Court Opinion

ID: 6655286
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:57:19.06182+00
Date Added: 2024-06-11T15:59:52.965977
License: Public Domain

The following opinion on rehearing was filed January 21; 1904. Former judgment vacated} and decree of district court reversed:
Holcomb, C. J.
This cause, now submitted on rehearing, comes here by appeal from a judgment of the district court for Douglas county dismissing, for want of equity, plaintiff’s suit begun in that court. For former opinion, see Klabunde v. Byron Reed Co., ante, p. 120. By the petition filed in the trial court, it is sought to obtain relief from a decree in foreclosure proceedings establishing in the mortgagee, plaintiff in that action, a lien on the real estate covered by the mortgage superior to the right and interest of the plaintiff, appellant, defendant in the foreclosure proceedings, who claims under the provisions of a will made by his deceased wife, who in her lifetime was the owner in fee of said premises. The pleadings are of too great length to be here reproduced. The petition or bill in equity is very lengthy, containing much of repetition, by way of argument, and matters properly to be introduced as evidence. The sub; stance, however, of plaintiff’s cause of action is to the purport and effect that by provisions of the will, under which he claims, he was the beneficiary of a trust estate in the real property devised by his wife for the purpose and with the object of providing for his support and maintenance during the remainder of his life, which was a first and paramount charge and lien on the real estate covered by the mortgage, under which the defendant company claimed and established its right in the foreclosure proceedings, theretofore by it instituted; that, in the foreclosure action, he was prevented from presenting a defense and deprived of the opportunity of doing so and of asserting his superior right and interest in and to such real estate, because of the wrongful action and conduct of the plaintiff in that action, its officers, agents and attorney, and that by such action and conduct, a fraud was perpetrated on him which *128resulted in the loss of substantial and valuable rights, which otherwise he would have shown himself entitled to. He prayed to have the former decree vacated and set aside; that he might be permitted to plead further in that action; that a new trial be had, and that a decree be entered establishing his equitable interest in and to the real estate, as a charge thereon superior to that of the plaintiff and to any other lien appearing as a charge on such real estate. The answer traverses the allegations of the bill wherein a prior lien is asserted and especially those portions thereof asserting fraud as a ground for vacating the prior decree and granting a new hearing in the action. By the appeal, the whole record is brought to this court for trial de novo■, and in the determination of the issues of fact, we are required to reach an independent conclusion from the evidence, uninfluenced by the finding and judgment rendered in the trial court. Sec. 681a- of the code. Whether under the section cited, we should grre any weight to the findings of the trial court, we will not stop here to consider as that question has not been presented or discussed and we feel able to dispose of the case to our satisfaction Avithout determining to a nicety such question at this time.
At the commencement of the trial of the present suit in the lower court, the plaintiff sought, 'by competent evidence, to show that .he, as a defendant in the foreclosure suit, had a substantial and meritorious defense to the plaintiff’s cause of action as pleaded in its petition and had a superior lien on the land involved, and was entitled to a decree establishing his precedent claim and interest therein, but to such offer the defendant company interposed the general objection that such proffered testimony Avas irrelevant, incompetent and immaterial under the issues raised.
The court thereupon ruled as follows:
“I am going to limit the plaintiff’s testimony to the transactions that took place betAveen the Byron Reed Company and the parties after the commencement of the foreclosure suit. I am sitting here now to know, whether or *129not I am to set aside the decree of foreclosure that was rendered in that case. If that is set aside, then the defendant in that action will be permitted to file his answer and make his defense to the foreclosure suit and to these mortgages. I will not go into that question of defense in this action, so I will confine you in your proof to whát took place from and after the commencement of the foreclosure suit.”
Counsel say in their brief in this court after quoting the foregoing ruling:
“So that this case, the one now before the court, started out upon the proper theory, that is, that the Question to be determined was whether or not the decree in the foreclosure suit Avas fraudulently obtained. If it was, then the court would set it aside. If it Avas set aside, then Avhatever defense might be made to the foreclosure could be made in that action.”
Having been successful in preventing the plaintiff from establishing the fact, that he had a meritorious defense in the foreclosure suit, and having secured the trial court to adopt the theory, that the only question to be tried was, Avhether in equity and good conscience the plaintiff ought to have a new trial because of the acts complained of, and that issue being the- only one tried, we feel at liberty to adopt the same theory in disposing of this appeal, Avitliout at all committing ourselves to the rule that,a party Avho seeks to be relieved against a judgment or decree need not plead and prove a good defense thereto, and therefore, for the purpose of this case, we will assume that the plaintiff has a valid defense and a good cause of action for affirmative relief which gives him precedence over the defendant, who claims a lien by virtue of the mortgage pleaded in its petition in the foreclosure suit.
