Western Loan & Savings Co. v. Smith

STOCKSLAGER, C. J. Plaintiff commenced this action in the district court of Bingham county against C. S. Smith and Nellie J. Smith to foreclose a mortage it had against these defendants. The complaint alleges that on the twenty-eighth day of February, 1891, defendants Smith executed their promissory note for the sum of $1,000, payable on or before five years after date with interest at the rate of nine per cent per annum payable monthly in advance, to the Western Building and Loan Association, a corporation, under the laws of Idaho. That on the same day defendants executed their mortgage to secure the payment of the note above referred to; that said mortgage was duly acknowledged, delivered to said corporation and filed for record. That on the tenth day of October, 1894, said Western Building and Loan Association assigned, transferred and delivered all its right, title and interest in and to the note and mortgage to the Western Loan and Sav — 96 — ings Company, which company is now the owner and holder of said note and mortgage. That on or about the second day of January, 1900, an accounting and settlement was had between plaintiff and C. S. Smith, and there was found to be a balance due on said note of $1,104.80, which said amount Smith then and there agreed in writing to pay; that no part of said sum or interest has ever been paid since said date; that on or about the twenty-first day of August, 1894, Charles S. and Nellie J. Smith made and delivered to one Charles Bunting their certain promissory note for $3,241.60, and to secure the payment thereof executed and delivered to said Bunting a certain mortgage of same date, duly acknowledged, recorded, etc. The property described in the mortgage is lots 1, 2, 3, 4 and 5, block 52, Danilson & Shilling’s addition to Blackfoot, Idaho, being the same property described in the mortgage marked plaintiff’s exhibit “A” and made a part of the complaint. The ninth allegation of the complaint is that the said mortgage given to Bunting is subsequent and inferior to the mortgage given by the defendants, C. S. Smith and Nellie J. Smith, to the Western Building and Loan Association. Then follows an allegation that plaintiff is informed and believes, and therefore alleges, that the defendant John W. Givens is the assignee of the Bunting note and mortgage, and claims to have some interest or claim upon said premises, or some part thereof, by virtue of being the owner and holder of said mortgage, which is subsequent to the mortgage of plaintiffs. Then follows prayer “for the sum of $1,404.80, with interest from January 2, 1900, at nine per cent per annum, .... that the defendants and all persons claiming under them subsequent to the execution of the mortgage given’by said C. S. Smith and Nellie J. Smith to the Western Building and Loan Association upon said premises . . . . may be barred and foreclosed of all rights, claims or equity of redemption in said premises,” etc. To this complaint a demurrer was filed by counsel for defendant John W. Givens, to wit: “1. That the complaint of the plaintiff herein does not state facts sufficient to constitute a cause of action against — 97 — the defendant. 2. That said action is barred by the provisions of section 4052 of the Revised Statutes of Idaho, 1887.” If the court ever passed upon this demurrer the record fails to disclose the order. On the twenty-fifth day of April, 1905, defendant Givens filed what is termed answer and cross-complaint. In the answer, alleging as a reason that he has not sufficient knowledge, information or belief to answer positively, he denies all the allegations from 1 to 7; admits the seventh allegation which refers to the execution and delivery by the defendants Smith to Charles Bunting of the mortgage described in the complaint. Denies the eighth allegation, which is that the Bunting mortgage is inferior to the one sued on by plaintiff; admits the allegations of the Bunting mortgage with note to defendant Givens, and avers that he is now the lawful owner and holder thereof; that the principal sum has not been paid, and no interest with the exception of $242.45 paid by C. S. Smith to defendant Givens on February 20, 1899, and another payment made on said interest by said Smith on the thirtieth day of April, 1903. The fourth allegation of the answer is that the defendant is informed and believes, and upon such information and belief alleges, that the plaintiff’s action herein is barred by the provisions of section 4052 of the Revised Statutes of Idaho of 1887. And further answering by way of cross-complaint against the plaintiff and eách and all of the defendants hereto other than this cross-complaint, the said John Givens alleges as follows, to wit: 1. Sets up the execution and delivery of the note by defendants Smith to Bunting and a copy thereof; 2. The execution and delivery of the mortgage to secure the note; 3. The assignment of