Gundlach v. Park
| Decision Date | 04 January 1918 |
| Docket Number | 20,663 |
| Citation | 165 N.W. 969,140 Minn. 78 |
| Parties | E. T. GUNDLACH v. LOUIS M. PARK |
| Court | Minnesota Supreme Court |
April 19, 1918 On Reargument
Action in the district court for Hennepin county to recover $1,005.23 upon a judgment recovered in the municipal court of Chicago, February 14, 1916. In the third paragraph of the opinion will be found the defenses set up in the answer. The case was tried before Fish, J., who granted plaintiff's motion for a directed verdict for $761.83. From an order denying his motion for a new trial, defendant appealed. Reversed.
Confession of judgment -- warrant of attorney -- defences against foreign judgment -- want of consideration.
A judgment was entered in the municipal court of Chicago Illinois, by confession under a warrant of attorney appended to two promissory notes, executed in Illinois by defendant who then was and ever since has been a resident of this state. It is held:
(1) The attorney, in the cognovit, exceeded the authority of the warrant by stipulating that no bill in equity should be filed to interfere in any manner with the operation of the judgment. This was a substantial departure from the authority given; and, appearing upon the face of the record evidencing the judgment, vitiates the same.
(2) The defense, that the promissory notes, upon which the judgment was rendered, were obtained by fraud, being litigated by consent, the court erroneously ruled that want of consideration had no bearing upon the determination of that issue and that there was not sufficient evidence to go to the jury.
(3) Since the courts of Illinois freely open judgments obtained by confession to allow a defense on the merits, and entertain bills in equity to vacate and enjoin the enforcement of domestic judgments of that sort, and also permit a citizen of that state, when sued therein upon such a judgment obtained in a sister state, to proceed by bill in equity to vacate and restrain the enforcement of the judgment on the ground that the note, upon which it was based, was obtained by means of duress or fraud and was without consideration; likewise to a citizen of this state, when here sued upon a like judgment obtained in Illinois, the defense is available that the judgment note was obtained by fraud and was without consideration, and appropriate equitable relief should be granted.
James D. Shearer and L. B. Byard, for appellant.
Adams, Follansbee, Hawley & Shorey, Brown & Guesmer and Edwin C. Brown, for respondent.
A verdict was directed in favor of plaintiff and defendant appeals from the order denying a new trial.
The suit is upon a judgment entered by confession, under a warrant of attorney, in the municipal court of Chicago, Illinois. The exemplified record from that court shows the judgment to be based upon two promissory notes, dated September 5, 1914, at Chicago, executed by defendant, payable to the order of plaintiff, the one being for $600 and the other for $273. Subjoined to each note is a power or warrant authorizing any attorney of any court of record to appear for defendant, and confess judgment without process in favor of the holder of the note, and to waive and release all errors which may intervene in any such proceeding, and consent to immediate execution. The defendant for many years had been and now is a resident of this state.
The defenses pleaded were: (a) The Chicago court had no jurisdiction to enter the judgment; (b) the said promissory notes were obtained by fraud; and (c) they were without consideration and void. Defendant asked relief against the judgment and its enforcement.
The notes were executed and delivered in Illinois to plaintiff, a resident of that state. Therefore the validity of the notes and the stipulation therein contained, in respect to the confession of judgment by attorney, are governed by the laws of Illinois. There is no doubt that, upon a debt bona fide due, the municipal court of Chicago had authority to render a judgment by confession, under the warrant of attorney contained in these notes, without personal service upon defendant. Also, that the waiver of errors precluded defendant from attacking the judgment by writ of error or on appeal. Frear v. Commercial Nat. Bank, 73 Ill. 473; Hall v. Hamilton, 74 Ill. 437. We are also of the opinion that this waiver prevents any advantage being taken of the irregularity, if any there be, in including the two notes in one judgment.
