ABC Drilling Co., Inc. v. Hughes Group
Decision Date | 18 March 1980 |
Docket Number | No. 52050,52050 |
Citation | 609 P.2d 763 |
Parties | ABC DRILLING CO., INC., Appellee, v. The HUGHES GROUP, Appellant. |
Court | Oklahoma Supreme Court |
Appeal from the District Court of Oklahoma County; Jack R. Parr, District Judge.
The Hughes Group appeals the trial court's overruling of its motion to vacate a default judgment, wherein the invalidity of the judgment was correctly alleged to arise from the court's lack of jurisdiction over the person of the foreign corporate defendant.
REVERSED AND REMANDED.
Mark D. Coldiron and Brent D. Coldiron, Del City, for appellee.
Barney W. Miller and Steven C. Smith, Oklahoma City, for appellant.
ABC Drilling Company, an Oklahoma corporation, brought this action against the Hughes Group, a foreign corporation, having its principal place of business in Phoenix, Arizona, alleging it incurred money damages resulting from breach of a contract executed in Oklahoma. The contract obligated A.B.C. to drill oil and gas wells for the defendant out of state. The petition alleges the defendant was obligated to furnish water and drilling mud under the agreement. After locating on the first drilling site on April 30, the plaintiff waited until May 17, 1976 for the arrival of those materials. Plaintiff alleged it was entitled to recovery of a daily standby rate of $2040.00 and actual expenses totaling $39,354.86 in addition to attorney fees and costs. In a second cause of action, plaintiff prayed for a judgment of $22,500.00 for damages incurred by defendant's fraudulent misrepresentation of the ability to carry out its obligations under the contract, resulting in the loss of use of the drilling rig, and additionally sought a $25,000.00 punitive damages judgment.
The plaintiff served the Secretary of State of Oklahoma under the provisions of 18 O.S.1971 § 1.204a, which provides:
"In all cases where a cause of action has accrued or shall accrue to any person by reason of a foreign corporation doing business in this state or having done business in this state or while a foreign corporation was doing business within this state and such foreign corporation has no registered agent in this state upon whom service of summons or other process may be had, an action may be filed against such foreign corporation in any county in the state and service of summons or other process may be had upon the Secretary of State, and such service shall be sufficient to give jurisdiction of the person to any court in this state having jurisdiction of the subject matter whether sitting in the county where the Secretary of State is served or elsewhere in the state."
Although not required to do so under the above statute, the Secretary of State mailed the petition and summons to defendant's service agent and it was subsequently returned unable to forward.
Prior to the answer date, plaintiff applied for and received a special commission to take a deposition in Phoenix, Arizona. The Application, Order, Notice to Take Depositions and Affidavit of Service of Notice, all refer to "sundry witnesses" and reflect service of notice was made to the service agent at the same address from which the notice of process was returned unable to forward. Although the affidavit of service of notice to take deposition reflects registered mail, the record contains no return receipt. The deposition was taken and is included in the record before this Court. The deposed party, Loren Hughes, is the sole stockholder of the defendant corporation. At the time the deposition was taken, the process papers which had never theretofore been actually received by the defendant corporation were examined by the corporate service agent. Such inspection was informal and no return was made thereof nor could it be, inasmuch as the papers were presented for inspection by the plaintiff's attorney, an interested party, and was not the single summons issued by the court clerk as required by 12 O.S.1971, § 153, 12 O.S.Supp.1973 § 155, or 12 O.S.Supp.1972 § 158. Service of process must stand upon the provisions of 18 O.S.1971 § 1.204a. The informal, actual notice is not sufficient as a substitute for the jurisdictional requirement of service of process upon the defendant. Wuchter v. Pizzutti, 276 U.S. 13, 48 S.Ct. 259, 72 L.Ed. 446 (1928).
The journal entry issued a default judgment on the 9th day of February, 1977. That journal entry reflects the court swore witnesses and took testimony in open court, finding therefrom personal and subject matter jurisdiction, specifically stating, "plaintiff was duly served with summons more than thirty days prior to this date." The journal entry finds the contract attached to the plaintiff's petition was "initiated and negotiated in the State of Oklahoma." The judgment assesses damages against the defendant on the first cause of action at $39,354.86, prejudgment and postjudgment interest costs of $27.00, and an attorney's fee of $6,823.26. The judgment assesses damages on the second cause at the sum of $22,500.00 and interest from judgment, reserving the punitive damages issue.
