*1 REVENUE, MONTANA, OF OF STATE DEPARTMENT FRANK, De KENNETH JOHN Appellant, v. Plaintiff Respondent. fendant 86-423. No. Briefs Dec.
Submitted on
1986.
April
Decided
John D. Falls, Child Program, plain- Enforcement Great for appellant. tiff and Skorheim, Falls,
Randall O. Great respondent. for defendant and MR. JUSTICE SHEEHY Opinion delivered the of the Court. uphold this case we of determination the District Eighth District, Judicial County, Cascade that there was an accord and satisfaction Department of the claim against of the of Revenue Kenneth Frank for paid by of monies the State as Aid (AFDC). Dependent Families of Children pass upon
We propriety also procedures of De- used partment attempting recoupment where there exists a District support Court order for arising child out of a marital dissolution proceeding. marriage of Judith and Kenneth Frank was dissolved 1979.
The District Court custody decree three awarded minor chil- Judith, dren pay and support Kenneth ordered to child was per amount of per $100 month child until the children reached time majority. age majority The children are at the not appeal. dissolution, November, 1979, Three months after Judith be- funds, recipient assigned came a of AFDC her child support Department from Kenneth of Revenue. 27,1980, February Department Support
On issued a “Notice of notice, however, for $374.1 Debt” not served on Kenneth later, request six on April until weeks Kenneth did on pursuant debt to the notice. On June Department County, filed in the District Court Cascade $1,340 its requested warrant of distraint for a debt of writ of any County execution directed to the sheriff Cascade to attach might possess accounts in which Kenneth an interest. The writ of requested by 21, 1981, execution April any being was returned without funds collected. 31, 1983, May requested
On a further of exe- writ cution, which, 9, 1983, issued on June was returned “no accounts”. 8, 1983, On June filed an “Amended Warrant $7,040. against Distraint” Kenneth for a claimed debt On June 27, 1984, filed the Clerk of the District Court Kenneth, its “Second Amended Warrant Distraint” claim- $14,240 *3 ing of debt due.
Aside original from the to communication Kenneth from De- partment debt, specifying Support $374 a no further “Notice of Debt” respect was served accruing sup- Kenneth with to port payments, (with Department respect and the further failed to warrant) each give any of distraint to a notice Kenneth of to a on each warrant. Other ability events occurred which affected Kenneth’s to make support payments. child painter He awas and suffered an industrial 1980, August, in accident totally which left him He disabled. 1984, February, unable to January, return to work until 1985. Until only his per Compensation income $219 week from Workers’ lump benefits. He entered into a sum with In- settlement the State compensation surance Fund his claim. When Kenneth submitted petition lump settlement, his sum he in submitted an affidavit $8,500 up which he required indicated he believed would be to make support arrearages. time, his child Department theAt had calcu- arrearages $7,040. lated his to be important
Another event related to Judith. She remarried three recipient times while notifying agency a of AFDC funds without appar- notify Department is an marriages. Her failure to of her 53-4-237, MCA, provides: of Section ent violation may con- department part this . in “. . the administration individuals stepparents and other and resources sider the income to the available and income in the home as resources who reside household.” was an funds. She
Moreover, steadily AFDC did not receive Judith December, 1979, during recipient in AFDC November during any AFDC funds years did not receive 1980 and 1981. She December, in grant $425 received a of 1983. She 1982 and most period, the 1983, January, Over the entire grant in 1984. $425 and a payments, assigned in the retained its interest accruing in Department was calculated and Kenneth’s debt to the any receiving AFDC funds. was not periods when Judith 1984, peti- April, Kenneth important A event was that third Because custody the minor granted children. tioned for and was change prevent state to enforcement moved to another Judith $3,000 the chil- have custody, spent approximately Kenneth dren returned to his care. at- Kenneth’s 1983, Department investigator wrote
