State Bank of Sheridan v. Heider

• Decision Date: 15 March 1932
• Citation: 139 Or. 185,9 P.2d 117
• Parties: STATE BANK OF SHERIDAN v. HEIDER et al.
• Court: Oregon Supreme Court

9 P.2d 117

139 Or. 185

STATE BANK OF SHERIDAN v. HEIDER et al.

Supreme Court of Oregon

March 15, 1932

Department 1.

Appeal from Circuit Court, Yamhill County; Gale S. Hill, Judge.

Suit by the State Bank of Sheridan against Otto W. Heider and others. From an order dismissing the suit, plaintiff appeals.

Remanded with directions.

W. M. Ramsey and Frank Holmes, both of McMinnville for appellant.

Otto W Heider, of Sheridan, for respondents.

RAND J.

The State Bank of Sheridan brought this suit to vacate and annul a judgment of the circuit court for Yamhill county, which affirmed a judgment of the justice's court, from which the plaintiff had appealed. The relief prayed for herein is that the judgment of the circuit court and that of the justice's court be vacated, and that the defendants be enjoined and restrained from enforcing said judgments, or either thereof, pending the final hearing herein.

The ground upon which plaintiff bases its right to the relief prayed for is fraud and collusion upon the part of Otto W. Heider, the plaintiff in the action, and K. E. Shetterly, the justice of the peace who rendered the judgment whereby plaintiff, without fault or negligence upon its part or that of its agents, was prevented from exercising its right to appeal from the judgment rendered in the justice's court.

This appeal is from an order of the circuit court dismissing this suit after a demurrer to the amended complaint had been sustained and plaintiff had declined to plead further.

In substance, the amended complaint alleges that Heider brought an action in the justice's court against plaintiff herein and recovered judgment for the sum of $126.90; that plaintiff appealed from said judgment by filing in said justice's court a proper notice of appeal, and an undertaking on appeal with proof of service indorsed upon each thereof, and demanded of the justice of the peace that he prepare, certify, and deliver to plaintiff a transcript upon appeal, as required by law, so that the same could be filed in the circuit court and the appeal be thereby perfected; that said justice did prepare a transcript but instead of inserting therein, as the law required him to do and as plaintiff had demanded of him, copies of the material docket entries of the cause and of the appeal, he fraudulently, and at the instigation of Heider, omitted to include therein any of said docket entries, and that by reason thereof, and for no other reason, the appeal was dismissed and plaintiff's right to appeal was lost without fault of this plaintiff or its agents.

The amended complaint further alleges that the cause of action alleged by Heider in the justice's court was based upon an unaccepted written order for the payment of money; that plaintiff had never accepted said order and had no knowledge of its existence until after the commencement of the action in the justice's court, and that plaintiff herein has never received any moneys whatsoever applicable to the payment of said order and does not now have and never has had in its possession or under its control any sum of money whatever which could be applied in payment thereof.

In addition to these averments, the amended complaint has attached thereto copies of all the pleadings, documents, and papers filed in said action in both the circuit and justice's courts and of all proceedings which were had and obtained therein. From these exhibits, as well as from the allegations of the complaint, it clearly appears that the sole cause for the dismissal of the appeal and the affirmance of the judgment by the circuit court was the failure of the justice to include in the transcript so prepared and certified to by him copies of said docket entries.

Defendants contend in support of their demurrer that the action of the circuit court, in sustaining the demurrer to the amended complaint, was proper for the reason that the plaintiff herein is attempting to attack the judgment collaterally. The argument is that, since the justice's court had jurisdiction of the parties and of the subject-matter and power to render the judgment, and rendered judgment after a trial upon the merits, that judgment cannot be impeached in a collateral attack for any error of law or fact occurring upon the trial, or for any irregularity in the proceedings, nor for fraud occurring subsequent to its rendition, even though such fraud prevented the plaintiff herein from obtaining a retrial of the cause. They cite in support of their argument Morrill v. Morrill, 20 Or. 96, 25 P. 362, 365, 11 L. R. A. 155, 23 Am. St. Rep. 95, and Altman v. School District, 35 Or. 85, 56 P. 291, 292, 76 Am. St. Rep. 468.

