Title: DOBLE v TALBOTT
Citation: N/A
Docket Number: 14372
State: Montana
Issuer: Montana Supreme Court
Date: January 10, 1979

No. 14372 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978 JOHN H . DOBLE, SR., Plaintiff and Respondent, -vs- CAROLE PATRICIA TALBOTT, et al., Defendants and Appellants. ....................................... No. 14345 HAROLD FULLER et al., Plaintiff, -vs- JOHN H. DOBLE, et ux, et al., Defendants. ........................................ No.14363 JOHN W . DOBLE, et ux, et al., Plaintiffs and Appellants, -vs- BONNERS FERRY LUMBER COMPANY, LIMITED, a corporation, et al., Defendants and Respondents. Appealed from: District Court of the Nineteenth and Eleventh Judicial Districts Honorable Robert C. Sykes, Presiding Judge Counsel of Record: For Appellants: H. James Oleson argued, Kalispell, Montana For Respondents: McGarvey, Lence and Heberling, Kalispell, Montana Dale L. McGarvey argued, Kalispell, Montana John M. Schiltz argued, Kalispell, Montana Murray, Donahue and Kaufman, Kalispell, Montana Geroge Best argued, Kalispell, Montana Murphy, Robinson, Heckathorn and Phillips, Kalispell, Montana Lawrence H. Sverdrup, Libby, Montana Submitted: October 12, 1978 Decided: JAN 1 1 g n - M r . J u s t i c e Gene B. Daly delivered t h e Opinion of the Court. These three actions were consolidated f o r appeal by order of t h i s Court on May 31, 1978. Each a r i s e s from the controversy between Carole Talbott e t a l . , judgment c r e d i t o r s , and John H. Doble, a judgment debtor. O n August 13, 1976, Carole Talbott and her minor children obtained a wrongful death judgment i n federal d i s t r i c t court against John H. Doble i n the amount of $450,000. This sum was subsequently reduced t o $225,000. C A U S E NO. 14345 -- PRIORITY O F CREDITORS The controversy i n t h i s cause centers on a determina- t i o n of creditors' p r i o r i t i e s made by the D i s t r i c t Court of the Eleventh J u d i c i a l D i s t r i c t . O n April 27, 1 9 7 7 , the D i s t r i c t Court ordered the p r i o r i t i e s of two Doble c r e d i t o r s , the Conrad National Bank and the F i r s t National Bank of Eureka a s f i r s t and second respectively. Both banks were p l a i n t i f f s i n a s u i t against Doble seeking s a t i s f a c t i o n on promissory notes which they had issued t o him during 1976. This order, however, made no mention of Carole Talbott's judgment against Doble. O n M a y 3, 1977, the D i s t r i c t Court entered an amended order, adding a paragraph which indicated t h a t Carole Talbott had a judgment against John H. Doble, and ordered t h a t judgment i n f e r i o r t o the claims of the banks. O n February 8, 1978, Talbott's attorney presented a motion t o have the May 3 , 1977 decree establishing pri- o r i t i e s among the c r e d i t o r s s e t aside on the ground t h a t Talbott was given no notice her r i g h t s were t o be determined. O n February 27, 1978, the ~ i s t r i c t Court ordered the May 3, 1977 order s e t aside "insofar a s any e f f e c t on the r i g h t s of Carolyn [ s i c ] P a t r i c i a Talbott a r e concerned." O n appeal, Talbott seeks t o have the orders of May 3 and April 27 s e t aside so the three c r e d i t o r s may reestab- l i s h t h e i r r e l a t i v e p r i o r i t i e s i n a single proceeding. Talbott and Doble have agreed t o a remand t o the D i s t r i c t Court, and the banks involved do not object t o a remand. Therefore, Cause No. 14345 is remanded t o the D i s t r i c t Court so a l l the John H. Doble creditors may l i t i g a t e t h e i r r e l a - t i v e p r i o r i t i e s i n a single proceeding. The p r i o r i t i e s a s established on April 27 and M a y 3, 1977, a r e hereby s e t aside. C A U S E NO. 14372 -- INJUNCTION O F SHERIFF'S S A L E Carole Talbott appeals from an order of the D i s t r i c t Court, dated April 11, 1978, permanently enjoining her from proceeding on a w r i t of execution