In the fall of $7,040 and arrearage grown to torney him had informing 1984, February, negotiating a settlement. indicated an interest attorney inform- investigator Kenneth’s wrote another Depart- $7,640. According grown to ing him the debt had possibility there was testimony, letter indicated that ment’s encourage settlement. might be discounted to the debt amount 1984, attorney later, sent Kenneth’s A on March month $1,000 stating that by a letter accompanied a check for The payment.2 compromise as a full and final the check was offered further the check and cashed did communicate January, wages his began garnishing it Kenneth until informally, formally Kenneth, either Department never informed rejected. 1984 had of March that his letter offer been painting January, as a work force Kenneth reentered the minor custody three remarried and had supervisor. He had per earning marriage. week. previous $336 He was children of his Falls, in Great supervisor Department, through regional its *4 levy which commanded employer a notice of upon served Kenneth’s the net paycheck 50% from Kenneth’s employer withhold future. proceeds then and in the attorney, Kenneth, moved 8, 1985, through his February
On stay District Court for relief from the warrants of distraint and for granted temporary stay enforcement. The District Court and set hearing. the matter down for The filed its motion to temporary dissolve the restraining order and further moved that required Kenneth be to furnish a The dissolve bond. motion to temporary restraining require order and to a bond were denied. At a 28, 1985, held before the District Court on March the mo- permanent tion injunction for was taken under advisement and on July 30, 1986, fact, findings District Court issued its conclu- sions and the subject appeal. order which is the of this urges appeal: Revenue five issues on
1. The District jurisdiction Court lost of the cause under Rule 60(c), fact, M.R.Civ.P. when it findings issued its conclusions of law and order days more than 45 February after the motion filed on 8, 1985.
2. The District Court’s determination that Kenneth should not re- process ceive due was incorrect.
3. Neither the fraud of Judith nor the mistake of the eliminates obligation Kenneth’s support payments. make child
4. The court in determining erred there had been an accord and satisfaction.
5. The court erred in determining that Kenneth was entitled to attorneys fees and costs.
JURISDICTION
The first issue relates to whether jurisdic- District Court had tion under the 60(c), time restraints of Rule M.R.Civ.P. set aside judgment 60(c), effect of the of a warrant distraint. Rule provides: M.R.Civ.P. “Time determining motions. Motions provided by subdivision for
(b) of this rule shall be provided by determined within the times Rule the case of motions for new trials and amendment judgment and if the court shall fail to rule on the motion within the day period, the motion shall be deemed denied.” argues that the elapsing time between the date of the father’s motion 8, 1985, for judgment, February relief from the hearing motion, days, March 1985 was 48 and the order itself did not July come down until and that the District jurisdiction lost of the cause. taxes, cases for delinquent collections or the payments here,
AFDC where the collection is based war- *5 distraint, actually as entered a judgment rants of a such is not Instead, files a District Court. of Revenue warrant duty of with is then distraint the Clerk of District whose judgment to with name of the file the warrant in the docket 15-1-704, taxpayer parent judgment or listed as the debtor. Section thereof, against Upon MCA. a lien all real and filing there is personal property delinquent parent taxpayer nonpaying or 15-1-701(2), county is MCA. where the warrant filed. Section Thus, the District the warrant judgment properly Court has the same effect as a lien docketed Department may delinquent taxes and enforce the tax collect recoup judgment lien manner a is or AFDC funds the same as 15-1-701(2), 40-5-241, MCA; enforced. Section MCA. case, relief from effect of the motion of Kenneth for judgment stay a situation of of enforcement is the same person seeking judgment from a of the District Court under relief 60(b) 60(b), is, however, provided Rule M.R.Civ.P. It Rule the rule indepen-
“. power . . does not to an limit the a court entertain order, party proceeding, or judgment, dent action to relieve a from a actually personally grant or notified as to relief to a defendant not may required by . . .” be law 60(c) read in provided in rule must be
The time limitations 60(b), light principle provides set out Rule such independent power an District Court action. The residual preserved complete District therein is a Court’s reservation independent power. purpose protect equity by “not enforc Its to Thomas v. ing judgment public conscience.” obtained Savage Elliston Lime (1973), 192, 118, 120; 161 P.2d Mont. 505 Company v. Lumber (1971), 64, P.2d Prentice Mont. 483 60(b) power particularly The Rule to portion residual was enacted prevent injustice. reason, motion an For that we hold Kenneth’s an warrant of distraint an set aside enforcement of unserved action, day limi independent subject time and thus is not 60(c), Rule tation of M.R.Civ.P.
