Director of Revenue, State of Colorado v. United States, 9640.

• Decision Date: 01 April 1968
• Docket Number: No. 9640.,9640.
• Citation: 392 F.2d 307
• Parties: DIRECTOR OF REVENUE, STATE OF COLORADO, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

392 F.2d 307 (1968)

DIRECTOR OF REVENUE, STATE OF COLORADO, Appellant, v. UNITED STATES of America, Appellee.

No. 9640.

United States Court of Appeals Tenth Circuit.

April 1, 1968.

John E. Bush, Denver, Colo., (Duke W. Dunbar and Frank E. Hickey, Denver, Colo., with him on brief), for appellant.

William Kanter, Washington, D. C. (Edwin L. Weisl, Jr., New York City, Lawrence M. Henry, Denver, Colo., and John C. Eldridge, Washington, D. C., with him on brief), for appellee.

Before MURRAH, Chief Judge, and LEWIS and HILL, Circuit Judges.

MURRAH, Chief Judge.

In this suit by the United States to foreclose a Small Business Administration chattel mortgage, the only contest is between the United States and the State of Colorado over lien priorities. The state appeals from the judgment adjudicating the priorities in favor of the United States. The United States raises the question of timeliness of the appeal, but invites us to ignore it for decision on the merits. Of course, we cannot do that, for if the appeal is untimely, jurisdiction is lacking and that ends the matter. The question is not free from doubt, but we sustain the appeal.

The essential facts are these: The case was tried to the court in three stages. Pursuant to a hearing in January, 1967, the court entered an order adjudging lien priorities in favor of the United States, but entered no final order. A definitive pretrial order on the foreclosure issues only was thereafter entered. Later and on March 7, the state moved for rehearing or for new trial on the court's assumption of jurisdiction and adjudication of lien priorities. Without ruling on the motion and pursuant to trial on the pretrial order issues, the court entered final judgment on March 17. On April 4, the court entered an order effective March 31 denying the state's motion for rehearing or for new trial on jurisdiction and lien priorities. Notice of appeal was filed May 29, more than sixty days from the final judgment of March 17, but less than sixty days from the order denying the motion for rehearing or new trial. The decisive question is whether a motion for rehearing filed prior to the entry of the final judgment can be said to relate to such judgment; and, if so, whether a final judgment inconsistent with the motion operates to effectively deny the motion by necessary implication thus depriving the court of the power to reconsider the motion at a later date.

Rule 59(b), F.R.Civ.P., expressly provides that "A motion for a new trial shall be served not later than 10 days after the entry of the judgment." And, Rule 73(a) expressly provides that the running of the time for appeal is terminated by timely motion under Rule 59. But, the rules must be liberally construed to effectuate the ends of justice and to promote the consideration of appeals on the merits. Giving effect to the spirit of these rules, we have said that "Where the court has power to further review its judgment, it cannot be said that the judgment is final as long as it is being considered by the court. It makes no difference whether the attention of the court is directed to a further consideration of its judgment by a pleading filed as a matter of right, or by a pleading which has no standing in the case as a matter of law, or springs from the court itself. The fact that the court expresses an intent to further consider the judgment prevents its finality." Suggs v. Mutual Ben. Health & Accident Ass'n, 10 Cir., 115 F.2d 80.

Our case is very much like Partridge v. Presley, 88 U.S.App.D.C. 298, 189 F.2d 645. In that case, as here, the motion for rehearing or new trial preceded the entry of the judgment pursuant to the court's oral announcement. Also as here, the motion for new trial was formally considered and overruled after the entry of judgment. Distinguishing these facts from the Second Circuit case of Mosier v. Federal Reserve Bank of New York, 132 F.2d 710,¹ the Partridge court reasoned that the order overruling the premature motion for rehearing, entered after the final judgment, indicated that the court's final judgment had not consciously disposed of the matter raised by the premature motion. Thus, "instead of being unnecessary, as was the subsequent order in the Mosier case, the order * * * was the first and only disposition of the pending motion." Partridge v. Presley, supra, 189 F.2d 647. The Fifth Circuit has followed this reasoning to the effect that a motion for new trial filed before the entry of the judgment, not disposed of either expressly or by necessary implication by the final judgment, operates to terminate the running of the time for taking an appeal although it was not formally overruled until after the judgment. See United States v. Pan American World Airways, Inc., 299 F.2d 74.²

