No. 14612 IN THE SUPREME COURT OF THE STATE OF MONTANA 1979

VOGA HOPPER, Plaintiff and Respondent,

-vsEDWIN S. HOPPER, Defendant and Appellant.

Appeal from: District Court of the Eighteenth Judicial District, Honorable Jack Shanstrom, Judge presiding. Counsel of Record: For Appellant: Hoyt and Lewis,Great Falls,Montana For Respondent: Lyman H. Bennett, 111,Bozeman, Montana

Submitted on briefs: July 5, 1979 Decided:

### SEFL ; 

### 1979Mr. Justice Gene B. Daly delivered the Opinion of the Court.

his isan appeal from a finaljudgment of the District Court of the Eighteenth Judicial District, dated September 19, 1978. The DistrictCourt upheld itsprevious denial of appellantEdwin Hopper's alternativemotions tovacate and setaside a property settlement and support agreement incorporated inthe July 19, 1976 decree dissolving themarriage of Edwin and Voga Hopper. This Court ordered the matter submitted on the briefs and decides the case without oral argument. The parties to thisappeal weremarried inthe Stateof Idaho in 1969. In the fallof 1975 the parties, residing in Bozeman, Montana, decided toobtain a dissolution of the marriage and orallyagreed between themselves toa division of theirproperty. Out of total assets of a value of approximately $200,000, virtually allof which had been contributed tothemarriage by Edwin, Voga was toreceive $50,000 cash plus an automobile and certain furnishings from the house. Atthe timeEdwin had been employed for some 14years as the exclusive salesrepresentative for Tony Lama Boot Company for a territoryencompassing several western states, a job which required extensive traveling. Shortly after Christmas, Edwin leftBozeman inconnection with hisbusiness, and Voga, who was not employed outside the family home, consulted an attorney regarding the dissolution. Edwin testified that after thisconsultation, Voga increased her settlement demands to $85,000 cashplus the other property, Subsequently, Edwin and Voga together metwith her attorney atwhich timethepartieswere advised that if they could agree upon a property settlement and an uncontested dissolu-tion, they would save on expenses for attorney fees. Itwas decided thather attorney would represent both parties in the dissolutionproceedings. Edwin and Voga thereafter negotiated the terms of a property agreement and consulted with Edwin's financial advisor, Mr. Terry Lynn, regarding the tax consequences of their proposed settlement. Their attorney drafted a written property settlement and support agreement toreflect the agreement reached by the parties. The agreement was reviewed and slightlymodified by Terry Lynn and then returned to the attorney who prepared the finaldraft. Edwin signed this final draftwithout reading it. A petition fordissolution of marriage was filedby Voga inthe DistrictCourt of the Eighteenth Judicial District on April 9, 1976, and a summons served on Edwin April 16, 1976. Edwin failed toappear attrial, and his default

was entered by the District Court ina July 19, 1976, decree granting the dissolution and incorporating the termsof the property settlement and support agreement. The District Courtmade the following finding of fact: "IX. That the parties tothis action have reached a property settlement and support agreement and filed the same tobe incorporated inthisDecree, and the same isnot unconscionable." Under the termsof thisproperty settlement and support agreement, Voga was toreceive various assetsof themarriage. Furthermore, Edwin was obligated topay her the sum of $64,632 amortized over a period of 121months inmonthly installments of $850, with interest at10percent annually. Hewas alsorequired toprovide security for the payment of thisobligation. The DistrictCourt awarded the attorney $2500 asreasonable attorney fees and made a further finding of factthat:"IV. The plaintiff is unemployed and is not trained forany employment other than the keeping of the recordsof the parties with respect to property of the parties

# ..." Somewhat at odds with this finding is the factthat Voga began work as a receptionist in a dentist's office at a salary of $450per month the day following the date of the decree, a position she acknowledged she had obtained a short time prior to the dissolution of marriage. Edwin first obtained separate counsel in November 1976 after the law firm that represented the parties in their dissolution attempted to execute on his property to collect attorney feesawarded in the decree. This disputewas settled out of court. Edwin regularlymade the designated monthly payments to his former spouse and nothing further

was done by either party in connectionwith the decree until September 1, 1977, when Voga filed an affidavit charging Edwin with contempt of court for failure to provide security for payment of the sum required to be paid to her under the property settlement agreement and decree. An order to show

causewhy he should not be held in contempt was issued by the HonorableW. W. Lessley on September 6, 1977. The Honorable Jack 

