Baumlin & Ernst, Ltd. v. Gemini, Ltd., 80-1175

• Decision Date: 30 December 1980
• Docket Number: No. 80-1175,80-1175
• Citation: 637 F.2d 238
• Parties: BAUMLIN & ERNST, LTD., Appellee, v. GEMINI, LTD.; John L. Stickley & Company; John L. Stickley; John L. Stickley, Jr., Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 238

637 F.2d 238

BAUMLIN & ERNST, LTD., Appellee, v. GEMINI, LTD.; John L. Stickley & Company; John L. Stickley John L. Stickley, Jr., Appellants.

No. 80-1175.

United States Court of Appeals Fourth Circuit.

Argued Nov. 13, 1980.

Decided Dec. 30, 1980.

Robert B. Cordle, Charlotte, N. C. (Helms, Mulliss & Johnston, Charlotte, N. C., on brief), for appellants.

Larry B. Sitton, Greensboro, N. C. (William L. Young, Smith, Moore, Smith, Schell & Hunter, Greensboro, N. C., on brief), for appellee.

Before HALL, MURNAGHAN and SPROUSE, Circuit Judges.

MURNAGHAN, Circuit Judge:

Baumlin & Ernst, Ltd., plaintiff and appellee, is a Swiss corporation which manufactures and exports yarn for sale in the United States and elsewhere. Commencing in October of 1972, several lots were sold and delivered to Gemini, Ltd., a North Carolina corporation.

The initial lot and all subsequent lots were covered by an order confirmation form employed by appellee identical in all cases except for the specification as to date and price for each individual order. The order form, inter alia, states that, in the absence of an agreement to the contrary, prices would be expressed in Swiss francs per kilo.

When the account fell into arrears, suit was instituted, not only against Gemini, Ltd., but also to enforce asserted guarantees of the obligation made by John L. Stickley, John L. Stickley, Jr., and John L. Stickley & Co., a North Carolina corporation. The parties executed a stipulation which showed total orders of $213,831.85 less payments and a credit aggregating $69,581.96. The difference of $144,249.89 was stipulated to represent the outstanding indebtedness. Accrued interest brought the sum of $144,249.89 to a total of $220,509.20. ¹

The stipulation was entered on January 26, 1976, the day before the case was scheduled to proceed to trial in the United States District Court for the Western District of North Carolina. The only issues to be tried were whether or not the two Stickleys as individuals and the Stickley corporation were liable on guarantees of Gemini's obligation.

On the morning of trial the parties, assisted by Judge James B. McMillan, entered a stipulation which was expressed in the form of a consent judgment signed by all the parties as well as by Judge McMillan.

The consent judgment called for the staging of payments for the period extending to and including December 31, 1980. The defendants first confessed judgment in the aggregate sum of sfr. 569,067.70 ² with interest at 6% per annum from January 27, 1976. The consent judgment went on to provide, however, that the judgment would be fully satisfied if payments were made on a schedule as follows:

Outstanding unpaid balances were to bear interest at the rate of 7% per annum, payments in Swiss francs were to be by cashier's checks, and the defendants agreed on demand to execute negotiable instruments evidencing the obligations.

In the event of a default in timely payment of the staged payments or of accrued interest, Baumlin & Ernst, Ltd. was entitled to immediate judgment and execution on the sum of sfr. 569,056.70, less credit for sums paid in the interim. To date all payments, save that which will fall due on December 31, 1980, have been made.

The consent judgment was expressed in francs and not in U. S. dollars because of the explicit and firm insistence on the part of Baumlin & Ernst, Ltd. that provision for payment in stages over a period in excess of four years introduced the possibility of currency fluctuations. Baumlin & Ernst, Ltd. was unwilling to run that risk in United States dollars and would only accept the exposure in Swiss francs.

For a time all was peaceful. Appellants paid the first five installments either in Swiss francs or in the current amount of dollars which, at the then prevalent rate of exchange, translated into the specified number of Swiss francs. However, the exchange rate has, on the whole, substantially worsened from the point of view of the holder of U. S. dollars. The 1976 rate of $.3875 applicable to the February 3, 1976 payments slid to $.4095 for the December 31, 1976 installments, to $.5146 for the December 31, 1977 installment, to $.6090 for the December 31, 1978 installment, and to $.625 for the December 31, 1979 installment. As of the writing of this opinion, the exchange rate had somewhat improved, from defendants' point of view, to $.5720.