But appellant urges an objection which seems to us fatal to the validity of the judgment. It is well settled by the decisions in Illinois that a judgment entered by confession under a warrant of attorney may be opened on motion of a defendant who offers to defend on the merits, and that an action in equity will lie to enjoin the enforcement of a judgment thus obtained if a meritorious defense exists to the claim upon which the judgment was confessed. "A judgment entered by confession on a note should be vacated if it appears that there was no consideration for the note in question." Hannah v. Biggio, 189 Ill.App. 460, 461. Where it is made to appear that a note, upon which such a judgment has been taken by confession, was made in the belief that some other document was signed, leave to make a defense should be granted. Funk v. Hossack, 115 Ill.App. 340. "Bill to vacate a judgment by confession on a demand judgment note and to enjoin a sale of complainant's property, held to state grounds for equitable relief where it avers that complainant had forgotten about the note, but believes that it never represented an actual indebtedness, and if it did it was long ago paid." Karcher v. Citizens State Bank, 183 Ill.App. 49. The municipal court of Chicago has jurisdiction to open such a judgment more than two months after its entry, and should do so upon a petition showing that the judgment note was given as part of the purchase price of an automobile and that the seller misrepresented the condition of the vehicle. Simco v. Mankowitz, 184 Ill.App. 506. In 1860 a judgment on a promissory note was entered by confession against one Cooper by one Tyler in Wisconsin. Six years later Tyler brought suit on the judgment in Illinois, and garnisheed debtors of Cooper. Thereupon Cooper filed a bill in equity in Illinois to enjoin the action at law and to restrain the enforcement of the judgment on the ground that the contract for the purchase of the lands, for which the note was given, had been rescinded or abandoned. The court entertained the bill holding that since the judgment was procured in a foreign county without notice to Cooper (both parties appeared to have been residents of Wisconsin, but not in the county where the judgment was confessed), he was not precluded from resorting to a court of chancery for relief, although the relief thus sought was available in the Wisconsin action had Cooper had notice thereof. Cooper v. Tyler, 46 Ill. 462, 94 Am. Dec. 442. From these decisions it appears that, notwithstanding the waiver of errors in the proceeding wherein a judgment by confession is entered, the courts of Illinois are ever ready to open such judgment upon a showing of a meritorious defense. And the chancery courts therein, upon such showing, do unhesitatingly entertain a bill to vacate and enjoin the enforcement of a judgment so obtained. Therefore, we think the attorney exceeded his warrant in a substantial manner when in the cognovit he agreed that no bill in equity should be filed to interfere in any manner with the operation of the judgment. That the warrant has been thus exceeded is disclosed by the record of the judgment in suit, and hence the objection to its validity may now be asserted, and is not a collateral attack upon the judgment.
The authorities are in accord that, in entering judgment by confession under warrants of attorney, the authority given must not be exceeded or deviated from, it must be strictly followed. Weber v. Powers, 213 Ill. 370, 72 N.E. 1070, 68 L.R.A. 610, and the many Illinois cases there cited; First Nat. Bank of Kansas City v. White, 220 Mo. 717, 120 S.W. 36, 132 Am. St. 612, 16 Ann. Cas. 889; In re Claghorn's Estate, 181 Pa. St. 600, 37 A. 918, 59 Am. St. 680; Spier v. Corll, 33 Oh. St. 236; Cuykendall v. Doe, 129 Iowa 453, 105 N.W. 698, 3 L.R.A. (N.S.) 449, 113 Am. St. 472; Kahn v. Lesser, 97 Wis. 217, 72 N.W. 739; Grover & Baker Sewing Mach. Co. v. Radcliffe, 137 U.S. 287, 11 S.Ct. 92, 34 L.Ed. 670; 15 R.C.L. 657.
By consent of plaintiff the defense of fraud, in the procurement of the promissory notes, upon which the judgment was confessed, was litigated. The court, however, held the evidence, adduced by defendant upon that issue, insufficient to go to the jury. And in that connection the court ruled that the total want of consideration for the notes testified to by defendant, had no material bearing on the issue of fraud. We are of the opinion that the trial court erred.
The testimony of defendant was in brief this: In 1909 the parties became interested in the Hiawatha Water Company and its financing, and, at defendant's request, plaintiff loaned the company $2,500, receiving from it a note and mortgage. A year later, when this note became due and was not paid plaintiff requested of defendant a note for $2,500, as additional security. This was given. Nothing further passed between the parties in reference to this matter until in August, 1914, when the last mentioned note got into the hands of an attorney who threatened defendant with suit unless it was paid. Defendant thereupon wrote plaintiff that he was in financial straits, and if the suit was pressed it would go very hard with him. On September 5, plaintiff, in response to defendant's appeal, wrote a letter, inclosing the two notes upon which...
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