Lincoln Steel, Inc. v. Mid-Continent Nat. Bank

• Decision Date: 07 December 1982
• Docket Number: No. WD32845,MID-CONTINENT,WD32845
• Citation: 646 S.W.2d 809
• Parties: LINCOLN STEEL, INC. and Robert J. Chapman and Elizabeth Chapman, Appellants, v.NATIONAL BANK, Respondent.
• Court: Missouri Court of Appeals

Page 809

646 S.W.2d 809

LINCOLN STEEL, INC. and Robert J. Chapman and Elizabeth Chapman, Appellants, v. MID-CONTINENT NATIONAL BANK, Respondent.

No. WD32845.

Missouri Court of Appeals Western District.

Dec. 7, 1982.

Motion for Rehearing and/or Transfer to

Supreme Court Overruled and Denied

Feb. 1, 1983.

Application to Transfer Denied

March 29, 1983.

Charles C. Shafer, Jr., Kansas City, for appellants.

Douglas Y. Curran, Lawrence M. Berkowitz, Stinson, Mag & Fizzell, Kansas City, for respondent.

Before SHANGLER, P.J., and PRITCHARD and DIXON, JJ.

SHANGLER, Presiding Judge.

The circuit court rendered judgment against appellants Lincoln Steel and Chapman spouses, officers of the corporation, in favor of respondent Mid-Continent Bank and Civic Plaza Bank [not joined on appeal] on a series of promissory notes executed by Lincoln Steel and Chapmans jointly and severally. The claim of each bank was originally by separate suit, but the notes of both banks were secured by the accounts receivable of Lincoln Steel, and the suits were consolidated for trial to determine priority between the creditors as to the accounts receivables. Lincoln Steel and the Chapmans, defendants, counterclaimed in each suit on allegations--among numerous others--of intentional disparagement of the Lincoln credit, tortious interference with its business and conversion. Mid-Continent cross-claimed against Lincoln for false representations. The judgment adjudicated contentions in favor of the Banks and against Lincoln Steel and the Chapmans.

Lincoln Steel and the Chapmans appealed from the Mid-Continent judgment only. Those parties concluded a settlement thereafter and the appeal was dismissed. The terms of settlement, among others, included satisfaction of a judgment against Lincoln Steel and the Chapmans for some $150,000 and payment of some $7,000. A year later, Lincoln Steel and the Chapmans moved the circuit court to set aside the judgment in that separate action [CV75-4334]--later consolidated with the Civic Plaza Bank petition, which went to judgment and has since become final--on the allegation that the judgment was procured by fraud. The motion was accompanied by a memorandum of suggestions. The memorandum, a miscellany of bare assertions, epithetical allusions and simple chatter, was nevertheless interspersed with content of fact and documentary exhibits. The memorandum was subscribed by the affidavit of Robert J. Chapman.

The contentions of fraud discernible from that intermixed pleading are that the judgment for Mid-Continent Bank [case No. CV75-4334] was concocted by forgery of the Chapman signature on a UCC form [attached as an exhibit] used by the Bank to collect the Lincoln Steel accounts receivable, that the extent of the Mid-Continent security interest in those assets was altered on other copies of the UCC form [also attached], and that several Mid-Continent employees were encouraged to commit perjury to induce a favorable judgment. The memorandum explains that the forgery and false evidence came to notice for the first time long after that suit was concluded by the settlement when Mid-Continent [for some reason unexplained] dispensed the closed litigation file to Chapman, a defendant. The memorandum requested a hearing on the merits of the motion. The circuit court nevertheless entered judgment against the motion without a hearing, and Lincoln Steel and the Chapmans appeal.

They contend the motion stated a cause of action so that the adjudication without evidence was not valid. Mid-Continent Bank responds that the rules of procedure allow a court to expedite a motion by decision without a hearing. Rule 55.30(b). A motion to set aside a judgment for fraud, however, notwithstanding the rubric of the pleading, amounts to a separate action in equity for that purpose when the averments suffice to invoke the substantive cause of action. J.R. Watkins Company v. Hubbard, 343 S.W.2d 189, 195 (Mo.App.1961). The trial court understood that the law discerns no distinction in the stature of a pleading for that purpose and treated the motion as a separate bill in equity, but held nevertheless that allegations were not sufficient to invoke adjudication. We sustain that judgment.

A court of equity does not usually interfere with a judgment at law or examine the intrinsic process of adjudication, but leaves it to each party to litigate with diligence. Reis v. La Presto, 324 S.W.2d 648, 653[8-9] (Mo.1959). Equity will annul a judgment for fraud, but only where the deceit was extrinsic to the subject matter litigated so as to distract the suitor from a trial or from the full presentation of the case. Hemphill v. Hemphill, 316 S.W.2d 582, 586[5-7] (Mo.1958). In such a case, the fraud--although practiced by one party upon the other--goes to the very procurement of the judgment [Fadler v. Gabbert, 333 Mo. 851, 63 S.W.2d 121, 132 (1933) ] and so perpetrates a fraud on the court as well as on the injured party. 3 Pomeroy, Equity Jurisprudence §...