on her judgment against Doble. O n August 29, 1977, Talbott f i l e d her federal judg- ment against Doble i n the Nineteenth J u d i c i a l D i s t r i c t Court and obtained a w r i t of execution on the judgment. Her attorney prepared notice of a s h e r i f f ' s s a l e i n the Eleventh J u d i c i a l D i s t r i c t of John H. Doble's i n t e r e s t i n the con- t r a c t f o r deed and had the date of s a l e s e t f o r October 11, 1977. O n t h a t date, however, Doble's attorney f i l e d a com- p l a i n t i n D i s t r i c t Court asking t h a t the s h e r i f f ' s s a l e be enjoined on various grounds, including t h a t the date of the contract on the s h e r i f f ' s s a l e notice was wrong, t h a t the wrong form of notice was used ( r e a l property rather than personalty), t h a t the judgment creditor had f a i l e d t o pay t h e p r i o r security i n t e r e s t s before levying (section 93- 4338, R.C.M. 1947), and t h a t there was no proper levy. Due t o these alleged defects, the D i s t r i c t Court enjoined the sale under a temporary restraining order issued the same day and ordered a show cause hearing for October 18 to determine whether the sale should be permanently enjoined. Finally, the District Court ordered that copies of the complaint be served on defendants, Carole Talbott, and the Flathead County sheriff. Doble's attorney hand delivered copies of the complaint and temporary restraining order and show cause order to the sheriff and to Talbott's attorney. After various delays an attorney's conference was scheduled for April 11, 1978. Following the conference the District Court made an order reciting that Talbott's attor- ney was present and that he "[represented] to the Court that Defendants Talbott do not intend to proceed further on the writ in question . . ." The court then ordered that a permanent injunction be granted on the writ of execution, that the sheriff be dismissed from the action - and that Talbott's right to proceed on a new writ was "in no way pre- judiced". On April 24 Talbott's attorney filed a motion for re- consideration of the April 11 order, alleging that the service of process on him was not adequate as service on his client, that the order was void because no hearing was held on the merits, and that he did not say that he did not intend to proceed on the August 29, 1977, writ of execution, but that "in -- all likelihood" he would not proceed. (On June 8 following Talbott's notice of appeal, ~oble's attor- neys filed an affidavit that ~albott's lawyer said his client did not intend to proceed on the writ.) Following the District Court's denial of Talbott's motion to reconsider, Talbott applied to this Court on May 19 for a writ of supervisory control which was denied on May 31 (Cause No. 14319) with directions to proceed by appeal. Talbott argues on appeal t h a t the service of process on her attorney was i n s u f f i c i e n t rendering the D i s t r i c t Court's ~ p r i l 11, 1978 order void f o r lack of jurisdiction and t h a t the injunction is void because the D i s t r i c t Court f a i l e d t o hold a hearing o r take evidence justifying such an order. The D i s t r i c t Court's order enjoining the s h e r i f f ' s s a l e expressly places no prejudice on Talbott's r i g h t t o proceed under a new w r i t . The s t a t u t e of limitations f o r actions on judgments is ten years. Section 93-2602, R.C.M. 1 9 4 7 . Doble's attorney sought and obtained an injunction against execution on the August 29, 1977 w r i t not a s an attempt t o s h e l t e r t h e proceeds of the contract f o r deed from a legitimate execution, but rather t o prevent the undesirable. conse- quences of a s h e r i f f ' s s a l e which f a i l e d t o take account of p r i o r secured interests--that is, the security i n t e r e s t s of t h e Conrad Bank and the F i r s t National Bank of Eureka. Talbott's attorney contends the injunction was not e f f e c t i v e a s t o h i s c l i e n t due t o improper service of process. Doble's attorney hand delivered a copy of the complaint and restraining order and show cause order t o Talbott's attorney only one week a f t e r Talbott's attorney had prepared notice of the s h e r i f f ' s sale. Talbott argues t h a t such hand de- l i v e r y t o the attorney was not adequate service on h i s c l i e n t a s he was not a general agent f o r her, c i t i n g and v. Hand (1957), 131 Mont. 571, 312 P.2d 990, and Kraus v. Treasure Belt Mining Co. (1965), 1 4 6 Mont. 432, 408 ~ . 