Ketcham v. Selles

• Court: Supreme Court of Oregon
• Writing for the Court: GILLETTE
• Citation: 748 P.2d 67,304 Or. 529
• Parties: Ronald M. KETCHAM, Respondent on Review, v. George W. SELLES and Elaine B. Selles, husband and wife, Petitioners on Review, Steve Carson and Joanne Carson, husband and wife, Respondents. TC 85-678-CV; CA A39458; SC S34058.
• Decision Date: 29 January 1988

Page 67

748 P.2d 67

304 Or. 529

Ronald M. KETCHAM, Respondent on Review, v. George W. SELLES and Elaine B. Selles, husband and wife, Petitioners on Review, Steve Carson and Joanne Carson, husband and wife, Respondents.

TC 85-678-CV; CA A39458; SC S34058.

Supreme Court of Oregon,

In Banc.

Argued and Submitted Nov. 5, 1987.

Decided Dec. 22, 1987.

Reconsideration Denied Jan. 29, 1988.

William H. Walters, Portland, argued the cause and filed the petitions on behalf of the petitioners on review. With him on the petitions were Miller, Nash, Wiener, Hager & Carlsen and James N. Westwood, Portland.

David V. Gilstrap, Ashland, argued the cause and filed the response on behalf of the respondent on review, Ronald M. Ketcham.

William M. Ganong, Klamath Falls, filed the response on behalf of respondents Steve and Joanne Carson.

GILLETTE, Justice.

Plaintiff Ketcham (plaintiff) appealed to the Court of Appeals from a judgment dismissing his action for replevin of a rock screening plant and for reasonable rent during the time that defendants Selles (defendants) retained possession of the plant. The plant had been the subject of an earlier sheriff's sale to defendants, based on the judgment in a preceding case. The trial court allowed defendants' motion for summary judgment on the ground that plaintiff's present action was an impermissible collateral attack on the prior judgment. The Court of Appeals reversed, holding that the execution in the earlier case was void, Ketcham v. Selles, 85 Or.App. 74, 735 P.2d 1246 (1987), and defendants sought review in this court. We reverse the Court of Appeals and affirm the judgment of the trial court.

On April 5, 1979, defendants came into lawful possession of plaintiff's rock screening plant pursuant to a rental agreement with plaintiff. In January, 1981, plaintiff and defendants were parties in another case involving multiple parties and the same rock screening plant. In that case, defendants obtained a "judgment" ¹ by default against plaintiff on January 14, 1981. That "judgment" did not resolve all the issues between all the parties and did not comply with former ORS 18.125(1) (repealed by Or. Laws 1981, ch. 898, § 53). ² Nonetheless, on February 6, 1981, defendants obtained a writ of execution to enforce the default judgment. The sheriff levied upon plaintiff's rock screening plant. Defendants purchased the plant at a sheriff's sale. A final judgment disposing of all the issues in the case was not entered until April 7, 1981. Until he brought the present action, plaintiff did not contest the validity of the execution and sale either before or after the final judgment was entered.

In October, 1985, plaintiff filed the present action. The trial court granted defendants' motion for summary judgment and held that the execution on the January 14, 1981, "judgment" was proper, that the replevin action was a collateral attack on the former action and that plaintiff's remedy, if any, against the execution and sale was by direct appeal in the former action.

The Court of Appeals reversed. It held that the writ of execution was invalid because the "judgment" entered on January 14, 1981, "was merely an intermediate order," and "therefore could not * * * support issuance of the writ." 85 Or.App. at 77-78, 735 P.2d 1246. It held also that "[e]xecutions issued without authority are void" and that, therefore, "plaintiff may properly attack [the execution and sale] collaterally in this proceeding." Id. at 78, 735 P.2d 1246. The present petition for review followed.

EXECUTION BEFORE FINAL JUDGMENT

Former ORS 18.125 was adopted in recognition that interlocutory appeals could avoid the possible injustice of delay to some litigants. Before the passage of that statute, a party in a multiple-party case could have judgment entered against him or her and "the prevailing party could execute on that judgment and the party against whom the judgment was entered could not even stay the proceedings pending appeal because a supersedeas bond could only be filed after an appeal and an appeal could only be taken after entry of final judgment" resolving all issues in the case. May v. Josephine Memorial Hospital, 297 Or. 525, 531 n. 8, 686 P.2d 1015 (1984) (citing Minutes, House Committee on Judiciary 1-3 (Feb. 4, 1977)). Former ORS 18.125(1) provided that,

"when multiple parties are involved, the court may direct the entry of a final judgment or decree as to one or more but fewer than all of the * * * parties * * * upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment or decree."