On August 1, 1979, the Stickleys filed a Fed.R.Civ.P. Rule 60(b) motion to vacate and set aside the consent judgment of January 27, 1976. ³ The motion rests on the proposition that, the judgment, having been expressed in Swiss francs and having called for its satisfaction through payments in Swiss francs, was void. ⁴ Allied to those grounds, defendants also advance allegedly equitable considerations under other provisions in Rule 60(b): "(5) ... it is no longer equitable that the judgment should have prospective application;" and "(6) any other reason justifying relief from the operation of the judgment." ⁵

The principal contention of appellants centers on the argument that statutory requirements governing currency of the United States and legal limits on monetary methods of satisfying obligations render the judgment void. There is, however, a substantial difference between a judgment which is erroneous and one which is altogether void:

A void judgment is to be distinguished from an erroneous one, in that the latter is subject only to direct attack. A void judgment is one which, from its inception, was a complete nullity and without legal effect. In the interest of finality, the concept of void judgments is narrowly construed.... Only in the rare instance of a clear usurpation of power will a judgment be rendered void.

Lubben v. Selective Service System Local Board No. 27, 453 F.2d 645, 649 (1st Cir. 1972).

A judgment is not void merely because it is or may be erroneous.... For a judgment to be void under Rule 60(b)(4), it must be determined that the rendering court was powerless to enter it. If found at all, voidness usually arises for lack of subject matter jurisdiction or jurisdiction over the parties. It may also arise if the court's action involves a plain usurpation of power or if the court has acted in a manner inconsistent with due process of law.

V. T. A., Inc. v. Airco., Inc., 597 F.2d 220, 224-25 (10th Cir. 1979).

The present case clearly met diversity requirements for jurisdiction. More than $10,000 was in controversy with a Swiss corporation on one side and North Carolina individuals and corporations on the other. The court usurped no power nor did it act inconsistently with due process. All the parties clearly wanted the court to do as it did in entering the consent judgment and no one was then dissatisfied. The judgment, therefore, may, at most, have been erroneous, but any error, if it indeed existed, could have been attacked on appeal. Error, however, does not make the judgment void and, therefore, Fed.R.Civ.P. 60(b)(4) is inapplicable. In re Texlon Corp., 596 F.2d 1092, 1099 (2d Cir. 1979) ("The financing order was not 'void' within the meaning of F.R.Civ.P. 60(b)(4).... Even if the order had been contrary to an express provision of the Bankruptcy Act, which we have held it was not, the order would not have exceeded the 'jurisdiction' of the court.... The financing order was within the parameters of the bankruptcy court's authority, '(a)nd even gross error in the decree would not render it void.' Swift & Co. v. United States, 276 U.S. 311, 330, (48 S.Ct. 311, 316, 72 L.Ed. 587)...."). See also Gulf Coast Building and Supply Co., Inc. v. IBEW, Local 480, 460 F.2d 105 (5th Cir. 1972) (judgment which included prejudgment interest erroneous, but not void despite inconsistency with 28 U.S.C. § 1961 which provides that "interest shall be calculated from the date of entry of the judgment").

Appellants assert, however, that the cases holding a judgment at most erroneous but not void deal with a less serious disregard of statutory requirements and of the public purposes behind them. The appellants seek so to elevate the importance of statutes dealing with United States currency as to make the claimed infringement which they here perceive serious enough to invalidate in toto any resulting court decree or judgment. In particular they cite 31 U.S.C. § 463 which reads:

§ 463. Provision for payment of obligations in gold prohibited; uniformity in value of coins and currencies

(a) Every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts. Any such provision contained in any law authorizing obligations to be issued by or under authority of the United States, is hereby repealed, but the repeal of any such provision shall not invalidate any other provision or authority contained in such law.

(b) As used in this section, the term "obligation" means an obligation (including every obligation of and to the United States, excepting currency) payable in money of the United States; and the term "coin or currency" means coin or currency of the United States, including Federal Reserve notes and circulating notes of Federal Reserve banks and national banking associations.

Defendants cite in support of their contentions Guaranty Trust Co. v. Henwood, 307 U.S. 247, 59 S.Ct. 847, 83 L.Ed. 1266 (1939). Henwood upheld legislation enacted as part of the comprehensive...