2 d 151. These cases a r e distinguishable from the present matter and do not r u l e out service of process on an attorney a s a means of obtaining jurisdiction over a c l i e n t . In Hand t h e service of process on an attorney was held inadequate because it was on a senior member of a law firm who knew nothing about t h e defendant's case, who had n o t appeared i n any manner a s an a t t o r n e y of record i n t h e defendant's a f f a i r , and whose f i r m had n o t " i n any manner appeared a s respondent's a t t o r n e y s of record." 131 Mont. a t 575, 312 P.2d a t 992. I n Kraus t h e s e r v i c e of process was on a former employee of an out-of-state mining company who had no access t o t h e closed mine premises, who w a s r e c e i v i n g unem- ployment compensation a t t h e time of s e r v i c e , and who t o l d t h e serving s h e r i f f t h a t he no longer had' any connection with t h e mining company. Under t h e s e circumstances s e r v i c e of process was n o t adequate under Rule 4D(2) ( e ) (i) as s e r - v i c e upon a "managing o r general agent" of t h e company. 146 Mont. a t 436, 408 P.2d a t 153. I n t h e p r e s e n t case t h e a t t o r n e y ' s r e l a t i o n s h i p t o t h e c l i e n t and t o t h e s u b j e c t matter of t h e a c t i o n is much c l o s e r . Doble's c i t a t i o n t o United S t a t e s v. Bosurgi (S.D. N.Y. 1972), 343 F.Supp. 815, i s h e l p f u l i n t h a t both t h e f a c t s and a p p l i c a b l e l a w are closer, t o t h e matter a t i s s u e . I n Bosurgi t h e defendant sought t o vacate s e r v i c e of process upon it under Rule 1 2 ( b ) , Fed.R.Civ.P., a l l e g i n g t h a t its a t t o r n e y was not an "agent authorized by appointment . . . t o r e c e i v e s e r v i c e of process." 343 F.Supp. a t 816. The defendant (SAICI), a claimant of a fund which Bosurgi had recovered i n a s e p a r a t e a c t i o n , f i l e d an a c t i o n i n s t a t e c o u r t i n New York claiming t h a t it was r i g h t f u l l y e n t i t l e d t o t h e proceeds of Bosurgi's fund. Meanwhile t h e United S t a t e s had f i l e d an a c t i o n i n f e d e r a l c o u r t seeking t o f o r e c l o s e on t a x l i e n s which it held on t h e fund. Thus, t h e United S t a t e s named SAICI as an a d d i t i o n a l defendant i n its f o r e c l o s u r e a c t i o n and served process on t h e s e n i o r p a r t n e r of t h e law firm which represented SAICI i n its s t a t e c o u r t action. I n declaring t h i s a c t i o n v a l i d s e r v i c e of process, t h e f e d e r a l d i s t r i c t c o u r t f i r s t noted t h e l i m i t a t i o n s on s e r v i c e of process on an attorney: "An attorney, s o l e l y by reason of h i s capacity as an attorney, does n o t thereby become h i s c l i e n t ' s agent authorized by 'appointment . . . t o receive s e r v i c e of process.' Nor is t h e f a c t t h a t an attorney represents h i s c l i e n t i n a completely unrelated l i t i g a t i o n s u f f i c i e n t t o e s t a b l i s h t h e r e q u i s i t e authority. What i s necessary i s t h a t it appear t h a t t h e attorney w a s authorized, e i t h e r expressly o r impliedly, t o receive s e r v i c e of process f o r h i s c l i e n t . And i f such agency is t o be implied, it must be implied from a l l t h e circumstances accom- panying t h e a t t o r n e y ' s appointment which indi- c a t e t h e e x t e n t of a u t h o r i t y t h e c l i e n t intended t o confer." 