Estate of Hutchins v. Fargo

• Decision Date: 02 July 2003
• Citation: 188 Or. App. 462,72 P.3d 638
• Parties: ESTATE OF Selmar A. HUTCHINS, Deceased, Respondent, v. Michael S. FARGO and John Does # 1-10, Defendants, and E.R. "Max" Mills, Appellant.
• Court: Oregon Court of Appeals

72 P.3d 638

188 Or. App. 462

ESTATE OF Selmar A. HUTCHINS, Deceased, Respondent, v. Michael S. FARGO and John Does # 1-10, Defendants, and E.R. "Max" Mills, Appellant.

93CV3003; A117086.

Court of Appeals of Oregon.

Argued and Submitted January 14, 2003.

Decided July 2, 2003.

Jim Petersen argued the cause for appellant. With him on the briefs was Slothower & Petersen, PC.

Gary Hill argued the cause and filed the brief for respondent.

Before EDMONDS, Presiding Judge, and KISTLER and SCHUMAN, Judges.

SCHUMAN, J.

Selmar Hutchins held the vendor's interest in property in which Michael Fargo held the vendee's interest. Fargo then sold the property to appellant Max Mills, who did not maintain the required payments. After Hutchins's death, his estate obtained a judgment of foreclosure against Fargo and 10 "John Does." Mills subsequently moved for an order vacating that judgment. The trial court dismissed his motion on the ground that he "did not have standing to assert the issues he has raised." We reverse and remand.

Most of the facts are uncontested; for the purposes of this opinion we accept the trial court's findings on the disputed facts. In October 1977, Hutchins sold the property in question to Dorothy Palmer and Ruth Fargo by a land sale contract. They thereafter transferred their interest to Michael Fargo (Fargo). In 1989, Fargo conveyed his interest to Mills by a bargain and sale deed and moved to Nevada. Mills, however, did not record the deed until 1997. He continued to make payments through the same escrow account at the Douglas National Bank that Fargo had used; the bank did not change its records to reflect the conveyance from Fargo to Mills and may not have known of it.

By 1993, the payments required under the land sale contract were significantly in arrears, and, in September, Hutchins filed an action against Fargo and 10 John Does to foreclose the contract. Hutchins was unsuccessful in attempting to serve Fargo; on December 2, 1993, Hutchins died. Plaintiff became the personal representative of Hutchins's estate.¹ His attorney then filed a motion to permit service on Fargo and the 10 John Does by publication. In support of that motion, the attorney filed an affidavit stating only that "the Defendant has been sent a letter to his last known address in California; the letter has been returned, marked `Forward Expired.'" The affidavit neither stated nor implied that the attorney had attempted to determine where Fargo had moved after leaving his address in California or to locate him in Nevada. Nonetheless, the court granted the motion for service by publication. Fargo did not appear in response, and, on September 22, 1994, the court entered a judgment by default foreclosing Fargo's (and the John Does') interests in the property.

On July 6, 2001, almost seven years after the entry of the judgment of foreclosure, Mills filed a motion to set the judgment aside. He supported it with an affidavit in which he stated, among other things, that Hutchins knew that he had acquired Fargo's interest in the property and that he was not served with the complaint in the action. He also included an affidavit from Fargo, who stated that he had lived in Redding, California, for only four months but had lived in Reno, Nevada, since 1988, that Hutchins knew that he lived in Reno, that several people in the Roseburg-Sutherlin area knew where he could be contacted, and that he had no knowledge of the foreclosure. After a hearing at which several witnesses testified, the trial court issued an order denying the motion and a letter opinion stating, in part:

"I simply don't believe [Mills] has standing to assert the issues he has raised. Generally speaking, persons may only assert their own legal rights and not those of others, see Kelly v. Silver, 25 Or.App. 441[, 549 P.2d 1134,

rev. den.] (1976)."

Mills appeals from the order denying his motion. ORS 19.205(2)(c).

Mills raises two issues. First, he argues that he has standing to contest the adequacy of service on Fargo. Second, he argues that service on Fargo by publication was ineffective and that the court therefore had no jurisdiction over Fargo when it entered the judgment. As a result, he contends, the judgment is void as to Fargo and as to himself because he claims through Fargo. The trial court did not reach the second issue because it concluded that Mills did not have standing to raise it. We first describe why Mills's interest in the judgment gives him standing to attack it and then explain why his attack has merit.

Because Mills argued that the judgment against Fargo was void for lack of personal jurisdiction, his motion to set it aside was based on ORCP 71 B(1)(d). See Davis Wright Tremaine, LLP v. Menken, 181 Or.App. 332, 336 n. 3, 45 P.3d 983 (2002)

(argument that judgment is void necessarily implicates ORCP 71 B(1)(d)). Whether a judgment is void is a question of law; we review a ruling on such a motion for errors of law, accepting the trial court's factual findings if the evidence supports them. See Adams and Adams, 173 Or.App. 242, 245, 21 P.3d 171 (2001).

