Herrmann v. State Bank of Rolla

• Decision Date: 06 March 1916
• Docket Number: 1915
• Citation: 158 N.W. 986,34 N.D. 313
• Court: North Dakota Supreme Court

158 N.W. 986

34 N.D. 313

A. B. HERRMANN v. STATE BANK OF ROLLA, a Corporation, et al

No. 1915

Supreme Court of North Dakota

March 6, 1916

Appeal from the District Court of Rolette County, Buttz, Judge.

Affirmed.

Cowan & Adamson and H. S. Blood, for appellant.

"A contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it." Comp. Laws 1913, § 5841; Parlin v Hall, 2 N.D. 473, 52 N.W. 405; Chung Kee v Davidson, 73 Cal. 522, 15 P. 100; Bray v. Booker, 6 N.D 526, 72 N.W. 933.

"A voluntary trust arises out of a personal confidence reposed in and voluntarily accepted by one for the benefit of another." Comp. Laws 1913, § 5703; Perry Tr. 6th ed. § 21, and 1 Lewin, Tr. § 19; 3 Pom. Eq. Jur. 3d ed. § 981, p. 1835.

Where a trust is alleged to exist, it is the duty of the court to determine whether the evidence is sufficient to create such trust, and to render its judgment accordingly. Brown v Spohr, 87 A.D. 522, 84 N.Y.S. 995; Booth v. Oakland Bank of Savings, 122 Cal. 19, 54 P. 370; Weer v. Gand, 88 Ill. 490.

Where the complaint wholly fails to state a cause of action against a party and judgment is taken by default, the proper remedy for that party is to move to vacate it as to him. The doctrine of laches and estoppel has no place in this case. Freeman v. Wood, 14 N.D. 95, 103 N.W. 392; Beach v. Beach, 6 Dak. 371, 43 N.W. 701; Stahl v. Chicago, St. P. M. & O. R. Co. 94 Wis. 315, 68 N.W. 954; Mason v. Kansas City C. R. Co. 58 Kan. 817, 51 P. 284.

"Estoppel by laches consists of a neglect to do something which one should do, or to seek to enforce a right, at a proper time." Hunt v. Reilly, 23 R. I. 471, 50 A. 833.

Flynn & Traynor, for respondent.

The application and motion to vacate the judgment being an appeal to the favor of the court, the defendant cannot attack the sufficiency of the pleadings or findings, or the judgment, on this motion. Oakes v. Ziemer, 62 Neb. 603, 87 N.W. 350.

If there was any infirmity in the judgment by reason of a defective complaint, the remedy of the defendant was by appeal from the judgment. Edwards v. Hellings, 103 Cal. 204, 37 P. 218; Cowie v. Strohmeyer, 150 Wis. 401, 136 N.W. 956, 137 N.W. 778.

Where there is great delay in moving to vacate a judgment or to take other proper steps, the most liberal rule of construction is applied, and every reasonable presumption in favor of the judgment should be indulged. Kubesh v. Hanson, 93 Minn. 259, 101 N.W. 73; Sweet v. Ward, 43 Kan. 695, 23 P. 941; Ex parte Bigelow, 113 U.S. 328, 28 L.Ed. 1005, 5 S.Ct. 542; Selby v. Pueppka, 73 Neb. 179, 102 N.W. 263; Grannis v. Superior Ct. 146 Cal. 245, 106 Am. St. Rep. 23, 79 P. 891; Olson v. Mattison, 16 N.D. 231, 112 N.W. 994.

Errors of law cannot be corrected by motion to vacate, nor can a review of the case be had. A motion for a new trial or appeal is the proper remedy. State ex rel. McClory v. Donovan, 10 N.D. 203, 86 N.W. 709; Whitney v. Ritz, 24 N.D. 576, 140 N.W. 676; State ex rel. Noggle v. Crawford, 24 N.D. 8, 138 N.W. 2; Strecker v. Railson, 19 N.D. 677, 125 N.W. 560.

In the first instance, where a pleading is attacked for insufficiency, either by motion or by demurrer, the objections must be specific. When they come after judgment, this rule is much more rigid. 31 Cyc. 761; Chilson v. Bank of Fairmount, 9 N.D. 96, 81 N.W. 33; Schweinber v. Great Western Elevator Co. 9 N.D. 113, 81 N.W. 35; James River Nat. Bank v. Purchase, 9 N.D. 280, 83 N.W. 7; Pine Tree Lumber Co. v. Fargo, 12 N.D. 384, 96 N.W. 357.

The defendant is estopped by its own laches, and failure to pursue the proper remedy at the proper time. In this case defendant should have timely proceeded by motion for a new trial, to correct any error which it deemed to exist. Freeman v. Wood, 14 N.D. 95, 103 N.W. 392; Cline v. Duffy, 20 N.D. 525, 129 N.W. 75; Racine-Sattley Mfg. Co. v. Pavlicek, 21 N.D. 226, 130 N.W. 228; Martinson v. Marzolf, 14 N.D. 301, 103 N.W. 937; Keeney v. Fargo, 14 N.D. 419, 105 N.W. 92; Minnesota Thresher Mfg. Co. v. Holz, 10 N.D. 16, 84 N.W. 581.