For purposes of appeal, ORS 19.040 provides for an automatic stay by supersedeas bond. With respect to stays for other purposes, former ORS 18.125(2) provided that, if the court entered a judgment in accordance with former ORS 18.125(1), "the court may stay enforcement of that judgment * * * until the entering of a subsequent judgment * * * and may prescribe such conditions as are necessary to secure the benefit thereof to the party in whose favor the judgment * * * is entered."

In order for the remedial purposes of former ORS 18.125 to be fulfilled, it is necessary to conclude that execution may issue only upon a judgment that would give the non-prevailing party an opportunity either to file a supersedeas bond and stay the proceeding under ORS 19.040 or to make a motion to stay the execution under former ORS 18.125(2). In the absence of a determination that there is no just reason for delay and an express direction for the entry of judgment, the "judgment" of January 14, 1981, was an intermediate order "subject to revision [by the trial court] at any time before the entry of judgment" adjudicating all the claims between all the parties. Former ORS 18.010, 18.125(1). See also Jefferson State Bank v. Welch, 299 Or. 335, 339, 702 P.2d 414 (1985) (construing ORCP 67, the successor to former ORS 18.125). At the time of execution, there was no judgment upon which the execution could be based under ORS 23.030. ³ However, the posture of the prior case did not remain the same.

CHALLENGE OF DEFAULT "JUDGMENT" AND EXECUTION AFTER FINAL

JUDGMENT IS ENTERED AND TIME FOR APPEAL HAS EXPIRED

As noted by the Court of Appeals, the conclusion that execution may issue only upon a final judgment does not end the inquiry. In this case, we must further "determine whether plaintiff may collaterally attack the execution and sale of the plant to defendant, the judgment creditor, or whether his only remedy was through direct appeal in the earlier case." 85 Or.App. at 78, 735 P.2d 1246. ⁴ The Court of Appeals concluded that

"there was no basis upon which the execution could issue, because the January 14, 1981, 'judgment' was merely an intermediate order. Jefferson State Bank v. Welsh, supra, 299 Or at 339 . Because the judgment was not final, it was not a lien and the execution was void. * * * Therefore the subsequent sheriff's sale was likewise void. That the intermediate order later became final does not validate the void execution and sale. The sale, therefore, did not pass title to defendant and, because the execution and sale were void, plaintiff may properly attack them collaterally in this proceeding."

85 Or.App. at 78, 735 P.2d 1246 (citation omitted).

The distinction between void and voidable "is often related to the distinction between 'direct' and 'collateral' attack, in that it is said that a 'void' judgment is vulnerable either to direct or collateral attack, while a 'voidable' judgment is subject only to direct attack." Restatement (Second) Judgments, Chapter 5 Introductory Note, comment c at 143 (1982). "[T]he interconnection of this distinction with that between 'direct' and 'collateral' attack imports the ambiguities of the latter distinction" without aiding the analysis. Id. Instead, we think that the appropriate distinction for present purposes is between a "procedural error" and a "jurisdictional" defect: "The former is submerged in the judgment and ordinarily beyond remedy after the judgment has become final and the time to appeal expired; the latter in some situations can be a basis for future avoidance of the judgment." Id., § 69, comment b at 177. See Jones v. Dove, 7 Or. 467, 471 (1879) (if irregularities in a writ of execution are amendable, the amendments "are considered as actually made in all collateral proceedings").

We have stated in various contexts that, "[o]nce the judgment has been entered and the time for appeal has expired, the defaulting party has no recourse unless the trial court lacked jurisdiction [over the parties and the subject matter] to enter the judgment"; other defenses are lost. Rajneesh Foundation v. McGreer, 303 Or. 139, 144 n. 3, 734 P.2d 871 (default judgment not subject to collateral attack on ground that pleadings were insufficient to support it), former decision adhered to, 303 Or. 371, 737 P.2d 593 (1987); Rogue Val. Mem. Hosp. v. Salem Ins., 265 Or. 603, 615, 510 P.2d 845 (1973) (statutory requirement that hospital lien be filed within specified period not a jurisdictional requirement; therefore, judgment based on lien not subject to collateral attack); Travelers Insurance v. Staiger, 157 Or. 143, 148, 69 P.2d 1069 (1937) (judgment awarding excessive relief not subject to collateral attack); Walling v. Lebb, 140 Or. 691, 692, 15 P.2d 370 (1932) (failure of a complaint to state claim does not subject subsequent judgment to collateral attack); Booth v. Heberlie, 137 Or. 354, 356, 2 P.2d 1108 (1931) (judgment entered prematurely "could be attacked only by motion in the original case"). See also State ex rel Kalich v. Bryson, 253 Or. 418, 422, 453 P.2d 659 (1969) (courts do not have jurisdiction to enter default judgment against one without notice; however, failure to give party notice of time within which to answer did not prevent court from acquiring jurisdiction to entertain a motion to amend the summons). In this...