A party has standing if, under the substantive law, it has a right to obtain an adjudication of its claims. See Eckles v. State of Oregon, 306 Or. 380, 383, 760 P.2d 846 (1988),

appeal dismissed, 490 U.S. 1032, 109 S.Ct. 1928, 104 L.Ed.2d 400 (1989). At least in the absence of a statute, a party has standing to assert only its own legal rights. See Ellis v. Municipal Reserve & Bond Co., 60 Or.App. 567, 570-71, 655 P.2d 204 (1982). However, even "strangers to the record" have standing to attack a void judgment if the judgment, given effect and enforced against them, would adversely affect their rights. State ex rel Costello v. Cottrell, 318 Or. 338, 344, 867 P.2d 498 (1994) (quoting Hughes v. Aetna Casualty Co., 234 Or. 426, 444, 383 P.2d 55 (1963)). The question, then, is whether Mills has any legal interest in the judgment foreclosing Fargo's interest in the property. It is apparent that he does.²

After the delivery of the deed from Fargo, Mills owned Fargo's interest in the property. However, he did not record the deed, and it therefore did not constitute constructive notice to plaintiff of his interest in the land. See ORS 93.640. At least in the absence of actual or constructive notice to plaintiff, Mills's interest in the property can rise no higher than Fargo's. See Sanders v. Ulrich, 250 Or. 414, 416, 443 P.2d 231 (1968)

; Vista Management v. Cooper, 81 Or.App. 660, 664, 726 P.2d 974 (1986).³ Thus, the judgment foreclosing Fargo's recorded interest necessarily terminated the interest that Mills gained by his unrecorded purchase of Fargo's interest. If Mills can show that the judgment is invalid, his prejudgment rights will be restored, with the added advantages that he has now recorded the deed and that plaintiff unquestionably has actual notice of his interest. Thus, the validity of the judgment directly affects Mills's legal rights; indeed, such a challenge may be the only way that he can vindicate those rights. He therefore has standing to move to set the judgment aside on the ground that it is invalid.

Having concluded that Mills has standing to challenge the judgment against Fargo and the John Does, we also conclude that his challenge must succeed. Mills bases his argument on the assertion that the trial court did not have personal jurisdiction over Fargo because the service by publication was invalid. We summarized the requirements for valid service by alternative means in Huffman v. Leon De Mendoza, 135 Or.App. 680, 899 P.2d 734 (1995), rev. den., 322 Or. 489, 909 P.2d 161 (1996). An affidavit supporting a motion to allow such service "`must contain positive averments of probative or evidentiary facts' from which a court can conclude that `all reasonable means have been exhausted' in attempting to locate the defendant for service." Id. at 684, 899 P.2d 734 (quoting Kintigh v. Elliott, 280 Or. 265, 270, 570 P.2d 659 (1977)). The Supreme Court has suggested that possible sources for locating a defendant include the post office, the defendant's employer, utility companies, neighbors, and friends and relatives in the area. Id. In Huffman, the plaintiff attempted to serve the owner of property who had allegedly received it as the result of a fraudulent conveyance. The only information in the plaintiff's affidavit concerning the owner was that the plaintiff had checked with a person at the county assessor's office and learned that the owner had an address in San Jose, California, and that someone at the San Jose address stated that he forwarded the owner's mail to an undisclosed address. That was insufficient diligence to justify service by alternative means. Huffman, 135 Or.App. at 685, 899 P.2d 734.

Plaintiff's effort in this case was even less than the plaintiff's in Huffman. Here, plaintiff made no efforts at all after having received a single returned envelope showing that Fargo no longer lived at a particular address in California. Plaintiff's affidavit contained no indication of any additional attempt to locate Fargo. Nothing indicates that he questioned Fargo's known associates. Further, the returned envelope contained the message, "Forward Expired." That might mean that the post office will no longer forward mail without additional postage; it does not mean that the forwarding address is unknown. Plaintiff's efforts do not constitute a minimal attempt to comply with the standard that we and the Supreme Court have described. As a result, the service was ineffective, and the trial court did not have personal jurisdiction over Fargo when it entered the judgment. The judgment is void, and Mills, who stands in Fargo's shoes, is entitled to have it set aside. See Resnik and Resnik, 99 Or.App. 56, 58-59, 781 P.2d 856 (1989), rev. den., 309 Or. 521, 789 P.2d 1386 (1990) (husband entitled to have judgment set aside when trial court did not have personal jurisdiction over him).

Pl...