Striegel v. Dakota Hills, Inc.

• Decision Date: 20 March 1985
• Docket Number: No. 10699,10699
• Court: North Dakota Supreme Court
• Parties: Curtis G. STRIEGEL and Maurine T. Striegel, Plaintiffs and Appellees, v. DAKOTA HILLS, INC.; Moore Engineering Company, Moore Engineering, Inc.; Donald Gartner and Kathy Gartner; First National Bank and Trust Co.; Dakota Northwestern Bank National Association; Kenneth O. Leonard; R.L. Kilzer, P.C. Pension & Profit Sharing Plan; and Ralph L. Kilzer, individually, Defendants, and Hillside Trust; Lovelle Biby, Trustee of the Hillside Trust; and Gerald D. Biby, Defendants and Appellants. Civ.

Page 491

365 N.W.2d 491

Curtis G. STRIEGEL and Maurine T. Striegel, Plaintiffs and Appellees, v. DAKOTA HILLS, INC.; Moore Engineering Company, Moore Engineering, Inc.; Donald Gartner and Kathy Gartner; First National Bank and Trust Co.; Dakota Northwestern Bank National Association; Kenneth O. Leonard; R.L. Kilzer P.C. Pension & Profit Sharing Plan; and Ralph L. Kilzer individually, Defendants and Hillside Trust; Lovelle Biby, Trustee of the Hillside Trust; and Gerald D. Biby, Defendants and Appellants.

Civ. No. 10699.

Supreme Court of North Dakota.

March 20, 1985.

Tschider & Smith, Bismarck, for plaintiffs and appellees; argued by Sean O. Smith, Bismarck.

John O. Holm, Dickinson, for defendant Dakota Hills, Inc.

Thomas M. Disselhorst, Bismarck, for defendants and appellants.

PEDERSON, Surrogate Justice.

This is an appeal from a "Final Judgment Nunc Pro Tunc" which canceled a contract for deed and foreclosed a security agreement. We affirm.

In January 1979, Curtis and Maurine Striegel executed a contract for deed to sell campground property to Gerald Biby. Biby subsequently conveyed his interest in the property by quit claim deed to Hillside Trust [Hillside], notwithstanding a provision in the contract for deed that Biby's interest was not assignable without the written consent of the Striegels.

In March 1982, the Striegels brought a foreclosure action against Biby seeking cancellation of the contract for deed. The Striegels invoked the acceleration clause in the contract for deed and claimed that Biby had failed to make the requisite monthly payments of principal and interest and had refused to pay delinquent 1981 real estate taxes. In his answer, Biby raised numerous affirmative defenses and counterclaims. Biby asserted that he was not a proper party to the foreclosure action because he had assigned his interest to Hillside, which was not named as a party defendant. He also claimed, among other things, fraud and material misrepresentations on the part of the Striegels.

A partial summary judgment in the Striegels' favor was entered by the district court on June 14, 1982, canceling the contract for deed and establishing a redemption period for Biby of 100 days from the date of entry of judgment. The partial judgment also ordered that the Striegels amend their complaint to include Hillside as a defendant, and Hillside and its trustee were served on June 14, 1982. The district court, concluding that Biby's affirmative defenses were more appropriately described as counterclaims, declined to rule on them because questions of fact existed.

On June 16, 1982, Biby and Hillside filed for joint relief under Chapter 11 of the United States Bankruptcy Code. The bankruptcy court did not permit the joint filing, but allowed Biby's petition to proceed. Hillside subsequently filed separately for relief, but the Striegels successfully obtained dismissal of its bankruptcy petition.

Hillside, through Biby's counsel, filed an answer and counterclaim to the foreclosure action in state court. The answer admitted that under the terms of the quit claim deed, Hillside "obtained all right, title, interest, claim or demand in and to the tract of land that is the subject of this lawsuit." The answer also incorporated by reference Biby's answer and counterclaim of April 1982.

A partial summary judgment in the Striegels' favor was entered on July 5, 1983, foreclosing Hillside's interest in the real and personal property and establishing a redemption period for it of 30 days from the date of entry of judgment. This partial judgment, similar to the partial judgment entered on June 14, 1982, foreclosing Biby's interest, authorized the issuance of a "Writ of Special Execution." The Striegels took possession of the personal property on July 14, 1983.

On July 15, 1983, Hillside filed another petition in bankruptcy court. The Striegels were once again successful in having the petition dismissed and they took possession of the real property. Biby and Hillside appealed to this court, and in Striegel v. Dakota Hills, Inc., 343 N.W.2d 785 (N.D.1984), we dismissed the appeal because the partial judgment was interlocutory and nonappealable without a Rule 54(b), NDRCivP, determination.

The Striegels then requested the district court to enter a Rule 54(b) certification and to dismiss the counterclaims. The district court denied the Striegels' motion for dismissal of the counterclaims, but granted the 54(b) certification and entered a judgment nunc pro tunc which provided that the two partial judgments previously entered were final judgments as to the Striegels' claims. Biby and Hillside have appealed.

