Production Credit Ass'n of Grafton v. Davidson, 11332

• Citation: 444 N.W.2d 339
• Decision Date: 17 July 1989
• Docket Number: No. 11332,11332
• Parties: PRODUCTION CREDIT ASSOCIATION OF GRAFTON, Plaintiff and Appellee, v. John V. DAVIDSON a/k/a John Davidson and Catherine Davidson, husband and wife, Defendants and Appellants. Civ.
• Court: United States State Supreme Court of North Dakota

Page 339

444 N.W.2d 339

PRODUCTION CREDIT ASSOCIATION OF GRAFTON, Plaintiff and Appellee, v. John V. DAVIDSON a/k/a John Davidson and Catherine Davidson, husband and wife, Defendants and Appellants.

Civ. No. 11332.

Supreme Court of North Dakota.

July 17, 1989.

John V. Davidson, (argued) Edinburg, for defendants and appellants, pro se.

Pearson, Christensen & Fischer, Grand Forks, for plaintiff and appellee; argued by Douglas A. Christensen.

ERICKSTAD, Chief Justice.

John and Catherine Davidson appeal from a money judgment granting the Production Credit Association of Grafton $80,134.12 plus costs and disbursements. We affirm in part, reverse in part, and remand.

The fact that the Davidsons have been acting pro se throughout the majority of these proceedings and have filed several bankruptcy petitions contemporaneous with this civil action ¹ has complicated the procedural aspects of this case. We will not modify or apply our rules and statutes differently merely because a party not learned in the law is acting pro se. See Lang v. Bank of North Dakota, 377 N.W.2d 575, 580 n. 6 (N.D.1985). We will, however, set forth the sequence of procedural events in detail so as to add perspective to the issues on appeal.

On June 10, 1985, PCA commenced this action by personally serving John and Catherine Davidson with a summons and complaint. The complaint alleged that on or about May 29, 1981, the Davidsons entered into a Basic Loan Agreement under which the PCA was named as Lender and the Davidsons were named as Borrower. PCA contended that, pursuant to their Lender/Borrower relationship, further loans were made to the Davidsons as follows: on March 14, 1984, PCA loaned the Davidsons money pursuant to a Supplementary Loan Agreement, under which the Davidsons agreed to remit to PCA 100% of all proceeds obtained from the sale of crops and also to repay PCA the sum of $25,485.99 on or before November 1, 1984; pursuant to another Supplementary Loan Agreement dated October 1, 1984, PCA advanced to the Davidsons the sum of $69,830.38 to be repaid according to the terms of the March 14, 1984, agreement; and, on January 11, 1985, PCA loaned the Davidsons $1,000.00 to be repaid by May 1, 1985.

In addition to the Basic Loan Agreement and the Supplementary Loan Agreements, the complaint alleged that PCA and the Davidsons entered into two security agreements. A security agreement dated May 29, 1980, gave PCA a security interest in all the Davidsons' farm equipment then owned or thereafter acquired, all accessions thereto, spare and repair parts and special tools and equipment. A security agreement, dated May 20, 1983, gave PCA a security interest in all crops growing or to be grown, the products of all crops, the proceeds derived, and all accounts arising from the sale of said crops grown on real estate located in Pembina County and described in the agreement. PCA perfected its security interest by filing a financing statement on May 23, 1983.

The complaint further alleged that the Davidsons had sold some grain, and had in their possession a check in the amount of $21,728.00, made payable to the Davidsons and PCA, for the sale of sunflowers, and furthermore, that the Davidsons had cashed a check in the amount of $1,474.00 received from the sale of 1984 sunflowers, made payable to PCA and the Davidsons, without obtaining the endorsement of PCA. The complaint alleged that, although PCA had demanded that the Davidsons remit to PCA the money they received from the sale of 1984 sunflowers as payment toward their indebtedness, payment had not been received.

In addition to filing the summons and complaint, PCA filed an ex parte motion with the trial court for an order to show cause in a claim and delivery proceeding. The motion was granted and the Davidsons were ordered to show cause before the trial court on June 24, 1985, why they should not be required to assemble the secured collateral and make it available to PCA and permit PCA to repossess it, and also to endorse and deliver the checks to PCA. A copy of the ex parte motion and the order to show cause were personally served on the Davidsons on June 10, 1985, the same day they were served with the summons and complaint.

