Cooper v. Disbrow

Granger, J. 1 I. We may first notice the attitude of plaintiffs and Mrs. Cornelia K. Winslow on the appeal. It will be remembered that, as to plaintiffs, there is a judgment against them in favor of the appellants for twelve thousand dollars, and as to Mrs. Winslow there is a judgment in favor of appellants for six thousand dollars. These judgments are evidently based on the statutory liability of stockholders for an amount equal to the amount of stock held by them. Erom these judgments there is no appeal, and no question is made here' as to their validity. Their contention in this court is that the judgments so entered are the full measure of their liability to any and all creditors of the bank, and that, in no event, should there be such a change in the proceedings as to increase their liability over the amount of-the judgments entered against them. It is their express claim that they shall be so protected as that they shall not pay these judgments, and then be liable to other creditors of the bank for a like amount, so as to bear a double burden. This appeal brings in question alone the validity of the order of the court in setting aside the default and decree so as to permit a new trial. If we reverse the order, the effect will be to restore and perpetuate the judgments as they were entered. If we affirm the order the effect will be to leave the ease without judgment for the parties to proceed as advised. As we view the record, we cannot make any specific order as to the plaintiffs and Mrs. Winslow, but can only affirm or reverse the order, as our conclusion may require, and leave it to the law, or to further procedure under it, to fix the rights of the parties. [556] II. The articles of incorporation of the Oass County Bank contain a provision for liability of stockholders much to the same effect as our statute, since enacted, by which stockholders are made liable for an additional amount equal to the stock owned by them. The act creating this liability was considered in the somewhat late case of State v. Bank, 103 Iowa, 549. Our reference to that case is only to call attention to the application to be made of the fund derived from stockholders by virtue of such a liability. It is there said that the fund is to be distributed equally among all the creditors of the corporation in proportion to the amount due each. Such is the language of the statute creating the liability. See section 2 of the act (Acts of the Eighteenth General Assembly chapter 208.). We have called attention to this provision of the law in view of some points urged in argument. The judgments entered by the district court gave to a part of the creditors of the corporation eighteen thousand dollars of such a fund, and in terms estopped the other creditors from making any claim, in the following language: “It is further ordered, adjudged, and decreed by the court that the other defendants, being those in default, having failed to appear and set up their claims, be, and they are hereby, f oreyer barred and estopped from setting up and making any claim arising out of the matters set out in plaintiffs’ petition and set out in defendant’s cross petition.” The order of the court in setting aside the default and decree is, in so far as it is important, as follows: “And the said motions being duly submitted to the court on this fourteenth day of July, 1896, the court overrules the said motion filed by the said Park Disbrow et ah, to which ruling they at the time except; and the said default heretofore entered against the other creditors of the Cass County Bank, and the judgments rendered against the said Coopers and the said O. K. Winslow are set aside, and held for naught, upon the grounds that the creditors of the Cass County Bank served with notice of the cross petition of W. C. and Ann Eliza Cooper, executor and executrix, etc., were not in default at the time the same were taken and entered, but [557] had an answer and cross petition on file in the third count of the answer and cross petition of C. E. Winslow, filed February 10, 1896, made for and on behalf of all of the creditors of the Cass County Bank, and were entitled to have the issues as tendered on their behalf determined, and their rights preserved; and it is found that no original notice was served upon the defendants Michael McEniry, Ernestine Cotton, and Susan Osgood, and the same entry and judgment made as to them.” It should be borne in mind that the decree was based on .the default of these defendants and creditors. The answer and cross petition of O. E. Winslow entitled her to, and in fact gave her, equal rights in the judgment with the other appellants. In the third count of her cross petition she alleges that the action is brought on behalf of herself and all the other creditors, depositors of the Cass County Bank, and the count is based on the double liability of the stockholders under the law. The averments of that part of the cross petition entitled the other creditors in whose behalf she pleaded to the same measure of relief she was entitled to, unless it should be denied them because of a difference in facts when the proofs were submitted. It is said the judgments, as entered, were by consent. This can mean only that appellants and plaintiffs so consented. There is no pretense of a consent by those moving to set aside the decree. The record, however, does not show a judgment by consent. In so far as it shows how the issues were submitted, it was upon evidence taken. The record shows that a trial was had upon the claims made against plaintiffs and C. K. Winslow and “such evidence as was offered by the parties.” The record, however contains no evidence. If we may assume that there was no evidence, still it does not follow, as a legal conclusion, that the judgments were by consent. This fact is important, because appellants, in argument, place great stress upon it, and claim for the judgments, because by consent, peculiar legal attributes, in that they may not be as readily disturbed or set aside as other judgments. In fact, it is urged that they are practically invulnerable to an attack [558] like the one in this case. To make a judgment by consent or agreement, we think the fact must appear of record. Our law- provides for a judgment by agreement, and that it may be entered at any time, and, if not done in open court, the judgment agreed to shall be in writing, signed and filed with the clerk, who shall enter the same accordingly. Code 1873, section 2861. The law evidently contemplates that, to constitute a. judgment by agreement, the fact that it is such a judgment shall appear in the proceedings. In Hershee v. Hershey, 15 Iowa, 185, it is not held that it must so appear, but the court refused to consider a judgment (one by argument) because the record failed to show the fact. That it is competent for the court to vacate and set aside its judgments is conceded. See Taylor v. Lusk, 9 Iowa, 444; Boals v. Shules, 29 Iowa, 507. It is said that the right of the court to set aside a judgment is not an arbitrary one, but is a discretionary one, controlled by fixed legal principles. The proposition is, no doubt, a correct one. We can hardly conceive of a stronger reason for setting aside a judgment than that it has been erroneously entered to the prejudice of parties. By the judgments in this case the parties asking their vacation were adjudged in default when they were not. As a result of such a judgment, they were denied a recovery which, assuming a statutory liability of plaintiffs and O. K. Winslow, they were absolutely entitled to, and what belonged to them is given to appellants. If the judgments are to stand, the result is a forfeiture, by these inovers, of what belonged to them, and the appellants are to take it because of what is charged as neglect, during this proceeding, to protect their rights. Of course, rights are thus lost and gained, but such results can only be justified under the plain requirements of the law. It is urged that these parties had neglected for years, while the litigation was going on, to come in, and take part in securing the rights of the creditors, while appellants had been active in the prosecution of suits. This is likely true, but it does not reach the merits of the question before us. One of these appellants had thought it advisable to bring them in, and prosecute for them; [559] and being tbns in the case, and on the face of the record, entitled to judgment for just what the appellants were, and being erroneously adjudged in default, and, as a consequence, denied a recovery, and when the court below has discovered this, and set aside the default and decree, to correct the error, ought its ruling to be disturbed? We do not regard what occurred during the years of litigation as controlling. What we do regard as controlling is that on the twenty-first day of May, 1896, when the judgments were entered, on the face of the record, these parties, seeking to set aside the judgments, were not in default, and, with the exception of the three not in court, were entitled to judgment. It is said in argument that the decrees were prepared and agreed to by the plaintiffs and appellants, and signed by the court. If so, the appellants, barring C. K. Winslow, secured judgments unwarranted by the record, because of which result the court set them aside. The error was not the result of laches or neglect. It was not because, as the case stood, the parties were not entitled to relief, but because the court signed an erroneous decree, both as to the facts and the law, as the case was presented. Nothing more need be said than that none of the considerations urged ought to disturb the order of the court in setting aside the decrees. Aeeirmed.