AUTOMATIC STAY

Biby claims that the district court erred in ignoring the automatic stay provisions of 11 U.S.C. Sec. 362(a) which have been in effect since he filed his bankruptcy petition on June 16, 1982.

The automatic stay provisions of the Bankruptcy Code prohibit the commencement or continuation of judicial, administrative or other proceedings against the debtor that were or could have been commenced before the bankruptcy petition was filed. See Kessel v. Peterson, 350 N.W.2d 603 (N.D.1984). Although 11 U.S.C. Sec. 362(a) provides for an automatic stay of all proceedings or acts against the debtor, the debtor's property or property of the estate, it does not stay acts against property which is neither the debtor's nor the estate's. In re Sparkman, 9 B.R. 359 (Bkrtcy.E.D.Pa.1981). If, under state law, the debtor did not have an interest in property at the time the bankruptcy petition was filed, the automatic stay provisions cannot be applied to shield that property. In re Fidelity American Mortg. Co., 19 B.R. 568 (Bkrtcy.E.D.Pa.1982); Foulke v. Lavelle, 308 Pa.Super. 131, 454 A.2d 56 (1982).

In his answer to the foreclosure action, Biby disclaimed any interest in the property and asserted that he was not a proper party because of his quit claim conveyance to Hillside. In Hillside's answer to the Because the vendor is the person intended to be protected by the validity of a contractual prohibition against assignment, "a vendee cannot assert the invalidity of his own assignment in seeking to defeat his assignee." 6 R. Powell, The Law of Real Property Sec. 847, at p. 77-45 (1984). It is clear under North Dakota law that a vendee's assignment of a contract for deed in derogation of a contract provision that it shall not be assigned without the consent of the vendor does not automatically void the assignment. In Syllabus 4 of Star v. Norsteby, 75 N.D. 563, 30 N.W.2d 718 (1948), this court held that a "[p]rovision in a contract for deed that it shall not be assigned without the consent of [the] vendor is one which [the] vendor may insist upon or waive as he sees fit." Although the Striegels have relied upon the assignment as an instance of default under the contract for deed, we do not view their actions as an attempt to void Biby's assignment to Hillside.

foreclosure action, it claimed all right, title and interest to the property by virtue of the quit claim deed. Biby's bankruptcy schedules also reveal that he has never claimed any interest in the campground property. In its bankruptcy schedules Hillside has claimed the interest in the campground property under the contract for deed. Not until Biby was allowed to proceed in bankruptcy, and Hillside's bankruptcy proceedings were dismissed by the bankruptcy court because it did not qualify as a "debtor" under 11 U.S.C. Sec. 109, did Biby attempt to question the validity of his assignment of the contract for deed to Hillside.

We conclude that Biby had no interest in the campground property at the time he filed for bankruptcy because he had conveyed his interest to Hillside in April 1980. He cannot claim otherwise at this point in the proceedings. As a result, the automatic stay provisions of 11 U.S.C. Sec. 362(a) had no effect on the district court's ruling in this case. Accordingly, we conclude that Hillside and its trustee are the sole appellants with an interest at stake in this appeal.

AMENDMENT NUNC PRO TUNC

Hillside asserts that the trial court abused its discretion in amending the partial judgments nunc pro tunc to include the Rule 54(b) certification. The test of whether or not an amendment nunc pro tunc is permissible is " 'whether on the one hand the change will make the record speak the truth as to what was actually determined or done, or intended to be determined or done by the court, or whether, on the other hand, it will alter such action or intended action.' " Aabye v. Aabye, 292 N.W.2d 92, 94 (N.D.1980) [quoting State v. District Court of Fifth Judicial Dist., 110 Mont. 36, 98 P.2d 883, 885 (1940) ].

The trial court's comments during the July 1, 1983, proceedings indicate that the partial judgments were considered to be final. The trial court stated that the proceedings had "been going on long enough," and directed that counsel for Biby and Hillside prepare an order denying Striegel's motion to dismiss the counterclaims because the counterclaims had "been severed, in effect, or separated." The trial court also expressly authorized issuance of a "Writ of Special Execution." The partial judgment entered on July 5, 1983, provided that the judgment entered on July 14, 1982, was "res judicata to any further assertion of [Biby's] interests." We conclude that the trial court did not abuse its discretion in amending the judgment nunc pro tunc.

RULE 54(b) CERTIFICATION

Hillside asserts that the trial court improvidently granted the Rule 54(b), NDRCivP, certification in this case. In Union State Bank v. Woell, 357 N.W.2d 234, 238 (N.D.1984), we quoted with approval from Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 364 (3d Cir.1975):

" 'In reviewing 54(b) certifications, other courts have considered the following factors, inter alia: (1) the relationship In its certificate and order for final judgment nunc pro tunc, the trial court stated:

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