On June 18, 1985, John and Catherine Davidson each filed a motion to dismiss the complaint, an accompanying brief, and an affidavit entitled "Special Appearance." The Davidsons asserted that the complaint failed to state a claim upon which relief could be granted "due to the fact that they [PCA] are not organized under the laws of this state and the fact that Plaintiff does not have the certificate of authority necessary to gain standing in a court of this state as a fictitious entity." ²

On June 20, 1985, both John and Catherine Davidson filed a return to the order to show cause and an accompanying affidavit. The documents were again entitled "Special Appearance." The Davidsons asserted that PCA's "affidavit fails to state that the Plaintiff is the owner of the property or that the Plaintiff has a special property therein. The Defendant asserts that John V. Davidson is the owner of the property in question and that the Plaintiff has absolutely no ownership or special property therein."

On June 24, 1985, a hearing was held on PCA's motion for an order to show cause in conjunction with its claim and delivery motion. On June 28, 1985, the trial court ordered that, after being given a seven-day notice, the Davidsons must assemble all of the items of farm machinery and equipment in which PCA had a security interest and make them available to the sheriff who could then seize and deliver the collateral to PCA to sell. The trial court further ordered that the Davidsons endorse and deliver to PCA all checks they had received from the sale of their 1984 crop. The Davidsons were warned that failure to assemble the property or cooperate with the sheriff might subject them to contempt proceedings. ³

On July 9, 1985, the Davidsons filed a counterclaim against PCA alleging fraud, breach of fiduciary trust, racketeering, and contempt of Congress. PCA filed a reply to the counterclaim on July 29, 1985, alleging that the counterclaim failed to state a claim upon which relief could be granted and further asserting that the allegations contained in the counterclaim were frivolous and not made in good faith.

On May 30, 1986, the trial court ordered John Davidson to appear on June 9 to show cause why he should not be held in civil contempt of the court's order dated June 28, 1985, for failure to cooperate with the sheriff and comply with the terms of the order. Davidson was personally served with a copy of the order to show cause on June 6, 1986. Apparently, the hearing was held and the court again ordered Davidson to cooperate with the sheriff. ⁴ Davidson did not do so, and on July 21, 1986, the court ordered both John and Catherine Davidson to appear on August 6, 1986, to show cause why they should not be held in civil contempt.

PCA filed a motion for default judgment under Rule 55 or, in the alternative, summary judgment. A copy of this motion, a brief and affidavit in support of the motion, and a notice of the hearing on the motion scheduled for August 6, 1986, were mailed to the Davidsons on July 18, 1986. The record contains no response from the Davidsons to the motion for summary judgment.

Also on July 18, 1986, PCA moved that the trial court issue an order directing the First American Bank & Trust Company of Grafton to turn over to the PCA money in the Davidsons' account which had been derived from the sale of the 1984 sunflowers. A copy of this motion, the accompanying brief, and notice of hearing set for August 6, 1986, were also mailed to the Davidsons on July 18, 1986. In the notice of hearing, PCA advised the Davidsons that the motion was submitted pursuant to Rule 3.2 of the North Dakota Rules of Court and, accordingly, the adverse parties were directed to file a brief within ten days of the service of the motion upon them. The Davidsons were further advised that failure to do so would be deemed an admission that the motion was meritorious. ⁵

The hearing scheduled for August 6, 1986, on the order to show cause for civil contempt, the motion for default judgment and alternative summary judgment, and order directing the bank to turn over to PCA the proceeds from the sale of 1984 sunflowers, was apparently held but we are unable to review those proceedings because the Davidsons did not order a transcript of that hearing. "If an appeal is taken in a case in which an evidentiary hearing was held, it is the duty of the appellant to order a transcript of the proceedings." Rule 10(b), N.D.R.App.P.

On August 8, 1986, the trial court issued an order finding John Davidson in contempt of court for failing to obey the previous court orders directing him to turn over his property and sentenced him to thirty days in jail or until such time as he purged himself of contempt by disclosing the location of the property. In oral argument, John Davidson indicated that he did spend some time in jail.

On August 18, 1986, the trial court granted PCA's motion for default judgment and alternative motion for summary judgment and directed entry of judgment against the Davidsons.

On August 19, 1986, PCA moved that the trial court direct the Edinburgh Farmers Elevator to issue a check payable to PCA in the sum of $21,728.47 owed by the elevator to John Davidson by virtue of the elevator's purchase of sunflowers from Davidson's 1984 crop. A copy of that motion and accompanying brief and affidavit were mailed to the Davidsons on August 19, 1986. ⁶

On August 20, 1986, judgment was entered in accordance with the order of August 18, 1986. A notice of entry of judgment and a copy of the judgment were mailed to the Davidsons on August 21, 1986. The Davidsons filed a notice of appeal on August 29, 1986.

The Notice of Appeal reads in pertinent part:

"PLEASE TAKE NOTICE that Defendant ...