Holt v. Holt

• Citation: 41 N.C.App. 344,255 S.E.2d 407
• Decision Date: 05 June 1979
• Docket Number: No. 7828DC722,7828DC722
• Court: North Carolina Court of Appeals
• Parties: Luella S. HOLT v. David R. HOLT, II.

Page 407

255 S.E.2d 407

41 N.C.App. 344

Luella S. HOLT v. David R. HOLT, II.

No. 7828DC722.

Court of Appeals of North Carolina.

June 5, 1979.

Shuford, Frue & Best by Ronald K. Payne, Asheville, for plaintiff-appellee.

Stephen L. Barden, III, Asheville, for defendant-appellant.

CARLTON, Judge.

Ordinarily, there is no right of appeal from the refusal of a motion to dismiss. The refusal to dismiss the action generally will not seriously impair any right of defendant that cannot be corrected upon appeal from final judgment. 1 Strong, N.C. Index 3d, Appeal and Error, § 6.6, p. 200; Auction Co. v. Myers, 40 N.C.App. 570, 253 S.E.2d 362 (1979). However, G.S. 1-277(b) provides in part that an interested party "shall have the right of Immediate appeal from an adverse ruling as to the jurisdiction of the court over the person or property of the defendant." (Emphasis added.) Hence, the question for determination on this appeal is whether the trial court properly denied defendant's motion to dismiss pursuant to G.S. 1A-1, Rule 12(b)(2) on the ground that the court lacked jurisdiction over the person of defendant.

The contentions of the parties in their briefs evolve around two theories under which they perceive jurisdiction might be asserted over the defendant: (1) under the Full Faith and Credit Clause of the United States Constitution, by the enforcement of a valid In personam judgment of one state in the courts of another state, and (2) by jurisdiction Quasi in rem acquired by constructive service where defendant's property has "minimum contacts" with the case.

In contending that jurisdiction was properly exercised over the defendant under the first theory noted above, plaintiff relies primarily on a statement and a footnote by the United States Supreme Court in Shaffer v. Heitner, 433 U.S. 186, 210, 97 S.Ct. 2569, 2583, 53 L.Ed.2d 683, 702 (1977):

Moreover, we know of nothing to justify the assumption that a debtor can avoid paying his obligations by removing his property to a State in which his creditor cannot obtain personal jurisdiction over him. The Full Faith and Credit Clause, after all, makes the valid in personam judgment of one State enforceable in all other States.

In a footnote to that statement, the Court added:

Once it has been determined by a court of competent jurisdiction that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a State where the defendant has property, whether or not that State would have jurisdiction to determine the existence of the debt as an original matter. . . .

We do not believe this dictum of the Supreme Court embraces the facts disclosed by the record before us. To proceed under this principle, we think it would be essential for plaintiff to first obtain a judgment in the Missouri courts that defendant is in arrears for a sum certain on the ordered payments. From that subsequent judgment, North Carolina courts could then take proper notice that defendant is a "debtor" of plaintiff and the action would lie under this theory. The present posture of the case, however, discloses that defendant is at most only an Obligor of plaintiff.

In light of this portion of our holding rejecting the argument that jurisdiction might be obtained over the defendant under the first theory noted above, we deem it unnecessary to discuss the question of whether the Missouri decree is entitled to full faith and credit in North Carolina. This is the matter dealt with most extensively in the briefs of both parties. Under the rejected first theory, a resolution of that question would have been essential. The question of full faith and credit is also the ultimate question to be determined in this lawsuit. For that reason, the parties would undoubtedly prefer that we deal with that question here. We think it would be improper for us to do so. It is our function in the judicial process to review matters first decided by the trial courts. The trial court's order, without any findings of fact or conclusions of law, merely denied the defendant's motion to dismiss pursuant to G.S. 1A-1, Rule 12(b)(2). Indeed, absent a request by a party to do so, the trial court was not required to make findings of fact or conclusions of law in ruling on the motion. G.S. 1A-1, Rule 52(a) (2).

