Hodges v. Lake Summit Co.

• Citation: 152 S.E. 658,155 S.C. 436
• Decision Date: 28 March 1930
• Docket Number: 12874.
• Parties: HODGES v. LAKE SUMMIT CO.
• Court: South Carolina Supreme Court

152 S.E. 658

155 S.C. 436

HODGES v. LAKE SUMMIT CO.

No. 12874.

Supreme Court of South Carolina

March 28, 1930

Appeal from Common Pleas Circuit Court of Greenville County; Wm. H Grimball, Judge.

Action by Oscar Hodges against the Lake Summit Company. From judgment for plaintiff, defendant appeals.

Reversed and rendered.

Bomar & Osborne, of Spartanburg, and Blythe & Bonham, of Greenville for appellant.

Haynsworth & Haynsworth, of Greenville, for respondent.

COTHRAN J.

The appeal in this case was heard at the June term, 1929, and on August 24th the opinion of the court therein was filed reversing the judgment of the circuit court and dismissing the complaint.

Thereafter for reasons satisfactory to the court, the opinion filed on August 24th was withdrawn and an opinion, substituted therefor, was filed on September 3d, the judgment of this court being the same, the reversal of the judgment of the circuit court and the dismissal of the complaint.

The plaintiff, respondent, then filed a petition for a rehearing which upon consideration was granted on November, 1929.

At the December term the rehearing of the appeal was had, and this opinion follows; it will supersede the opinion filed September 3d.

This is an action by Oscar Hodges, trustee of Green River Manufacturing Company and E. W. Montgomery Company, against Lake Summit Company, upon a note dated July 1, 1921, due on demand, payable to Green River Manufacturing Company, for $26,970.76, at the office of the Green River Manufacturing Company, signed "Lake Summit Company, J. O. Bell, Treasurer."

The setting of the case may be thus explained:

It appears that about the year 1919, the Blue Ridge Power Company owned, in addition to the property connected with its power enterprise, certain land near Tuxedo, N. C., which it considered available for development into mountain lots. A separate corporation was chartered and organized under the laws of North Carolina, the Lake Summit Company, for the sole purpose of subdividing this land and disposing of the lots; that was the only business in which it ever engaged.

In the real estate development a system of road building was inaugurated, which included certain adjacent lands of the Green River Manufacturing Company, and about $100,000 was expended in the work; it being understood and agreed that the companies interested would contribute to the expenses thereof.

J. O. Bell was the treasurer of the Lake Summit Company, and also the executive head of the Green River Manufacturing Company; he was actively engaged in the enterprise of the Lake Summit Company, and had immediate supervision and direction of the road building, in the construction of which he is supposed to have used money of the Green River Manufacturing Company. For this money he executed and delivered to the Green River Manufacturing Company the note which is the subject of this action, on July 1, 1921. This note was executed in North Carolina, payable in North Carolina, and was a North Carolina contract.

After the execution and delivery of the note, Bell, as executive head of the Green River Manufacturing Company, hypothecated it to the E. W. Montgomery Company, a South Carolina corporation engaged in the cotton business at Greenville, S.C. This appears to have taken place in Greenville, as E. W. Montgomery testified, "some time between July 1, and October 1922," more than a year after its date. The note has ever since been held by the E. W. Montgomery Company, as it claims, as a continuing guaranty or collateral to what might be due to that company by the Green River Manufacturing Company, upon acceptances and other cotton transactions.

In 1922 Bell, as treasurer of Lake Summit Company, was succeeded by H. L. Bomar (an attorney living and doing business as such in the city of Spartanburg), as president and treasurer. He appears not to have been satisfied with the authority of Bell to execute the note, and did not authorize its payment.

Thereafter the management of the Green River Manufacturing Company changed hands, and Bomar had considerable correspondence with the new executive head of the company about the note. The payment of the note was thus further delayed. Eventually the note became barred by the statute of limitations in North Carolina before any action was taken upon it by either the Green River Manufacturing Company or the E. W. Montgomery Company.