the note and mortgage to Givens; 4. The payment of certain interest on the note by C. S. Smith and the amount he claims to be due on the note; 5. That he is the lawful owner and holder and entitled to payment, etc.; 6. That plaintiff has, or claims to have, interest in- or claim upon said premises, or some part thereof, as mortgagee or otherwise, and refers to some contract or claim held by Charles A. Warner, deceased, by virtue of a trust deed executed and delivered by defendants Smith to said Warner for the pay — 98 — ment of certain debts, but said interest or claim of said Warner is subsequent to and subject to the lien of cross-complainant’s mortgage. Seventh only refers to the power of sale and application of the proceeds in ease of default in payment, etc., and then follows prayer that cross-complainant may have judgment for $3,241.60, with interest at one per cent per month from the twenty-first day of August, 1894, and usual prayer for general relief. Counsel for plaintiffs demur to this answer and cross-complaint, to wit: ‘ ‘ Comes now the plaintiff in the above-entitled action and demurs to the answer filed by the defendants C. S. Smith, Nellie J. Smith and John W. Givens, and for grounds of demurrer allege as follows: That neither of said answers state facts sufficient to constitute a defense or action against this plaintiff.” If the court ever ruled upon this demurrer the record is silent as to the order. The next step taken as shown by the record was what is termed “Reply to answer and pretended cross-pomplaint, ” which was filed July 3, 1905; the first paragraph is: “That as respects the allegations contained in paragraphs 7 and 9 of the answer of said defendant Givens, wherein said defendant alleges ownership of a certain note and mortgage executed by his codefendants, C. S. Smith and Nellie J. Smith, to C. Bunting & Co., and alleges that said note and mortgage is superior to the note and mortgage of the plaintiff; the plaintiff answering upon information and belief that the note and mortgage referred to and described in said paragraph is barred by the provisions of section 4052 of the Revised Statutes of Idaho for 1887, and that the defendant’s alleged cause of action thereon, as against this plaintiff, is barred by the provisions of section 4052 of the Revised Statutes of Idaho for 1887.” The plaintiff denies that the plaintiff’s action is barred by the provisions of section 4052 of the Revised Statutes of Idaho for 1887. And further replying to the said answer and pretended cross-complaint of the said defendant, the plaintiff admits and alleges as follows: “1. Plaintiff has no knowledge, information or belief sufficient to enable it to reply to the allegations of paragraph — 99 — 2 of said pretended cross-complaint positively, and basing its denial upon that ground, it denies each and all of the allegations contained in the said second paragraph, except as such allegations are admitted by the allegations of the complaint herein.” Paragraphs 3, 4, 5 and 7 are denied on the same grounds for the same reasons and practically in the same language as is used in the denial of paragraphs 1 and 2. Respecting the sixth paragraph in the cross-complaint, plaintiff says: “Respecting the allegations of the sixth paragraph of the said pretended cross-complaint, the plaintiff admits that it claims to have some interest in, or claim upon, said premises described in the said pretended cross-complaint as mortgagee; but denies that said interest and claim is inferior to, or subject to, the lien of the said cross-complainant’s mortgage, but alleges that it is superior to the cross-complainant’s mortgage, and further alleges that the said claim and interest of the plaintiff is described and set forth in the plaintiff’s complaint herein, which is hereby referred to and made a part of this reply. That as regards the other matters and things alleged in said paragraph, the plaintiff has no knowledge, information or belief concerning them, and basing its denial upon that ground, denies each and all of the other allegations in said paragraph contained.” The eighth is: “Plaintiff alleges upon information and belief that the said pretended cause of action alleged by the cross-complainant against his said codefendants, C. S. Smith and Nellie J. Smith, and particularly as against the said plaintiff, is barred by the provisions of section 4052 of the Revised Statutes of Idaho for 1887.” On the eighth day of May, 1905, the clerk made the following entry: “In this action, the plaintiff having been served with copy of the cross-complaint of defendant John W. Givens, and having failed to answer or demur to said cross-complaint, and the legal time for answer having expired, the default of the plaintiff in the premises is hereby entered according to law.” On the ninth day of June, 1905, a judgment was rendered in favor of cross-complainant, John W. Givens, for amount — 100 — prayed, for in