Custom Leasing, Inc. v. Gardner, GC 6643-S.

• Decision Date: 17 December 1969
• Docket Number: No. GC 6643-S.,GC 6643-S.
• Citation: 307 F. Supp. 161
• Parties: CUSTOM LEASING, INC., Plaintiff, v. W. S. GARDNER, Defendant.
• Court: U.S. District Court — Northern District of Mississippi

307 F. Supp. 161

CUSTOM LEASING, INC., Plaintiff, v. W. S. GARDNER, Defendant.

No. GC 6643-S.

United States District Court N. D. Mississippi, Greenville Division.

December 17, 1969.

Philip Mansour, Greenville, Miss., for plaintiff.

H. L. Merideth, Jr., Robertshaw, Merideth & Swank, Greenville, Miss., for defendant.

MEMORANDUM OPINION

ORMA R. SMITH, District Judge.

The complaint in the case sub judice was filed in this Court on August 9, 1966. The complaint sets forth that a judgment was rendered in favor of the plaintiff, Custom Leasing, Inc., a Texas Corporation, against the defendant, W. S. Gardner, in the Seventy-Second District Court of Lubbock County, Texas, for the amount of $16,566.98, plus 6% per annum from the date of the judgment. Attached to the complaint is a copy of the judgment which is dated August 12, 1965. In this action the plaintiff seeks a judgment against the defendant in the amount of $16,566.98, with interest of 6% per annum from August 12, 1965, together with costs.

In his answer the defendant sets forth that the Texas Court did not have jurisdiction to enter the judgment because the record in the Texas Court does not affirmatively show that the service of process requirements of the Texas Long Arm Statute (Art. 2031b, Texas Civil Statutes) were fulfilled in that: (a) The record does not show by affirmative allegations that the defendant did not maintain a place of regular business in Texas or a designated agent upon whom service may be made as required by § 3 of the said Article, (b) The record does not show that the Secretary of State of Texas forwarded a copy of the process issued by the Court to the defendant as required by § 5 of the said Article. The defendant further alleges that Article 2031b, Texas Civil Statutes, violates the Fourteenth Amendment to the Constitution of the United States, and if the Article does not violate the Constitution, the Texas Court did not have jurisdiction of the defendant so that it might render a judgment against him.

The cause came on for trial before the Court without a jury on September 5, 1969, in the United States District Court, Greenville, Mississippi.

FINDINGS OF FACT

The plaintiff offered in evidence a certified copy of the judgment rendered in the Seventy-Second District Court of Lubbock County, Texas, in the case of Custom Leasing, Inc., v. W. S. Gardner, No. 48,242, which judgment was rendered on August 12, 1965. The plaintiff further offered in evidence a certificate of the Secretary of State of Texas which certifies that on July 1, 1965, the Secretary of State of Texas received a citation issued out of the Seventy-Second District Court of Lubbock County, Texas, No. 48,242, styled Custom Leasing v. W. S. Gardner and that a copy was forwarded on July 1, 1965 by certified mail, return receipt requested, to W. S. Gardner, Route #1, Glen Allan, Mississippi. The certificate further states that the return receipt was received in the office of the Secretary of State of Texas carrying the signature of the addressee and was dated July 3, 1966. In order to clarify the record, this Court entered an order on November 4, 1969, which allowed counsel 15 days within which to submit such further certificates as might clarify the record. On November 17, 1969, the plaintiff filed another certificate from the Office of the Secretary of State of Texas which shows that the return receipt from W. S. Gardner was received on July 3, 1965.

The defendant introduced in evidence the certified copy of the plaintiff's original petition, citation for personal service, and the judgment of the Texas Court. The defendant introduced in evidence a copy of a letter from counsel for the defendant to the Clerk of the District Court of Lubbock County, Texas in which letter counsel requests a certified, authenticated copy of the entire court file of Custom Leasing, Inc. v. W. S. Gardner, No. 48,242. Finally the defendant introduced a copy of a contract between Custom Leasing, Inc., and W. S. Gardner which is dated March 28, 1964, and which is marked void across the face of the instrument.

