Country Clubs, Inc. v. Ward

• Decision Date: 20 November 1970
• Docket Number: No. 17514,17514
• Citation: 461 S.W.2d 651
• Parties: COUNTRY CLUBS, INC., Appellant, v. John A. WARD and Jack Smalley, Partners, d/b/a John Ward Associates Advertising, Appellees.
• Court: Texas Court of Appeals

Page 651

461 S.W.2d 651

COUNTRY CLUBS, INC., Appellant, v. John A. WARD and Jack Smalley, Partners, d/b/a John Ward Associates Advertising, Appellees.

No. 17514.

Court of Civil Appeals of Texas Dallas.

Nov. 20, 1970.

Rehearing Denied Dec. 18, 1970.

M. Clifton Maxwell, Dallas, for appellant .

John Gillis, Dallas, for appellees.

CLAUDE WILLIAMS, Justice.

The question presented by this appeal is whether a Kentucky court had jurisdiction to render an in personam judgment by default against a nonresident Texas corporation. We hold that the court of the sister state did not possess jurisdiction and accordingly we reverse and render the judgment of the Texas court which was based upon such judgment.

John A. Ward and Jack Smalley, Partners, doing business as John Ward Associates Advertising, residents of the State of Kentucky, instituted an action in Jefferson Circuit Court, Common Pleas Branch, of the State of Kentucky, against Urban Properties, Inc., a Kentucky corporation, seeking to recover judgment for goods sold and delivered as well as for services rendered in the sum of $1,835. Thereafter plaintiffs amended their complaint to include as defendant 'County Clubs, Inc., 3800 Golfing Green Drive, Dallas, Texas.' Thereafter plaintiffs filed what is designated as 'Second Amended and Supplemental Complaint' which contained only the following two paragraphs:

'I.

Through mistake, the word 'County' was used in their amended and supplemental complaint rather than the correct word 'Country'. The proper name of the defendant is Country Clubs, Inc.

'II.

Each and every allegation of their prior complaints are hereby reiterated and reaffirmed the same as if copied herein in full, except each and every instance where the name Country Clubs, Inc. was used is hereby amended to the name Country Clubs, Inc.'

A copy of the summons on the amended and supplemental complaint, dated November 25, 1966, and directed to be served upon the Secretary of State of the State of Kentucky contains no certificate that same was actually executed by delivering same to the Secretary of State.

A copy of the summons of the second amended and supplemental complaint, dated December 12, 1966 and directed to be served upon the Secretary of State of the Commonwealth of Kentucky, contains a return showing that it was executed on the 19th day of December 1966 by serving Country Clubs, Inc., a nonresident of the Commonwealth of Kentucky, by delivering a true copy of the summons together with attested copy of complaint to the Secretary of State of the Commonwealth of Kentucky, as process agent for said defendant.

On December 19, 1966 the Secretary of State of the Commonwealth of Kentucky addressed a letter to Country Clubs, Inc., 3800 Golfing Green Drive, Dallas, Texas, stating that suit had been filed against such corporation in the Jefferson Circuit Court at Louisville, Kentucky. The letter further stated that: 'As provided under Section 271.610, Kentucky Revised Statutes, I am enclosing herewith a copy of the summons and complaint.' This letter was received by Country Clubs, Inc., in Dallas, Texas, and the officer of that corporation who received same testified that the only pleading accompanying the notice and summons was a copy of the second amended and supplemental complaint, copied above.

Thereafter, in the Kentucky action, plaintiffs filed a motion for default judgment against defendant, Country Clubs, Inc., by addressing same to: 'Mr. James E. Maser, Attorney for Defendant Urban Properties, Inc., P.O. Box 14355, Dallas, Texas, 75234.' In said motion it was recited that defendant Country Clubs, Inc. had been served with a summons December 19, 1966 but that defendants had failed to appear and respond to the action.

Thereafter on March 14, 1967 judgment was rendered by default in the Jefferson Circuit Court in favor of plaintiffs and against defendant Country Clubs, Inc. in the sum of $1,835 with interest and costs. The judgment recites that the defendant had been duly summoned but failed to appear and also that the defendant is a corporation doing business in Kentucky.

The present suit was instituted by the judgment creditors in the Kentucky case in the district court of Dallas County, Texas against Country Clubs, Inc. seeking a judgment based upon the Kentucky decree. Country Clubs, Inc. challenged the validity of the Kentucky judgment contending (1) that proper service had not been had upon it and (2) that there had been no minimal contact in the State of Kentucky by the Texas corporation which would subject Country Clubs, Inc. to the jurisdiction of the Kentucky court. Following trial before the court without a jury the trial court found that the Kentucky judgment was valid and rendered judgment as prayed.