### D. Shanstromassumed jurisdiction on September 13, 1977,pursuant to an order granting Edwin's motion for disqualification. On November 7, 1977, Edwin filed an

answer to the order to show cause and a motion for relief from the July 19, 1976 decree, together with an affidavit alleging that the terms of the property settlementand support agreement incorporated into the decreewere unconscionable. Following several continuances, a hearing was held on the order to show cause on December 9, 1977. During theexamination ofVoga Hopper as an adverse witness, counsel for appellant initiated an inquiry touching upon elements of fraud allegedly committed upon the District Court at the time of the dissolution proceeding. This line of questioning was objected to by counsel for Voga on the grounds that

no specific allegations of fraud had been previously alleged in any of the pleadings. Following oral argumentby counsel, the District Court continued the hearing allowing Edwin to file additional pleadings setting forth specific allegations of fraud. On April 12, 1978,Edwin, appellant herein, filed alternative motions pursuant to Rule 60(b), M.R.Civ.P. These motions requested the District Court to set aside that portion of the decree of dissolution relating to the property settlementand support agreementon grounds of fraud on the court, fraud in the inducement, and change of circumstances rendering the provisions unconscionable. Respondent's attorney then filed a motion asking the District Court to overrule appellant's motions for the reason that appellant's motions were not filed within 60days after judgment as required by Rule 60(b), M.R.Civ.P., and for the further reason that no hearing was held on appellant'smotions within ten days after the filing of the alternativemotions,

as is required by Rule 60(c)and Rule 59(d)

## ,M.R.Civ.P. Respondent's motion also requested a determination of the issues before the court. The District Court issued an order on July 15, 1978, denying appellant's alternativemotions. On August 4, 1978, appellant's attorney filed a motion, supportedby affidavit, to vacate the order or judgment as there had been no hearing

on the matter. Themotion to vacate was then set for ahearing on the merits and the hearing was held onAugust 31, 1978. At the commencementof this hearing, counsel for respondent contended that the issue of fraud was not properly before the District Court because the court lacked jurisdiction to hear the issue by virtue of Rule 60(b), M.R.Civ.P. The District Courtpermitted the testimony, aswitnesses had been brought in from outside the area, and counsel for respondentparticipated in the hearing,preserving his jurisdictional challenge. Thereafter, on September 19, 1978, the District Court issued findingsof fact and conclusions of law as proposed by counsel for respondent. Edwin Hopper appeals from these findingsof factand conclusions of law upholding the denial of his alternative motions to vacate the property settlement provisions of the decree of dissolution. The issuespresented may be summarized as follows: 1. Isparagraph I1of the "property settlementand support agreement"a provision for the disposition of property or a provision for the payment of maintenance and support? 2. Did the District Court have jurisdiction to consider whether fraud had been committed upon the court? 3. Was the District Court's conclusion that no fraud had been committed upon the court supported by substantial evidence and the law? 4. Did the District Court have jurisdiction to considerwhether fraud had been committed upon the appellant? 5. Did the ~istrict Court have jurisdiction to determine the conscionability of the provisions of the property settlementand supportagreement?The parties executed a written separation agreement which was incorporated into the decree of dissolution. Appellant contends that paragraph I1 of this instrument, set forth below, is a provision for the maintenance of his former spouse. Respondent argues that the provision conternplates a distribution of property. The agreement provides inpertinent part: "Additionally, in full and final settlement of the Second Party's obligation to support and maintain the First Party, the Second Party shallpay to the First Party or her designated beneficiary, the sum of Sixty Four Thousand Six Hundred Thirty Two and no/100 Dollars ($64,632.00) to be amortized over a period of one hundred twenty one

(121)months, bearing interest at the rate of ten percent (10%)per annum and payable in monthly installmentsof Eight Hundred Fifty and no/100 Dollars ($850.00)." (Emphasisadded.) Appellant argues that the language employed by the parties governs, so that the payments, as designated, are to be made "in full and final settlement of the Second Party's obligation to support -- and maintain the First Party 

# .

# .." Furthermore,appellant contends that if this language is ambiguous, it should be construed most strongly against respondentas the drafting party. While we agree that the language employed is ambiguous when read in light of the entire agreement, this language

was drafted in final formby counsel for both parties. We agree with respondent that this language is in substance a provision for the distribution of property, notwithstanding the fact that it is couched in terms of support and maintenance. In a case decided prior to the enactment of the Uniform Marriage -and Divorce Act in this state, the wife gave up the right to any future support, relinquished claims againstproperty owned by the husband, and agreed to assumesome of the husband's liabilities as consideration for payments of $750 amonth for nine years. We held that: "In the property settlement agreement, the payments to the wife for nine years were labeled as