DUE PROCESS had
The District concluded that because the defendant court of distraint personally never been served with the amended warrants entry opportunity hearing that his for a before their afforded constitutions right process under both federal and state to due violated. post-judgment right Department argues is no to no- that there execution, levy relying Endicott-John-
tice
before
(1924),
285,
Corporation
Encyclopedia
son
v.
266 U.S.
Press
61,
Eldridge
v.
argues
under Mathews
S.Ct.
Montana in grants the use of federal and other sources payments. to make AFDC program in our statutes for the re- coupment parents of AFDC funds proceed- from inwho dissolution ings custody sup- other matters have been ordered to make child port payments grows necessity comply out of the to the federal with Thus, programs. law, applicant under federal for AFDC funds assign rights must support payment all to accrued at the time of to agency. 602(26)(A). by state U.S.C. assignment Section recipient to the state allows the state to which make collections are government. on behalf of the state and the federal Section 654(5). U.S.C. The amounts collected are to the distributed state agencies and federal until the AFDC funds and other costs are recovered, the balance to be distributed under certain rules to the family. 657(b). 42 U.S.C. Section statutes,
The state gain recoup- has two avenues under its state payments. order, ment of AFDC If there has been no District 40-5-223, MCA, proceed can under Section to serve liability a notice of subsequent recoupment proceed- and undertake ings. order, case, If Depart- there is a district court this proceeds 40-5-222, statute, ment under Section MCA. Under that empowered is to send out a “notice of debt” which accruing, and support debt accrued or includes a statement of the fair delinquent parent he is entitled to a that which informs the was sent out and Kenneth In case such a notice of debt hearing. elapsed days af- request any hearing. When 31 have further did debt, Department may issue a war- of the notice of ter service Section of the debt. based on the amount rant for distraint warrant, however, provi- subject 40-5-241, is MCA. Such a 15-1-708, 15-1-709, 15-1-701, 15-1-704, MCA. sions of Sections 40-5-241, supra. Section 40-5- appear in Section Title referred
The sections which delinquent tax payments, is which relate to the collection It is Section 15-1-701 of Revenue. also a function of County warrant, upon filing provides that a distraint prop- Recorder, personal a lien real and Clerk and becomes 40-5- erty delinquent parent. appears strange It that Section MCA, support payments delinquent incorporating for taxes, delinquent did not include procedures to collect used 15-1-705, debtor af- provides judgment MCA. That section hearing. It states: is entitled to a filing ter the of a distraint warrant hearing to provide notice of the “The must writing within taxpayer. request A must be made may given prior to be days notice. This notice of the date of the . . .” in 15-1-702 the notice referred to Depart- cases, judgment is obtained the Clerk warrant with through
ment of a distraint lodged distinguished judgment from a District Court is to be of a In the case the District Court. through and entered an order of court, made for no- provision there is judgment issued a district *7 may execution although is true that entry judgment, it tice of How- been served. entry judgment has the notice of occur before presumably after ever, by court occurs judgment entered a district defaulted) for (unless has judgment debtor opportunity the a full judgment. in the claim which results notice and on the opportu- recoupment, no such for warrant of distraint the case of a illustrates delinquent parent. This case alleged nity is afforded distraint filing of the hearing upon the necessity notice of If judgment debtor. parent becomes to the who warrant procedure part of the 15-1-705, MCA, made had also been Section notified 40-5-241, have been would Kenneth for under opportunity given an and each distraint warrant with the why should he presented as are now present arguments that never Kenneth was payments. Because those liable for not be held him in warrants filing of the distraint given notice given any fur- not and was of the District office of the Clerk had been served the first notice accruing debt after ther notice of oppor- notice and him, deprived of upon that Kenneth was we hold process. him due We accorded tunity hearing which would have for in uphold its conclusion. the District SATISFACTION ACCORD AND satisfaction, because it issue of accord and
skipWe to the next contends that case. The is determinative owing the debt finding in error in that District Court was by fully finally satisfied accord payments for AFDC and State liqui argues the debt was and satisfaction. The impossible without the De accordingly dated and satisfaction was 28-1-1403, partment’s acceptance. MCA. Because of written by liquidated, Kenneth is its claim that the indebtedness owed (1929), Sawyer Lumber Co. v. Sommers relies on course, Sawyer is, P. Mont. 852. The statement illuminating: contract, a con-
“An is and accord and satisfaction founded authority, if necessary. By great weight of sideration therefor is by unliquidated dispute, payment is or indebtedness creditor, by and the re- an amount less than claimed debtor of he ceipt by circumstances the latter of such amount under such payment in full make the is bound to know that the intention was to claim, claim, discharge will the whole settlement may collect additional not thereafter maintain an action to creditor compro- agreement sums. these circumstances there is an Under and, dispute, being a parties, there mise the differences between the authority). (Citing agreement exists. a consideration for the check acceptance of the plaintiff’s unliquidated, “If his claim was an ac- by record constituted disclosed under the circumstances liquidated, it could be dis- If cord and satisfaction. the claim amount by payment of a lesser charged only by payment in full or authority). There was not writing. (Citing acceptance thereof in (sic) the check acceptance writing. The indorsement writing as is con- plaintiff cashing such a purpose for it only ques- templated by it follows [quoting a statute] unliquidated? liquidated tion determination is: Was the claim has fixed law or due is liquidated “A claim is when the amount *8 292 agreed by parties. authority.)