Appellant, in two points of error, urges that the Texas judgment should be voided because (1) the service of process by the Kentucky Secretary of State was inadequate to confer jurisdiction on the Kentucky court, and (2) there was no activity by appellant in Kentucky sufficient to warrant jurisdiction by the Kentucky court either under the Kentucky statute or the Federal Constitution.

The 'Long Arm Statute' of the State of Kentucky is Art. 271.610, Kentucky Revised Statutes Annotated and Sections (2), (3) and (4) thereof provide as follows:

'(2) Any foreign corporation that does business in this state without having complied with the provisions of KRS 271.385 as to designation of process agent shall, by such doing of business be deemed to have made the Secretary of State its agent for the service of process in any civil action instituted in the courts of this state against such corporation involving a cause of action arising out of or connected with the doing of business by such corporation in this state. The plaintiff in such action shall set forth in his petition the postoffice address of the home office of the corporation.

'(3) A plaintiff desiring to obtain service as a corporation under this section shall cause two copies of his petition, together with two copies of the summons, to be served upon the Secretary of State. The Secretary of State shall immediately forward one copy of the petition, and one copy of the summons, by registered mail to the corporation at its home office as shown in its notice of intent to withdraw or in the plaintiff's petition, as the case may be. The process server shall make the usual return to the court, and in addition the Secretary of State shall make a return to the court, showing that the acts contemplated by this subsection have been performed, and shall attach to his return the registry receipt, if any. Jurisdiction over the corporation shall not attach until the return by the Secretary of State is filed.

'(4) The Secretary of State shall keep a file of the petitions and summons served upon him, and shall make a record of the action taken by him respecting the service in each case. His return to the court shall be conclusive as between the parties, but shall not protect him in an action for damages, by any party aggrieved, in case of his dereliction of duty in this regard.'

It is undisputed in this record that appellant Country Clubs, Inc. was incorporated under the laws of the State of Texas; that it was not incorporated or qualified in the State of Kentucky; that it had no office or place of business in Kentucky and that it had no designated agent for service in this sister state . Accordingly, appellant occupied the status of a nonresident of Kentucky and in order for a court of that state to render an in personam judgment against a nonresident corporation it is imperative and essential that the record affirmatively show a strict compliance with the provisions of the Kentucky 'Long Arm Statute' providing a mode of service on the nonresident defendant. McKanna v. Edgar, 388 S.W.2d 927 (Tex.Sup.1965); Texaco, Inc. v. McEwen, 356 S.W.2d 809 (Tex.Civ.App., Dallas 1962, writ ref'd n.r.e.); Castle v. Berg, 415 S.W.2d 523 (Tex.Civ.App., Dallas 1967).

While it is true that Article IV, Section 1, of the Constitution of the United States provides that full faith and credit shall be given in each state to the public acts, records and judicial proceedings of every other state, it is equally well established that despite the provisions of this full faith and credit clause, the Texas courts may examine the facts to determine whether or not the court of the sister state did in fact have jurisdiction to enter the decree of which full faith and credit is sought. Williams v. State of North Carolina, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577 (1945); Burleson v. Burleson, 419 S.W.2d 412 (Tex.Civ.App., Houston 14th Dist.1967); 34 Tex.Jur.2d, § 368, p. 385.

When a plaintiff sues upon a judgment of a sister state in Texas and introduces a properly authenticated copy of the judgment as provided by 28 U.S.C.A. § 1738, he thereby establishes a prima facie case. The burden of attacking the judgment and establishing reasons why it should not be given full faith and credit, such as lack of jurisdiction of the person of the defendant, then shifts to the defendant. Williams v. State of North Carolina, 325 U.S. 226, 65 S.Ct. 1092, 89 L.Ed. 1577; Hamilton v. Newbury, 412 S.W.2d 801 (Tex.Civ.App., Dallas 1967, writ ref'd n.r.e.).

Our Supreme Court in McKanna v. Edgar, 388 S.W.2d 927 (Tex.Sup.1965), in passing upon a similar question concerning sufficiency of notice under the Texas 'Long Arm Statute' not only reiterated the rule that the provided mode of service contained in the statute must be strictly complied with but also that the ordinary presumptions in support of the judgment (including presumptions of due service of citation when the judgment so recites) are not available in attacks against default judgments. The court held that in a case such as this no inferences of essential jurisdiction of facts are to be inferred but must affirmatively appear on the face of the record. See also Aetna Casualty and...