Great delay after knowledge of the judgment will bar defendant from the right to vacate. McClymond v. Noble, 84 Minn. 329, 87 Am. St. Rep. 354, 87 N.W. 838; 3 mo. 2 days; Council Improv. Co. v. Draper, 16 Idaho 541, 102 P. 7; 2 mo. 9 days; De Laittre v. Chase, 112 Minn. 508, 128 N.W. 670; 7 mo.; McMurran v. Meek, 47 Minn. 245, 49 N.W. 983; 2 mo.; St. Paul Land Co. v. Dayton, 39 Minn. 315, 40 N.W. 66; nearly 5 mo.; Seibert v. Minneapolis & St. L. R. Co. 58 Minn. 72, 59 N.W. 828; 6 mo.; Coast Land Co. v. Oregon Colonization Co. 44 Ore. 483, 75 P. 884; 4 mo.; Smith v. Pelton Water Wheel Co. 151 Cal. 394, 90 P. 934; 4 mo.; California Casket Co. v. McGinn, 10 Cal.App. 5, 100 P. 1077, 1079; 6 mo.; 23 Cyc. 909; Wheeler & W. Mfg. Co. v. Monahan, 63 Wis. 194, 23 N.W. 109; 27 Cyc. 857.

"A contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind the same." McArthur v. Dryden, 6 N.D. 443, 71 N.W. 125; Code of 1899, § 3840, Comp. Laws, 1913, § 5841; Smith v. Pfluger, 126 Wis. 253, 2 L.R.A. (N.S.) 783, 110 Am. St. Rep. 911, 105 N.W. 476.

"The person whose confidence creates a trust is called the truster; the person in whom the confidence is reposed is called the trustee, and the person for whose benefit the trust is created is called the beneficiary." Comp. Laws 1913, § 6274.

This trust or relationship may be taken advantage of at any time prior to its rescission. Comp. Laws 1913, § 6296.

Courts will not assume that a bank has disobeyed the law, or that its officers have committed a crime. Ultra vires is always a matter of defense, and one desiring to take advantage of it must plead it. 10 Cyc. 1155; Iowa Business Men's Bldg. & L. Asso. v. Berlau, 125 Iowa 22, 98 N.W. 766; Arizona L. Ins. Co. v. Lindell, 15 Ariz. 471; 140 P. 60; Citizens' State Bank v. Pence, 59 Neb. 579, 81 N.W. 623; Belch v. Big Store Co. 46 Wash. 1, 89 P. 174.

"A judgment will not be opened or vacated because founded on an illegal or fraudulent consideration, if the party knew of this objection and might have set it up in defense of the action." 2 Purdy's Beach, Priv. Corp. § 912; 23 Cyc. 928.

OPINION

BURKE, J.

This is an appeal from an order refusing to vacate a default judgment. The facts as they appear to us are as follows: The Murrays, husband and wife, were the owners of the farm in Rolette county. The land was encumbered as follows: $ 3,500, first mortgage, payable to one Maher second mortgage, controlled by O'Laughlin, $ 398; a judgment for $ 495, owned by the plaintiff, Herrmann; a mortgage to one Gilhully, the son of Mrs. Murray, and one or two other liens subsequent to those enumerated. In September, 1912, the second mortgage for $ 319 was foreclosed, and the holder thereof attempted to take up the first mortgage and add it to his claim, thus selling the land for the sum due upon both mortgages of $ 4,093. Herrmann, this plaintiff, applied to the court for permission to redeem from the second mortgage only, and joined in this action the defendant State Bank of Rolla, as will be hereinafter mentioned. Obtaining the relief asked, he redeemed from the second mortgage, paying about the sum of $ 653. Gilhully thereupon redeemed from him. Herrmann was still entitled to redeem on his judgment, but in the meantime other complications had arisen which he claims influenced him to allow the redemption period to expire without action upon his part. Those circumstances are as follows: A few days after the foreclosure the Murrays went to the First State Bank of Rolla and executed to it their notes for $ 6,300 secured by mortgages upon the land. It was their understanding that this loan was to take up all of the outstanding encumbrances and become a first mortgage upon the premises. There was some hitch, however, in the proceedings, and plaintiff did not receive the sum due him upon his judgment, although other encumbrances were paid by the bank. As already intimated, plaintiff, when he brought his action to be allowed to redeem, joined the defendant bank and asked that they be required to pay over to him the amount due upon his judgment upon the theory that they held the same in trust for him,--the allegations of his complaint, outside of the formal parts, being that "on the 25th day of September, 1912, the defendants Murrays made, executed, and delivered to the defendant State Bank of Rolla two certain mortgages on said premises, one for $ 5,000 . . . and one for $ 1,300. . . . That the two mortgages mentioned in the last paragraph were given to the state bank for the purpose of obtaining funds with which to pay the amount claimed by said defendant O'Laughlin on said foreclosure, and other liens then of record against the said premises. . . . That by reason of the delivery of the mortgages described in paragraph number six of this complaint, the said defendant State Bank of Rolla became the trustee of the funds raised by said mortgage; to wit, $ 6,300 to be applied to the payment of the encumbrances against the said premises, including the claim of the plaintiff; and the said State Bank of Rolla is still the trustee thereof, and the same should be applied in the payment of the plaintiff's said judgment. Wherefore, plaintiff prays judgment as follows: . . . and the defendant State Bank of Rolla be declared to be the trustee of the sum of $ 6,300 and interest from September 25, 1912, . . . and that judgment be entered requiring the defendant State Bank of Rolla to pay same out of said trust fund." This complaint was served personally upon the cashier of the bank on the 19th day of September, 1913. The bank, however, made no answer thereto, and judgment was...