'alimonyt, but, as is apparent from the agreement, the paymentswere not in fact alimony per se, and the use of the term 'alimony'was only a label." Washington v. Washington (1973), 162Mont. 349, 354, 512 P.2d 1300. See also,blovius v. Movius (1974),163Mont. 463, 517 ~.2d

Under the principles expressed in Washington, this Courtwill look past mere labels to the substance of the partiestagreement to determine whether particular provisions are maintenance payments to the former spouse or part of a property settlement. This rationale has been followed in a recent case decided under the Uniform Marriage and DivorceAct where the wife relinquished her right to the family residence in consideration for payments, labeled alimony,whichwere held to be part of the property settlement. In reMarriage of Reilly (1978), 

### -Mont

# . , 577

Thepresent case involves a provision for the payment of a lump sum, bearing interest, over a period of time, payable to the wife or to her designated beneficiary. The husband is required to provide security for payment of the principal and the sum of the unpaid balance becomes immediately due and payable upon his death or permanent disability. The agreementwas drafted with the purpose of making the payments qualify as periodic payments for income tax purposes. The wife released all claims to any other property of the parties. Under the foregoing circumstances, it is clear that the paragraph in question is a provision for the distribution of property, rather than 

### a provision formaintenance or support.Turning to the second issue,we conclude that it was within the District Court's jurisdiction to determine whether fraud had been committed upon the court. The Uniform Marriage and DivorceAct, section 40-4-208(1) MCA, provides pertinent part: "(b)

# ... The provisions as to property disposition may not be revoked or modified by a court, except:

"(ii) if the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state." Rule 60(b), M.R.Civ.P., states that fraud is adequate grounds for granting relief from a judgment or order: "Onmotion and upon such terms as are just, the courtmay relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:

# . .. (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party 

# . .

# . The motion shall be made within a reasonable time, and for reasons (1)

### ,(2)and (3 1 when a defendanthas been personally served 

# . . . not more than 60days after the judgment,order or proceeding was entered or taken 

# .

# . . This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order or proceeding 

# . . . or to set aside a judgment for fraud upon the court." Respondent contends that the District Court lacked jurisdiction to rule on appellant's motion because he failed to complywith the 60-day time limitation set forth in Rule 60(b)

### ,M.R.Civ. P. The last sentence of Rule 60(b) forecloses any possibility that the time limitations formaking

amotion under the Rule have any application where fraud has been committed upon the court: "Thisrule does not limit the power of a court

# . . . to set aside a judgment for fraud upon the court.

### " The law in this state is settled:"Thepower of the court to set aside a judgment on the basis of fraud upon the court is inherent and independent of statute, and the timeliness of proceedings to set aside a prior judgment so obtained isnot subject to the six months time limitation in Rule 60(b), M.R.Civ.P., but must ultimately depend upon equitable principles and the sound discretion of the court." In re Julia Ann Bad Yellow Hair (1973), 162Mont. 107, 111, 509 P.2d 9, 12. In Selway v. Burns (1967), 150Mont. 1, 429 P.2d 640, 645,a

case involving fraud committed upon the court, this Court stated: "Itwas also argued thatMrs. Suthard's motion was not timely. If this argument is based on the requirements of Rule 60(b), it cannotbe accepted because the power invokedby the court in this matter does not depend on statute." The only limitation that has been placed upon the exercise of this power is that the investigating court must observe the usual safeguards of the adversary process by granting notice to affected persons and by conducting a fair hearing on the existence of the fraud. Selway v. Burns, supra, 429 P.2d at 644. See also Pilati v. Pilati (19791, Mont. 

## , 592 P.2d 1374, 36 St.Rep. 619. In light of the foregoing,we hold that the question of whether fraud

was practiced upon the court was properly before the District Court. We now turn to the question of whether the District 

### ' Court holdingwas supported by substantial evidence and by the law. The District Court reached a conclusion of law: 

### "IV. That no fraud was committed on the Court during the plaintiff's presence before the Honorable W. It W. Lessley on the 19th day of July, 1976,



# ... This conclusion, coupledwith the District Court's holding that appellant's alternativemotions were properly denied for failure to comply with the time limitations of Rule 60(b), M.R.Civ.P., indicates that the District Courtproperly considered applicable law and that its ruling is supported by the law. Because the District Court heard testimony on the issue and reached the conclusion of law quoted above, we must assume that the District Court considered this issue on themerits. Having concluded that no fraud had been committed upon the court, the District Court properly denied appellant's motions as being untimely under Rule 60(b)