The character of the suit, the.nature of the relief prayed for and the facts upon which those are based appeal with peculiar force to the conscience of a court of equity. The plaintiff is an aged German of more than seventy years, illiterate, who speaks and understands the English lan*130guage most imperfectly. He requires the assistance of an interpreter when conversing with those speaking the English language, when giving his testimony in court or when engaged in any transaction where that language is used and when the comprehension thereof is essential to intelligent action thereon. He apparently has no very clear conception of the ordinary business transactions, other than those of the most simple kind, or of the methods by which controversies of a legal character are conducted and litigated in the courts. He and his wife were occupying .the real estate over which the controversy arises, as a homestead, the legal title being in her name. At her demise, the land was devised to a son (August Klabunde) with the following provisions incorporated in the will for the support and maintenance of her surviving husband and under which he claims whatever equitable interest and right he may have in and to the real estate over which the parties are litigating. After the words of devise to the son it is provided:
“With the following condition that my son August Klabunde shall give to Ernest Klabunde, my husband, a good home with board and $150 per year, during the natural term of Ernest Klabunde’s life; and this shall be a mortgage upon above described premises, nor shall my son August Klabunde have a right to sell the within described real estate without the consent of my husband, Ernest Klabunde.”
The mortgage under which the defendant claims was executed subsequently to the probating and allowance of the testamentary instrument from which we have just quoted. The evidence preserved by bill of exceptions is quite voluminous, covering some 335 typewritten pages. We can not here reproduce it or such parts thereof as Avould give an intelligent understanding of the tendency of the whole, without extending this opinion to an unwarrantable length, and must content ourselves by stating the inferences we deem properly drawn therefrom and our conclusions of fact, from a careful consideration of the whole. The son *131and the father were not able, it appears from the record, to live peaceably together and the plaintiff had sought a home elsewhere. The defendant, the Byron Reed Company, began foreclosure proceedings on its mortgage, making August Klabunde, his wife, Ernest Klabunde, the plaintiff herein, and others, defendants. After the institution of the foreclosure suit, the plaintiff, in company with a person acting as interpreter, went to the office of the defendant company, for the purpose of securing information regarding the suit, its nature and purpose; and it is testified to by him and insisted by his present counsel, that by the action, promised, and. agreement of the defendant company and its attorney, he was misled to his detriment and prejudiced and failed, because thereof, to malee his defense in said action and establish his interest in the land under the provisions of the will as a first charge and lien thereon. It is the contention of the plaintiff that the defendant, through its officers and agents, promised that he should have from the proceeds of a sale of the land $2,800 to pay for his support and maintenance, which he could draw annually in stated amounts from the court where the suit was pending; and that he would thereby and by such arrangement, receive what he was entitled to under the will. It is also testified and urged upon us as a warrantable inference from the evidence, that he was given to understand that the interests of the Byron Reed Company and himself Avere identical, and that it would be advisable for them to cooperate together, proceed with the suit and sell the land in order to deprive the son, August Klabunde, who had refused to provide for the father according to the terms of the Avill, of whatever interest he might have in the land and thus dispossess him and realize from a sale of the land a sufficient sum to meet the demands of both; that from that time forward Ernest Klabunde, in pursuance of such an agreement and understanding, acquiesced in and submitted to such further proceedings as resulted in a trial and the establishment by decree of court of the mortgage lien of the defendant and another prior thereto, as being superior *132to the defendant’s trust estate under the will, and the sale of the land in pursuance of a decree of court for but little more than enough to satisfy such prior liens, leaving to the plaintiff but a very small sum, scarcely enough to pay his attorneys, for the satisfaction of his claim under ihe will. The defendant vigorously challenges the truth of the narrative as related by the plaintiff and it is but just to say, that the version of the defendant, of the several transactions had, is more nearly the correct one; nevertheless, as will be seen by a further discussion, we think the plaintiff without fault on his part was led into a grievons error and suffered the loss of substantial rights from which equity ought to relieve him. It is true, and it is admitted on all hands, that after the foreclosure suit was instituted, the plaintiff with an interpreter, as has been stated, visited the office of the defendant company and there conversed with those in its employ about the suit and the proper course for him to pursue in relation thereto ; that the attorney for the defendant company was called in for his advice and counsel, and that at the request of the company or its attorney, the plaintiff went to the