Court Opinion

ID: 6737559
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:19:42.318734+00
Date Added: 2024-06-11T16:01:50.879050
License: Public Domain

Burke, J.
This case is also connected with the litigation commencing with Investors’ Syndicate v. Letts, 22 N. D. 452, 134 N. W. 317, and Beyer v. Investors’ Syndicate Co. 31 N. D. 247, 153 N. W. 476. It is also remotely connected with the case of Beyer v. Robinson, post, - 560, 156 N. W. 203, just handed down by this court. The facts have been so often stated by this court that we will do little more than mention them. The case at bar seeks to enjoin the Investors’ Syndicate from continuing the foreclosure of the $500 Dana mortgage given in ,1888 by the Letts’s upon the N.W.J of 16, 139-94. This quarter was; first homesteaded by Jeremiah Letts, who received a patent from the *547government about 1888. The same year he executed a mortgage thereon in favor of Mrs. Dana for $500, being the mortgage involved in the present action. About the year 1895 one Williams, a promoter, persuaded Letts and Beyer to organize a coal mining company to develop lignite mines upon this and three other quarter sections in the vicinity. After an ineffectual effort to organize, a corporation known as the North American Coal Mining Company was brought into existence with a capital stock of $50,000. The Letts’s were to contribute their equity in this quarter section and another tract of land and received $10,000 in stock in the new company. Beyer, this plaintiff, was to furnish money enough to purchase this Dana mortgage and other similar items to the amount of $3,440, and he also received $10,000 in stock. Williams, the promoter, received $30,000 in stock. In this manner Beyer became the owner by assignment of the $500 mortgage, and he, in turn, assigned it to the North American Coal Mining Company. In 1895 Williams, who was in control of the coal mining company, made a fraudulent transfer of this mortgage to the Investors’ Syndicate Company. The details of this fraudulent transfer are set forth in Investors’ Syndicate v. North American Coal Min. Co. 31 N. D. 259, 153 N. W. 472. It is sufficient to say that the action of Williams and his colleagues was illegal and ultra vires, and was so known to the Investors’ Syndicate Company at the time of the alleged transfer, and that the said assignment was void. The effect of that decision was to show that the title to this Dana mortgage was really in the North American Coal Mining Company. About the same time as this transfer, Beyers attempted to rescind his contract with the coal company and recover the Dana mortgage and other property, but was defeated in the United States court upon the grounds that he had gone into the deal with his eyes open. Shortly thereafter the Investors’ Syndicate started to foreclose the mortgage, and Beyer intervened, alleging that he — rather than the Investors’ Syndicate — was the owner of the mortgage. He was met with a plea of res judicata and defeated. See Investors’ Syndicate v. Letts, supra. It was, however, held that Beyer was not defending for the coal company or the minority stockholders. The sale under such foreclosure has never been made, and the present action is one to permanently enjoin the Investors’ Syndicate from asserting title to the mortgage and attempting to foreclose the same. The complaint is *548lengthy, — covering twenty-four pages of the printed abstract. As this case will have little value as a precedent, we will not attempt to reproduce it. It alleges all of the facts which we have heretofore mentioned, with the formal parts alleging the corporate existence, and further alleges that as the said litigation progressed it developed from time to time that Williams and the secretary of the Investors’ Syndicate were in collusion, “fraudulently contriving and designing to take over all the assets of said company.” The various acts of collusion and fraud are then set forth in minute detail. It is incidentally said: “As part of said pretended scheme and fraud an assignment was made of the said Dana mortgage to the said Investors’ Syndicate.” The facts regarding the foreclosure, and Béyer’s ineffectual effort to recover the same, are set forth. It is alleged that the officers and directors of the coal company have fraudulently refrained from taking any action to recover the said Dana mortgage, and that “none of the other stockholders of said corporation or any of the officers of' said corporation have at any time attempted to protect the rights of the North American Coal Mining Company, . . . but, on the contrary, the said Herbert Williams, L. B. Williams, and F. B. Nichols have aided and assisted the Investors’ Syndicate in carrying out the scheme and fraud hereintofore referred to.” Plaintiff further alleges that he has at all times endeavored to wind up the affairs of the said coal company and dispose of its property among its stockholders; that he has commenced an action to have himself reimbursed upon the assets of the coal company for moneys advanced by himself; that he has requested the officers and directors of the said mining company to bring suit, but they have at all times refused and neglected to do so. He further alleges that there have been no meetings of the directors of the said corporation, no proceedings had in any respect whatsoever to change the status of any of the parties since the beginning of the litigation, so that there are no innocent parties intervening. These and other matters of a similar nature are set forth, and a permanent injunction requested against the Investors’ Syndicate Company, taking further steps towards the foreclosure.
