Northern Montana Ass'n of Credit Men v. Hauge

• Decision Date: 24 September 1940
• Docket Number: 8045.
• Citation: 105 P.2d 1102,111 Mont. 56
• Parties: NORTHERN MONTANA ASS'N OF CREDIT MEN v. HAUGE.
• Court: Montana Supreme Court

105 P.2d 1102

111 Mont. 56

NORTHERN MONTANA ASS'N OF CREDIT MEN v. HAUGE.

No. 8045.

Supreme Court of Montana

September 24, 1940

Appeal from District Court, Fifteenth District, Roosevelt County; V Hover, Judge.

Action by the Northern Montana Association of Credit Men, a corporation, and Northern Montana Association of Credit Men a corporation, trustee, against Charles Hauge, doing business under the firm name and style of City Food Store, to recover on accounts which defendant owed to several companies for merchandise sold to defendant, wherein defendant filed a demurrer. From a judgment sustaining the demurrer and overruling plaintiff's motion for leave to file an amended and supplemental complaint, plaintiff appeals.

Reversed and remanded.

MORRIS J., dissenting.

J. P Freeman, of Great Falls, for appellant.

E. L. Walton, of Wolf Point, for respondent.

ERICKSON Justice.

This is an appeal from a judgment of the district court of Roosevelt county. The action was commenced by complaint filed by the Northern Montana Association of Credit Men, a corporation, trustee, upon various accounts which it is alleged the defendant owed to five companies for goods, wares and merchandise sold by the companies to the defendant. The complaint alleged that these accounts were sold, assigned and set over in trust to the plaintiff for the use and benefit of the companies who assigned the accounts.

The suit was originally brought in the district court of Cascade county on March 24, 1938, and at the time the complaint was filed a writ of attachment was issued, based upon affidavit and undertaking. Thereafter upon motion the cause was transferred to Roosevelt county. A demurrer was interposed and it was thereafter called up for hearing on March 8, 1939. Prior to the time set for hearing of the demurrer, the plaintiff filed a motion for leave to file an amended and supplemental complaint. The amended and supplemental complaint was the same as the original complaint, except that the word "trustee" was stricken whereever it appeared in the original complaint, and in addition it was alleged that subsequent to the filing of the complaint the Northern Montana Association of Credit Men, a corporation, had purchased the accounts sued upon and that it was the sole owner and holder thereof. An affidavit in support of the motion was filed at the time the motion was filed. On March 8, 1939, the demurrer was sustained, and on April 19th of the same year, the district court made an order denying plaintiff's motion to file its amended and supplemental complaint and denied the motion to strike the word "trustee" where the same appeared on the papers on file in the action.

The specifications of error are five in number and they all have to do with the alleged error of the district court in denying the motion to file the amended and supplemental complaint, its refusal to permit the amendment of the writ of attachment, affidavit of attachment, undertaking on attachment and summons by striking the word "trustee," and in rendering judgment in favor of the defendant and against the plaintiff. Error is also specified on the sustaining of the demurrer to the original complaint.

The sole question involved, with the exception of the latter specification which for the determination of this lawsuit we need not discuss, concerns the question of whether or not the court abused the discretion lodged in it by refusing to allow the amendments prayed for.

The argument of the respondent hinges on his contention that the appellant could not maintain the action as trustee of the account sued upon under the decision in Streetbeck v. Benson, 107 Mont. 110, 80 P.2d 861, 862.

An examination of the decision in that case demonstrates that it is not controlling. In the Streetbeck case the facts were that the plaintiff operated a collection agency and that by agreement with the owners of the account sued upon, the plaintiff was to retain a part of the proceeds as compensation for his services in collecting the accounts. This was admitted by the plaintiff in his statement of the facts in the case. This court said: "This is an admission that the alleged trust agreements were entered into for the purpose of evading the effect of the above decision [State ex rel. Freebourn v. Merchants' Credit Service, 104 Mont. 76, 66 P.2d 337] of this court." This court in its opinion held that the creation of the express trust in that case from the agreed facts was for the purpose of evading the effect of section 8980, Revised Codes, and the ruling in the Merchants' Credit Service case, and the decision is based on that alone. The court did not hold by implication or otherwise that the trustee of an express trust could not maintain an action as provided in section 9067, Revised Codes, in his own name.

We have in the present case, then, this situation: From the pleadings including the complaint, demurrer, process papers and the motion to amend and the objection to the motion, it is not possible to determine that the plaintiff is in the position of the plaintiff in the two cases above referred to. No testimony to this effect is before us, and, so far as the record is concerned, no showing is made that such a condition exists here. Since that is the situation and since the allegation in the complaint is that the plaintiff is a trustee of an express trust, we must presume that the plaintiff could have maintained the action under section 9067. As that is the case, there would seem no reason why the amendment sought should not be granted.

The causes of action remain the same. The debts sued upon are identical and the amendment would not in any way affect the substantial rights of the defendant. By section 9086 provision is made by statute for the substitution of the assignee of the cause of action as plaintiff. There can be no question but that the terms of section 9086 apply. See Osborne v. McDonald, 91 Mont. 83, 5 P.2d 568; Price v. Skylstead, 69 Mont. 453, 222 P. 1059; 1 Bancroft's Code Pleading, 834.

Since the suit could have been maintained by the plaintiff originally as trustee, absent a showing that the action was a mere subterfuge to escape the effect of the decision in the Merchants' Credit Service case, a cause of action was stated and the amendment in no way changed that cause except in the particulars noted.

The defense, except as to the assignment, would be the same were the amendment allowed as it would be under the original declaration, and we can see no way in which the defendant is prejudiced.

This court in State ex rel. Gold Creek Min. Co. v. District Court, 99 Mont. 33, 43 P.2d 249, 250, has stated the rule in Montana as to amendments: "The rule being to allow, and the exception to deny, them." (Citing many cases.)

It is true that the district court under section 9187, Revised Codes, has a wide discretion in allowing or denying amendments, but we think the denial of leave to amend here was an abuse of that discretion. We think the amendment was proposed at an opportune time (when the demurrer was set for hearing), and the rule announced in State ex rel. Gold Creek Min. Co. v. District Court, supra, is applicable, i. e.: "'But the refusal to permit an amendment which is proposed at an opportune time and should be made in furtherance of justice is an abuse of discretion on the part of the trial court."' (Citing cases.)

Certainly permitting the amendment in this case where no change is made in the...