office of the attorney, where an answer was drawn, in which the mortgages pleaded in the petition of tire defendant company in the foreclosure action were admitted to be first and prior liens, and, upon proper averments it was asked that the plaintiff’s equitable interest, by virtue of the will, be fixed and established by the court as a junior lien on the mortgaged premises. The answer thus prepared and the conference leading up to it, we doubt not, are the action and conversation referred to by the plaintiff, as an agreement to pay him '$2,800 and the making of a contract to that- effect which he had signed; nor have we any doubt, from the representations made to the plaintiff and from his understanding thereof, he believed that his lien would be established by decree of court, that he would get the full amount which it was admitted or agreed he should have under the terms of the will, and that it would be paid to him annually at the court house. This was the agreement made *133with, the defendant as understood and testified to by the plaintiff. Having regard to plaintiff’s expectancy of life and estimating his board to be worth $100 per year in cash, the present value of the charge upon the real estate, including the $150 cash annual payments, was, as found by Hie court, the sum of $2,800. While the defendant and its attorney were arranging with him to obtain a decree of court awarding him $2,800 to be paid out of the proceeds of the land and by the clerk of the court, provided such amount could be realized ovér and above the prior mortgage liens, the plaintiff himself understood and believed that such an amount would be paid him absolutely and without the contingency of the land being of sufficient value to satisfy, first, the mortgage liens aggregating more than $3,000. This difference as to the order of payment, we conceive to be, in a large measure, the explanation of the seeming contradiction in the testimony introduced in the case. It is shown, quite conclusively, that the plaintiff was relying upon the statement, that he would receive money from the court house and that he was inquiring about it, was expecting it and was disappointed in its not being forthcoming. In this connection we quote briefly an excerpt from the testimony of defendant’s attorney as. to what transpired when he drafted the answer of the plaintiff in the foreclosure suit. He says:
A. I explained to him just how that he could realize on the will.
Q. And you told him that money would be paid into court and he could get some there each year until it was all gone?
A. I can repeat again what I told him.
Q. I am asking you.
A. I told him that at the time of the trial, now, it would be determined how much was due him from August by reason of the provision of the will wherein he was to give him, Ernest, $150 every year and provide him a home, which we considered worth $100 •? year — that would be $250 a year. Now then it would be determined by the *134court what that amount Avould be, at the time of the trial, and then, that the property Avould be sold and he would have a lien on it for that amount, and if the land sold for anything, why he would get that money — whatever the court found for him — and that if it sold for any more than enough to pay that — pay up all and pay that off-
Q. What?
A. The amount that would be found by the decree in his favor by reason of the construction of the will — his lien on the land. If there was any surplus money above that, that it would lay over there in the court, by the terms of the decree that he could go in there every year and get $250.
Q. That Avas on June 29, 1896?
A. That was what I explained to him when I drew up . the answer.
The plaintiff was laboring under the impression that his interests and the interests, of the Byron Reed Company Avere harmonious, when in fact they were antagonistic. He relied upon the advice of the company’s attorney and employed him to represent him in the case under that belief. Although it is testified that his answer was explained to him before he signed it, in which the mortgages were admitted to be prior, it is manifest that he did not understand the legal effect of such admission nor that the admissions as made jeoparded his rights under the provisions of the will. The attorney, acting apparently upon the conviction that there was no real conflict of interests between plaintiff and defendant, undertook to represent both parties and pursued the course herein indicated. It is true that later on, other counsel was employed by the plaintiff, Avho could speak the German language, but this employment, it appears, was only for the purpose of contesting a third mortgage executed by the son, August Klabunde, and his wife, on the real estate devised by the will and no effort was made to raise any issue as to priority of right between the defendant company and the plaintiff. The plaintiff, we are satisfied, through the entire litigation and until after *135a sale of the premises, acted under the belief; formed at the beginning of the litigation from the transactions referred to, and with the expectation that as between him and the defendant company, his interests in the premises would be protected and that he would receive all he claimed to be due him under the provision of the will. At the suggestion if not solicitation of the defendant’s agents, he counseled with its attorney and acted on his advice. There is evidence positive in the record that the company sought to yoke its interest in the litigation with that of the plaintiff, and that both of them should make common cause against the son who, it is evident, ivas not executing the trust imposed on him by the terms of the will, of which he was the principal beneficiary.