On November 30, 1925, the note concededly being barred by the statute of limitations in North Carolina (C. S. N.C. § 441), the Green River Manufacturing Company and the E. W. Montgomery Company jointly executed an assignment of it to Oscar Hodges as trustee, to collect the same and, if necessary, to institute and prosecute suit thereon; and out of the proceeds of collection to pay certain costs of collection, commissions, and attorney's fees, and out of the balance, the claim of E. W. Montgomery Company, and what remained to the Green River Manufacturing Company.

The present action was instituted on February 3, 1926, by the service of the summons and complaint upon H. L. Bomar, president of the Lake Summit Company, at his office in the city of Spartanburg, S. C.

The defendant, by special appearance, appearing solely for the purpose of questioning the jurisdiction of the court of common pleas for Greenville county, served notice upon the plaintiff that it would on the 20th day of February, 1926, move before Hon. T. J. Mauldin, at Pickens, S. C., for an order setting aside the service of summons and complaint, upon the ground that such service was ineffectual, null, and void, for the reason that the defendant was not at the time of such service engaged in doing business in South Carolina, and being a nonresident, the court could not obtain jurisdiction of it by service upon its president.

The motion to dismiss the process, for want of jurisdiction, was postponed to suit the convenience of counsel, and thereafter deferred from time to time, until some time in November, 1926, when counsel for the plaintiff requested that counsel for the defendant file an answer to the complaint, and plaintiff's counsel agreed that such filing of the answer would not be considered a waiver of the right to insist upon the motion to dismiss for want of jurisdiction, or in any way to interfere with defendant's right to have such motion heard. With this understanding, defendant on the 29th day of November, 1926, filed its answer to the complaint reserving its rights under the motion to dismiss for lack of jurisdiction. The matter thus stood until the case came on for trial, at which time counsel for the defendant urged the hearing of the motion to dismiss for want of jurisdiction, which counsel for plaintiff resisted.

When the case was called for trial (at a time not stated in the record for appeal), before his honor, Judge Grimball, and a jury, the defendant presented the motion to dismiss for want of jurisdiction. The motion was refused in an order dated March 23, 1928.

In the answer of the defendant the material allegations of the complaint were denied. The defendant specially relied upon the defense of the statute of limitations of North Carolina; that the court was without jurisdiction; and that the defendant did not justly owe the amount of the note, but that upon an accounting between it and the Green River Manufacturing Company, it would be found that a large part of the note, if not all of it, is not a proper obligation of the Lake Summit Company, but was and is the obligation of the Green River Manufacturing Company for whose benefit the work was done.

After much evidence the case was submitted to the jury, which found a verdict in favor of the plaintiff for the full amount sued for. From the judgment entered upon this verdict the defendant has appealed upon exceptions which fairly present the matters hereinafter discussed.

The Question of Jurisdiction.

This question is to be considered in a double aspect: The jurisdiction of the person of the defendant, and the jurisdiction of the subject-matter of the controversy.

Both maker and payee of the note were corporations of North Carolina; the note was executed and delivered in that state; it was payable there; the maker was engaged in business in that state; it had no corporate business anywhere else; its property which might be subjected to a judgment was there.

It so happened that the payee of the note and its pledgee allowed the time for bringing action under the law of North Carolina to run out. An action in the courts of North Carolina would have been defeated by the bar of the statute.

We do not think that it can be denied that the main purpose of the assignment to Hodges, trustee, was to present the controversy to a South Carolina court which as was conceived, rightly or not, would apply the statute of limitations of South Carolina rather than that of North Carolina.

At the same time it must be conceded that if the payee and the pledgee of the note were within their legal rights in executing this assignment, their motive in so doing is not a subject of legitimate inquiry, unless it be made to appear that it was but a plan to vest in the South Carolina courts a jurisdiction which it otherwise did not have of the controversy.

As to the jurisdiction of the person of the defendant:

This depended upon the issue of fact whether the defendant, at the time of the service of the summons and complaint upon the president at Spartanburg, was doing business in this state.

His Honor, Judge Grimball, held that there was sufficient evidence of the fact that the defendant was doing business in this state to justify the conclusion that the court of common pleas of Greenville county had jurisdiction of the case. He relied upon the...