been
(Citing
ascertained and
the
Mont,
177,
86
at
The letter of March sent Kenneth’s the Department clearly $1,000 indicated that the as full set- offered pointed lump tlement. It out that sum which Ken- the settlement attachable, neth compensation had received his claim and given separately the letter was notice from the itself that check negotiation represent compro- of the check would a full consent to Department’s mise of the against claim There was more Kenneth. cashing here by the the check than mere endorsement Department. separate negotiation letter was notice that and ac- ceptance of the check an constituted accord and satisfaction. Fur- ther, although support payments by Kenneth’s were a decree of set certain, District and effect were made question certain. case is not Ken- surely neth would not be liable if Judith had payments obtained through very and uncertain fraud it is Judith subrogee, could if judgment. have enforced the A subrogee, subrogor. is a stands in the shoes of the
We agree Depart- determine and with the District Court that the ment’s against disputed unliquidated claim Kenneth awas check, claim acceptance of the which was 26, accompanied by letter of in fact March does create an accord and satisfaction.
ATTORNEY FEES
The District Court has ordered that Kenneth his attor receive costs, ney although yet fees and attorney the amount of fees has not been Department appeals decided the District Court. The from attorney fees, contending award of authorizes that no statute 60(b) awarding attorney prevailing party fees to in Rule mo tion, parties that no contract exists under which the between reciprocal allowed, payment attorney fees would be because exists, statutory authority attorney no or contractual award (Mont. fees should be State ex rel. Foss v. District reversed. 1985), 327,] 845; St.Rep. In Re Mar Mont. 701 P.2d [216 (Mont. riage 1985), 272,] P.2d Cannon Mont. [215 St.Rep. 25-10-711,MCA, costs, including Under award attor- fees, ney entity if may granted against person governmental be prevails entity governmental and the court finds the pursued entity governmental claim frivolous or defense bad order faith. The court stated: satisfaction, That, foregoing
“4. the de- because accord and *9 attorney . fendant costs and fees . .” awarded by implies attorney the award of fees District Court that the the the in bad in this matter. Af- court found state acted faith ter the in and receiving cashing the check and same an accord satis- faction, later, year Department, the about levied execution one Moreover, wages newly-found although the job. of Kenneth from his court, restraining Department under the was to order of the hold abeyance in any attempts at collection or enforcement of the dis- warrant, received, Department traint from the Internal Revenue by prior Service as Department a result action taken entry order, stay $1,593.38 representing Kenneth’s 1985 in- Moreover, come Department tax refund. his state in- received come tax refund of $401.50. The moved District pay court, Court for an granted. order into monies which brief, $4,598.31 As of Department’s the date has total paid been Department’s prevent into court under the motion falling funds from into Kenneth’s hands.
In State ex rel. Florence Carlton Consolidated Schools District v.
District
(Mont. 1981),
1204,
St.Rep.