## ,M.R.Civ.P. Our standard for review has been stated as follows: "When reviewing findings of fact and conclusions of law of a district court, sitting without a jury, this Court has repeatedlyheld such findings and conclusions will not be disturbed if supported by substantial evidence and by the law." Arrowhead, Inc. v. Safeway, Inc. (1978), Mont

# . , 587 P.2d 411, 413, 35 St.Rep. 1830, 1832. Appellant relies largely on the wife's failure to disclose that shehad secured employment as establishing a fraud upon the court. Respondent began employment as a receptionist for a dentist at a salary of $450per month on the day after the date of the decree of dissolution,having obtained thatposition some days prior to the dissolution. Yet the decree recited that shewas "unemployed and not trained for any employment." Unfortunately, there is no transcript of the testimony taken at the dissolution proceedingsof July 19, 1976,when this alleged fraud upon the court occurred. This Court has held that "[flraud upon the court

# . .

# . may consist of affirmatively misrepresenting facts to the court or of concealment ofmaterial factsby a person who is under a legal duty tomake a full disclosure to the court." In re JuliaAnn Bad Yellow Hair (1973),162Mont. 107, 111, 509 P.2d 9, 12, citing Selway v. Burns, supra.The same issues were raised in a recent case where a former spousepetitioned to set aside a decree of dissolution and property settlement on grounds of fraud. Pilati v. Pilati (1979), Mon t

# . , 592 P.2d 1374, 36 St.Rep. 619. ,Pilatiinvolved a situation where the husband failed to make a full and accurate disclosure of all the assets of the parties to either his spouse or to the court, with the result that the wife received a grossly inadequate property settlement under the terms of a settlement agreement incorporated in the decree. We held that his nondisclosure constituted an extrinsic fraud and a fraud upon the court so

as to justify relief. There was no intentional concealment of material assets from the court in the present case as there was in Pilati. Likewise, this case does not involve a misrepresentation to the courtpreventing a fair submission of the controversy, aswas the case in Selway,where the testator's executor represented to the District Court that the testator's daughter had consented to a stipulated judgment againsther mother's estate when in fact the daughter had not so consented and was not even aware of the suit. Furthermore, the District Court had before it and incorporated into its decree a property settlement agreement that had been reached by the parties; it was not adjudicating a property settlement nor determining a maintenance award that would be affected by the future employment or employability of the parties. The District Court could well have concluded that there

was no affirmative misrepresentation or concealment by respondentor by counsel when he submitted the decree to the court and that any error as occurredwhen the court adopted the finding thatVoga was unemployed and not trained for anyemployment was inadvertent. Alternatively, the District Courtmay have concluded that the wife's employment status

was not a material fact in view of the parties' property settlement agreement and that it did not substantially affect the merits of the case. That being so,we are unable to say that the District Court's holding was not supported by substantial evidence and the law. There isno record of the dissolution proceedings of July 19, 1976,available to assist this Court in our review of the District Court's ruling. Furthermore, in balancing interests this Court has recognized a public interest in the finality of judgments. Although a different balance was struck under the differing facts of that case, the proper rulewas stated in Selway: 

# ".



# .. Any time limitations thatmay be involved in this case require that a balance be struck between the public interest in putting an end to litigation at some point and the public interest in keeping its judicial system free 

### of corruption. For this reason the timeliness of the motion to vacate must ultimately depend upon equitable principles and placed within the sound discretion of the court

# . .

# ." 429 P.2d at 645. Under all of the circumstances of the present case,we are constrained to uphold the ruling of the trial court. The next issue iswhether the District Court had jurisdiction to considerwhether appellant had been defrauded into executing the property settlement agreementwhich was incorporated in the decree of dissolution. Prior to the enactment of Rule 60(b), M.R.Civ.P., the

now repealed predecessor statute, section 93-3905R.C.M. 1947,provided that: 

# ".

.

