Sargent County Bank v. Wentworth

• Decision Date: 09 January 1989
• Docket Number: No. 870218,870218
• Citation: 434 N.W.2d 562
• Parties: SARGENT COUNTY BANK, Plaintiff and Appellee, v. John WENTWORTH and Beth R. Wentworth, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 562

434 N.W.2d 562

SARGENT COUNTY BANK, Plaintiff and Appellee, v. John WENTWORTH and Beth R. Wentworth, Defendants and Appellants.

Civ. No. 870218.

Supreme Court of North Dakota.

Jan. 9, 1989.

Vogel, Brantner, Kelly, Knutson, Weir & Bye, Ltd., Fargo, for plaintiff and appellee; argued by Jon R. Brakke.

Coles & Snyder, Bismarck, for defendants and appellants; argued by James J. Coles.

ERICKSTAD, Chief Justice.

John and Beth Wentworth appeal from a district court order granting the Sargent County Bank [Bank] prejudgment possession of certain collateral securing loans made by the Bank to the Wentworths. We dismiss the appeal.

On May 16, 1987, the Bank initiated an action against the Wentworths, alleging that they were in default on a $381,642.83 obligation to the Bank under a series of promissory notes secured by crops, farm equipment and livestock, together with the proceeds and products therefrom, and seeking to foreclose its security interest in that property. The Bank also sought an order to show cause for prejudgment possession of the collateral pursuant to Chapter 32-07, N.D.C.C.

The Wentworths answered the complaint, alleging that as between an operating loan given by the Bank and another loan given by the Bank and guaranteed by the Farmers Home Administration [FmHA], the Bank had misapplied their payments, that the crop mortgages were invalid under Section 35-05-04, N.D.C.C., that they were not afforded the "appropriate notices and rights of appeal" for the FmHA guaranteed loan, and that they were entitled to relief under the confiscatory price defense provisions of Chapter 28-29, N.D.C.C. The Wentworths also filed a return to the order to show cause, asserting that the Bank failed to comply with Chapter 32-07, N.D.C.C., and raising essentially the same defenses as set forth in their answer to the complaint.

After a hearing on the order to show cause, the district court granted the Bank prejudgment possession of livestock, farm equipment, and proceeds from the sale of crops pending a final determination of the merits of the foreclosure action. Pursuant to Section 32-07-04, N.D.C.C., the Bank obtained a written undertaking by a surety in the amount of $650,000. The Wentworths have appealed from the order granting the Bank prejudgment possession.

The Bank moved to dismiss the Wentworths' appeal, contending that because the trial court specifically refused to enter a Rule 54(b), N.D.R.Civ.P., certification, the order does not constitute a final adjudication of the parties' claims and is not appealable. The Wentworths respond that the order is appealable pursuant to Section 28-27-02, N.D.C.C.

In Gillan v. Saffell, 395 N.W.2d 148 (N.D.1986), and Gast Construction Co. v. Brighton Partnership, 422 N.W.2d 389 (N.D.1988), we established the framework for analyzing this court's jurisdiction in cases where there is an appeal and there are unadjudicated claims remaining to be resolved by the trial court. See also Regstad v. Steffes, 433 N.W.2d 202 (N.D.1988); Matter of Estate of Stuckle, 427 N.W.2d 96, 101 (N.D.1988) (Meschke, J., concurring). In Gast Construction Co. v. Brighton Partnership, supra, 422 N.W.2d at 390, we said:

"First, the order appealed from must meet one of the statutory criteria of appealability set forth in NDCC Sec. 28-27-02. If it does not, our inquiry need go no further and the appeal must be dismissed. Gillan v. Saffell, supra. If it does, then Rule 54(b), NDRCivP, must be complied with. E.g., Production Credit Ass'n of Grafton v. Porter, 390 N.W.2d 50 (N.D.1986). If it is not, we are without jurisdiction. Ibid."

