Midwest Federal Sav. and Loan Ass'n of Minot v. Kouba, 10369

• Decision Date: 24 June 1983
• Docket Number: No. 10369,10369
• Citation: 335 N.W.2d 780
• Parties: MIDWEST FEDERAL SAVINGS AND LOAN ASSOCIATION OF MINOT, Plaintiff and Appellee, v. Albert W. KOUBA a/k/a Albert Kouba a/k/a Rusty Kouba and Sharon R. Kouba, his wife, Defendants and Appellants, W.S. Raymond; State of North Dakota; L.E. Coppersmith, Inc.; Town and Country Credit Union; Citizens State Bank of Ray; The United States of America, and all persons unknown claiming any estate or interest in, lien or encumbrance upon the property described in the Complaint, Defendants. Civ.
• Court: North Dakota Supreme Court

Page 780

335 N.W.2d 780

40 A.L.R.4th 338

MIDWEST FEDERAL SAVINGS AND LOAN ASSOCIATION OF MINOT Plaintiff and Appellee, v. Albert W. KOUBA a/k/a Albert Kouba a/k/a Rusty Kouba and Sharon R. Kouba, his wife, Defendants and Appellants W.S. Raymond; State of North Dakota; L.E. Coppersmith Inc.; Town and Country Credit Union; Citizens State Bank of Ray; The United States of America, and all persons unknown claiming any estate or interest in, lien or encumbrance upon the property described in the Complaint, Defendants.

Civ. No. 10369.

Supreme Court of North Dakota.

June 24, 1983.

Collin P. Dobrovolny, of Anderson & Dobrovolny, Minot, for plaintiff and appellee.

Albert W. Kouba, pro se.

PAULSON, Justice.

This is an appeal by Albert W. Kouba and Sharon Kouba from an order and a judgment which granted a motion for summary judgment made by Midwest Federal Savings and Loan Association of Minot. We affirm.

In 1975 the Koubas executed a note and a mortgage wherein they agreed to pay Midwest Federal $31,400 in monthly installments and eight and one-half percent interest on the unpaid balance for two lots in Minot and the house that was built upon the lots. In January, February, and March of 1982 the Koubas did not pay the monthly installments of $302 each.

On March 5, 1982, Albert Kouba presented Midwest Federal with a two-party check for $5,000. Kouba wanted to pay $906 for the three-month delinquency and he wanted the balance in cash. After Midwest Federal called the bank on which the $5,000 check was drawn, Midwest refused to honor the check. The South Dakota bank told Midwest Federal that although there were sufficient funds in the account to cover the check at that time, the bank would not guarantee payment by the time the check cleared. Kouba stated that he then took the $5,000 check to a Minot bank and cashed it; however, he did not return to Midwest Federal to pay the delinquent amount due.

On March 30, 1982, Albert Kouba gave Midwest Federal $302 cash for the April payment. The money was accepted by a teller, but Midwest immediately mailed Kouba a check for the $302 because of its policy not to accept partial payment for a loan which is delinquent more than one month.

Midwest Federal informed the Koubas of its intent to foreclose in April 1982, and began this action in June 1982. The Koubas requested a jury trial, and the trial judge sent the parties a document entitled "Order Setting Date of Jury Trial and Pre-Trial Conference". In October 1982 Midwest Federal moved for an order striking the Koubas' demand for trial by jury, an order striking several portions of the Koubas' answer and counterclaim, and an order for summary judgment pursuant to Rule 56 of the North Dakota Rules of Civil Procedure.

During a pretrial conference on November 18, 1982, the trial judge determined that the district court had jurisdiction over Midwest Federal; that federal reserve notes are legal tender; and that Midwest Federal gave the Koubas consideration for the promissory note. The trial judge concluded in a written opinion:

"All of the relevant defenses invoked by the defendants are questions of law. [The issues involved] ... can be determined by the Court because they are questions of law and not of fact.

"The Court DENIES the defendants request for a jury trial ...."