Our attention is directed to Miller v. Shell Oil Co., 10 Cir., 345 F.2d 891, in which we declined to give effect to a "Motion for Reconsideration" filed before the entry of the final judgment on the grounds that the order of dismissal with such motion pending reflected the overruling of the motion "regardless of what action was later taken by the court upon it." We are also cited the Ninth Circuit case of Agostino, et al. v. Ellamar Packing Co., 191 F.2d 576, 13 Alaska 34, wherein the court refused to give effect to a "Motion for Reconsideration" filed prior to final judgment, and the Eighth Circuit case of Cohen v. Curtis Publishing Company, 333 F.2d 974, wherein the court, quoting from Agostino and Mosier, refused to consider a motion to amend an order for summary judgment entered before the judgment. We think, however, that each of these cases is distinguishable upon its own peculiar facts. In Miller the court was confronted with a "confusing record" of numerous pleadings filed both before and after the final judgment. The motion for reconsideration related back and was intended to be supplementary to the appellant's reply to a motion to dismiss. It did not purport to request a reconsideration of the final order of dismissal. In ruling that the motion had no efficacy, we did not consider, hence could not have disagreed with the established case law flowing from Partridge v. Presley, supra. Similarly, in Agostino, the court (assuming that a motion for new trial may be filed prior to entry of judgment) was of the opinion that under the facts of the case the motion to reconsider "was in no sense a motion for new trial or a motion to amend the findings of fact, the denial of which would extend the time for appeal." Id. 191 F.2d 577. The Cohen court treated its motion as directed to deletion of the word "wrongfully" from the judgment and held that the "motion * * * presented no * * * substantial issue of fact or law * * * as would justify this court, in the interest of justice, overlooking * * * disregard of the time rule." Id. 333 F.2d 978.

Here the motion for rehearing did relate back to the prior adjudication of lien priorities and the final judgment of the court did reaffirm the prior adjudication. The final judgment thus had the effect of overruling the motion in the sense at least that it reaffirmed the interlocutory adjudication. But, it is also too clear for doubt that the trial court considered the motion for rehearing as going to its final judgment and raising a substantial issue of fact and law on the question of lien priorities. We can see no good reason for saying that in these circumstances the court was powerless to so consider the motion as timely under Rule 59(b).

Background facts are necessary to an understanding of the remaining jurisdictional issues as well as whatever merit there may be to the substantive issues asserted here. Ray J. Williams and his wife Betsy owned and operated the Puebloan Motor Hotel in Pueblo, Colorado. In 1964 they borrowed $350,000 from the Small Business Administration for which they executed a promissory note secured by a chattel mortgage upon personal property used in connection with the business. In addition and as further security for the promissory note, the Williamses executed a Deed of Trust for the benefit of the SBA covering the real property of the motel. All of these instruments were placed of record on May 12, 1964. Thereafter, in April, 1965, the Williamses sold the Puebloan to C. G. & R. Investments, a corporation, who assumed and agreed to pay the unpaid balance due on the promissory note. C. G. & R. failed to withhold, earmark or remit the Colorado sales and withholding taxes due for late 1965 and early 1966, and after proper demand, the Director of Revenue of the State of Colorado procured a warrant for distraint against the motel personal property. On April 14, 1966, pursuant to warrant, the Director padlocked the restaurant and bar of the motel, apparently as constructive seizure of the personal property therein. Meanwhile, the payments on the SBA loan became delinquent, and on April 20, 1966, this action by the United States in behalf of the SBA was instituted seeking judgment on the unpaid balance and a decree of foreclosure in satisfaction thereof. The trial court stayed the sale by the Director of any of the property of the motel in satisfaction of the unpaid taxes and thereafter adjudicated the priorities of the liens decreeing that "the matter is a federal question" and "under federal law the rule is `first in time, first in right'." On this basis the court entered its final judgment to the effect that the SBA was entitled to a money judgment against the Williamses and C. G. & R. and was entitled to foreclose its first lien on the property of the motel and have it sold to satisfy the money judgment; that the Director also held a valid lien against the personal property of the debtor and was entitled to proceed against certain property not encumbered by the SBA's first lien and was further entitled to any excess derived from the sale of the other personal property after satisfaction of the SBA's judgment.

The Director first attacks the...