his cross-complaint, ordering the property described in the complaint to be sold by the sheriff of Bingham County, and the proceeds arising therefrom to be applied on the judgment of defendant Givens, and further adjudging the claim of plaintiff barred by the statute of limitations as to the claim of cross-complainant Givens. On the same day the judgment was filed with the clerk of the court. Counsel for plaintiff moved to set aside the default entered by the clerk, and to vacate and set aside the judgment of the court entered thereunder: I. “That the purported ■ cross-complaint is not actually or in effect a cross-complaint as against plaintiff in the following particulars, to wit: a. That there is no demand or cause of action existing or shown to exist as appears from the alleged cross-complaint in favor of the said J. W. Givens and against the said Western Loan and Savings Company; b. That the matters and things alleged in the said pretended cross-complaint as against this plaintiff constitute merely a denial of the allegations contained in the plaintiff’s complaint, and as such amount merely to an answer to the complaint, and to such answer the plaintiff has-made an appearance by demurrer; e. That as respects the said plaintiff, the only claim made in the said pretended cross-complaint is that the mortgage of said Givens is superior to the mortgage of the plaintiff; and that this contention is made with equal force in the answer of said Givens to the complaint, and that this question is the sole issue between the plaintiff and the said J. W. Givens, and the plaintiff is nowhere in default upon said issue, but denied under oath in its complaint ; that said Givens holds a superior lien to the plaintiff’s lien, and has alleged under oath therein that its lien is superior; and the said Givens in his answer has denied said allegations of the complaint, and the said allegations substantially bring the parties to issue upon that point; d. That, said pretended cross-complaint states no grounds for affirmative relief against the said plaintiff upon which judgment against the plaintiff could be based, and the said cross-complaint does not pray for any relief against the said plaintiff, and is not entitled to any relief against the said plaintiff either upon default of the plaintiff or otherwise. — 101 — “II. That the said Givens was not legally entitled to enter the default of the plaintiff on the said cross-complaint for the following reasons: a. That the said pretended cross-complaint is contained in an instrument entitled, ‘Answer and Cross-complaint’ and is therein set up by way of and as part of the answer as is shown by its first paragraph, and the said plaintiff has duly appeared and plead to said answer by filing a demurrer thereto; b. That the plaintiff appeared in said action by filing the original complaint and by filing a demurrer to the answer of said Givens, notwithstanding which the default of the plaintiff was entered by the clerk without giving the plaintiff any notice as required by law. “III. That if said pretended cross-complaint is a valid and subsisting cross-complaint against the plaintiff, the plaintiff’s failure to demur or answer to .the same by express reference, is due to mistake, accident, surprise, inadvertence and excusable neglect, as follows, to wit: That as shown by the complaint the plaintiff holds the first and superior lien upon the premises described therein, and that the mortgage of J. W. Givens is inferior to that of plaintiff. That it was to determine this point only that said J. W. Givens was made a party to this action. That the answer and pretended cross-complaint of said Givens alleges no facts which controvert this contention of plaintiff and that it never was, and is not now, the intention of plaintiff to abandon this contention. That when the answer and cross-complaint of said Givens was served upon plaintiff’s attorney, H. K. Linger, the said attorney, through mistake and accident, overlooked the fact that that cross-complaint was directed against the plaintiff. He supposed that the answer was directed against the plaintiff, and that the cross-complaint was directed against the defendants only, C. S. Smith and Nellie J. Smith. That on this account the plaintiff, through its attorney, interposed a pleading, to wit, a demurrer to the answer only, but intended by the said pleading to demur to all matters alleged by the said J. W. Givens against the plaintiff in the said answer and cross-complaint. — 102 — “IV. That the said plaintiff has a substantial defense upon the merits to any claim made by the said defendant, J. W. Givens, in the said cross-complaint.” This motion is supported by the affidavit of P. W. Madson, president and manager of plaintiff corporation after stating that the plaintiff is the owner and holder of the note described in the complaint; that it is the first lien on the premises described in plaintiff’s