State, Dept. of Revenue v. Frank
| Decision Date | 02 April 1987 |
| Docket Number | No. 86-423,86-423 |
| Parties | STATE of Montana, DEPARTMENT OF REVENUE, Plaintiff and Appellant, v. Kenneth John FRANK, Defendant and Respondent. |
| Court | Montana Supreme Court |
Randall O. Skorheim, Great Falls, for defendant and respondent.
In this case we uphold the determination of the District Court, Eighth Judicial District, Cascade County, that there was an accord and satisfaction of the claim of the Department of Revenue against Kenneth Frank for recoupment of monies paid by the State as Aid to Families of Dependent Children (AFDC).
We also pass upon the propriety of the procedures used by the Department in attempting recoupment where there exists a District Court order for child support arising out of a marital dissolution proceeding.
The marriage of Judith and Kenneth Frank was dissolved in 1979. The District Court decree awarded custody of the three minor children to Judith, and Kenneth was ordered to pay child support in the amount of $100 per month per child until the children reached majority. The children are not of the age of majority at the time of this appeal.
Three months after the dissolution, in November, 1979, Judith became a recipient of AFDC funds, and assigned her right of child support from Kenneth to the Department of Revenue.
On February 27, 1980, the Department issued a "Notice of Support Debt" for $374. 1 The notice, however, was not served on Kenneth until six weeks later, on April 8, 1980. Kenneth did not request a hearing on the support debt pursuant to the notice. On June 12, 1980, the Department filed in the District Court of Cascade County, its warrant of distraint for a debt of $1,340 and requested a writ of execution directed to the sheriff of Cascade County to attach any accounts in which Kenneth might possess an interest. The writ of execution was requested by the Department on April 21, 1981, and was returned without any funds being collected.
On May 31, 1983, the Department requested a further writ of execution, which, issued on June 9, 1983, was returned "no accounts." On June 8, 1983, the Department filed an "Amended Warrant for Distraint" against Kenneth for a claimed debt of $7,040. On June 27, 1984, the Department filed with the Clerk of the District Court its "Second Amended Warrant of Distraint" against Kenneth, claiming $14,240 of debt due.
Aside from the original communication to Kenneth from the Department specifying a $374 debt, no further "Notice of Support Debt" was served upon Kenneth with respect to the accruing support payments, and the Department further failed (with respect to each filing of distraint warrant) to give any notice to Kenneth of a right to a hearing on each warrant.
Other events occurred which affected Kenneth's ability to make child support payments. He was a painter and suffered an industrial accident in August, 1980, which left him totally disabled. He was unable to return to work until January, 1985. Until February, 1984, his only income was $219 per week from Workers' Compensation benefits. He entered into a lump sum settlement with the State Insurance Fund on his compensation claim. When Kenneth submitted his petition for lump sum settlement, he submitted an affidavit in which he indicated he believed $8,500 would be required to make up his child support arrearages. At the time, the Department had calculated his arrearages to be $7,040.
Another important event related to Judith. She remarried three times while a recipient of AFDC funds without notifying the agency of her marriages. Her failure to notify the Department is an apparent violation of Sec. 53-4-237, MCA, which provides:
... in the administration of this part the department may consider the income and resources of stepparents and other individuals who reside in the home as resources and income available to the household.
Moreover, Judith did not steadily receive AFDC funds. She was an AFDC recipient in November and December, 1979, and during the years 1980 and 1981. She did not receive any AFDC funds during 1982 and most of 1983. She received a $425 grant in December, 1983, and a $425 grant in January, 1984. Over the entire period, the Department retained its assigned interest in the support payments, and Kenneth's debt to the Department was calculated as accruing in periods when Judith was not receiving any AFDC funds.
A third important event was that in April, 1984, Kenneth petitioned for and was granted custody of the minor children. Because Judith moved to another state to prevent enforcement of the change of custody, Kenneth spent approximately $3,000 to have the children returned to his care.