The certified petition of the plaintiff in the Texas Court (which is included in Defendant's Exhibit No. 2) sets forth the following facts with regard to the defendant:

"Plaintiff is a corporation duly organized and incorporated under the laws of the State of Texas, with its principal place of business in Lubbock, Lubbock County, Texas. The defendant, W. S. Gardner, is a resident of Issaquena County, Mississippi and is a non-resident of the State of Texas. Plaintiff would show that the defendant has not appointed or maintained a designated agent in the State of Texas upon whom service of process may be had, the defendant has conducted business in the State of Texas in that the contract upon which this suit is based is performable in the State of Texas and thereby pursuant to the provisions of Article 2031B of the Revised Civil Statutes of Texas, the defendant is conclusively presumed to have designated the Secretary of State of Texas as his true and lawful attorney upon whom service of process in this cause may be had. The home address of the defendant is Route 1, Glen Allan, Mississippi."

There is no allegation in the petition that the defendant does not maintain a regular place of business in Texas.

The defendant, W. S. Gardner, took the stand and testified that he obtained certain equipment, through a lease contract which was the subject of the Texas judgment, through Joe Jones Equipment Company at Rolling Fork, Mississippi. The defendant failed to make payment on the lease and the equipment was repossessed. When asked whom he leased the equipment from, Gardner replied "well, Joe Jones handled the paper, but it was Custom Leasing". He testified that he signed all of the papers in Rolling Fork, Mississippi.

Gardner stated that the first lease that he signed was turned down and a second lease was sent to him, which lease had a shorter expiration date. On cross-examination, counsel attempted to show that the second lease was resubmitted to Gardner, after signature, for the purpose of Gardner initialing the lease. Gardner stated that he did not remember initialing the lease, but that the initials look like his own and he would not deny putting the initials on the lease. In Defendant's Exhibit No. 2 there is a copy of the lease which was sued upon in the Texas Court. On the lease there is a signature, W. S. Gardner, and the initials, W. S. G. appear two times: (1) By the signature W. S. Gardner (2) By the clause "Payable and performable in Lubbock, Lubbock County, Texas).

With regard to the payments on the lease, Gardner testified that he made the first payment to Joe Jones Equipment Company, but that the other payments were made payable to Custom Leasing, Inc.

When asked if he recalled receiving notice from the Secretary of State of Texas that suit had been filed against him in Texas, Gardner replied "Not to my knowledge". When asked if he would deny receiving notice Gardner replied "I did not say that, I said not to my knowledge".

The Court finds that W. S. Gardner signed the lease within the State of Mississippi and that the equipment was released to him in the State of Mississippi. The Court further finds that defendant W. S. Gardner knew and realized that he was purchasing the equipment from a Texas corporation and that ultimate approval of the lease contract had to be made by the Texas corporation. Finally, the Court finds that the petition of the plaintiff in the Texas Court did not contain an allegation that the defendant does not maintain a regular place of business in Texas.

CONCLUSIONS OF LAW

After due consideration the Court feels that the defendant has two main defenses: (1) That the plaintiff did not comply with the Texas statutes so that there was no jurisdiction in the Texas Court for the default judgment, (2) That the defendant did not have sufficient minimum contacts with the State of Texas so that the Texas Court could render a judgment without abridging the defendant's rights under the due process clause of the Fourteenth Amendment.

With regard to the latter point the Court feels that under McGee v. International Life Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223, and its progeny there is no doubt but that the defendant had sufficient contact with the State of Texas. The defendant stated that he knew that he was dealing with a Texas corporation. The contract that he signed had to go to Texas for final approval. The defendant's initials appear beside the clause "Payable and performable in Lubbock, Lubbock County, Texas". Finally, the defendant made payments to the Texas corporation.

It is obvious that Texas had a rational nexus between the fundamental events giving rise to the cause of action so that the state had sufficient interest to compel the defendant to defend in the Texas forum. Curtis Publishing Company v. Birdsong, 360 F.2d 344 at 346, 5 Cir. 1966. See also "Construction and Application of State Statutes or Rules of Court Predicating In personam Jurisdiction Over Non-residents Or Foreign Corporations On Making Or Performing A Contract Within The State," 23 A.L. R. 3rd 551 at 598.

The Supreme Court case of National Equipment Rental, Ltd. v. Szukhent et al., 375 U.S. 311, 84 S.Ct. 411, 11 L.Ed.2d 354 is factually similar to the case sub judice. Though in that case the main legal point was whether there was an agency created in a lease contract for the purpose of service of process. The case involves a Michigan farmer who leased two incubators from a corporation whose principal place of business was New York City. The lease contract designated the wife of one of the corporate lessor's officers as agent for the purpose of accepting service of process within the State of New York. The Court held that the agency was valid and stated thus at 375 U.S. 316, 84 S.Ct. 414: "and it is settled, as the courts below recognized, that parties to a...