NO. 94-279

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

IN RE THE MARRIAGE OF

CATHARINE GAY GROUNDS

f/k/a CATHARINE GAY COWARD,

Petitioner and Respondent,

and

HAROLD MARK COWARD

Respondent and Appellant.

APPEAL FROM: District Court of the Fourth Judicial District,

In and for the County of Missoula,

The Honorable Ed McLean, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Timothy J. Lape, Missoula, Montana

For Respondent:

Kerry Ann Newcomer, Missoula, Montana

Submitted on Briefs: February 9, 1995

JUN15 13%

Decided: June 15, 1995

Filed:
Justice James C. Nelson delivered the Opinion of the Court.

Harold Mark Coward (Mark) appeals from two post-dissolution

orders of the District Court for the Fourth Judicial District,

Missoula County. In those orders, the court denied Mark's motion

to modify maintenance payments and granted the motions of Catharine

Gay Grounds (Catharine) to join Mark's professional corporation as

a party and to disregard the professional corporation for purposes

of enforcing the judgment. We vacate the orders of the District

court, based upon failure to serve process upon the professional

corporation.

The dispositive issue is whether the District Court's orders

must be vacated because of Catharine's failure to serve the

professional corporation. Because we conclude both orders must be

vacated for that reason, we do not address the other issues raised

in this appeal.

The parties' marriage was dissolved by order of the District

Court in March 1991. Mark, a physician, was ordered to pay

Catharine maintenance of $2,150 per month for seven years, to allow

her to pursue a law degree.

Mark soon fell into arrears on the maintenance payments, and

Catharine's efforts to collect through writs of execution were

unsuccessful. In July 1993, Catharine obtained a 65% income

withholding order for maintenance, directed to Mark's professional

corporation, Mark Coward, M.D., P.C. When the corporation failed

to withhold income as ordered, Catharine moved to disregard the

corporate entity and to join the corporation as a party.

2
Mark was the corporation's sole shareholder and corporate

president, and that, at the hearing, his counsel opposed the motion

to join the corporation. She argues that a requirement of service

upon the corporation would honor form over substance and should be

rejected.

The nature of service of process is twofold: it serves notice

to a party that litigation is pending, and it vests a court with

jurisdiction. Fonk v. Ulsher (19931, 260 Mont. 379, 383, 860 P.Zd

145, 147. Service of process rules are mandatory and must be

strictly followed. Knowledge of the action is not a substitute for

valid service. -rFonk 860 P.Zd at 147.

Service upon a Montana corporation may be accomplished in

several ways described in Rule 4D(2) (e), M.R.Civ.P. They include

delivering a copy of the document to an officer, director,

superintendent or managing or general agent, or partner, or

associate for the corporation; leaving a copy at the place of

business of the corporation; or delivering a copy to the

corporation's registered agent.

This Court has held that service of process was adequate to

confer jurisdiction over a defendant corporation when only one copy

of the documents was served upon a defendant corporate officer as

both an individual and defendant corporate officer. Richland Nat'1

Bank & Trust v. Swenson (1991), 249 Mont. 410, 422, 816 P.Zd 1045,

1053-54. In the present case, however, no effort whatsoever was

made to serve the corporation. The motion to join Mark Coward,

M.D., P.C., and to disregard the professional corporation was

merely served by mail upon Mark's attorney, as part of the ongoing

4
action. We therefore conclude that Richland National does not

control here.

We cannot disregard the Rules of Civil Procedure and

jurisdictional prerequisites, even when faced with blatant attempts

to circumvent the law by individuals such as Mark. Actual

knowledge by Mark did not substitute for valid service upon his

professional corporation. We hold that, without valid service, the

court did not possess jurisdiction to enter orders directed to the

professional corporation.

Because the District Court asserted jurisdiction over Mark

Coward, M.D., P.C., in both orders from which this appeal is taken,

both orders are vacated. This matter is remanded to the District

Court for further proceedings co

Justices

5
Justice Terry N. Trieweiler dissenting.

I dissent from the majority opinion.

This case is the clearest example I have seen of a husband's

total contempt and disregard for the maintenance obligations

imposed upon him by a lawful order of a district court. It is no

wonder that at the conclusion of the testimony on which the

District Court based its order disregarding the corporate entity,

the District Judge made the following observation:

Dr. Coward, I want to make something clear to you

here. I have been sitting on the bench for close to six

years; prior to that I was a prosecutor for 17 years, and

I have never encountered anybody who has such a total

disregard and [dislrespect for other people as you do.

The appellant has used the legal process and abused the

corporate fiction successfully since 1991 to avoid his maintenance

obligation to his former spouse, and as of April 1, 1994, was

$80,328.90 in arrears on his debt to her.

By exalting form over substance, this Court's current opinion

has prolonged the tortuous procedural history which has served the

appellant so well. And, to what purpose?

Mark Coward, M.D., P.C., the shell of a corporate entity in

which the appellant now hides and protects his income, is nothing

more than Harold Mark Coward, the individual. He is the president

of the corporation; he owns all of its shares; he operates all of

its business; he performs all of its services; and he makes every

single decision that can be made for the corporation's operation

and existence.

6
Rule 4D(e), M.R.Civ.P., is not a demanding rule when it comes

to service of process on corporations. It provides that service

can be accomplished in various ways. Among them is service on any

officer of the corporation. In this case, the document with which

the majority is concerned was served on the attorney for the

president of the corporation, who in turn appeared in court to

oppose the relief sought in the motion. Nothing could more

effectively notify the corporation's only officer of the relief

being sought than service on his attorney. Furthermore, because of

the appearance of the president's attorney, jurisdiction over the

corporation was accomplished, whether or not the president was

personally served. Rule 4B(2), M.R.Civ.P., provides as follows:

(2) Acquisition of jurisdiction. Jurisdiction may

be acquired by our courts over any person through service

of process as herein provided; or bv the voluntarv

aonearance in an action bv anv person either personally,

or through an attornev, or throush any other authorized

officer, acient or emwlovee.

(Emphasis added.)

In this case, Harold Mark Coward was the president and

authorized agent for Mark Coward, M.D., P.C. He appeared in this

action in response to his former spouse's motion through his

attorney. Therefore, pursuant to the specific terms of Rule 4B,

the District Court had jurisdiction to enter the order that it

entered. To ignore the syllogism which leads to this conclusion is

to ignore reality in favor of an artificial distinction based on a

corporate fiction. The District Court, after listening to the

total lack of any distinction between Harold Mark Coward and his

7
pseudo-corporation, and the length to which Coward was willing to

go in order to avoid his obligation to his former spouse, refused

to do so. After reviewing the record, I agree with the District

court.

For these reasons, I dissent from the majority opinion. I

would affirm the orders of the District Court.