Canal Ins. Co. v. Cambron, s. 33008

• Decision Date: 19 January 1978
• Docket Number: 33009,Nos. 33008,s. 33008
• Citation: 240 Ga. 708,242 S.E.2d 32
• Parties: CANAL INSURANCE COMPANY v. Bobby C. CAMBRON et al. Bobby C. CAMBRON v. CANAL INSURANCE CO.
• Court: Georgia Supreme Court

Page 32

242 S.E.2d 32

240 Ga. 708

CANAL INSURANCE COMPANY v. Bobby C. CAMBRON et al.

Bobby C. CAMBRON v. CANAL INSURANCE CO.

Nos. 33008, 33009.

Supreme Court of Georgia.

Jan. 19, 1978.

Rehearing Denied Feb. 8, 1978 in case No. 33008 only.

T. Cullen Gilliland, Robert B. Wedge, Hurt, Richardson, Garner, Todd & Cadenhead, Atlanta, for appellant.

Marson G. Dunaway, Jr., Rockmart, Harl C. Duffey, Jr., Duffey & Sawhill, Rome, for appellees.

HALL, Justice.

Canal Insurance Company filed a suit in equity in Polk Superior Court seeking to set aside certain judgments against its former insured, Glover. This appeal is brought by Canal from adverse judgments which dismissed its complaint as to each defendant; granted each defendant summary judgment; denied Canal's motion for summary judgment; and dismissed Canal's complaint against Evelyn Hilton for additional jurisdictional reasons. There is a cross appeal.

Canal's insured was Glover, a taxi driver who was sued by his passengers, Mr. and Mrs. Hilton, following a serious automobile collision. Mr. Hilton later died of his injuries as did Glover. (For convenience, the suit instituted in his name will be referred to as Mr. Hilton's suit). Canal began defense of the Hiltons' suits against Glover, but later decided the relevant policy had been cancelled by Canal prior to the collision. Canal withdrew from the defense, and one Cambron, the deputy clerk of Polk County Superior Court, was appointed Glover's administrator on the day of trial. Marson G. Dunaway, Jr., an attorney, represented Cambron as Administrator of Glover's estate, and he was also counsel of record for the Hiltons in their suit against Glover. Cambron adopted the defensive pleadings filed by Canal and announced ready for trial; but when the case was called for trial he did not appear himself nor through counsel, and the Hiltons took default judgments. After hearing a minimal amount of evidence concerning damages, which was insufficient to prove the amounts sued for, namely $250,000 for Mr. Hilton and $100,000 for Mrs. Hilton, the court directed the jury to enter verdicts for the Hiltons in the amounts sued for, and this was done.

Cambron then sued Canal to recover under the policy. Canal removed the suit to federal court, and in Polk Superior Court filed its own suit in equity under Code Ann. § 81A-160 seeking to set aside the Hiltons' judgments against Glover. The federal court stayed its decision pending decision of Canal's suit. The Polk Superior Court ruled against Canal, granting on all grounds the defendants' motions to dismiss its suit in equity, and defendants' motions for summary judgment. There was a counterclaim brought by defendants Cambron, Dunaway and Evelyn Hilton against Canal, alleging abuse of process in claiming fraud without basis. The trial court denied the counterclaim and this judgment is the basis of the cross appeal.

1. For clarity, some hotly protested initial matters must be decided. Contrary to defendants' (Cambron and the Hiltons) argument here, Canal has not brought a collateral attack on these judgments. A suit in equity is a direct attack under Code Ann. § 81A-160(b). Lewis v. Lewis, 228 Ga. 703, 187 S.E.2d 872 (1972). Additionally, there is a no requirement that to attack it Canal show the judgment to be void on its face. See, e. g., Henry & Co. v. Johnson, 178 Ga. 541, 173 S.E. 659 (1933). Voidness "on its face" under 81A-160(a) is said to allow any person to attack a judgment in any court; but it does not specify the only way an entity affected by a judgment may attack it. Canal has sought to proceed under Code Ann. § 81A-160(e) with a complaint in equity to set the judgment aside "for fraud, accident or mistake, or the acts of the adverse party unmixed with the negligence or fraud of the complainant." Defendants contend that Canal may not bring such an attack because it was not a party to the judgment. This is an incorrect proposition.

Our statute is dissimilar to the federal rule allowing attacks on judgments (Rule 60, Fed.R.Civ.Proc.), and the noted treatises thereon, usually so helpful, are inapposite. But Georgia case law shows that relief in equity is not limited to parties, nor even to their "privies" in the narrowest ¹ technical sense.

Since 1852 it has been the law of Georgia that when a court purports to render judgment beyond its jurisdiction, the judgment is void as to a third person, "and may be impeached whenever and wherever it is sought to be used as a valid judgment." Central Bank of Georgia v. Gibson, 11 Ga. 453 (1852). It is clear that a third person not a party to a judgment may attack it for fraud, as Canal seeks to do. Lewis v. Lewis, 228 Ga. 703, 187 S.E.2d 872, supra (1972); Simpson v. Bradley, 189 Ga. 316, 318, 5 S.E.2d 893 (1939).

