Hassell v. Wilson

• Decision Date: 04 November 1980
• Docket Number: No. 16,16
• Citation: 272 S.E.2d 77,301 N.C. 307
• Court: North Carolina Supreme Court
• Parties: Tex R. HASSELL and wife, Phronia Loy Hassell v. J. Kenyon WILSON, Jr., Trustee; Albemarle Savings & Loan Association; James Aubrey Hudson and wife, Helen B. Hudson.

Page 77

272 S.E.2d 77

301 N.C. 307

Tex R. HASSELL and wife, Phronia Loy Hassell v. J. Kenyon WILSON, Jr., Trustee; Albemarle Savings & Loan Association; James Aubrey Hudson and wife, Helen B. Hudson.

No. 16.

Supreme Court of North Carolina.

Nov. 4, 1980.

Cherry, Cherry & Flythe by Joseph J. Flythe, Ahoskie, for plaintiffs-appellees.

White, Hall, Mullen, Brumsey & Small by Gerald F. White, Elizabeth City, for defendants-appellants.

EXUM, Justice.

This case raises questions regarding the insufficiency of a sheriff's return of substituted service of process and the procedurally proper method of attacking it.

Plaintiffs, husband and wife, filing both a motion in the cause before the Pasquotank Clerk and a separate action in Pasquotank Superior Court, seek to have a clerk's order in foreclosure of plaintiffs' home and trustee's deed to defendants set aside for failure to serve notice of the foreclosure hearing on plaintiff husband, Tex Hassell. Defendants counter-claim in the superior court action for possession of the property and for rent due. After hearing evidence without a jury, Judge Walker, without finding facts, entered an order of involuntary dismissal of plaintiffs' action pursuant to Rule 41(b). He also entered judgment, based on that dismissal, in favor of defendants on their counterclaim.

The Court of Appeals concluded that plaintiffs were required to proceed, if at all, by motion in the cause; that the parties could not by stipulation give the superior court jurisdiction of the motion pending before the clerk; and that plaintiffs' independent action ought to be dismissed for failure to state a claim. The Court of Appeals also vacated the judgment for defendants on their counterclaim because the trial court erroneously based this judgment on its involuntary dismissal of plaintiffs' action. The Court of Appeals then remanded the matter for further proceedings on defendants' counterclaim. We allowed defendants' petition for further review.

We conclude that plaintiffs were entitled to attack the foreclosure proceeding either by motion in the cause or by independent action; the superior court properly had before it both proceedings; and it erroneously dismissed plaintiffs' claim. Since its judgment for defendants on their counter-claim was predicated on its dismissal of plaintiffs' claim, that judgment must be vacated. The result is that we reverse the Court of Appeals' decision that plaintiffs' independent action ought to be dismissed; for the reasons given herein we affirm the Court of Appeals' vacation of both judgments entered by the superior court; we remand for further proceedings not inconsistent with this opinion.

Plaintiffs owned their home, a house and lot, which was the real property conveyed to defendants Hudson at the foreclosure sale. From 1 September 1977 plaintiffs owed the sum of $5,035.62 with interest to Albemarle Savings & Loan Association; the debt was secured by a deed of trust on the property. Plaintiff husband was employed away from home beginning 1 September 1977 and entrusted his wife with the duty and necessary funds to make the required payments on the loan. This she failed to do. She also failed to tell her husband she was not making the payments. Foreclosure proceedings were begun against the home. When on 16 September 1977 a Pasquotank deputy sheriff served notice of the foreclosure hearing on Mrs. Hassell, she hid the papers under a mattress, never delivered them to her husband, and never told him about them. Mrs. Hassell did attend the hearing before the clerk on 14 October 1977 but said nothing about it to her husband. Pursuant to the foreclosure order issued after the hearing on 14 October 1977 and after due advertisement the foreclosure sale was held on 14 November 1977. No upset bids were received. The trustee executed and delivered a deed dated 1 December 1977 conveying the property to defendants James Aubrey Hudson and wife, Helen B. Hudson, for the price of $6,300. Mr. Hassell first learned of these developments on 1 January 1978 when his sister and brother found the papers and brought them to him. Plaintiffs purchased their home in 1971 for $7,900 and made extensive additions and renovations. Apparently they are willing to reimburse defendants for the $6,300 defendants paid at foreclosure. They have deposited this amount with the clerk.

I.