In this case, pursuant to Chapter 32-07, N.D.C.C., the trial court granted the Bank prejudgment possession of certain collateral and proceeds. The order was thus a provisional remedy and therefore appealable pursuant to Section 28-27-02(3), N.D.C.C. ¹

However, our inquiry also requires an analysis of the applicability of Rule 54(b) and the trial court's refusal to grant the Wentworths' request for a Rule 54(b) certification. The purpose of Rule 54(b) is to discourage piecemeal disposal of multi-claim litigation. Union State Bank v. Woell, 357 N.W.2d 234 (N.D.1984). Rule 54(b) provides that "[i]f more than one claim for relief is presented in an action, ... or if multiple parties are involved, the court may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment." In the absence of such a determination, an appeal may not be taken in multi-claim litigation which leaves some claims unadjudicated. Gillmore v. Morelli, 425 N.W.2d 369 (N.D.1988). We have said that "claims" is used in the general sense in Rule 54(b) to include "issues." Mitzel v. Schatz, 167 N.W.2d 519 (N.D.1968). This action involves an adjudicated claim for prejudgment possession of collateral and an unadjudicated claim for foreclosure, and we therefore conclude that Rule 54(b) is applicable. ²

In Union State Bank v. Woell, supra, 357 N.W.2d at 238, we outlined the following relevant factors for trial courts to consider in assessing a request for a Rule 54(b) certification:

" 'In reviewing 54(b) certifications, other courts have considered the following factors, inter alia: (1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in setoff against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like. Depending upon the facts of the particular case, all or some of the above factors may bear upon the propriety of the trial court's discretion in certifying a judgment as final under Rule 54(b).' Allis-Chalmers Corp. v. Philadelphia Electric Co., supra, 521 F.2d at 364 [3rd Cir.1975]. (Footnotes omitted.)"

In Union State Bank v. Woell, supra, we reviewed the trial court's decision on a request for a Rule 54(b) certification under the abuse-of-discretion standard. See also Mitzel v. Schatz, supra.

In this case, the Wentworths defended the order to show cause for prejudgment possession of the collateral with some of the same defenses they raised in their answer to the foreclosure action. The similarity of defenses demonstrates a legal and factual interrelationship comparable to that in Union State Bank v. Woell, supra; see also, Buurman v. Central Valley School District, 371 N.W.2d 146 (N.D.1985). Some of the issues ³ raised by the Wentworths on this appeal directly involve the merits of their defenses to the unadjudicated foreclosure action, and there is a possibility this court may be obliged to consider some of those issues in a subsequent appeal of that action. Moreover, some of the issues raised in this appeal might be rendered moot by future developments in the unadjudicated foreclosure action. Under these circumstances, we are not persuaded that unusual or compelling circumstances were presented to the trial court to warrant Rule 54(b) certification, and we conclude that the trial court did not abuse its discretion in denying Rule 54(b) certification.

Although we have jurisdiction to review orders such as the one in this case when there is a proper appeal from a final judgment, see Production Credit Ass'n v. Halverson, 386 N.W.2d 905 (N.D.1986), the absence of a Rule 54(b) certification requires us to decline to consider the propriety of the order appealed from at this time. Accordingly, we dismiss this appeal.

VANDE WALLE and GIERKE, JJ., and VERNON R. PEDERSON, surrogate Justice, concur.

VERNON R. PEDERSON, Surrogate Justice, sitting in place of LEVINE, J., disqualified.

MESCHKE, Justice, concurring.

I concur but still unenthusiastically. See Regstad v. Steffes 433 N.W.2d 202 (N.D.1988) (Meschke, concurring). I write separately to bring notice to the dramatic procedural step this understated opinion represents, to register my reservations, and to acknowledge its lone meritorious quality.

Heedless of the concerns that I recorded in my concurrence to Regstad v. Steffes, this decision applies Rule 54(b) to a classic temporary injunction, an order requiring a debtor to make pretrial turnover of mortgaged goods to a foreclosing creditor. The doctrine of finality is applied to "an adjudicated claim for prejudgment possession of collateral" because "an unadjudicated claim for foreclosure" remains. Thus, it is concluded that "Rule 54(b) is applicable."

So it is quietly decided that there can be no appeal from an order granting an interlocutory injunction without the trial court's further action under Rule 54(b). Without any mention, this abandons the assumption made in Regstad v. Steffes, supra, "that an order granting an injunction may be appealed without regard to Rule 54(b)." As I set out in Regstad, this departs from more than a century of experience in this state, ignores the longstanding and widespread experience of other states, and carries our Rule 54(b) well beyond its prototype and the experience of its federal procreators. Today's decision leaves behind a century of procedural tradition with scarcely a farewell wave of the pen. This is a radical innovation and the need for it goes undisclosed.

I joined in Gillan v. Saffell, 395 N.W.2d 148 (N.D.1986) and Gast Construction Co. v. Brighton Partnership, 422 N.W.2d 389 (N.D.1988), with their unnecessarily sweeping statements of how Rule 54(b) should be employed. Neither involved an interlocutory injunction. Later I paused, concurring in Matter of Estate of Stuckle, 427 N.W.2d 96 (N.D.1988), to evaluate for myself...