Georgia R. R. Bank & Trust Co. v. Eways

• Decision Date: 06 May 1980
• Docket Number: No. 7929SC570,7929SC570
• Citation: 46 N.C.App. 466,265 S.E.2d 637
• Court: North Carolina Court of Appeals
• Parties: GEORGIA RAILROAD BANK & TRUST COMPANY v. Joseph M. EWAYS.

Page 637

265 S.E.2d 637

46 N.C.App. 466

GEORGIA RAILROAD BANK & TRUST COMPANY v. Joseph M. EWAYS.

No. 7929SC570.

Court of Appeals of North Carolina.

May 6, 1980.

A. Clyde Tomblin, Spindale, for plaintiff-appellant.

C. Frank Goldsmith, Jr., Marion, for defendant-appellee.

PARKER, Judge.

Plaintiff contends on this appeal that the trial court erred in failing to find sufficient facts to support the dismissal of this case. G.S. 1A-1, Rule 52(a)(2) provides that findings of fact and conclusions of law are necessary on decisions of any motion "only when requested by a party and as provided by Rule 41(b)." The record reveals no such request by either party. In fact, the trial judge did file an Opinion and Memorandum of Decision in this case in which he made factual findings upon which he concluded as a matter of law that the court lacked jurisdiction over the person or property of the defendant. The facts found, which were essentially undisputed at the hearing, adequately reflect the material evidence presented at the hearing. Thus, the principal question presented by this appeal is whether, on the basis of the essentially undisputed facts, the trial court erred in granting defendant's motion to dismiss under G.S. 1A-1, Rule 12(b)(2), on the grounds that jurisdiction over the person of the defendant was lacking.

In Dillon v. Funding Corp., 291 N.C. 674, 231 S.E.2d 629 (1977), our Supreme Court adopted a two-step analysis to be used in determining whether a trial court has acquired jurisdiction over the person of a nonresident defendant. The first step is to determine whether the statutes of North Carolina permit the courts of this jurisdiction to entertain the action against the defendant. If so, the next step is to determine whether the exercise of this power by the North Carolina courts violates due process of law. G.S. 1-75.4(1)(d) provides that a court has jurisdiction over a person served in an action pursuant to Rule 4(j) of the Rules of Civil Procedure as follows:

(1) Local Presence or Status. In any action, whether the claim arises within or without this State, in which a claim is asserted against a party who when service of process is made upon such party:

d. Is engaged in substantial activity within this State, whether such activity is wholly interstate, intrastate, or otherwise.

The legislative intent in the enactment of G.S. 1-75.4(1)(d) was to extend to the North Carolina courts the full jurisdictional powers permissible under federal due process. Dillon v. Funding Corp., supra. Similarly, the effect of G.S. 1-75.8(5) is to permit the exercise of quasi in rem jurisdiction over the property interest of a defendant who has been served with process pursuant to Rule 4(k) of the Rules of Civil Procedure in any action where constitutionally permitted. There is no question in this case that the Superior Court in Rutherford County had jurisdiction of the subject matter or that process was properly served under Rule 4. Thus, as applied in the present case, the two-step analysis required by Dillon, supra, becomes limited to the question of whether the assertion of jurisdiction over the person of the Pennsylvania defendant or over his interest in North Carolina property violates the principles of due process established by the U.S. Supreme Court in International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). That principle, applicable to the exercise of both personal and quasi in rem jurisdiction, is well established:

(D)ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'

326 U.S. at 316, 66 S.Ct. at 158, 90 L.Ed. at 102.

Whether minimum contacts exist is not to be determined by the application of per se rules; rather, their presence depends upon the particular facts of each case, with particular scrutiny being given to the quality and the nature of defendant's contacts with the state of North Carolina. Buying Group, Inc. v. Coleman, 296 N.C. 510, 251 S.E.2d 610 (1979). In each case it is essential "that there be some act by which the defendant purposefully avails (him)self of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283, 1298 (1958); applied in Chadbourn, Inc. v. Katz, 285 N.C. 700, 208 S.E.2d 676 (1974). Other factors to be considered are: (i) any legitimate interest the forum state has in protecting its residents with respect to the activities and contacts of the defendant; (ii) an estimate of the inconveniences to the defendant in being forced to defend a suit away from his home; (iii) the location of crucial witnesses and material evidence; and (iv) the existence of a contract which has a substantial connection with the forum state. Byham v. House Corp., 265 N.C. 50, 143 S.E.2d 225 (1965).

Plaintiff contends in effect that the exercise of jurisdiction here does not violate due process because defendant has had contacts with North Carolina which evidence that he has availed himself of the laws and benefits of this state. Applying the above stated principles of law to the facts presented, we conclude that the application of either G.S. 1-75.4(1)(d) or G.S. 1-75.8(5) to assert jurisdiction over the Pennsylvania defendant or his North Carolina property does offend traditional notions of fair play and substantial justice. Plaintiff, a Georgia banking corporation, seeks to enforce the obligation of defendant, a Pennsylvania resident, upon his guaranty of payment of a debt of a South Carolina corporation of which defendant was president. The debt was incurred to finance the development of real property located in South Carolina. Clearly, the material witnesses and relevant evidence necessary to establish plaintiff's right to recover have no connection with this State. No portion of the contract was negotiated or executed in North Carolina, and the laws of another state would govern its interpretation. Plaintiff bank, a nonresident itself, has not demonstrated that this state has any interest in encouraging the litigation of this suit within its borders.

As to the evidence presented by plaintiff bank at the hearing on defendant's motion to dismiss concerning defendant's contacts with this State, plaintiff's exhibits showed only that defendant owns a substantial amount of real property in Rutherford County and McDowell County. Between 1974 and 1978, defendant and his wife executed several deeds to the North Carolina property which were...