The Restatement of Judgments addresses the problem directly:

" § 115 Persons Not Parties to a Judgment.

(1) Any person whose interests have been adversely affected by a judgment, and only such a person, may be entitled to equitable relief.

"(Comment f. on subsection 1:) A person who is subjected to liability by the rendition of a judgment, whether or not he is a party to it, is entitled to equitable relief against it if it was improperly obtained, in accordance with the rules stated in this Chapter." Restatement, Judgments § 115 (1942). (Emphasis supplied.)

There can be no doubt that Canal is an entity subjected to liability by the rendition of the judgment, within the meaning of the Restatement. This conclusion follows from prior holdings. For example, "In the absence of fraud and collusion, if an automobile liability insurer who has a right to defend actions against the insured has timely notice of such an action and elects not to defend, the judgment in such case is binding on the insurer as to issues which were litigated therein, when the insurer is later sued by the injured person." Public National Ins. Co. v. Wheat, 100 Ga.App. 695, 701, 112 S.E.2d 194, 200 (1959).

Therefore, the fact that Canal was not a party to the judgments it seeks to attack does not prevent its bringing this action.

2. The attack is brought on the ground of fraud, among others, and defendants assert that the complaint is subject to dismissal because the allegations of fraud are not adequately particularized. The defendants' position overlooks Bryant v. Bryant, 236 Ga. 265, 223 S.E.2d 662 (1976), holding that fraud does not have to be pleaded with particularity to withstand a motion to dismiss. The proper remedy is by motion for a more definite statement under Code Ann. § 81A-112(e). The allegations of fraud in the complaint are adequate to state a claim.

What has been written is sufficient to show that Canal is entitled to its day in court seeking to prove the allegations of its complaint. Defendants in their motion for summary judgment failed to show that they were entitled to judgment as a matter of law and that there were no material fact issues remaining for decision. Code Ann. § 81A-156(c). If Canal succeeds below, the entire judgments including liability and damages may fall. But Canal may not succeed on its fraud theory, requiring that we consider its independent attack on the damages portion of the Polk County judgments.

3. Canal attacks the award of damages totalling $350,000 on the ground that the trial judge's directing the jury to return verdicts in that amount exceeded the power of the court because the amount of damages is for the jury to determine. Again, Canal need not show that the alleged unauthorized act is visible "on the face of the record" subjecting it to collateral attack, in order to attack the judgment. This is a direct attack brought under Code Ann. § 81A-160(e). Although the language of that section mentions only the following situations, "complaint in equity may be brought to set aside a judgment for fraud, accident or mistake, or the acts of the adverse party unmixed with the negligence or fault of the complainant," equity has the power to afford relief on more grounds than those mentioned. In Kitchens v. Clay, 224 Ga. 325, 327, 161 S.E.2d 828, 829 (1968), we ruled that subsection (e) embodied the principles of former Ga.Code Ann. §§ 37-219 and 110-710, repealed by the CPA, and cases under those sections applied under subsection (e). The principles of Code Ann § 110-709, which was not repealed by the CPA, apply to subsection (e). See Wasden v. Rusco Industries, Inc., 233 Ga. 439, 445, 211 S.E.2d 733 (1975). Code Ann. § 110-709 reads as follows:

"The judgment of a court having (sic) jurisdiction of the person or subject-matter, or void for any other cause, is a mere nullity, and may be so held in any court when it becomes material to the interest of the parties to consider it." (Emphasis supplied.)

(The statute is obviously misprinted, and means to refer to a court not having jurisdiction, etc.) This court wrote 25 years ago that a judgment void on jurisdictional grounds could be attacked by third parties:

"A lack of jurisdiction or power in a court entering a judgment always avoids the judgment, and this is especially true as it relates to and affects the rights of other parties; such action is a mere usurpation of power by the court and may be declared void collaterally without any direct proceedings to revise it. Prescott v. Bennett, 50 Ga. 266. And since the court rendering the judgment here involved had no jurisdiction or power to give it any retroactive effect, its action in attempting to do so was a nullity; and such action, being therefore void, is subject to collateral attack by anyone whose rights are affected thereby, whenever and wherever asserted. Code § 110-709; Western Union Telegraph Co. v. Taylor, 84 Ga. 408, 11 S.E. 396, 8 L.R.A. 189; Deck v. Shields, 195 Ga. 697, 25 S.E.2d 514; 31 Am.Jur. 184, § 583." Royal Indemnity Co. v. Mayor, etc., Savannah, 209 Ga. 383, 391, 73 S.E.2d 205, 209 (1952). Accord, First Fidelity Ins. Corp. v. Busbia, 128 Ga.App. 485, 486, 197 S.E.2d...