Three months and seventeen days after judgment, the defendant filed his motion to vacate the default judgment in which he preserved his objection to jurisdiction over the person of the defendant by alleging only jurisdictional defects. Therein the defendant alleges the court did not possess subject matter jurisdiction by virtue of the fact that the contract sued upon was not "initiated, negotiated, executed, performed or intended to be performed in the State of Oklahoma." Secondly, defendant objected to service, alleging the service made upon the Secretary of State did not afford actual knowledge of the pending litigation. Thirdly, the motion to vacate alleges the taking of a default judgment against the defendant corporation without service of process upon it is a violation and denial of due process of law as guaranteed by Article 2, § 7 of the Oklahoma Constitution and the Fourteenth Amendment to the Federal Constitution, when, as in this instance, the plaintiff had actual knowledge of the location of the corporate office and whose service agent's name and address were a matter of public record.
The trial court's order overruling the motion to vacate recites a finding that the Court had jurisdiction over the corporate defendant by virtue of service of process on the Secretary of State, finding that service proper inasmuch as the foreign corporation had no service agent in this state. The order then states, ". . . the Court lacks jurisdiction to entertain said motion for reasons as set forth." A void judgment, however, may be vacated at any time on motion of a party or any person affected thereby. 12 O.S.1971 § 1038. A personal judgment rendered against a corporation without service of process on it or other sufficient legal notice to it, in the absence of an appearance in the suit, is void for want of jurisdiction. Southwestern Surety Ins. Co. v. Walser, 77 Okl. 240, 188 P. 335 (1920). Here the motion to vacate is directed solely to jurisdictional defects in the judgment and thus the defendant has not waived defects in the judgment relating to jurisdiction over the person of the defendant. La Bellman v. Gleason & Sanders, Inc., 418 P.2d 949 (Okl.1966).
In the case of Consolidated Flour Mills v. Muegge, 127 Okl. 295, 260 P. 745 (1927) substantially the same objection as is now raised to 18 O.S.1971 § 1.204a was offered against C.O.S. 1921 § 5442, which provided:
"Any foreign corporation, doing business in the State of Oklahoma, having failed either to appoint an agent upon whom service of summons or other process may be had, or failed to file in the office of the Secretary of State a duly authenticated copy of its article of incorporation or character (charter), or having failed to pay the license fee as required by law, then in the event of said foreign corporation having failed to comply with any of the provisions of the law above referred to, any person now or hereafter having any cause of action against any foreign corporation may file suit against said foreign corporation in any county in the state and service of summons or any process upon the Secretary of State shall be sufficient to give jurisdiction of the person to any court of this state having jurisdiction of the subject-matter."
Title 18 O.S.1971 § 1.204a similarly contains a provision for service of process upon the Secretary of State without a requirement that such service be forwarded to the defendant. Insofar as both statutes provide for service on a foreign corporation not having a service agent appointed within the state by serving the Secretary of State and contain no provision for forwarding such service to the corporation itself, the statutes are operatively identical. Prior to 1972, however, Title 18 contained a second provision in § 661 specifying that the Secretary of State shall forward the service of process served upon him to the corporate defendant. This provision was repealed by Ch. 208, § 12 Okla.Sess.Law 1972 and therefore, as the law of this state now stands, there exists no statutorily imperative procedure for assuring that notice of process is transmitted to the defendant in the manner most likely under the circumstances to achieve actual notice of the pending litigation.
Precisely this posture of the law was upheld by this state's Supreme Court in Consolidated Flour Mills v. Muegge, supra. The rationale utilized to justify this method of service of process was that where state law designates an agent upon whom service of process may be served, the corporation assents to the statute and at least impliedly clothes that officer with authority to receive service in its behalf upon that corporation's failure to appoint a resident service agent. This decision upholding the constitutionality of the statute was overturned in a memorandum opinion, Consolidated Flour Mills v. Muegge, 278 U.S....
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