Court Opinion

ID: 9624088
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:50:25.826224+00
Date Added: 2024-06-11T10:04:36.194542
License: Public Domain

MR. JUSTICE ANGSTMAN:
(dissenting)
I think the trial judge properly exercised his discretion in setting aside the default judgment.
The judgment was entered on December 14, 1951. It quieted title to the lands in controversy in plaintiffs and adjudged that no other person or persons had any interest therein and specifically included the minerals and mineral rights.
The moving parties, who are the heirs of the only stockholder in the Stondall Land and Investment Company, did not learn of the entry of judgment until May 26, 1952. Under section 93-3905 they were required to move within six months after the entry of judgment. The estate of their ancestor had not yet been probated. This allegation appears in the affidavit in support of the motion to set aside the judgment: “That the will of Albert M. Stondall has been probated in the State of Wisconsin and that steps have been taken to have the same probated within the State of Montana, and that the same will be offered for probate as a foreign will within the State of Montana before the hearing on this motion.” The stock apparently had not yet been distributed to the heirs. They were in no position as yet to make a demand upon the officers of the corporation (if in fact there were any). True, the ownership of the shares of stock passed to their heirs upon the death of Albert M. Stondall, the sole stockholder of the land and investment company, subject of course to the claims of creditors. But as before stated they were in no position to make any demand upon the directors of the corporation in the capacity of stockholders. They were not yet stockholders.
*152I think the eonrt was right in setting aside the default and giving them an opportunity to protect their interest if and when they are adjudged to be the heirs of Albert Stondall and if the shares of stock pass to them as such heirs. It may be that at the proper time they will be required to amend their answer, but that does not deprive them of the right to open the way to defend the quiet title suit. Section 93-3905 was designed to prevent an injustice. Here if the judgment is allowed to stand the property of the land and investment company (being all the minerals reserved to it in the lands in question together with the use of the surface rights to remove the same) will be forfeited to plaintiffs, who in fact have no right, title or interest therein whatsoever and the rightful heirs of the only stockholder will be deprived of their mineral rights. I think they have done everything necessary to protect their interests and everything which they could do in the light of conditions as they existed when they asked to have the judgment set aside.
Thus far I have assumed that the corporation is a going concern. The record however would seem to indicate that it no longer operates a business and probably has no officers. In obtaining an order to serve summons on the secretary of state for the corporation one of plaintiffs counsel filed an affidavit in which it is stated: ‘ ‘ That after due and diligent search and inquiry in sundry places and of diverse and sundry persons, affiant is unable to learn or find the name of any one that is able to give affiant the name of any president, secretary, cashier, managing agent, or any business agent, principal director or anyone at all that may be connected with the said defendant Stondall Land and Investment Company, a corporation of the State of Minnesota, upon whom the service of summons in the foregoing action might be made.”
The complaint in naming the defendants says in part: “and all the successors, assigns, creditors, heirs of trustees of the above named corporation if it be terminated or expired * * *” All this would imply that the corporation long since ceased to do business and has no regular officers or directors and hence comes *153within the rule dispensing with the necessity for the stockholders to resort to the officers before protecting their rights in corporate property. 18 C.J.S., Corporations, section 564, page 1285; 13 Am. Jur., Corporations, section 464, page 508. But whether this be so or not the time to make a demand upon the officers of the corporation, if it be an ordinary going concern, is after the heirs of the sole stockholders themselves become stockholders. The fact that the Minnesota laws permit the stockholders to elect themselves as directors and thus control the corporation is no help to movants at this time since it is apparent that they are not yet stockholders.
The facts set forth in the answer are at least sufficient to show that there is a good and meritorious defense to the suit to quiet title and that the movants here are those beneficially interested in that defense. A party in interest who is prejudiced by the default judgment may apply to have it set aside even though he is not a party to the record. 49 C.J.S., Judgments, section 337, page 662; Annotation 135 A.L.R. 839.
The case of Hamill v. Great Northern Copper Co., 52 S.D. 271, 217 N.W. 195, denies the right of stockholders to move to set aside a default judgment against the corporation and holds that they must proceed by an independent suit in equity. In South Dakota however the courts relax this rule where a meeting of the board of directors may not be had, and permit stockholders under such circumstances to apply to the court for relief without first presenting to such board a request that it proceed to protect their interests. Frederick Milling Co., v. Frederick Farmers’ Alliance Co., 20 S.D. 335, 106 N.W. 298; and see Annotation 33 A.L.R. (2d) 492.
I think the district judge was right in setting aside the default judgment so that the movants may litigate their rights on the merits. If the facts are such that a demand must be made upon the officers before stockholders may assert the defense that still may be done and the answer amended accordingly and these procedural requirements fully complied with.
"I think the order appealed from should be affirmed.