West Virginia Oil & Gas Co. v. George E. Breece Lbr. Co.

• Decision Date: 04 June 1954
• Docket Number: No. 14960.,14960.
• Citation: 213 F.2d 702
• Parties: WEST VIRGINIA OIL & GAS CO., Inc. v. GEORGE E. BREECE LUMBER CO., Inc. et al.
• Court: U.S. Court of Appeals — Fifth Circuit

213 F.2d 702 (1954)

WEST VIRGINIA OIL & GAS CO., Inc. v. GEORGE E. BREECE LUMBER CO., Inc. et al.

No. 14960.

United States Court of Appeals Fifth Circuit.

June 4, 1954.

George M. Snellings, Jr., James H. Trousdale, Jr., Henry Bernstein, Jr., and F. G. Hudson, Jr., Monroe, La., for appellant.

A. B. Freyer, Sam A. Freyer, Shreveport, La., for appellees.

Before HUTCHESON, Chief Judge, HOLMES, Circuit Judge, and WRIGHT, District Judge.

WRIGHT, District Judge.

Plaintiff, West Virginia Oil & Gas Co., Inc., a Louisiana corporation, filed a complaint in the United States District Court for the Western District of Louisiana by which it seeks to correct certain errors alleged to exist in a compromise agreement and a judgment based thereon entered by that court in 1945. The errors relate wholly to descriptions of real estate. The District Court sustained a motion to dismiss on the ground that indispensable parties are not before the court and could not be without ousting its jurisdiction.

From the allegations of the complaint which for the purpose of the motion to dismiss must be taken as true, it appears that in 1944 the defendants herein brought a complaint in the United States District Court for the Western District of Louisiana against the plaintiff herein, West Virginia Oil & Gas Company, Inc., seeking the cancellation of a mineral lease covering land situated mainly in Ouachita Parish, Louisiana. Thereafter, in order to settle the controversy, parties to that suit entered into a compromise agreement which was made part of the record, and, based thereon, the court rendered a judgment which terminated the litigation. The complaint further alleges that by mistake and contrary to the intention of the parties, the compromise agreement, in dividing the leasehold property between the parties, gave certain gas producing acreage under the lease to the defendants herein instead of to the plaintiff, and that this mistake was incorporated in the judgment. The complaint also alleges that the parties thereto since 1945, when the judgment was entered, have lived under the judgment and exercised rights under the judgment, not as adjudicated therein but as intended by the parties. It alleges further that the mistake was not disclosed to either of the parties herein until late 1951 or early 1952 when new drilling activity aroused new interest in the leasehold area. At that time, the defendants herein admitted that the plaintiff, West Virginia Oil & Gas Company, Inc., was morally entitled to have the mistake in the former judgment corrected but refused to join in a correction thereof, stating that "more than one year had elapsed since the rendition of the decree."

The defendants herein moved to dismiss on the ground that the judgment sought to be corrected and reformed was rendered at a term of the court since terminated, that the complaint fails to state a claim for the reason that the alleged errors in the compromise agreement and judgment are not legally sufficient to form a basis for correcting or reforming a judgment, and that indispensable parties, to whom interests in the property covered by the former decree have been since transferred by the defendants herein, are not joined in this action, and cannot be joined without ousting the jurisdiction of the court, for the reason that some of them are domiciled in Louisiana, the same state under whose laws the plaintiff corporation is chartered.

Both sides agree that the disposition of this case involves an interpretation of Rule 60 of the Federal Rules of Civil Procedure, 28 U.S.C.A. Plaintiff contends that the mistake in the former judgment was a clerical one and, under Rule 60(a), such mistake may be corrected by the court at any time. Defendants, on the other hand, argue that the mistake in the former decree was one of substance, therefore not clerical, and comes under the kind of mistake covered in Rule 60(b)(1) which cannot be corrected more than one year after the judgment was entered. The defendants say, further, that the plaintiff is foreclosed under Rule 60(b) from bringing an independent action to reform the judgment for the reason that an independent action to reform a judgment cannot be predicated upon the mistake of a party, and, in any event, since interests in the property in suit have been acquired by persons indispensable to this litigation whose presence herein would oust the jurisdiction of the court, plaintiff's action must fail.

This case presents a clash of two principles of judicial administration founded on sound public policy, namely, that litigation must finally and definitely terminate within a reasonable time and that justice must be done unto the parties. In Southern Pacific Railroad Co. v. United States, 168 U.S. 1, at page 48, 18 S.Ct. 18, at page 27, 42 L.Ed. 355, Mr. Justice Harlan wrote:

"The general principle announced in numerous cases is that a right, question, or fact distinctly put in issue, and directly determined by a court of competent jurisdiction * * * cannot be disputed in a subsequent suit between the same parties or their privies; * * *. This general rule is demanded by the very object for which civil courts have been established, which is to secure the peace and repose of society by the settlement of matters capable of judicial determination. Its enforcement is essential to the maintenance of social order; for the aid of judicial tribunals would not be invoked for the vindication of rights of person and property if, as between parties and their privies, conclusiveness did not attend the judgments of such tribunals in respect of all matters properly put in issue, and actually determined by them."

On the other hand, the desire of courts to repair an injustice wrought by a judgment will overcome the necessity for finality where it is against conscience to execute that judgment and where that judgment was rendered without fault or neglect on the part of the party seeking to reform it. Marine Insurance Company of Alexandria v. Hodgson, 7 Cranch 332, 336, 11 U.S. 332, 336, 3 L.Ed. 362.

Before the advent of the Federal Rules and from time immemorial, a judgment could not be corrected or reformed after the term of court had expired. In order to circumvent the rigor of this rule, courts of equity in their resourcefulness historically have recognized various types of writs and bills granting relief from judgments unconscionably obtained, including writs of coram nobis, coram vobis, audita querela, bills of review, bills in the nature of a bill of review, and the independent action in equity. As a result, the whole subject of ancillary remedies for relief from final judgments became "shrouded in ancient lore and mystery." In an effort to cut a path through this "ancient lore and mystery," the Federal Rules in Rule 60 set up a procedure for seeking relief from final judgments. Rule 60(a) provides that clerical mistakes may be corrected at any time by motion in the proceeding in which the judgment was rendered, and 60(b)¹ outlines six additional reasons for relief from a final judgment which may be obtained on motion in the same proceeding. With reference to the first three reasons, a time limit of one year is prescribed. However, it is provided further, that, "This rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding * * *, or to set aside a judgment for fraud upon the court." The rule then abolishes all the ancient writs.

Applying Rule 60 to the case before us, it is clear at once, contrary to plaintiff's contention, that the error in the former judgment is not a clerical one. A clerical error is generally defined as an error made by a clerk in transcribing or otherwise. Marsh v. Nichols, Shepard and Company, 128 U.S. 605, 9 S.Ct. 168, 32 L.Ed. 538. We are not concerned here with mere error in transcription. A study of the allegations of plaintiff's complaint shows that substantial interest in gas producing property has allegedy been decreed to the wrong litigant. It shows further that the correction is asked, not because the judgment does not embody what the court intended and the record justified, but because it does not embody what the parties intended in making up the record. Such a mistake is one of substance which should not be corrected without a substantial showing of equitable right therefor. Hiawassee Lumber Co. v. United States, 4 Cir., 64 F.2d 417.

From a perusal of the six reasons under Rule 60(b) for relief from a final judgment, we find that the relief sought by the plaintiff herein comes under 60 (b)(1) relating to mistake, inadvertence, surprise, or excusable neglect. However, since Rule 60(b)...