Challenging the foreclosure proceeding, plaintiffs complain that service of the notice of foreclosure hearing was not properly had on Mr. Hassell. ¹ Plaintiffs maintain that the return of service does not show that the papers which were left with Mrs. Hassell were left at Mr. Hassell's "dwelling house or usual place of abode" as Rule 4(j)(1)(a) requires. ² Defendants contend that the return, certified by a deputy sheriff, shows substantial compliance with the rule. The return of service reads as follows:

"I certify that this Order of Service was received on the 15th day of September, 1977 and together with the copy of the Notice of Hearing was served as follows: on Tex R. Hassell.

On the 16 day of Sept., 1977 at the following place:

(Address where copy delivered or left)

By: X leaving copies with Phronia Loy Hassell who is a person of suitable age and discretion and who resides in the designated recipient's dwelling house or usual place of abode."

When plaintiffs' action was brought in superior court the parties, at pre-trial conference, stipulated "(A) companion action raising the identical issues presented in the present action and seeking the same relief as that sought in the present action has been instituted by plaintiffs herein upon filing motion in the cause in the foreclosure proceedings herein and therein disputed, said companion action being contained in File No. 77-Sp-72 of the Pasquotank County Clerk of Superior Court's office. By consent of the parties hereto, the final result and judgment reached in the present action shall likewise finally determine said companion litigation as contained in said File No. 77-Sp-72."

Although both parties agree before us as they did in the Court of Appeals that this stipulation was sufficient to put before the superior court the motion in the cause pending before the clerk so that the superior court could assume original jurisdiction of the motion, the Court of Appeals concluded to the contrary "since, under the statute, the Superior Court would have only appellate jurisdiction over the original foreclosure proceeding, and over the clerk's ruling on a motion in the cause." 44 N.C.App. at 439, 261 S.E.2d at 230. The Court of Appeals erred in this conclusion.

The stipulation of the parties at pre-trial conference was sufficient in substance, if not in form, to transfer the motion in the cause pending before the clerk to the superior court for its determination. Original jurisdiction of the superior court over the motion is established by G.S. 1-276:

"Judge determines entire controversy; may recommit. - Whenever a civil action or special proceeding begun before a clerk of a superior court is for any ground whatever sent to the superior court before the judge, the judge has jurisdiction; and it is his duty, upon the request of either party, to proceed to hear and determine all matters in controversy in such action, unless it appears to him that justice would be more cheaply and speedily administered by sending the action back to be proceeded in before the clerk, in which case he may do so."

This Court has consistently construed this statute to mean that the clerk is really an arm of the superior court. When a proceeding before the clerk is brought before the superior court, the court's jurisdiction is not appellate or derivative; it is original. Hudson v. Fox, 257 N.C. 789, 127 S.E.2d 556 (1962); Langley v. Langley, 236 N.C. 184, 72 S.E.2d 235 (1952); Perry v. Bassenger, 219 N.C. 838, 15 S.E.2d 365 (1941).

Furthermore because of the nature of the defect in the officer's return, we believe plaintiffs were entitled to attack the foreclosure proceeding either by a motion in the cause or by an independent action. Rule 60 provides for an attack on a judgment void because of lack of personal jurisdiction by way of motion in the cause or independent action. But which method must be used depends upon whether the jurisdictional defect appears on the face of the record. If the officer's return of process shows that service was duly made upon the party over which personal jurisdiction was required, then that party may attack the proceeding only by a motion in the cause; but if a defect in the service of process appears on the face of the return itself, the prior proceeding may be attacked either by motion in the cause or by an independent action. "If the defect (pertaining to personal jurisdiction) appear on the face of the papers, or is discernible from an inspection of the record, the judgment may be treated as a nullity, vacated on motion, or attacked collaterally." Dunn v. Wilson, 210 N.C. 493, 187 S.E. 802, 803 (1936).

As already noted G.S. 45-21.16 required as a prerequisite to the validity of the foreclosure proceedings here being attacked that Mr. Hassell be served with notice of the foreclosure hearing in accordance with the Rules of Civil Procedure. The deputy sheriff's return of service as to Mr. Hassell indicates that he attempted to use the substituted service provisions of Rule 4(j)(1) (a). These provisions require that the papers to be served be left: (1) at the dwelling house or usual place of abode of the person to be served (2) with a person of suitable age and discretion (3) who resides with the person to be served. The papers, in other words, must be left at a place which constitutes the dwelling of both the person to be served and the person with whom the papers are left. Guthrie v. Ray, 293 N.C. 67, 235 S.E.2d 146 (1977). There is no valid service if the papers are not left at this place. Id.

Furthermore, G.S. 1-75.10 prescribes how proof of...