It is obvious that the plaintiff had no clear conception of the clashing of interest as between him and the defendant; that he regarded himself as an ally and not as an antagonist, and that this status was the result of the conversation and conduct and encouragement of the defendant’s agents and was maintained until the end of the suit.
Assuming, as Ave do for the purpose of this case, that the plaintiff had a superior equity in the land, devised by the Avill, Avhich was coA'ored by the subsequent mortgages, he is not, in our judgment, guilty of such neglect as would be inexcusable because his demand for relief avus not properly presented for adjudication at the former trial. . It seems to us quite clear that lie was led astray by the negotiations first had between himself and the agents of the defendant company, at the time he sought information regarding the case and Avhen his first answer was prepared and filed, and that the Avrong course then adopted, for Avhich, we are of the. opinion, lie is to be excused, under the circumstances disclosed by the record, attended his after movements and conduct throughout the entire course of the litigation. While Avhat AAras said and done was not in its nature a compromise of differences, it partakes somewhat of the character of a compromise. The plaintiff was led to believe, it may be Avithout intentional wrong by the *136defendant or its attorney, that both he and the company were working to attain a common object, that their interests were mutual; that it was advisable for them to thus work together to dispossess the son, who was in opposition to both of them in their endeavor to have their respective rights in the land adjudicated, and that his interests under the will would be amply and fully protected without loss or reduction of the amount believed to be due him. He was thus misled greatly to his injury and when, too late for rectification in that litigation, he discovered that, while having a decree for the payment out of the land of all that which his deceased wife had provided for his support in his declining years, such decree was but a shadow and without substance, because the land itself had been wrested away from him under other claims adjudged to be prior in time and right to the one accruing in his favor under the terms of the -will.
We do not say there has been any action on the part of defendant or for which it should be held responsible, which worked an actual fraud on the plaintiffs rights. It is not necessary that we should, nor do we think we would be warranted in so saying. There is, however, sufficient in the record to warrant the' inference that he has suffered a wrong which equity will relieve against. There is at least constructive fraud. The plaintiff was lulled into a feeling of ease and safety, because of what, he understood and what he was justified in believing was the promise and agreement of the defendant and because of the information received from its counsel, who undertook to represent him also in the litigation. Their, interests were in fact conflicting and antagonistic, but from the explanation made to him, he believed them to be mutual and harmonious, and trusted both the defendant and its attorney for the safeguarding of his rights. He did not comprehend that the trust that he sought to impress on the real estate was endangered by the claims of the defendant company. He was satisfied from what had been told him that he would suffer nothing by having his case conducted by the same *137attorney having in charge the defendant’s litigation. Therefore he inquired no further. But if his theory in the present case is correct, then a most substantial and valuable right to him, at his age in life, was lost because an issue was not made as to the superiority of his rights over those of the defendant, and for not raising this issue, under the facts and circumstances in this case, Ave feel quite confident he is excusable and equity may properly intervene and grant relief against a decree thus obtained — a decree cutting off all his rights in the land, until and unless the amounts due on the two mortgages, hereinbefore mentioned, were first satisfied. The foUoAving authorities, bearing more or less directly on the question we have been discussing, illustrate the rule as to when equity Avill relieve against judgments obtained by fraud, actual or constructive, and on the ground of excusable neglect, and which, in the main, support the conclusion we have reached in the case at bar: Nord v. Marty, 56 Ind. 531; United States v. Throckmorton, 98 U. S. 61; Payton v. McQuown, 97 Ky. 757, 53 Am. St. Rep. 437, and notes to the same; Arrington v. Arrington, 116 N. Car. 170; Pomeroy, Equity Jurisprudence, page 1393, note 1 to section 960; 2 Freeman, Judgments, sec. 492.
While we have assumed,' for the purposes of this case, that the plaintiff’s equities in the land involved in the litigation were superior to those of the defendant company, it is of course not determined in this action that such is the case, either in law or in fact. The rights of the respective parties in this respect can be determined in the further litigation of the cause. All that is adjudged here is, that the plaintiff should be given an opportunity in the foreclosure suit to present his defense and set forth his alleged rights, by virtue of the provisions of the will, as being prior and superior to those of the defendant company, under its mortgages, and have the matter properly litigated and determined upon such issue
The former judgment of affirmance is vacated. The decree of the district court, dismissing the plaintiff’s bill, *138is reversed, and the decree entered in the foreclosure suit is vacated and set aside as prayed for in the plaintiff’s, petition, a new hearing allowed, and this cause is remanded for further proceedngs.
Reversed.