The first case cited was a suit to quiet title and one of the defendants answered, setting up as a defense, and in proof of his title, a prior decree between the same parties in a former partition suit. In the reply plaintiff sought to impeach the decree by alleging certain errors and irregularities which she claimed had occurred upon the trial of the partition suit, and it was held that this was a collateral attack upon the decree. Among other things, the court said: "When a court has jurisdiction of the subject-matter and the parties, its judgments cannot be impeached collaterally for errors of law or irregularity in practice." Clearly, the court was right in holding that it was a collateral attack upon the decree, for when a person in a suit to quiet title relies upon a decree to show his title, objections to the decree for judicial errors in the case is a collateral attack upon the decree.

The last case cited was a mandamus proceeding to compel the directors of a school district to draw their warrant in payment of a judgment which the plaintiff in the mandamus proceeding had obtained against the district. The directors answered, setting up that the judgment was void because the complaint in the action on which the judgment was rendered failed to state facts sufficient to constitute a cause of action. Clearly, this was an attempt to impeach the judgment collaterally and the court so held, and, in answer to these objections, said: "This is an attempt to impeach the judgment collaterally. It was rendered by a court having general jurisdiction over the subject-matter, and the power to grant the relief contained in the judgment. And the facts set up in the complaint, however imperfectly stated, were sufficient to authorize it to proceed to hear and determine the matter. It may be conceded, for the purpose of this decision, that if these objections had been made at the proper time they would have been sustained ( Ryan v. School-dist., 27 Minn. 433, 8 N.W. 146); but the failure to make them left the court with authority to proceed to judgment. In doing so, it necessarily determined that the complaint stated a cause of action, and its decision therein cannot be questioned or impugned collaterally, even though it may be erroneous. [Citing authorities.]"

In the Morrill Case referred to, the court attempted to define a collateral attack, saying: "A collateral attack on a judgment is any proceeding which is not instituted for the express purpose of annulling, correcting, or modifying such decree." Assuming that this is a correct definition of a collateral attack, and defendants do no deny its correctness, then this suit which was instituted for the express purpose of annulling the judgment is not a collateral attack, but is a direct attack upon the judgments in question. It is between the same parties, the only difference being that in this suit the justice of the peace and certain county officers, whose official duty it is to enforce the judgment, have been made defendants herein. But none of these additional parties are innocent purchasers under the judgment, or have any rights which could convert this suit into a collateral attack.

The question of what is a direct attack on a judgment as distinguished from a collateral attack is often a question of some difficulty, and one upon which there is much divergence of opinion. Van Fleet says that a direct attack on a judicial proceeding is an attempt to avoid or correct it in some manner provided by law, and that a collateral attack is an attempt to avoid, defeat, or evade it or deny its force and effect in some manner not provided by law, and that any proceeding provided by law for the purpose of avoiding or correcting a judgment is a direct attack which will be successful upon showing the error, while an attempt to do the same thing in any other proceeding is a collateral attack which will be successful only upon showing a want of power. He also says that a bill in equity to set aside a judgment for fraud or mistake is, as a general rule, a direct attack, and such a bill only becomes collateral when not filed within the time allowed by statute or by the rules of equity, or when it seeks to affect a bona fide purchaser under the judgment. See Van Fleet on Collateral Attack, pp. 4, 5, and 6.

In 1 Freeman on Judgments (5th Ed.) § 308, the author says: "That a litigant is engaging in a direct attack upon the judgment when he seeks equitable relief therefrom in the mode approved by law."

In a note to the principal case of Morrill v. Morrill, 23 Am. St. Rep., the writer at page 104 says: "It seems too obvious to require mention, that a proceeding to annul, modify, or correct a judgment is a direct proceeding. It is pointed directly at a judgment, and if it is successfully maintained, the judgment, or some part of it, must succumb to the attack and cease to exist." This note was cited with approval in Handley v. Jackson, 31 Or. 552, 50 P. 915, 65 Am. St. Rep. 839, and in Christensen v. Lane County, 90 Or. 401, 175 P. 845.

That this suit is a direct attack and not a collateral attack...