343 F.Supp. a t 817-18. Y e t i n t h a t case, a s i n t h e present one, the matter a t i s s u e w a s n o t "completely unrelated" t o t h e matter i n which t h e attorneys w e r e already a c t i v e l y representing SAICI. A s t h e c o u r t i n Bosurgi reasoned: " I t i s beyond question t h a t SAICI's attorneys were retained t o assert its alleged r i g h t t o , and t o obtain possession o f , t h e $215,000. This r e t a i n e r necessarily required t h e a t t o r - neys t o r e s i s t t h e claims t o the fund a s s e r t e d by other p a r t i e s , including t h e United S t a t e s Government. Receipt of process by t h e a t t o r - ney i n t h i s s u i t , which involves r e l a t i v e r i g h t s t o t h e settlement fund, w a s a necessary i n c i d e n t of t h e a t t o r n e y ' s e f f o r t t o e s t a b l i s h SAICI's claim t o t h e settlement fund by op- posing t h e claims of t h e government, as w e l l as those of t h e o t h e r claimaints. L i t i g a t i o n with t h e United S t a t e s must have been intended as within t h e scope of the a t t o r n e y ' s a u t h o r i t y , s i n c e t o obtain t h e fund f o r SAICI, its a t t o r - neys would i n e v i t a b l y have t o f a c e and overcome t h e claim of t h e United States." 343 F.Supp. a t 818. I n t h e present case, T a l b o t t ' s attorney necessarily would be required " t o resist the claims t o t h e fund a s s e r t e d by other p a r t i e s . " Logically h i s duty a l s o extends t o pro- t e c t i n g h i s c l i e n t ' s c l a i m a g a i n s t t h e judgment d e b t o r ' s attempt t o block t h e execution sale. A s t h e person entrusted t o safeguard h i s c l i e n t ' s i n t e r e s t s through t h e treacherous journey from judgment to satisfaction, Talbott's attorney was "not only adequate, but probably optimal" as the person to receive service of process. 343 F.Supp. at 818. In a circumstance similar to that in Bosurgi and the instant case, another federal court echoed this conclusion: "There is no fear . . . that service of the summons and complaint upon [the attorney] would not be brought home to each principal. This is at times a matter of concern in these problems of service of process through claimed authorized agent. That service of process upon their lawyer would bring notice of the lawsuit to [the principals] seems beyond argument and is evident here from the motion itself in their behalf to quash the service. Also, a lawyer endowed with all the authority given as here to act and appear is about the best candidate one could choose to insure notice of a pending lawsuit." United States v. Davis (N.D. N.Y. 1965), 38 F.R.D. 424, 425-26. (Bracketed material added.) Thus, due to the attorney's representation of Talbott in a closely related action, which necessarily implied a duty to protect his client's interests against this type of action, service of process on her attorney was valid as service on Talbott within the meaning of Rule 4D(2) (a), As to Talbott's second contention that the District Court granted the permanent injunction without considering evidence at a hearing, it appears that the words of Talbott's attorney precluded the need for such a hearing. The order granting the permanent injunction states that he told the judge his client did not intend to proceed on the writ of August 29. While Talbott's attorney later declared that what he said was "in all likelihood" the defendant did not intend to proceed on the writ, it is clear that the judge and the other attorneys present at the April 11, 1978 con- ference understood Talbott's attorney to say his client did not intend to proceed on the writ. Under these circumstances, t h e D i s t r i c t Court's version of t h e r e p r e s e n t a t i o n s of an a t t o r n e y must be considered t h e b e s t guide of what he