mortgage, and superior to the lien of defendant Given’s mortgage set np in his cross-complaint, and as a reason why the default of plaintiff should be vacated and the judgment entered in favor of Givens vacated, says: “That the attorneys in the above-entitled action were C. S. Price of Salt Lake and H. K. Linger of Idaho Falls, Idaho. That the answer and cross-complaint of the defendant J. W. Givens was served upon H. K. Linger, who mailed the same to C. S. Price of Salt Lake City. That said C. S. Price directed H. K. Linger to file a demurrer to the said answer. That the said H. K. Linger, upon receipt of said letter, drafted a demurrer to the said answer and filed the same. That at said time he was under the impression that he was pleading to the whole of the pleadings filed by J. W. Givens. That he did not have the answer and cross-complaint before him at the time, and his recollection was that simply an answer was filed as to the said plaintiff, and for that reason his demurrer ran to the answer simply. That it was the proposed intention of said Price and said Linger and the said plaintiff to demur to both the answer and to said cross-complaint, and that it was by reason of the foregoing accident and mistake that the cross-complaint was not expressly mentioned in said demurrer.” In the order overruling this motion it was shown that H. K. Linger, G. H. Hansbrough and James Ingebretsen appeared for the plaintiff in the argument of the motion. On the first day of July, 1905, the motion was overruled. This is practically a complete record of this ease, and is given in order that the facts just as they were before the trial court may be understood. The application to vacate and set aside the default entered by the clerk and also the judgment entered thereafter was — 103 — within the sound, legal discretion of' the trial court, and unless it is shown that there has been an unwarranted exercise of that discretion, this court will not disturb the order and judgment. It must be borne in mind that the trial court has so many opportunities in the proceedings in the lower court to know and understand the real situation of each case there pending. We know nothing of the conditions only as they may be made to appear upon paper, and many things transpire which furnish the lower court light that cannot be brought to our attention. It is for this reason that the trial courts have been given large discretionary power over the proceedings in those courts, and is the foundation for the almost, if not quite, universal rule that appellate courts will not interfere with the discretionary orders governing the proceedings and conduct of the business of the lower courts. It is urged by learned counsel for appellant that there is apparent from the record a clear abuse of discretion in refusing to vacate the order of the clerk in entering the default of plaintiff, and in ordering judgment for cross-complainant Givens, for the amount found due on his note and mortgage as shown by his answer and cross-complaint. It is shown by the complaint that plaintiff recognized that Givens had, or pretended to have, some kind of a claim adverse to plaintiff’s interest in the property in controversy, otherwise it would not have made him a defendant, and thereby required him to come in and set out by proper pleadings whatever claim he might have. After such service on Givens it was necessary for him to plead his claim in this action or his right would be barred by the statute. He could not do so by answer, neither could he plead by counterclaim. He could only deny the superiority of plaintiff’s claim by answer and plead priority of his by cross-complaint. The statute of this state makes a distinction between a counterclaim and a cross-complaint. If plaintiff had commenced its action against Givens, alleging that he was indebted to it in a given amount of money due on a note and mortgage, he might meet the issue by answer alone, or if he desired to show that in the settlement — 104 — of their differences there' was money dne him not shown by the complaint, then he could show that fact by counterclaim. If, as in the case at bar, Givens does not claim anything from the plaintiff, but does claim that the same property plaintiff is attempting to subject to its mortgage is subject to a prior lien by mortgage of which he is the assignee, then he must answer denying the superiority of plaintiff's lien and set his out by way of cross-complaint. This being the law in this state, Allen v. Breusing, 32 Ill. 505, Parker v. Cochrane, 11 Colo. 363, 18 Pac. 209, Rood v. Taft, 94 Wis. 380, 69 N. W. 183, Gunn v. Madigon, 28 Wis. 158, Aqua Pura Co. v. Mayor, 10 N. Mex. 6, 60 Pac. 208, 50 L. R. A. 224, do not apply, as they all deal with counterclaims, and correctly state the law as we understand applicable to counterclaims in the states referred to, and would be good authority in this state were we dealing with a counterclaim. For a