Bibend v. Kreutz

TMs is an action to set aside a judgment by default, on the ground of surprise. The judgment was rendered in an action for money *114had and received, and the facts disclosed by the record show conclusively that no cause of action existed. It is admitted that the suit was improperly brought, but it is contended that the judgment is strictly just, and ought to be allowed to stand. This view, though acted upon by the Court below, is manifestly erroneous, and we find in the facts of the case nothing to justify or support it. The Yreka Water Company executed to several parties, among whom was the plaintiff, a mortgage in trust to secure the payment of certain indebtedness, a portion of which was owing to defendant Kreutz, whose name, however, does not appear in the mortgage. The complaint in the original suit charged an assignment and surrender of this mortgage, and a receipt by the persons to whom it was executed of the amount secured by it. This was sufficient prima facie to recover upon; but the facts now before us present the case in a very different light, and it is evident that gross injustice has been done. The mortgage has neither been assigned nor surrendered, but is still in the hands of the trustees, and may at any time be enforced for the payment of the debts. The evidence on this point is clear and explicit, and in determining the case the Court below was misled by certain transactions with a corporation known as the Shasta River Water Company. This corporation was organized to take the place of the Yreka Water Company, and an agreement was entered into entitling the holders of the indebtedness secured by the mortgage to exchange it for stock of the corporation. A portion of the indebtedness was exchanged in pursuance of this agreement, and the Court appears to have regardgd the agreement itself as superseding the mortgage. It is clear, however, that nothing of the kind was intended, and that Kreutz, whose debt has not been exchanged, is entirely unaffected by the agreement.

Objection is taken to the mode in which the plaintiff seeks redress, but we are of opinion that the remedy in equity was properly resorted to. The statutory remedy by motion, except in cases where there has been no service of summons, is only available during the term at which the judgment is rendered, and in many cases a denial of the most obvious justice would result from holding this remedy exclusive. The assistance of equity cannot be invoked so long as the remedy by motion exists; but when the time within *115which a motion may be made has expired, and no laches or want of diligence is imputable to the party asking relief, there is nothing in reason or propriety preventing the interference of equity. “ In general,” says Story, “it may be stated, that in all cases where by accident, or mistake, or fraud, or otherwise, a party has an unfair advantage in proceedings in a Court of Law, which must necessarily make that Court an instrument of injustice, and it is therefore against conscience that he should use that advantage, a Court of Equity will interfere and restrain him from using the advantage which he has thus improperly gained.” (Story’s Eq. sec. 885.) In the present case, there is no doubt that an unconscientious advantage has been obtained of the plaintiff, and the findings of the Court expressly negative any inference of a want of diligence on his part. Under these circumstances, and in view of the positive injustice which must result from a refusal to interfere, we do not see upon what principle relief can be denied.

The point as to the necessity of an averment in the complaint, showing that the plaintiff could not obtain relief on motion, is untenable. It is unnecessary to determine whether the complaint was or was not demurrable on that ground; no demurrer having been filed, and the parties having answered to the merits, the objection comes too late. So far as the fact is concerned, the record shows that the suit was commenced after the expiration of the term.

Judgment reversed and cause remanded for new trial.