State ex rel. Word v. Dist. Court of First Judicial Dist. In

• Citation: 112 Mont. 458
• Decision Date: 02 October 1941
• Docket Number: No. 8227.,8227.
• Parties: STATE ex rel. WORD v. DISTRICT COURT OF FIRST JUDICIAL DIST. IN AND FOR LEWIS AND CLARK COUNTY et al.
• Court: United States State Supreme Court of Montana

112 Mont. 458

STATE ex rel. WORD
v.
DISTRICT COURT OF FIRST JUDICIAL DIST. IN AND FOR LEWIS AND CLARK COUNTY et al.

No. 8227.

Supreme Court of Montana.

Oct. 2, 1941.

Original prohibition proceeding by the State of Montana on the relation of Augusta J. Word against the District Court of the First Judicial District of the State of Montana in and for the county of Lewis and Clark and the Honorable R. E. McHugh, Judge of the District Court of the Third Judicial District presiding.

Writ issued.

MORRIS, J., dissenting.

Geo. E. Hurd, of Great Falls, and Robert L. Word, Jr., of Helena, for relatrix.

Gunn, Rash & Hall, of Helena, for respondents.

ANGSTMAN, Justice.

This is an original proceeding for an appropriate writ seeking to set aside an order of the respondent court setting case No. 15862 in the respondent court for trial as an equity case and prohibiting the respondent court from proceeding with the trial thereof without a jury. Case No. 15862 has heretofore been before this court, and it was held by this court that the complaint was good as against the general demurrer. Word v. Union Bank & Trust Co., 111 Mont. 279, 107 P.2d 1083. The sole question for our consideration is whether the action is one in equity or at law. If the action is one at law, then a jury trial must be had. For a general statement of the nature of the action, reference is made to the opinion in 111 Mont. 279, 107 P.2d 1083. It is sufficient to say in addition that the answer puts in issue most of the material allegations of the complaint.

It is the contention of defendants that in order for plaintiff to recover she must prove the value of her shares of stock and bonds, and that this would necessitate an accounting to determine the value of the property owned by the dissolved corporation at the time of the acts complained of, the amount of its debts, and the expenses of administering the trust, and other things cognizable only by a court of equity. We do not agree that the action is one for an accounting in equity. As we made plain in the former opinion, the action is one in tort against the trustees of the dissolved corporation to recover damages against them in their individual capacity, and against the bank acting in complicity with them. There is no attempt made in the complaint to seek recourse against property of the dissolved corporation; nor is there any attempt made to seek redress on behalf of other stockholders or bondholders. The action is simply one in which this individual plaintiff seeks damages from the individual defendants and the bank for a tort alleged to have been committed by them, resulting in damages to plaintiff. The fact that books and records will be introduced in evidence is no obstacle to the maintenance of the action at law, or to the trial of the case by a jury.

In actions at law it is frequently necessary to examine books of account. Bradford, etc., Co. v. New York, etc., Co., 123 N.Y. 316, 25 N.E. 499, 11 L.R.A. 116. See, also, Nordeen v. Buck, 79 Minn. 352, 82 N.W. 644, where the court quoted from the prior case of Bond v. Welcome, 61 Minn. 43, 63 N.W. 3, as follows: “In ‘an action at law for the recovery of money only, the plaintiff is entitled absolutely to a trial by jury, although it involves the examination of a long account on each side; for the constitution guaranties him that right.”’

The court was in error in setting the case down for trial as an equity case. Plaintiff is entitled to have the issues determined by a jury. It is suggested that plaintiff has an adequate remedy by appeal and, therefore, that this application cannot be entertained. This suggestion is without merit. Obviously the remedy by appeal would be inadequate in this: The trial of the case would undoubtedly cost considerable and, if the plaintiff is entitled to a jury, as we have found she is, any judgment rendered in the case would not be binding upon her. We believe in such a situation this court should interpose its extraordinary power to correct the error of the district court at this stage of the case. Reasons similar to those which prompted us to intercede in the case of State ex rel. Crowley v. District Court, 108 Mont. 89, 88 P.2d 23, 121 A.L.R. 1031, apply here.

The writ applied for will issue.

JOHNSON, C. J., ERICKSON, and ANDERSON, JJ., concur.

MORRIS, Justice (dissenting).

