LITTLE HORN STATE BANK v REAL BIRD

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No. 14630 I N THE S P E E COUKL' O THE STATl3 O M3NTANA UR M F F 1 979 LI'ITLE HORN STATE BANK, a hbntana Banking Corporation, P l a i n t i f f and Respondent, -VS- WW REAL BIRD, J . and R lw!DIw REAL BIRD, Defendants and A p ~ l l a n t s . Appeal fm: D i s t r i c t Court of t h e Thirteenth Judicial D i s t r i c t , Honorable Charles Luedke, Judge presiding. Counsel of Record: For Appellants: D. Michael Eakin, Legal Services, argued, Hardin, Ibntana Steven L. Bunch, Legal Services, argued, H e l e n a , Fkx&ana For Respondent : Clarence T Belue argued, H a r d i n , Mntana . Suhitted: Filed: ' A ~ G !p - g - Decided: June 1 , 1979 1 RUG - 9 1979 J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n o f t h e Court. Mr. P l a i n t i f f bank b r o u g h t t h i s a c t i o n i n J u s t i c e C o u r t , Big Horn County, t o r e c o v e r money owing from d e f e n d a n t o n c e r t a i n promissory notes. The J u s t i c e C o u r t e n t e r e d a d e f a u l t judgment i n f a v o r of p l a i n t i f f . D e f e n d a n t ' s m o t i o n t o s e t a s i d e t h e de- f a u l t was d e n i e d , and s h e a p p e a l e d t o t h e D i s t r i c t C o u r t . The D i s t r i c t C o u r t d i s m i s s e d t h e a p p e a l , and d e f e n d a n t a p p e a l s from t h e d i s m i s s a l . I n December 1 9 7 7 , p l a i n t i f f i n i t i a t e d t h i s a c t i o n i n J u s - t i c e C o u r t t o r e c o v e r money owing from two l o a n s made t o d e fendant. S e r v i c e o f p r o c e s s was c o m p l e t e d on d e f e n d a n t o n J a n u a r y 1 0 , 1978. On J a n u a r y 1 2 , d e f e n d a n t a p p e a r e d b e f o r e t h e J u s t i c e C o u r t and s o u g h t t h e c o u r t ' s a s s i s t a n c e i n n e g o t i a t i n g a settlement. No w r i t t e n a p p e a r a n c e was made n o r was t h e r e any showing t h e d e f e n d a n t had a n a t t o r n e y a t t h a t t i m e . A t t h e s u g g e s t i o n of t h e J u s t i c e C o u r t , d e f e n d a n t c o n t a c t e d p l a i n t i f f ' s a t t o r n e y and t r i e d t o r e a c h a s e t t l e m e n t . She p a i d t h e a t t o r n e y $150 on h e r a c c o u n t and l e f t w i t h t h e u n d e r s t a n d i n g t h a t no a c t i o n would b e t a k e n i n t h e m a t t e r w h i l e s h e a t t e m p t e d t o s e c u r e a l o a n t o pay o f f t h e r e m a i n d e r o f t h e i n d e b t e d n e s s . On J a n u a r y 2 3 , w i t h o u t n o t i c e t o t h e d e f e n d a n t , t h e J u s - t i c e C o u r t e n t e r e d a d e f a u l t judgment i n f a v o r of t h e bank and issued a w r i t of execution. The judgment d i d n o t g i v e t h e d e f e n - d a n t c r e d i t f o r t h e $150 p a i d by h e r t o p l a i n t i f f ' s a t t o r n e y . D e f e n d a n t l e a r n e d o f t h e d e f a u l t when h e r o n l y nonexempt a s s e t was s e i z e d p u r s u a n t t o t h e w r i t o f e x e c u t i o n . Defendant t h e n c o n t a c t e d a n a t t o r n e y and f i l e d a t i m e l y m o t i o n t o s e t a s i d e t h e d e f a u l t judgment, s u p p o r t e d by a n a f f i d a v i t s e t t i n g o u t d e f e n s e s , c o u n t e r c l a i m s , and f a c t s t o show d e f e n d a n t was n o t r e q u i r e d t o f i l e a w r i t t e n answer. The J u s t i c e C o u r t d e n i e d t h e m o t i o n . Defendant t h e n f i l e d n o t i c e of a p p e a l i n J u s t i c e Court. She was u n a b l e t o f i n d s u r e t i e s f o r u n d e r t a k i n g , s o s h e subm i t t e d an a f f i d a v i t of i n a b i l i t y t o provide t h e undertaking. P l a i n t i f f objected t o t h e j u r i s d i c t i o n of t h e District Court t o h e a r t h e a p p e a l when no u n d e r t a k i n g was p r o v i d e d . The D i s - t r i c t C o u r t d i s m i s s e d t h e a p p e a l , and t h i s a p p e a l f o l l o w e d . D e f e n d a n t p r e s e n t e d two i s s u e s o n a p p e a l i n v o l v i n g v i o l a t i o n o f c o n s t i t u t i o n a l r i g h t s , b o t h s t a t e and f e d e r a l . Due t o t h e p e c u l i a r f a c t s s u r r o u n d i n g t h e e n t r y o f t h e d e f a u l t judgment h e r e , w e f i n d i t u n n e c e s s a r y t o c o n s i d e r t h e two i s s u e s on appeal. R a t h e r , w e b a s e o u r d e c i s i o n o n Montana c a s e law dealing with considerations similar t o those presented i n t h i s case. I n B r o t h e r s v . B r o t h e r s ( 1 9 2 4 ) , 7 1 Mont. P. 60, 61, t h i s C o u r t s a i d : 378, 383-84, 230 "No g r e a t a b u s e o f d i s c r e t i o n by t h e t r i a l c o u r t i n r e f u s i n g t o s e t a s i d e a d e f a u l t need b e shown t o w a r r a n t a r e v e r s a l , f o r t h e c o u r t s u n i v e r s a l l y f a v o r a t r i a l on t h e m e r i t s . " The C o u r t went o n t o s t a t e i t i s p r e f - e r a b l e t o d i s p o s e o f c a s e s on t h e i r m e r i t s t h a n t o m a i n t a i n t o o s t r i c t a r e g a r d f o r t e c h n i c a l r u l e s of procedure. 7 1 Mont. a t 384, 230 P . a t 61. Brothers, Here, t h e r e c o r d shows t h e p l a i n t i f f t o o k a d e f a u l t a f t e r t h e d e f e n d a n t f e l t s h e had b e e n a s s u r e d s h e would b e g i v e n t i m e t o n e g o t i a t e a s e t t l e m e n t , and t h e judgment e n t e r e d e x c e e d s t h e amount d e f e n d a n t owed p l a i n t i f f a t t h e t i m e t h e c o u r t e n t e r e d judgment by $150. Given t h e a b o v e r u l e f a v o r i n g h e a r i n g c a s e s o f t h i s n a t u r e on t h e i r m e r i t s , defendant should have h e r day i n c o u r t . W e t h e r e f o r e f i n d t h e judgment e r r o n e o u s and remand t h e c a s e t o t h e D i s t r i c t C o u r t o f Big Horn County w i t h d i r e c t i o n s t o s e t a s i d e t h e d e f a u l t e n t e r e d and r e t u r n t h e c a u s e t o t h e J u s t i c e Court f o r f u r t h e r proceedings. We concur: I 1 i A ; Justi cbq , 1 ?r--,u& f $ ,/ 1 .

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