sale in favor of Northwest. 

We hold that the District Court properly entered a default 

9 
judgment against the Lunds. 

Af f inned. 

we concur: iJ 
November 5, 1992 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent. by United States mail, prepaid, to the following 

named: 

Mary L. Zemyan 

Attorney at Law 

P.O. Box 1094 

Wolf Point, MT 59201 

A. Lance Tonn 

LUCAS & MONAGHAN, P.C. 

P.O. Box 728 

Miles City, MT 59301 

D. Michael Eakin 

Montana Legal Services 

2442 First Ave. No. 

Billings, MT 59101 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA 

BY qt Deputy \