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Open Road Trucking, LLC v. Swanson

Supreme Court of North Dakota

December 12, 2019

Open Road Trucking, LLC, as Assignee of Leland A. Swanson, as Assignee of Western State Bank, Plaintiff and Appellant
v.
Leland A. Swanson, Defendant and James B. Lund, Defendant and Appellee

          Appeal from the District Court of Cass County, East Central Judicial District, the Honorable Steven L. Marquart, Judge.

          Bruce A. Schoenwald (argued) and Randolph E. Stefanson (on brief), Moorhead, MN for plaintiff and appellant.

          Sarah Aaberg (argued) and Sean T. Foss (on brief), Fargo, ND for defendant and appellee.

          OPINION

          VandeWalle, Chief Justice.

         [¶1] Open Road Trucking, LLC, appealed from district court orders: (1) denying Open Road's application for a charging order lien against James Lund; and (2) directing satisfaction of a judgment against Lund and Leland Swanson. We conclude Open Road was entitled to take an assignment of the judgment for the purpose of enforcing contribution against Lund. We affirm in part, reverse in part, and remand.

         I

         [¶2] In September 2018, Western State Bank sued Swanson and Lund to enforce commercial guaranties executed by Swanson and Lund. Swanson and Lund consented to entry of judgment, and a $1, 334, 374.25 judgment was entered against Swanson and Lund. The judgment stated Swanson and Lund were jointly and severally liable.

         [¶3] Swanson paid the judgment in full, and contemporaneously, Western State Bank assigned the judgment to Swanson. The next day, Swanson assigned his interest in the judgment to Open Road Trucking. The assignment from Swanson stated it assigned his contribution interest against Lund for $670, 952.24, one-half of the judgment amount.

         [¶4] Open Road applied for a $670, 952.24 charging order under N.D.C.C. § 10-32.1-45 against Lund's transferrable interests in five limited liability companies. In response, Lund argued Open Road was not entitled to a charging order because Swanson paid the full amount of the judgment debt to Western State Bank and therefore, the judgment was satisfied. After a hearing, the district court denied Open Road's application for a charging order. The court concluded Open Road was not entitled to a charging order because Swanson paid the judgment and there remained no unsatisfied part of the judgment under N.D.C.C. § 10-32.1-45(1).

         [¶5] In January 2019, an execution of judgment was issued against Lund for the full amount of the judgment. Open Road also began a separate action against Lund for contribution under N.D.C.C. § 9-01-08. Swanson then moved for an order directing entry of a satisfaction of judgment. The district court granted the motion, ruling the judgment against Swanson and Lund was satisfied as a matter of law. The February 2019 order directing satisfaction of judgment also cancelled any outstanding execution of judgment.

         II

         [¶6] Open Road argues the district court erred in denying its application for a charging order against Lund. Open Road claims it could enforce Swanson's right of contribution against Lund under the assignment of the judgment from Swanson.

         [¶7] This case requires us to review the district court's legal conclusions relating to the judgment and Open Road's application for a charging order. It also involves an examination of various statutes relating to joint and several obligations, contribution, and judgments. A district court's legal conclusions are fully reviewable on appeal. Estate of Conley, 2008 ND 148, ¶ 15, 753 N.W.2d 384. "The interpretation and application of a statute is a question of law, which is also fully reviewable on appeal." Id.

         [¶8] Under N.D.C.C. § 9-12-03, "[p]erformance of an obligation by one of several persons who are liable jointly under it extinguishes the liability of all persons who are liable jointly thereon." Section 9-01-08, N.D.C.C., allows a right to contribution between joint obligors: "A party to a joint obligation or to a joint and several obligation who satisfies more than that party's share of the claim against all obligors may require a proportionate contribution from all the parties joined with that party."

         [¶9] Here, Swanson and Lund executed a consent to entry of judgment. The consent to entry of judgment and the subsequent judgment stated Swanson and Lund were jointly and severally liable. Under N.D.C.C. § 9-12-03, Swanson's payment of the judgment debt to Western State Bank extinguished both Swanson's and Lund's liability to the bank. Swanson's payment also created a right to contribution from Lund under N.D.C.C. § 9-01-08.

         [¶10] We have stated, "In the absence of proof of a contrary agreement, a comaker who is required to pay the entire obligation may seek contribution or reimbursement from the other co-maker for one half of the amount paid." Estate of Egeland, 2007 ND 184, ¶ 9, 741 N.W.2d 724. The presumption of equal liability may be rebutted, and a defendant has the burden to raise an affirmative defense. Collection Ctr., Inc. v. Bydal, 2011 ND 63, ¶ 13, 795 N.W.2d 667. Here, the parties agreed to be jointly and severally liable ...


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