Baldwin v. Heinold Commodities, Inc.

• Decision Date: 22 October 1984
• Docket Number: No. 14498,14498
• Parties: Howard BALDWIN, Defendant and Appellant, v. HEINOLD COMMODITIES, INC., Plaintiff and Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 191

363 N.W.2d 191

Howard BALDWIN, Defendant and Appellant, v. HEINOLD COMMODITIES, INC., Plaintiff and Appellee.

No. 14498.

Supreme Court of South Dakota.

Considered on Briefs Oct. 22, 1984.

Decided Feb. 13, 1985.

Howard Baldwin, pro se.

Steven C. Beardsley of Lynn, Jackson, Shultz & Lebrun, Rapid City, for plaintiff and appellee.

MORGAN, Justice.

On February 17, 1981, a default judgment was entered in the Circuit Court of Cook County, Illinois, in favor of Heinold Commodities, Inc. (Heinold), a Delaware corporation, against Howard Baldwin (Baldwin), a South Dakota resident, for $13,861.00, plus interest of $1,936.74 and attorney fees of $405.00, for a total of $16,202.74 and Heinold's costs of the Illinois action. Heinold filed the foreign judgment with the Meade County Clerk of Courts in Sturgis, South Dakota, in November of 1981. On December 1, 1981, the Meade County Sheriff was ordered to execute the judgment. The execution was returned unsatisfied on February 26, 1982. On March 9, 1982, Heinold moved under the supplementary proceeding provisions of SDCL 15-20-1 that the Meade County Circuit Court require Baldwin to submit to an examination of any property he held that was subject to execution. The trial court heard Baldwin's motion to quash the order for supplementary proceedings and Baldwin's motion to set aside the judgment and issued a letter opinion on September 16, 1982. Baldwin's motion to quash the supplemental proceedings and his motion to set aside the judgment were denied. We affirm.

Baldwin filled out a Heinold customer application on July 9, 1979. He applied for an individual commodity futures account to be traded on his behalf on the Chicago Mercantile Exchange. Paragraph 25 of the application, which appears on page four of the contract immediately above Baldwin's initial signature specifies that

[t]his agreement shall not be deemed to be accepted by Heinold or become a binding contract between Customer and Heinold until approved at 222 South Riverside Plaza, Chicago, Illinois 60606 by (i) Heinold's New Accounts Department and (ii) the Regional Manager of the office of Heinold which furnished this Agreement to Customer.

Baldwin's application was forwarded from Heinold's Pierre, South Dakota, office for approval and execution in Chicago. A "Consent to Jurisdiction" clause and an "Authorization To Transfer Funds" appear beneath Baldwin's initial signature on page four. Baldwin signed and agreed to each of these clauses. ¹

After the agreement was accepted, Heinold executed Baldwin's orders for commodity futures contracts on the Chicago Merchantile Exchange, the exchange specified on the application. A number of margin calls were made on Baldwin's account and when he failed to maintain an adequate balance in his margin account Heinold closed out his open positions. Paragraph 13 of the agreement provided that in the event Heinold closed out Baldwin's account, the "[c]ustomer shall remain liable for and shall pay to Heinold the amount of any deficiency resulting from any such transactions." Under the Heinold agreement, all customer payments, including the initial maintenance and variation margin requirement, in this case $2,500.00, and all commission charges, premiums, markups, exercise fees, losses resulting from transactions, and interest and service charges on any deficit balances were payable to Heinold at 222 South Riverside Plaza, Chicago, Illinois. Baldwin's transactions with Heinold left a deficit balance in his account and on January 17, 1980, he executed a promissory note to Heinold to cover that deficit balance. Baldwin contends in his brief that after he executed the promissory note he learned that his loss occurred because Heinold's Pierre representative incorrectly placed his sell order. He therefore refused to pay the note. ²

Heinold filed a complaint in the Circuit Court of Cook County, Illinois, and prayed for judgment against Baldwin for $14,995.00, plus interest, service charges, costs and attorney fees. A copy of the customer application and agreement Baldwin signed, including the consent to jurisdiction, was attached to the complaint and incorporated therein by reference. The Illinois summons and complaint were served on Baldwin on March 31, 1980. Baldwin failed to appear or answer and on February 17, 1981, default judgment was entered against him for $16,202.74 and Heinold's costs. In November of 1981, the Illinois judgment order was filed with the Eighth Judicial Circuit Court in Meade County, South Dakota, pursuant to SDCL 15-16A-1 to 15-16A-10, the Uniform Enforcement of Foreign Judgments Act.

A copy of the Illinois summons and complaint, with Baldwin's application and agreement incorporated, arrived at the Meade County Clerk of Court's Office with the judgment but was apparently misfiled and was never marked as evidence. It is clear, however, that Baldwin's consent to jurisdiction was an issue before the trial court at the motion hearing of April 29, 1982, and that Baldwin admitted at the hearing of July 16, 1984, that he had signed the consent to jurisdiction.

The sole issue Baldwin raises on this appeal is whether the Illinois Circuit Court When a foreign judgment has been appropriately filed the grounds for vacating it are limited to lack of personal or subject matter jurisdiction of the rendering court, fraud in procurement of the judgment, satisfaction, lack of due process, or other grounds that make the judgment invalid or unenforceable; however, the nature, amount, or other merits of the judgment cannot be relitigated in the state in which enforcement is sought. Matson v. Matson, 333 N.W.2d 862 (Minn.1983); see Kreisler Mfg. v. Homstad Goldsmith, Inc., 322 N.W.2d 567 (Minn.1982); Olson v. England, 206 Neb. 256, 292 N.W.2d 48 (1980); Gifford v. Bowling, 86 S.D. 615, 200 N.W.2d 379 (1972). The Circuit Court of Cook County, Illinois, is a court of general jurisdiction and as such has the authority to hear contract cases. 2 Ill.Stats.Anno. Const. Article VI, Section 9. The Cook County Circuit Court had sufficient subject matter jurisdiction to issue its judgment in Heinold Commodities, Inc. v. Baldwin (No. 79 M1 178386).

had sufficient subject matter and personal jurisdiction to render a valid judgment against him.

The question of the Illinois Circuit Court's personal jurisdiction over Baldwin breaks down into two subissues: (1) Whether the Consent to Jurisdiction Baldwin signed was valid and enforceable; and (2) whether the Illinois Circuit Court had personal jurisdiction over Baldwin under the Illinois long-arm statute. Resolution of either question in favor of Heinold renders the Illinois Court's personal jurisdiction sufficient to validate the judgment. First, appended to the Baldwin-Heinold agreement was a "Consent to Jurisdiction" which provided in summary: (1) that all actions arising from the contract be litigated in Illinois courts; (2) that a resident agent be appointed for service of process on Baldwin in Illinois; and (3) that Baldwin waived any right to transfer or change of venue. ³

Federal courts have held that parties may contractually specify and consent to a state's jurisdiction over legal actions which arise under a contract. National Equipment Rental v. Szukhent, 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 (1964). Colonial Leasing Co. v. Pugh Bros. Garage, 735 F.2d 380 (9th Cir.1984); Merrill Lynch, Pierce, Fenner & Smith v. Lecopulos, 553 F.2d 842 (2nd Cir.1977); LFC Lessors, Inc. v. Pearson, 585 F.Supp. 1362 (D.C.Mass.1984); see Restatement of Conflict of Law, Sec. 81, p. 121, Illustration 2 (1934); Restatement of Conflict of Law, Second, Sec. 80, p. 244, comment a (1...