The trial judge recused himself from the action on November 30, 1982, and a different judge was assigned for the hearing on December 22, 1982. The second judge allowed the note and mortgage to be received as evidence over Albert Kouba's objection. The judge also denied the Koubas' demand for a pretrial evidentiary hearing and granted Midwest Federal's motion to strike portions of the Koubas' answer and counterclaim. In his order for judgment, the judge set forth several conclusions of law, including: (1) the court has jurisdiction over the parties; (2) there are no genuine issues of material fact in the action; (3) Midwest Federal is entitled to summary judgment as a matter of law; and (4) the Koubas' mortgage is to be foreclosed. The Koubas appealed.

The first issue on appeal is whether or not the district court had jurisdiction over Midwest Federal Savings and Loan during this action. Midwest Federal is a federally chartered savings and loan association regulated by the Federal Home Loan Bank Board. See Glendale Fed. Sav. & Loan Ass'n v. Fox, 459 F.Supp. 903 (D.C.Cal.1978). See generally 12 U.S.C. Secs. 1461 to 1470. The Koubas argue that Midwest Federal is not a North Dakota citizen and, as a result, North Dakota courts lack jurisdiction over Midwest Federal. The Koubas are the defendants in this action and, as such, they may challenge the court's jurisdiction of themselves and of the subject matter. However, the Koubas may not challenge the court's jurisdiction over Midwest Federal, the party bringing this action.

Our next consideration is whether or not the trial judge erred by denying the Koubas' request for a jury trial after informing them of the date of their trial with the issuance of a document entitled "Order Setting Date of Jury Trial and Pre-Trial Conference". When a court determines if a party is entitled to a jury trial, the distinction between an action at law and an action in equity is important. Northwestern Bell Tel. Co. v. Cowger, 303 N.W.2d 791, 794 (N.D.1981); Ziebarth v. Kalenze, 238 N.W.2d 261, 267 (N.D.1976). In an equitable action, there is no absolute right to a jury trial. See In re R.Y., 189 N.W.2d 644, 651 (N.D.1971). This court previously stated that the foreclosure of a lien is an equitable action, triable to the court without a jury. C.I.T. Corporation v. Hetland, 143 N.W.2d 94, 101 (N.D.1966). Accord Superior Products v. Merucci Bros., Inc., 107 Mich.App. 153, 309 N.W.2d 188, 191 (1981). Similarly, the foreclosure of a mortgage is an equitable proceeding. See Lincoln Joint Stock Land Bank v. Barnes, 143 Neb. 58, 8 N.W.2d 545, 549-550 (1943). Therefore, the Koubas do not have a right to trial by jury in this action.

However, we must also consider the effect of the order sent to the Koubas. The trial judge mistakenly used a form containing the words "order setting date of jury trial", which led the Koubas to believe he was granting their request for a jury trial, when, in fact, he was notifying them only of the dates for the pretrial conference and of the trial. Rule 61 of the North Dakota Rules of Civil Procedure requires that courts ignore procedural errors unless they have affected substantial rights of the parties. See 11 Wright & Miller, Federal Practice and Procedure: Civil Sec. 2881, at 273. Rule 61, N.D.R.Civ.P., provides in relevant part that:

"... no error or defect in any ruling or order or in anything done or omitted by the court ... is ground for granting a new trial or for setting aside a verdict or for vacating, modifying or otherwise disturbing a judgment or order, unless refusal to take such action appears to the court inconsistent with substantial justice. The court, at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties."

We do not believe that the Koubas' substantial rights were affected by the judge's action because the Koubas did not have a right to trial by jury in this mortgage foreclosure action. The trial court properly denied the Koubas' request for a jury trial.

The third issue is whether or not the trial judge correctly granted Midwest Federal's motion for summary judgment. Motions for summary judgment are often brought in actions involving debts. See Farmers & Merchants National Bank v. Lee, 333 N.W.2d 792, 793 (N.D.1983); Titus v. Titus, 154 N.W.2d 391, 396 (N.D.1967).

Summary judgment is proper when there is no genuine issue as to any material fact. Rule 56(c), N.D.R.Civ.P. Because Midwest Federal made the motion for summary judgment and supported it with documents and affidavits in the record, it is the Koubas' responsibility to "set forth specific facts showing that there is a genuine issue for trial". Rule 56(c), N.D.R.Civ.P. See Herman v. Magnuson, 277 N.W.2d 445, 454-455 (N.D.1979). The record contains both the note and the mortgage which pledged the real property as security; both were approved by...