In the fall of 1983, a Department investigator wrote Kenneth's attorney informing him that the arrearage had grown to $7,040 and indicated an interest in negotiating a settlement. In February, 1984, another Department investigator wrote Kenneth's attorney informing him that the debt had grown to $7,640. According to the Department's testimony, this letter indicated that there was a possibility that the debt amount might be discounted to encourage settlement. A month later, on March 24, 1984, Kenneth's attorney sent to the Department a check for $1,000 accompanied by a letter stating that the check was offered as a full and final compromise payment. 2 The Department cashed the check and did not communicate further with Kenneth until it began garnishing his wages in January, 1985. The Department never informed Kenneth, either formally or informally, that his letter offer of March 26, 1984 had been rejected.
Kenneth reentered the work force in January, 1985, as a painting supervisor. He had remarried and had custody of the three minor children of his previous marriage. He was earning $336 per week.
The Department, through its regional supervisor in Great Falls, served upon Kenneth's employer a notice of levy which commanded the employer to withhold from Kenneth's paycheck 50% of the net proceeds then and in the future.
On February 8, 1985, Kenneth, through his attorney, moved the District Court for relief from the warrants of distraint and for stay of enforcement. The District Court granted a temporary stay and set the matter down for hearing. The Department filed its motion to dissolve the temporary restraining order and further moved that Kenneth be required to furnish a bond. The motion to dissolve the temporary restraining order and to require a bond were denied. At a hearing held before the District Court on March 28, 1985, the motion for permanent injunction was taken under advisement and on July 30, 1986, the District Court issued its findings of fact, conclusions and the order which is the subject of this appeal.
The Department of Revenue urges five issues on appeal:
1. The District Court lost jurisdiction of the cause under Rule 60(c), M.R.Civ.P. when it issued its findings of fact, conclusions of law and order more than 45 days after the motion filed on February 8, 1985.
2. The District Court's determination that Kenneth should not receive due process was incorrect.
3. Neither the fraud of Judith nor the mistake of the Department eliminates Kenneth's obligation to make child support payments.
4. The court erred in determining that there had been an accord and satisfaction.
5. The court erred in determining that Kenneth was entitled to attorneys fees and costs.
The first issue relates to whether the District Court had jurisdiction under the time restraints of Rule 60(c), M.R.Civ.P. to set aside the judgment effect of the filing of a warrant of distraint. Rule 60(c), M.R.Civ.P. provides:
Time for determining motions. Motions provided by subdivision (b) of this rule shall be determined within the times provided by Rule 59 in the case of motions for new trials and amendment of judgment and if the court shall fail to rule on the motion within the 45 day period, the motion shall be deemed denied.
The Department argues that the time elapsing between the date of the father's motion for relief from judgment, February 8, 1985, and the hearing on the motion, March 28, 1985 was 48 days, and the order itself did not come down until July 30, 1986, and that thereby the District Court lost jurisdiction of the cause.
In cases for collections for delinquent taxes, or the recoupment of AFDC payments as here, where the collection is based upon warrants of distraint, a judgment as such is not actually entered by a District Court. Instead, the Department of Revenue files a warrant of distraint with the Clerk of the District Court, whose duty is then to file the warrant in the judgment docket with the name of the taxpayer or parent listed as the judgment debtor. Section 15-1-704, MCA. Upon the filing thereof, there is a lien against all real and personal property of the delinquent taxpayer or nonpaying parent in the county where the warrant is filed. Section 15-1-701(2), MCA. Thus, the filing of the warrant by the Department with the District Court has the same lien effect as a properly docketed judgment and the Department may collect delinquent taxes and enforce the tax lien or recoup AFDC funds in the same manner as a judgment is enforced. Section 15-1-701(2), MCA; Sec. 40-5-241, MCA.
In this case, the effect of the motion of Kenneth for relief from judgment and a stay of enforcement is the same as the situation of a person seeking relief from a judgment of the District Court under Rule 60(b), M.R.Civ.P. It is, however, provided in Rule 60(b) that the rule
... does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to grant relief to a defendant not actually personally notified as may be required by law ...
The time limitations provided in Rule 60(c) must be read in light of the...
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