Cole v. First Nat. Bank of Fort Smith

• Court: Arkansas Supreme Court
• Writing for the Court: GLAZE; HAYS
• Citation: Cole v. First Nat. Bank of Fort Smith, 800 S.W.2d 412, 304 Ark. 26 (Ark. 1990)
• Decision Date: 03 December 1990
• Docket Number: No. 90-156,90-156
• Parties: William H. COLE, Appellant, v. FIRST NATIONAL BANK OF FORT SMITH, Arkansas, Appellee.

Page 412

800 S.W.2d 412

304 Ark. 26

William H. COLE, Appellant, v. FIRST NATIONAL BANK OF FORT SMITH, Arkansas, Appellee.

No. 90-156.

Supreme Court of Arkansas.

Dec. 3, 1990.

Kenneth W. Cowan, Fort Smith, for appellant.

R. Gunner Delay, Fort Smith, for appellee.

GLAZE, Justice.

This appeal concerns a procedural question about service of process. First National Bank, appellee, filed suit against William Cole, appellant, on a past due note on August 7, 1984. At that time, the appellant was living in Houston, Texas. The appellee served the summons and complaint by certified mail, return receipt requested, addressed to Mr. William Cole at a post office box in Houston. The mail receipt shows that it was signed by the appellant's step-daughter Jacqueline Cole on August 17, 1984. When the appellant failed to file an answer, default judgment was entered against him for approximately $42,200 on December 14, 1984.

On April 11, 1989, the appellant received a letter stating that his bank account was being charged with a setoff pursuant to a default judgment obtained against him. On November 8, 1989, appellant filed a motion to set aside the default judgment. In that motion, the appellant alleged that he had never been personally served with process and had no notice, actual or constructive, of the proceedings against him until he received notification of the setoff on his bank account. The trial court denied the appellant's motion, and on appeal, appellant claims that denial was erroneous. He also claims appellee's cause of action should be dismissed with prejudice because it is now barred by the statute of limitations. While we agree with the appellant that the default judgment should be set aside, we dismiss the appellee's action without prejudice.

To serve the appellant, then an out-of-state defendant, by mail, the appellee was required to follow ARCP Rule 4(e)(3). Rule 4 has been amended many times, but in 1984, when appellee attempted service, it provided the following:

(e) Other Service: Whenever the law of this state authorized service outside this state, the service, when reasonably calculated to give actual notice, may be made:

(3) By any form of mail addressed to the person to [be] served and requiring a receipt signed by the addressee or the agent of the addressee. ¹

We have held that "agent" as referred to in this rule must be an agent appointed pursuant to postal regulations. Green v. Yarbrough, 299 Ark. 175, 771 S.W.2d 760 (1989); see also Reporter's Notes to Rule 4. In addition, we have stated that statutory service requirements, being in derogation of common law rights, must be strictly construed and compliance with them must be exact. Wilburn v. Keenan Cos., 298 Ark. 461, 768 S.W.2d 531 (1989).

In the present case, the appellee's sole attempt at service was mailing a copy of the complaint and summons addressed to the appellant. The appellee received a return receipt signed by the appellant's step-daughter, but there was no marking on the receipt in the boxes provided for "addressee" or "agent" located above her signature. There is no showing that the appellant appointed his step-daughter as his agent pursuant to postal regulations, and in fact there is an indication that the young woman was under the minimum age of fourteen for service at the time she signed the receipt. ARCP Rule 4(d)(1). Because the receipt was not signed by the appellant or his agent, the appellee's service failed to meet the requirements of Rule 4(e)(3).

In concluding that service was not made on the appellant, we now address the sufficiency of the appellant's motion to set aside appellee's default judgment. The appellee argues that even if service was not proper, the appellant's motion should not be granted because he did not raise a valid defense pursuant to ARCP Rule 60. Rule 60(d) provides that no judgment against a defendant shall be set aside under this rule unless the defendant in his motion asserts a valid defense to the action, and upon a hearing, makes a prima facie showing of such defense. Section 16-65-108, of Ark.Code Ann. (1987), however, provides that a judgment made by any court of the state against anyone without notice, actual or constructive, is null and void. We have held that in cases where judgments are void, no proof of a meritorious defense is necessary to set aside the judgment. Lawson v. Edmondson, 302 Ark. 46, 786 S.W.2d 823 (1990); Green v. Yarbrough, 299 Ark. 175, 771 S.W.2d 760 (1989); see also ARCP Rule 60(k). Thus, we conclude that appellant's motion is sufficient and should be granted.

While we agree that the trial court erred in denying the appellant's motion, we do not agree that the appellee's action is now barred under the statute of limitations. Under ARCP Rule 3, as amended in 1983, a civil action is commenced by filing a complaint with the clerk of the proper court who shall note thereon the date and precise time of filing. Pursuant to ARCP Rule 4(i), the plaintiff has 120 days after the filing of the complaint to serve summons on the defendant. If the service is not made within 120 days, the action against the defendant is dismissed without prejudice.

Here, the appellee timely filed its complaint on August 7, 1984. Appellee attempted service by mail, and the parcel was received by appellant's step-daughter on August 17, 1984. Although we now hold in this appeal that appellee's service was improper, the trial court previously granted appellee a default judgment, finding that the appellant had been "personally served in the time and manner required by law."

Although the trial court erred in finding that proper service had been made on the appellant, the appellee should not now be penalized five years later by having its action barred by the statute of limitations. This is especially true in this situation where the trial court...