P.2d
38
we
case, justice
stated that
if under all the circumstances of a
would
require
imposition
costs, equity
provide
can further
ex
cases,
treme
attorney
to allow
fees as an element of those costs. We
lodged
have here a
judgments
case where the
has
Kenneth,
personal
liens on
and
constitute
his real
property. They
garnished
intercepted
wages
have
his
and
his federal
levy
applied
only
state
tax
income
refunds. The
of execution
wages,
any
to his
levy,
wages
accrued
at the time of the
but to
future
(a
might
point
he
by
open
ques
receive
not raised
Kenneth but
tion;
credits,
ordinarily
only
an execution cannot
reach future
but
credits).
appeal
accrued
He has further
forced to this
and the
been
delay
engendered.
circumstances,
appears
In
it
all the
equity
District Court was
that Ken
correct and
demands
attorney
proceedings
neth be
awarded
fees
for the
District
both
appeal.
Court and for this
sound
Such an award is within the
discre
Joseph
Realty
Kenneally
v.
Russell
Co.
tion of the
trial court.
(1980),
Foy
v.
1107;
(1978),
Anderson
185 Mont.
P.2d
Mont.
needWe not consider the further issue raised relating fraudulently to whether Judith acted or the made a bearing mistake. That issue has no of this the outcome appeal.
Accordingly, we affirm the cause District Court and remand this attorney the determination of costs fees accordance Opinion. 33, M.R.App.Civ.P., See Rule for the collection of appeal. costs on
MR. CHIEF JUSTICE TURNAGE HARRI- and MR. JUSTICES SON and HUNT concur. specially
MR. concurring: JUSTICE WEBER agree I majority opinion with the conclusion of the that the issue of agree accord and satisfaction is determinative in this I further case. with the majority opinion determination of the that the claim was a disputed unliquidated acceptance by depart- claim and that ment of the check created an I accord and satisfaction. addition attorney’s concur majority with the affirmation fee de- result, major- termination the District Court. I As concur *10 ity opinion. join majority
I do not in the conclusion that the motion to set aside independent subject enforcement was limi- action and not 60(c) particular, agree tations of Rule M.R.Civ.P. In I do not majority personal that the absence of service of the conclusion amended warrants of distraint of the defend- constituted a violation rights process. ant’s to due foregoing special
MR. JUSTICE GULBRANDSON concurs concurrence.
FOOTNOTES you 1. YOU ARE HEREBY notified that of Revenue finds that pay support you $374.00
are in arrears ordered in Cause the child which were to BDR-79-653, County, No. entered into the EIGHTH DISTRICT CASCADE week/month/year you pay per $300.00 State of MONTANA. This Decree ordered to support your Bobby, Jimmy for the minor children and Lori Frank. required pay arrearage $374.00 You are Revenue this debt to days. required support payments within 20 are also to make current each You week/ 40-5-222, $300.00. month to the of Revenue in the amount of subrogated assigned right to collect MCA. The Revenue is to or support payments you obligated pay. the child are pay- respond you to this order given fail to notice that should You are further Notice, days you the State of with this the date are served within 20 from ment seizure, Any proceeds distraint, your property net may subject and sale. Montana your support applied debt. will the satisfaction of be you pay your THEREFORE, debt within 20 that should fail to be advised distraint, seizure, Notice, days receipt and sale of Notice or refusal of your property further Notice. will be lawful without February, day 1980. DATED this 27th Signed: Milligan Clarice /S/ Investigator Title: Posey Lori Hoard Investigator Department of Revenue
Legal Support Child Enforcement Division/ North, 503 First Avenue Suite Falls, Great Montana Posey:
Dear Ms. — Support Re: Kenneth J. Frank Back Child $1,000 please your as full and Enclosed find a check made out to office in the sum of compromise payment Negotiation this check final of the above referenced debt. represent your fully being compromised will for this amount consent to this matter you longer owing anything. and for Mr. Frank’s no that, you know, proceeds Compensation Be advised well Workers’ benefits or the thereof, years are not attachable. Mr. Frank hasn’t worked for three and a half and is $1,000 unemployed injuries. why payment still because of his This we feel that the hardship is the best that Mr. Frank will on him can do and even that amount work family. and his you any questions, your Again, please If me have feel free to contact at convenience. any negotiation represents compromise of this check full and final settlement of you may claims have Mr. of this check. Frank as of the date truly, Yours
OVERFELT LAW FIRM