s a i d . The D i s t r i c t Court had j u r i s d i c t i o n t o e n t e r i t s A p r i l 11, 1978 order enjoining t h e s h e r i f f ' s sale. Carole T a l b o t t may proceed under a new w r i t a s provided i n t h a t order. C A U S E NO. 14363 -- ORDER NUNC P R O T U N C I n t h i s t h i r d cause a p p e l l a n t T a l b o t t seeks t o set a s i d e an order of t h e Eleventh J u d i c i a l D i s t r i c t Court amending a 1967 judgment nunc pro tunc. A s described above, Carole T a l b o t t ' s f e d e r a l judgment of August 13, 1976, is a g a i n s t John H. Doble, who is p r e s e n t l y t h e r e c i p i e n t of payments under a c o n t r a c t f o r deed dated May 1, 1975, a s a t e n a n t i n common with Helen I. Doble, h i s wife. John W. Doble, Doble's son, is a l s o t h e r e c i p i e n t of payments under a s e p a r a t e c o n t r a c t f o r deed dated May 1, 1975. I n 1966, John H. Doble, Helen I. Doble, John W. Doble and Joyce Doble brought a q u i e t t i t l e a c t i o n i n t h e Eleventh J u d i c i a l D i s t r i c t i n Lincoln County. I n t h e pleadings f o r t h a t a c t i o n t h e Dobles d i d n o t i n d i c a t e s e p a r a t e ownership of t h e various t r a c t s t o which they wished t o q u i e t t i t l e s , b u t they d i d p r e s e n t s e p a r a t e evidence of ownership. John W. Doble brought before t h e c o u r t e x h i b i t s one through t h r e e which w e r e warranty deeds granting various t r a c t s t o him and h i s wife as j o i n t tenants. These t r a c t s , a l l located i n Township 37 North, Range 28 West M.P.M. w e r e : Exhibit 1 Section 26 E/2 NE/4 Exhibit 2 Section 1 1 W / 2 NE/4, E/2 NE/4 m/4, E/2 SE/4 NW/4, SW/4 SE/4 NW/4, S/2 NW/4 SE/4 JW/4 Exhibit 3 Section 10 S/2 SE/4 Section 1 1 S E / ~ SW/4, W / 2 S W / ~ Section 13 Lots 2, 3 ( ~ / 2 N E / ~ ) Section 1 4 m/4 John H. Doble produced warranty deeds granting t h e following t r a c t s t o him and h i s wife a s j o i n t t e n a n t s a s e x h i b i t s f o u r through seven: Exhibit 4 Section 3 Lots 2 and 7 Exhibit 5 Section 15 NE/4 SE/4 Exhibit 6 Section 1 4 1W/4 SW/4 E x h i b i t 7 Section 1 1 W / 2 NE/4 W/4, N/2 NW/4 SE/4 W/4 The D i s t r i c t Court granted judgment f o r t h e Dobles i n t h e i r q u i e t t i t l e a c t i o n on January 6, 1967, b u t f a i l e d t o indi- c a t e s e p a r a t e ownership of t r a c t s on t h e decree. The only mention of t h e p a r t i e s by name i s i n t h e caption of t h e judgment and decree, which simply lists a l l four Dobles as p l a i n t i f f s . O n March 28, 1978, a f t e r f i l i n g a t r a n s c r i p t of t h e f e d e r a l judgment with t h e Nineteenth J u d i c i a l D i s t r i c t Court, Carole T a l b o t t obtained a f e d e r a l w r i t of execution. The United S t a t e s Marshall l e v i e d on t h e property l i s t e d i n t h e 1967 q u i e t t i t l e decree on April 5, 1978, and set t h e d a t e f o r sale of t h e property on May 18. On May 2 Doble's a t t o r n e y f i l e d a motion t o amend t h e 1967 judgment nunc pro tunc t o r e f l e c t t h e s e p a r a t e owner- s h i p . The Nineteenth J u d i c i a l D i s t r i c t Court granted t h a t motion t h e same day. T a l b o t t considers h e r s e l f aggrieved because she i n t e r - p r e t s t h e order nunc pro tunc t o have been a device t o p r o t e c t Doble's property from her r i g h t f u l claim. This hinges upon her i n t e r p r e t a t i o n of t h e 1967 judgment which q u i e t s t i t l e t o t h e v a r i o u s Doble t r a c t s i n Lincoln County. H e r claim i s t h a t t h e a c t i o n served t o t r a n s f e r one-half of John W. and Joyce Doble's i n t e r e s t i n t h e i r s e p a r a t e lands t o John H. and Helen Doble "by operation of law", and similarly t o t r a n s f e r one-half of John H. and Helen Doble's i n t e r e s t i n t h e i r separate lands t o John W. and Joyce Doble by operation