further discussion of cross-complaint and counterclaim, see Hunter v. Porter, 10 Idaho, 72, 86, 77 Pac. 434. It is urged that the cross-complaint does, not set out facts entitling Givens to affirmative relief, and that there was no prayer for specific relief. We cannot agree with this contention. It stated the facts leading up to the assignment of the note and mortgage to cross-complainant; that it is a superior lien to that of plaintiff as shown by the complaint; and the answer puts in issue the bar of the statute of limitations. The prayer is specific as to amount, and asks that he may have such “other, and further relief in the premises as to this court may seem meet and agreeable to equity.” We think the cross-complaint fully apprised the plaintiff that Givens was seeking thereby to contest the superiority of his lien over that of the plaintiff, and that it became the duty of appellant to meet the issue by an answer to this cross-complaint. We also think the prayer of the cross-complaint was sufficient to authorize the court in rendering the judgment as shown by the record, unless the adjudication as shown by the judgment that the action of plaintiff was barred by the statute of limitations as to the claim of cross-complainant was unauthorized by — 105 — the pleadings as they stood at the time of the rendition of the judgment. Again, as to the discretion of the court, or its abuse thereof, as shown by the record, there is but one affidavit filed in support of the motion to set aside the default and judgment. Mr. P. W. Madson, the president and manager of plaintiff corporation, attempts to enlighten the court upon' the course pursued by his counsel, Mr. Price of Salt Lake and Mr. Linger of Idaho Falls, when they received the answer and cross-complaint filed by cross-complainant Givens. It is urged that from this affidavit, together with the facts shown by the record, the court should have granted the motion of appellant and relieved it of the default entered by the clerk and the judgment on such default. We are of the opinion there is enough stated in the motion, if supported by sufficient affidavits or some good reason shown why they could not be procured, to have warranted this court in saying that a refusal to grant relief would have been an abuse of legal discretion. There is no showing why the affidavit of Attorney Price of Salt Lake and Mr. Linger of Idaho Falls were not filed in support of this motion; they were the parties of all others who could have enlightened the court upon the reasons why the demurrer did not run against the cross-complaint as well as the answer, and if there was any reasonable excuse for such inadvertence, mistake or neglect, •they could have so stated in an affidavit. If such showing had been made it is possible, and even probable, that the learned judge of the lower court would have granted the relief demanded by the motion. It was shown by the judgment'or order overruling the motion that Mr. Linger was present and participated in the argument of the motion. We cannot understand why Mr. Linger did not supply the record with his affidavit stating the facts as stated in the affidavit of the president of plaintiff. He certainly knew the real facts so far as he is connected with them in the affidavit filed by Mr.. Madson better than anyone else, and hence ■was better prepared to convince the court by his affidavit that plaintiff was entitled to relief on the grounds of mis — 106 — take, inadvertence, surprise and excusable neglect on his part or on the part of his associate, Mr. Price, than anyone else. He might have supported his affidavit by one from Mr. Price. If either or both of their affidavits had been filed, it would perhaps have had more weight in the lower court and certainly in this court, than the affidavit upon which appellant relies. (May 26, 1906.) This court in a very recent case entitled D. Holzeman & Co. et al. v. Wm. Henneberry, 11 Idaho, 428, 83 Pac. 497, discussed the discretion of the trial court in setting aside or refusing to set aside a default judgment. Mr. Justice Ailshie said: “It is a well-established principle that the granting or refusing an order of this kind rests in the sound legal discretion of the court to which the application is made, and that unless it appears that such discretion has been abused, the order will not be disturbed on appeal”; citing Bailey v. Taaffe, 29 Cal. 422, note in 58 Am. Dec. 392; Holland Bank v. Lieuallen, 6 Idaho, 127, 53 Pac. 398. As to the merits of the respective parties to this action, we express no opinion as plaintiff is entitled to a hearing on his complaint, and the answer filed by cross-complainant Givens. Neither do we express an opinion as to the bar of the statute of limitations which each of the contesting parties seeks to invoke against the other. We find no error in the record and the judgment is affirmed. Costs to respondent. Ailshie, J., and Sullivan, J., concur.