Opinion ID: 1123584
Heading Depth: 1
Heading Rank: 2

Heading: part ii. the guardianship judge lacked authority to approve the settlement and the foreclosure judge lacked authority to enter the agreed judgment.

Text: A judgment is void when it affirmatively appears from an inspection of the judgment roll that any one of the three jurisdictional elements are absent: 1) jurisdiction over the person; 2) jurisdiction over the subject matter; or 3) jurisdictional power to render the particular judgment. Winona Oil Co. v. Barnes, 83 Okla. 248, 200 P. 981, 985 (1921). A void judgment may be vacated at any time on a motion of a party or person affected thereby when the fatal defect appears on the face of the judgment roll. 12 O.S. 1981, § 1038, now 12 O.S.Supp. 1993, § 1038; Matter of Delaney, 617 P.2d 886, 889 (Okla. 1980). There is no dispute here as to whether the judge handling Harding's guardianship had personal or subject matter jurisdiction over the guardianship proceeding(s). She did. There is also no dispute as to whether the judge handling the foreclosure action had personal jurisdiction over the parties or subject matter jurisdiction over the foreclosure suit. He did. The question is whether these courts had the jurisdictional power to render the particular order or judgment rendered by them  in the case of the guardianship judge, the order approving the settlement; in the case of the foreclosure judge, the agreed judgment based on the settlement. The Court of Appeals, relying principally on Carter Oil Co. v. Fleming, 117 Okla. 39, 245 P. 833 (1926), found that the two judges had the resulting power to render the particular order and judgment, respectively. The Court of Appeals quoted the following language from Carter Oil taken from the Syllabus by the Court: In the absence of a statutory or constitutional provision to the contrary, a guardian, by and with the approval of the county court having jurisdiction of the estate of his ward, may compromise any controversy or litigation involving the estate of such ward; and such compromise will be binding upon the ward when it is made for his best interest and in good faith; and the subject-matter of the compromised controversy or litigation cannot be relitigated by the ward. (emphasis added) Id. at 833. The Court of Appeals also quoted from an opinion of the United States Supreme Court regarding settlements by guardians on behalf of their wards which was relied on in Carter Oil. The case was Thompson v. Maxwell Land Grant & Ry. Co., 168 U.S. 451, 18 S.Ct. 121, 42 L.Ed. 539 (1897), where the Supreme Court reasoned that if settlements made on behalf of minors were allowed to be set aside when conditions changed, such allowance would be injurious to minors because no party would settle claims with them for fear of later repudiation. Although we agree with the general rule as stated in Carter Oil and the policy behind it as enunciated by the United States Supreme Court in Thompson, as the emphasized portion of the Syllabus by the Court from Carter Oil provides, the general rule does not apply where there exists a statutory or constitutional provision to the contrary. Section 385 is a statutory provision to the contrary which takes the settlement between Lee and Peoples outside the general rule. [8] Section 385 provides in pertinent part as follows: The district court or judge thereof may, upon verified petition supported by sufficient evidence showing that the best interest of the owners of the real estate affected requires it, by an order, grant authority to the ... guardians of the estates of .. . incompetents ..., to enter into contracts for and to renew or extend the time of payment of any mortgage or lien or an obligation which may by operation of law become a lien upon the real estate of such ... ward, including homestead, or to execute a new mortgage for the purpose of paying off and securing the release of any such mortgage or lien, or an obligation which may by operation of law become a lien; provided that in no case shall such authority be granted, to mortgage, or contract for the renewal or extension of any mortgage for an amount greater than may be necessary to pay an obligation which may by operation of law become a lien, or liens existing at the time such order is granted including principal, interest, taxes and such reasonable expenses as may be incident to perfecting such renewal, extension or new mortgage. (emphasis added) We have on numerous occasions construed the predecessor statutes to § 385 in regard to the authority of guardians to mortgage and courts to approve a mortgage on the real estate of wards. Although the statute has been amended over the years in regard to the emphasized proviso highlighted above as to when a court shall have no authority to place a mortgage (or renew or extend a mortgage) on such real property, one constant has remained in our interpretation of § 385, to wit: if it is facially shown that the court approves a mortgage that is outside the authority or power of the court as specified in § 385 the order approving the mortgage is void. In our view this constant is applicable to render the agreed judgment under attack void. In one of the earliest cases we held that an order of the court purporting to authorize a guardian to mortgage the lands of his ward to secure debts that are not a lien against the estate, or for the payment of which the estate is not bound, is in excess of the power of the court  is void  and that a mortgage executed in pursuance of such an order of the court is a nullity. Lee v. Tonsor, 62 Okla. 14, 161 P. 804, Fourth Syllabus (1916). Tonsor concerned a situation where a guardian contracted for improvements to a dwelling house and other improvements to land owned in part by two minor wards. [9] In that the guardian had been granted no authority by the court to initially contract on behalf of the wards for the improvements, this Court held that a mortgage placed on the real property with approval of the court was void because no valid lien had ever been created against the wards' interest in the land and that the wards were not bound for any part of