of law. Under t h i s theory it would appear t h a t John H. and Helen have retained t h e i r half i n t e r e s t i n the land which John W. and Joyce purport t o have sold t o others under the May 1, 1975, contract f o r deed. Several factors, however, make c l e a r t h a t John H. and Helen Doble have never acquired any i n t e r e s t i n John W. and Joyce Doble's land. F i r s t , the q u i e t t i t l e action which the Dobles f i l e d i n 1966 made no mention of a transfer of i n t e r e s t s among the Dobles. Its purpose was c l e a r l y t o give the Dobles uncontested t i t l e t o t h e i r various t r a c t s , especially a s against the Bonners Ferry Lumber Co. Ltd., the C.E. Conrad Estate, Inc., the Conrad Corporation, and several other individuals. Second, the evidence produced a t the hearing on the q u i e t t i t l e p e t i t i o n c l e a r l y showed John W. and Joyce Doble a s the grantees of c e r t a i n t r a c t s and showed John H. and Helen Doble a s t h e grantees of c e r t a i n other t r a c t s . In t h e absence of any pleading o r evidence t h a t e i t h e r of the Doble families claimed ownership i n the lands standing i n the name of the other, the D i s t r i c t Court could not transfer t i t l e from the one co-plaintiff t o the other co-plaintiff. The nunc pro tunc order did no more than c l a r i f y the evidence and the law governing the case. Third, the Dobles have treated t h e i r ownership a s separate since the q u i e t t i t l e action. The contracts f o r deed which the Doble families entered i n t o i n May, 1975, a r e completely separate and on t h e i r face convey separate t r a c t s of land. One describes John H. and Helen Doble a s tenants i n common. Clearly these people i n 1975 considered them- s e l v e s t o be s e p a r a t e owners of s e p a r a t e lands, and d e a l t s e p a r a t e l y with t h e purchasers of t h e i r land. I n 1978 when Carole T a l b o t t gave n o t i c e of her i n t e n t t o execute her judgment by s e l l i n g a l l t h e land l i s t e d i n - t h e 1967 decree, t h e Dobles understandably became concerned and moved t o amend t h e decree t o c l e a r l y r e f l e c t t h e i r t r u e i n t e r e s t . The only e f f e c t of t h e May 2 , 1978 order cor- r e c t i n g t h e judgment was t o r e f l e c t t h e o r i g i n a l i n t e n t of t h e p a r t i e s . Amendments a r e permissible under Rule 60 (b) (6) , M.R.Civ.P., where they w i l l make t h e meaning of a judgment o r decree more c l e a r and w i l l n o t a c t inequitably o r t o t h e p r e j u d i c e of a party. Smith v. Jackson Tool & Die, Inc. ( 5 t h C i r . 1970), 426 F.2d 5, 8. H e r e , t h e Dobles had l i t t l e reason t o suspect t h a t a subsequent c r e d i t o r would, more than a decade l a t e r , i n t e r p r e t t h e q u i e t t i t l e decree t o mean t h e four Dobles w e r e t e n a n t s i n common of a l l land involved i n t h e decree. A d i f f e r e n t question might be pre- sented i f T a l b o t t ' s theory of t h e e f f e c t of t h e 1967 decree was more p l a u s i b l e , and t h e order nunc pro tunc w a s i n f a c t a change i n t h e o r i g i n a l i n t e n t i o n of t h e q u i e t t i t l e de- cree. But under t h e t o t a l circumstances of t h i s case, t h e order does n o t appear t o p r e j u d i c e T a l b o t t . It merely c l a r i f i e s what had always been intended. With t h i s d e t e r - mination, it i s unnecessary t o consider Doble's claim t h a t T a l b o t t l a c k s standing. The order nunc pro tunc of May 2, 1978, is affirmed. The order does n o t a c t inequitably b u t r a t h e r c l a r i f i e s what w a s o r i g i n a l l y intended by t h e 1967 q u i e t t i t l e a c t i o n . d k J u s t i c e W e Concur: Judge, s i t t i n g i n p l a c e of M r . Chief J u s t i c e Haswell ~ i s t r i & ~ u d ~ e ; s i t k i n g i n place of M r . J u s t i c e Sheehy