Since the trial court did not make findings of fact or conclusions of law in its order, we assume that it ruled only that the District Court of Buncombe County had jurisdiction over the person of the defendant so that his Rule 12(b) (2) motion should be denied. We do not believe that we should interpret the trial court's order to rule that the Missouri decree is entitled to full faith and credit in North Carolina. Again, that is the ultimate and crucial question to be answered in this lawsuit. We think it would disrupt the judicial process for us to address this question here as suggested by the briefs of the parties. To do so would mean that we would be doing what appellate courts are not in the business of doing: We would be Initially determining questions which must first make their way through the trial courts. For example, in urging that North Carolina should not accord full faith and credit to the Missouri decree, defendant argues that the portion of the decree relating to alimony and other debts are not enforceable because they are merely contractual and that the portion of the decree relating to child support is subject to annulment by the Missouri courts. These are obviously questions which must be considered first at the trial level and we do not interpret the trial court's order denying the defendant's Rule 12(b)(2) motion to embrace them.

Nor do we believe that G.S. 1-277(b), allowing immediate appeal from an adverse ruling as to jurisdiction of the court over the person or property of the defendant, was enacted as a means of allowing litigants to seek advisory opinions from the appellate courts before necessary questions are resolved by the trial courts. That statute simply allows a defendant, in an action of this nature, a means of immediate appellate determination as to whether the trial court has jurisdiction so that it can then proceed to answer the questions raised by the lawsuit. We therefore decline to rule on the ultimate questions pertaining to full faith and credit of the Missouri decree and turn now to the remaining question we consider raised by this appeal: Was jurisdiction Quasi in rem, acquired by constructive service on the basis of defendant's property having "minimum contacts" with the case, properly obtained over the defendant?

Though we reach a different result, we think this case is controlled by Shaffer, supra, applied by this Court in Balcon, Inc. v. Sadler, 36 N.C.App. 322, 244 S.E.2d 164 (1978). In Balcon, the plaintiff was a Maryland corporation. It was neither domesticated nor did business in North Carolina. Defendant was an individual resident of Maryland who owned real property in North Carolina. Plaintiff brought suit on account and began ancillary proceeding for attachment of defendant's real property pursuant to G.S. 1-440.1(b). Judge Clark, writing for this Court, stated:

The plaintiff and defendant were nonresidents of this State, and the action arose in Maryland. Defendant owned real estate in Chowan County; his ownership of this realty did not give the court jurisdiction over the defendant's person. The basis of the court's jurisdiction must rest on plaintiff's proceeding to attach defendant's realty under G.S. 1-440.1. The realty had no relation to the account which is the subject matter of the action. The attachment is a Quasi in rem proceeding, instituted by plaintiff for the purpose of bringing the realty of the nonresident defendant under the jurisdiction of, and subject to the judgment of, the court. The attachment proceeding is ancillary and does not give the court In personam jurisdiction over the defendant. But G.S. 1-75.8(4) gives the court jurisdiction Quasi in rem when "the defendant has property within this State which has been attached or has a debtor within the State who has been garnished."

The opening sentence of G.S. 1-75.8 is as follows: "A court of this State having jurisdiction of the subject matter May exercise jurisdiction in rem or quasi in rem on the grounds stated in this section. . . ." (Emphasis added.) Thus, it appears that the exercise of such jurisdiction is a matter for the discretion of the court. See Anno. 90 A.L.R.2d 1109; 20 Am.Jur.2d, Courts, §§ 93, 172; 21 C.J.S. Courts, § 77(b), pp. 116-118. It is clear, however, in the case before us that the trial court found that it did not have jurisdiction, and not that it in its discretion refused to exercise it.

The foregoing statute and the case law relating to In rem jurisdiction has been based on the decisions in Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1878), which for a hundred years has provided the conceptual framework for jurisdictional matters in the United States. Pennoyer asserted that jurisdiction was defined by two principles: (1) that every state possesses exclusive jurisdiction and sovereignty over persons and property Within its territory, and (2) that a state cannot exercise direct jurisdiction over persons or property Without its territory. The decision recognized that the states must comply with the standards of due process but perceived the requirements for jurisdiction over property as conceptually distinct from those applicable to personal jurisdiction. The mere presence of property was sufficient for In rem jurisdiction, whereas the presence of the defendant's person within the state was essential for In personam jurisdiction. These bifurcated jurisdictional standards have been maintained over the years, with the state courts exercising jurisdiction based on the presence of property in actions In rem and Quasi in rem and exercising personal jurisdiction based on the presence of the...