the indebtedness. Id., 161 P. at 806-807. In another early case we held that where part of the judgment roll facially showed that the total indebtedness of the ward's estate was for a specified amount, an order authorizing a mortgage for a greater amount was void as to the excess and subject to collateral attack. Roth v. Union National Bank, 58 Okla. 604, 160 P. 505, 511-512 (1916); See also Yawitz v. Hopkins, 70 Okla. 158, 174 P. 257, Second Syllabus (1918) (county judge without jurisdiction to make an order authorizing guardian to execute a mortgage or other instrument creating a lien upon the property of his ward, except as security for then existing debts and liabilities for which such estate or any part thereof is then legally liable to be ordered sold). In another case, we held that the court was without authority to authorize the guardian to mortgage the property of the ward for the primary purpose of paying delinquent taxes and where the record in the case affirmatively disclosed the authorization order of the court was for such purpose, the order was void and subject to collateral attack. Glover v. Warner, 135 Okla. 177, 274 P. 867, 868-870 (1929). Part of the rationale in Glover for a determination that delinquent taxes were not a proper purpose within the then existent statute was that the statute at such time did not include debts or obligations that could become liens on the real property by operation of law, as is now the case. See also Cochran v. Norris, 175 Okla. 126, 51 P.2d 736, 739 (1935) (order of county court authorizing guardian to execute mortgage on ward's land for primary purpose of paying delinquent drainage assessment is subject to collateral attack and is void). In yet another case construing a predecessor statute to § 385 we said: [a] mortgage of real property of a minor made by a guardian under the direction and supervision of the county judge, but which mortgage is not within the limits of the law authorizing the same, is an absolute nullity. Kilpatrick v. James, 173 Okla. 629, 48 P.2d 1034, First Syllabus (1935). Kilpatrick held that a mortgage made by a guardian under a county judge's direction was a nullity where the purpose of the mortgage was to satisfy physician's and hospital bills. Id., 48 P.2d at 1035. Further, the case of McPhaul v. Franklin, 121 Okla. 162, 249 P. 293, Syllabus (1926), makes clear that the jurisdiction of courts handling guardianship cases is limited by § 385 in the matter of authorizing or approving mortgages by guardians on the real estate belonging to their wards. As one can see from reviewing the above cases, an order approving a mortgage that is facially not within the limits mandated by § 385 is void and subject to collateral attack. To counter these cases Peoples asserts that Lee misconstrues the situation and Peoples argues § 385 is not applicable because we are dealing here not with a mortgage, but merely with the settlement of a pending dispute. We disagree. To accept Peoples' view of the situation would require us to ignore the substance of the transaction and rely, instead, merely on its form. The simple fact is that the settlement agreement approved by the judge handling the guardianship validated a mortgage, as did the agreed judgment of the foreclosure judge. To us validation of the mortgage is nothing less than authorization of the mortgage. In fact, this was the whole point of the settlement. Review of the settlement and agreed judgment, thus, belies any claim these documents were something other than the placing of a mortgage on the property. That is exactly what they were meant to do and we will not ignore this fact. [10] Accordingly, if the settlement, and, thus agreed judgment, authorized a mortgage upon the real property that was unauthorized by § 385, both the approval order of the guardianship judge and the agreed judgment of the foreclosure judge are subject to collateral attack and are void. As we read the current version of § 385 no mortgage, renewal or extension of a mortgage is allowed to be authorized for an amount greater than may be necessary to pay obligations (i.e. debts) which are already valid liens upon the real property at the time the order is granted or to pay debts which may by operation of law become liens. [11] Here, the agreed judgment and the judgment roll in this case unequivocally and facially show that the $58,000.00 mortgage validated by the approved settlement and the agreed judgment was not to pay a legally existing lien on the property or to pay a debt that by mere operation of law could become a lien. The record here facially shows the mortgage (in the form of the settlement and agreed judgment) was placed on the property to pay an obligation of someone, i.e. the Smoots, who were eventually determined to own no interest in the property subject to being mortgaged. In other words, the settlement and agreed judgment placed a mortgage on the property irrespective of whether or not it was finally determined that Harding owned the property and irrespective of whether or not the debt was that of someone (the Smoots) who might be determined  as actually finally determined in the previous Sooner Federal case  had no interest in the property that was subject to being mortgaged. [12] The settlement simply ignored whether there was actually any debt of the ward that was then a legally existing lien on the property or whether there was a debt which could have become a lien by operation of law. [13] In fact, the whole purpose of the settlement agreement and the agreed judgment was to simply ignore the issue of whether there was a legally existing lien against the property, something that could not be done in light of the strictures of § 385. In our view, in light of the limitations contained in § 385 on the power of courts to approve mortgages sought to be placed on the real property of incompetents by their guardians this was a case that could not be settled by validating Peoples' mortgage as a lien on the real property of Harding. [14] Thus, the approved settlement and the agreed judgment based upon it were void as being outside the authorization granted by § 385.