Coker v. Basic Media, Ltd., 8228SC322
| Decision Date | 05 July 1983 |
| Docket Number | No. 8228SC322,8228SC322 |
| Court | North Carolina Court of Appeals |
| Parties | Joseph D. COKER v. BASIC MEDIA, LTD. Arthur Lee CANFIELD v. BASIC MEDIA, LTD. |
Bennett, Kelly & Cagle by Harold K. Bennett, Asheville, for plaintiffs-appellants.
Roberts, Cogburn, McClure & Williams by Max O. Cogburn and Isaac N. Northup, Jr., Asheville, for defendant-appellee.
The effect of the 1980 order of the District of Columbia federal court determines this action. If we hold that we are bound by the conclusion of that order that the instruments sued upon were not sealed, then the plaintiffs are barred by the three-year statute of limitations under G.S. 1-52(1).
The federal order found that the cause of action accrued on 6 September 1973 when the plaintiffs declared the entire amount of the notes due and payable. We agree.
The three-year statute of limitations for breach of contract begins to run in North Carolina when the contract is breached. Rawls v. Lampert, 58 N.C.App. 399, 400, 293 S.E.2d 620, 621 (1982). The defendants were in default on 6 September 1973 and default on the notes was a breach of contract.
Although the federal order did not state explicitly that the notes were not instruments under seal, it implicitly held this to be true when it applied the three-year statute of limitations for contract actions to bar the plaintiffs' recovery on all the notes, except for the last two installments on the non-negotiable notes. In fact, the seal issue was clearly before the federal court, contrary to what the dissent says. In the plaintiffs' statement in opposition to the defendants' motion for partial summary judgment filed on 16 October 1979, they acknowledge the applicable law.
In other jurisdictions, these promissory notes would be instruments under seal subject to the provisions of a statute of limitations provision of 12 years or longer, but counsel for the Defendants has directed attention to two cases in the District of Columbia stating that the corporate seal does not make such an instrument an instrument under seal.
Before we give collateral estoppel effect to the federal order's determination that the notes were not under seal, certain requirements must be met.
(1) The issues to be concluded must be the same as those involved in the prior action; (2) in the prior action, the issues must have been raised and actually litigated; (3) the issues must have been material and relevant to the disposition of the prior action; and (4) the determination made of those issues in the prior action must have been necessary and essential to the resulting judgment.
King v. Grindstaff, 284 N.C. 348, 358, 200 S.E.2d 799, 806 (1973); 1B Moore's Federal Practice p 0.443 (2d ed. 1982).
The issues here are the same as in the federal action. Whether that action decided that the instruments were not under seal was relevant and necessary to its decision. Thus, three of the four requirements are easily met.
Application of collateral estoppel here depends on if the seal issue was "raised and actually litigated." Although no explicit findings were made on the seal question, the federal court's decision could not have been made without a determination that the notes were not under seal. In such a case, "the court may infer that in the prior action a determination appropriate to the judgment rendered was made as to each issue that was so raised and the determination of which was necessary to support the judgment." 1B Moore's, supra, at p 0.443(4). We also note King's language that "If the record of the former trial shows that the judgment could not have been rendered without deciding the particular matter, it will be considered as having settled that matter as to all future actions between the parties." Id. at 359, 200 S.E.2d at 807. As discussed above, the record shows that the District of Columbia cases on instruments under seal were before the federal court.
Because the cause of action accrued on 6 September 1973 and the plaintiffs did not file this suit until 31 July 1980, this action is barred by the G.S. 1-52(1) three-year statute of limitations.
For these reasons, we affirm the trial judge's dismissal of the plaintiffs' actions.
Affirmed.
Collateral estoppel precludes parties from retrying fully litigated issues that were determined in a prior action. King v. Grindstaff, 284 N.C. 348, 356, 200 S.E.2d 799, 805 (1973). The majority believes the issue of whether the notes in question were under seal has been fully litigated since it was implicitly decided by the federal court. It is true that an issue will be deemed settled if the record of the former trial shows the matter was necessarily determined by the prior judgment. King v. Grindstaff, supra, at 359, 200 S.E.2d 799. The court in the subsequent action may review the pleadings and evidence to discover which issues were determined in the prior action. 1B Moore's Federal Practice p .0443 (2d ed. 1982); King v. Grindstaff, supra; Gunter v. Winders, 253 N.C. 782, 117 S.E.2d 787 (1961). Gunter states that a party's right to be heard in court is important enough for the doctrine of res judicata to be strictly applied, and therefore the matter determined "cannot be left to uncertain inference." Id. at 785, 117 S.E.2d 787.
In the present case, the majority infers that the federal court determined the instruments were not under seal from the federal court order stating that a three-year statute of limitations applied. However, examination of the pleadings, exhibits, and memoranda tends to show the parties never litigated the seal issue and the federal court never considered it.
The promissory notes involved here clearly bear the corporate seal of defendant. Defendant admitted that these exhibits were true and accurate copies, and also admitted they bore its seal. D.C.Code § 12-301(6) establishes a twelve-year statute of limitations for instruments under seal. The notes bearing defendant's seal plainly raise a question as to whether the twelve-year limitations period is applicable. Yet the federal court order, which discusses the facts and law of the case in detail, never broaches the issue of whether the notes were sealed instruments. Instead, the federal court assumed the three-year statute of limitations for contract and fraud actions was applicable. The strongest inference from the record is not that the federal court determined the notes were not under seal, but that it overlooked the issue.
Moreover, the seal issue was not fully litigated by the parties. This may explain why the issue was overlooked by the federal court. Alth...
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