State Ex Rel. Chisholm v. District Court

Citations: 731 P.2d 324; 224 Mont. 441; 1986 Mont. LEXIS 1127Docket: 86-190

Court: Montana Supreme Court; December 30, 1986; Montana; State Supreme Court

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The Supreme Court of Montana declined to issue a writ of mandamus in the case involving Thomas and Donald Chisholm against the District Court of the Seventeenth Judicial District. The Chisholms initially sued Nelson Corscadden for conversion, but Corscadden filed for bankruptcy. Subsequently, they attempted to sue First National Bank of Glasgow, alleging a conspiracy to deprive them of property rights related to the same subject matter. The bankruptcy court refused to abstain from jurisdiction, and before the trial against the Bank, the Bank sought partial summary judgment on property ownership. The District Court abstained from deciding ownership but required the Chisholms to pursue their bankruptcy claim diligently before it would grant a summary judgment.

The court emphasized that a writ of mandamus is an extraordinary remedy, only available when there is no plain, speedy, and adequate remedy in the ordinary course of law. The Chisholms did not demonstrate such a lack of remedy, as they were advised to file an adversary complaint in the bankruptcy court, which they had not done. The court also reiterated that a writ cannot compel action on matters outside a court's jurisdiction. The decision underscores the necessity for parties to follow appropriate legal procedures, particularly in bankruptcy contexts, to secure relief.

A bankruptcy court's determination of property ownership does not prevent Chisholms from pursuing claims against the Bank. Should the court find the property belongs to Chisholms, they may continue their state court action against the Bank. Conversely, if the property is deemed to belong to Corscadden, Chisholms retain the right to appeal the bankruptcy court's decision and may still assert claims in state court not related to the property's title. Chisholms’ assertion of inadequate due process in bankruptcy proceedings lacks merit, as jury trials are permissible under bankruptcy rules, federal statutes (28 U.S.C. 1480), and relevant case law. The dispute centers on an alleged breach of contract, where jury trials are constitutionally mandated for claims involving accounts and contracts. 

Chisholms have not yet requested a jury trial in bankruptcy court, nor has there been a ruling against their entitlement to one. The bankruptcy court has jurisdiction over the property due to Corscadden's Chapter 11 filing, and once ownership is determined, further actions can proceed. The court concludes that Chisholms have adequate legal remedies, denying their petition for a writ of mandamus. 

In a dissenting opinion, Justice Morrison underscores that the majority incorrectly assumes property title is contested in state court, clarifying that Chisholms' actions involve claims of conversion and bad faith against the Bank, which do not address title disputes. The dissent emphasizes that the bankruptcy court's role is to manage Corscadden's assets, while the state court case pertains to the Bank’s alleged unlawful interference with Chisholms' property interests, asserting that title is not at issue and that if the Bank acted in bad faith, it could be liable for damages.

The bankruptcy court recognized that the issues in the state district court differ significantly from those in the bankruptcy proceedings. In an order dated April 3, 1986, the court clarified that Corscadden is not involved in the state court action between the bank and the plaintiffs but is only a potential witness. The court noted that the protections sought by the debtor under the bankruptcy code's automatic stay provisions do not apply in this context. Although there are some similarities between the state court action and the debtor's bankruptcy case, the debtor's concerns regarding res judicata are deemed unfounded due to differing parties and relief sought. The bankruptcy court affirmed that the resolution of the litigation between the bank and Chisholm will not influence the bankruptcy proceedings. However, the state district court declined to exercise jurisdiction over Chisholm's bad faith claim against the bank, a decision the Court endorses. The author expresses frustration with the handling of these issues, criticizing the majority opinion for failing to address key facts and for not engaging in meaningful discussion about the case. The author dissents from both the decision and the decision-making process.