I dissent. The opinion of the majority is so revolutionary, that I am impelled to express my views at length.

The writ is sought to prohibit the district court of the First Judicial District in and for Lewis and Clark county, and the Honorable R. E. McHugh of the Third Judicial District, called in to try the case, from proceeding to set or try case No. 15862 in the district court without a jury, and that a certain order made and entered therein under date of May 29, 1941, wherein Judge McHugh set the case for hearing as an equity case, he vacated and set aside and the relator accorded a jury trial.

The controversy involves the handling of the affairs of the Beaverhead Ranch Company by the four individual defendants as statutory trustees after the expiration of the company's corporate charter in September, 1927. A number of actions involving some phase of the matter has preceded this. The cases litigated are in two branches, one commenced by the Union Bank & Trust Co. for the appointment of a receiver, and one by Augusta J. Word for damages to her holdings in the ranch company arising out of the alleged illegal and fraudulent acts of the defendant bank and four of the trustees. I will first take up and follow to conclusion the action commenced by the bank.

The ranch company was engaged in the ranching and livestock business in Beaverhead county; the three individual defendants and R. Lee Word, husband and chief counsel for the plaintiff, composed the board of directors of the company during its corporate existence, and Word was its vice president and its counsel. R. Lee Word will hereafter be referred to as Word and Augusta J. Word as the plaintiff.

It appears that during the administration of the trust by the trustees a majority deemed it advisable to restock the ranch and borrow money from the Union Bank & Trust Company of Helena to purchase sheep. Such arrangement was perfected, the trustees giving notes for the money borrowed which were secured by a mortgage on the sheep and other trust property. Word, it is alleged, opposed putting the corporation back into the sheep business and advised against the trustees doing anything except to liquidate the trust as provided by statute. It is alleged in the pleadings, however, that Word signed the notes and mortgage given for the money borrowed to restock the ranch. This allegation was denied by plaintiff's reply in action numbered 15862, supra.

In January, 1934, the Union Bank & Trust Company commenced an action in the district court praying for the appointment of a receiver to liquidate the affairs of the trust. That action resulted in the appointment of H. H. Pigott, one of the trustees, as receiver of the trust. He qualified and entered upon the duties of his office in May, 1934. Word filed notice of appeal on behalf of himself and the other trustees. That action in this court was entitled Union Bank & Trust Company of Helena v. Penwell, 99 Mont. 255, 42 P.2d 457. When the matter came on for hearing before this court counsel for the bank moved to require Word to produce his authority to make or maintain the appeal for the board of trustees. The record showed that the other four trustees were opposed to the appeal and we held that Word was without authority in the premises, and the appeal was dismissed. This concluded this action, and we held in a subsequent action, State ex rel. Union Bank & Trust Co. v. District Court, 108 Mont. 151, 91 P.2d 403, inter alia, that the questions relating to the legality of the appointment of the receiver in subsequent litigation were res judicata.

Litigation relative to the second branch of the controversy arose December 22, 1935, when Word, as attorney for the plaintiff, commenced action number 15862, mentioned above, in the district court. A second amended complaint was filed November 28, 1938. The complaint alleges the plaintiff is the owner of 50 shares of stock of the Beaverhead Ranch Company and the holder of certain bonds issued by the corporation, while it was a going concern, secured by real estate mortgage on the ranch lands.

It is further alleged that counsel, on request, advised the trustees and the bank in 1929 and again in 1930 that the trustees could not lawfully put the dissolved corporation into any new business but should confine their acts to such as were provided by statute for liquidating the affairs of the dissolved corporation; that certain of the defendant trustees, notwithstanding such advice by counsel, in secret conference with officials of the defendant bank, arranged the loans mentioned, bought sheep and continued in business, and that such acts resulted in loss and damage tending to and did destroy the value of plaintiff's stock and bonds in the dissolved corporation; that one of the bands of sheep bought by the trustees to restock the ranch was bought from an officer of the creditor bank; that the defendant bank is the owner of 1,378 shares of the dissolved corporation and, in fact, that such bank owns all the shares that are on the records of the trust in the names of the four defendant trustees; admits that the bank owns or controls more than 1,400 shares of stock of the defunct corporation and that the plaintiff owns 50 shares; that in the year 1932 the bank took possession of the property and...