# . [TIhe courtmay 

# .

# .. relieve a party or his legal representative from a judgment, order or other proceeding taken against him through hismistake, inadvertence, surprise,or excusable neglect; provided, that application therefor be made within a reasonable time, but in no case exceeding sixmonths after such judgment, order, or proceeding was taken."Because this predecessor to Rule 60(b),M.R.Civ.P., did not provide for relieving from j udgment fraud, this Court in several cases arising prior to enactment of Rule 60(b) relied on the inherent power of a court to grant relief from a judgment obtained by extrinsic fraud. "Thepower of a court of equity to grant relief from a judgment obtained by fraud is inherent; it does not depend upon statute." Bullard v. Zimmerman (1930), 88Mont. 271, 277, 292 P. 730, 732. The statutory time limitation the former statutedid not apply to fraud: 

# ".

. . a court of general jurisdiction has the right, entirely independent of statute, to grant relief against a judgment obtained by extrinsic fraud, and may grant that relief either onmotion in the original cause or upon a separate equity suit, and after 

### - the period proscribed 

### & the statute 

# . . ." Cure

### v. Southwick (1960), 137Mont. 1, 349 P.2d 575, 579, citing Gillen v. Gillen (1945),117Mont. 496, 159 P.2d 511.

(Emphasisadded.) This rule applied only to fraud which could be classified as "extrinsic fraud": "Not every fraud committed in the course of a judicial determination will furnish ground for such relief. The acts forwhich a judgment or decreemay be set aside or annulled have reference only to fraud which is extrinsic or collateral to thematter tried by the court, and not to fraud in thematter onwhich judgment was rendered

# . . . [Fraud] is extrinsic or collateral within the meaning of the rule,when the effect of it is to prevent the unsuccessful party from having a trial or frompresenting his case fully." Bullard v. Zimmerman, 88Mont. at 277, 292 P. at 732, citing Clark v. Clark (1922),64Mont. 386, 210 P. 93, 94. Rule 60(b), M.R.Civ.P., unlike its predecessor section 93-3905, specifically enumerates fraud as a ground for relief from a judgment: "Onmotion and upon such terms as are just, the courtmay relieve a party or his legal representative from a final judgment,order, or proceeding for the following reasons: 

# .

# . . (3) fraud (whether heretofore denominated intrinsic or extrinsic) II *.

# .Moreover, Rule 60(b) establishes 

### a time limitation within which the motion must be made: "The motion shallbe made within a reasonable time, and for reasons (I), (2) and (3)when a defendant has been personally served

# . .

# . not more than 60days after the judgment,order or proceeding was entered or taken 

# . . ." This time limitation, however, does not apply to an independent action for relief from a judgment,as distinguished from a motion for such relief. The last sentence of Rule 60(b)

### ,M.R.Civ.P., states that 

### " [t] his rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment. 

# . ."

In a recent case decided under Rule 60(b),we followed the established rule that the courts of this state have inherentpower to set aside a judgment for extrinsic fraud, independent of statute and statutory time limitations, where

one of the parties brought an independent action for relief. Pilativ. Pilati (1979), Mont

# . , 592 P.2d 1374, 36 St.Rep. 619. Appellant in the present case attempted to raise the issue of extrinsic fraud on 

### -motion after the 60- day time limitation of Rule 60tb)had expired, rather than by an independent action for relief from the judgment. He isbarred fromproceeding on motion under Rule 60(b), and the District Court properly denied his alternative motions in this regard. The final issue in this case is whether or not the District Court had jurisdiction to determine the conscionability of the property settlement agreement where the court had earlier, in the decree of dissolution, found the agreement to be not unconscionable. The District Court held that a determination of conscionabilitywas prevented by the doctrine of 

### - res judicata. We agree."The doctrine of res judicata states that a final judgment on themerits by a court of competent jurisdiction is conclusive as to causes of action or issues thereby litigated, as to the parties and their privies, in all other actions in the same or any other judicial tribunal of concurrent jurisdiction." Meagher County Newlan Creek Water Dist. v. Walter (1976),169 Mont. 358, 361, 547 P.2d 850, 852. 

# ".

. . [Flourcriteria exist inMontana law which must be met before a plea of res judicata can be sustained. These criteria are: (1)the parties or their privies must be the same; (2) the subject matter of the action must be the same; (3) the issuesmust be the same, and must relate to the same subjectmatter; and (4)the capacities of the personsmust be the same in reference to the subjectmatter and to the issuesbefore them." Smith v. County of Musselshell (1970), 155Mont. 376, 378, 472 P.2d 878, 880. All these criteria are satisfied in the present case. In view of the foregoing, it is unnecessary for us to decide whether or not appellant's motions were also untimely for the reason that no hearing was held on the motions within ten days after filing, as is required by Rule 60(c) and Rule 59(d)

## ,M.R.Civ.P. The judgment of the DistrictC0urt.saffirmed.

We concur:

A Chief Justice