To this complaint there was interposed a demurrer by the Investors’ Syndicate Company, coal company, and the other parties defendant. It was sustained upon the the grounds that the said complaint failed to state a cause of action. The decision of the trial court was rendered and *549the briefs in the present action filed before the decision of the case of Investors’ Syndicate Co. v. North American Coal Min. Co. supra. For this reason the briefs cover many points decided by said opinion. Therefore, we will not, of course, discuss all of the propositions covered by the briefs.
1. Respondent’s first argument is that no party may impeach the judgment by an action in equity as a matter of right, or upon the grounds only that the judgment was wrong. It is complained that Beyer is a stranger to the foreclosure proceedings and therefore should not be allowed to attack them. A complete answer to this contention is that Beyer has alleged that he is a stockholder in the company which owns this mortgage, and has requested the officers and directors to bring a suit to protect its assets, and has himself brought a suit to impound the assets and to give him a lien thereon for the money advanced by him. He has, therefore, sufficient interest to maintain this suit.
2. It is further alleged that defendant was a party to the foreclosure suit as an intervener, and that the decision of the court is res judicata. Two answers can be made to this. Plaintiff in the first action represented merely himself. In this action he is representing the minority stockholders. Besides, the plea of res judicata should be raised by answer, and not by demurrer, unless the fact and the nature of the prior adjudication appear on the face of the complaint.
3. Respondent further says that a party seeking, relief from a judgment must plead an available defense, in addition to pleading an excuse for not interposing such defense at the proper time. In answer to this it can be said that a sufficient excuse is pleaded. Plaintiff’s complaint shows that he did not leam of the various acts of fraud, or all of them at least, until shortly before the commencement of the present action.. He does not show that he knew all of those defenses at the time of the former action. The merits of his defense are that he is an interested minority stockholder of the company which owns this mortgage, and that the Investors’ Syndicate Company is asserting hostile ownership.
4. Respondent further states that a party seeking relief from a judgment must plead sufficient excuse for his failure to litigate his defenses upon its merits in the original action in addition to pleading such defense. We believe the complaint sets forth such' excuse. The plaintiff; *550as is shown in the North Dakota case, at 31 N. D. 259, did not leam of his defense until too late for the former action.
5. Respondent further says that a party seeking relief from a judgment must prove the existence of fraud or collusion between his party and the opposing party in addition to pleading an available défense and no legal remedy. We have said enough already to show that the complaint does plead the existence of fraud and collusion, and, in fact, this question is settled by the case in 31 N. D. 259, just mentioned.
6. Respondent further asserts that plaintiff has not shown an absence of a legal remedy. It is insisted that plaintiff’s remedy was by timely motion to open up the judgment in the foreclosure, suit, and that, if he has neglected this, he is debarred from equitable relief. To this, the same answer is made. The pleadings show that the fraud was not discovered in time either to interpose it in the former action, or to use it as a basis for opening up the judgment.
7. Lastly, it is contended that all of the matters requested to be plead in a complaint and an equity action which impeaches a judgment, must be pleaded with certainty and particularity. It is pointed out that the complaint does not show the date of the former trial, nor the entry of the original judgment, nor the day of the discovery of the fraud. We do not believe there is merit in any of those objections. All of those dates were known to these defendants, and they are not prejudiced by their omission. The court knows all of the dates and can take judicial cognizance thereof. The complaint alleges that the fraud was not discovered until after the former trial and after the day for application for relief had past. We rdalize that the omission of the text of the complaint from this opinion renders the opinion of little use as a matter of public precedent, but the trial court who conducts the next trial will have it before him in full. It is sufficient to say that, in our opinion, it states a good cause of action. As authority for our decision we cite: Pom. Eq. Jur. § 1095; Thomp. Corp. 2d ed. § 4568; 2 Machen, Corp. § 1179; Kley v. Healy, 127 N. Y. 555, 28 N. E. 593; Continental Securities Co. v. Belmont, 206 N. Y. 12, 51 L.R.A.(N.S.) 112, 99 N. E. 138, Ann. Cas. 1914A, 777; Pollitz v. Wabash R. Co. 207 N. Y. 113, 100 N. E. 721; San Diego, O. T. & P. B. R. Co. v. Pacific Beach Co. 112 Cal. 55, 33 L.R.A. 788, 44 Pac. 333; Jacobson v. Brooklyn Lumber Co. 184 N. Y. 152, 76 N. E. 1075; Reed v. Hollingsworth, 157 Iowa, *55194, 135 N. W. 37; Strong v. Repide, 53 L. ed. 853, and note (213 U. S. 419, 29 Sup. Ct. Rep. 521). And the eases cited by ns in Investors’ Syndicate v. North American Coal Min. Co. 31 N. D. 259, 153 N. W. 472. The judgment of the trial court is reversed.