Court Opinion

ID: 883653
Source: CourtListenerOpinion
Date Created: 2013-06-05 02:33:09.591177+00
Date Added: 2024-06-11T09:50:50.043670
License: Public Domain

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
                                              Decided:   June 15, 1995
Filed:    JUN15 13%
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.           -r 860 P.Zd at 147.
                         Fonk
        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.