Misco Leasing, Inc. v. Vaughn, 71-1142.

• Citation: 450 F.2d 257
• Decision Date: 26 October 1971
• Docket Number: No. 71-1142.,71-1142.
• Parties: MISCO LEASING, INC., Plaintiff-Appellant, v. James H. VAUGHN et al., Defendants-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

450 F.2d 257 (1971)

MISCO LEASING, INC., Plaintiff-Appellant, v. James H. VAUGHN et al., Defendants-Appellee.

No. 71-1142.

United States Court of Appeals, Tenth Circuit.

October 26, 1971.

Richard W. Stavely, Wichita, Kan., for plaintiff-appellant.

Timothy E. McKee, Wichita, Kan. (Jochems, Sargent & Blaes, Wichita, Kan., on the brief), for defendants-appellee.

Before LEWIS, Chief Judge, and HOLLOWAY and DOYLE, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

The question presented is whether Kansas process under its long arm statute is valid against an Oklahoma resident who executed a guaranty of payment contract in Oklahoma in connection with payments which were to have been made by an Oklahoma lessee of equipment leased by a Kansas lessor.

The complaint was filed by plaintiff-appellant, Misco Leasing, Inc.¹, on December 6, 1967. It sought judgment against the named defendants herein, the two Vaughns and Keller, upon their written guaranty of rental payments under a separate lease for three ice machines. Mr. Ice, Inc., an Oklahoma concern, was the intermediary in placing the business with Oklahoma Resorts, Inc., which was the lessee. Defendant Keller and the Vaughns were shareholders of Mr. Ice, Inc. Because of this connection they guaranteed the payments. The allegation in the complaint was that both the lease agreement and the written guaranty connected with it were made and delivered within Kansas and were Kansas contracts and, thus, that valid personal service could be made on the defendants under the Kansas long arm statute on the basis that they had transacted business within Kansas.

The service on the defendant-appellee, Keller, was in Oklahoma City on December 20, 1967, by a deputy U.S. Marshal. Keller did not file any responsive pleading, and so on February 1, 1968, judgment was entered against him for the full amount of the demand. Subsequently, an effort was made to execute on the judgment in Oklahoma and supplemental proceedings were carried out there. Keller appeared in the Oklahoma court and conceded that he had signed the guaranty and had offered to settle the obligation. Finally, on August 5, 1970, Keller filed the present motion to vacate the judgment for lack of personal jurisdiction. This motion was granted on November 3, 1970.

The lease agreement called for delivery of three ice vending machines to Oklahoma Resorts, Inc. of Checotah, Oklahoma. Rental payments were to be made under this lease by Oklahoma Resorts directly to plaintiff, Misco, in Wichita and the lease was by its terms to be governed by the law of Kansas. The lease was signed by Oklahoma Resorts on July 6, 1966, in Oklahoma. The trial court found that it was "executed and accepted in the state of Oklahoma by the lessee, Oklahoma Resorts, Inc." The guaranty agreement was signed in Oklahoma City, but stated on its face that it was dated at Wichita, Kansas.

The trial court found that the plaintiff prepared the guaranty agreement in its office in Wichita and forwarded the same to a Mr. Hugh Farr in Oklahoma City with instructions that he obtain the signatures of the guarantors. Farr went to the office of Mr. Ice, Inc. and obtained the signatures in accordance with his instructions. Appellant considers Farr an independent contractor authorized only to solicit and submit proposals to Misco. The trial court found that while Farr was not an employee of plaintiff he nevertheless acted for the plaintiff's predecessor and that he was not the agent of appellee, Keller, and also found that Keller was never present in Kansas in connection with the guaranty in suit. The court gave little weight to the fact that the guaranty stated that it was executed by the guarantors in Kansas since they had actually signed it in Oklahoma City.

The trial court concluded that defendant had not been shown to have transacted any business in Kansas within the meaning of Rule 4(e), Federal Rules of Civil Procedure as applied to the Kansas long arm statute, K.S.A. § 60-308,² and as construed by the Kansas Supreme Court in Woodring v. Hall, 200 Kan. 597, 438 P.2d 135 (1968); Tilley v. Keller Truck & Implement Corp., 200 Kan. 641, 438 P.2d 128 (1968); and White v. Goldthwaite, 204 Kan. 83, 460 P.2d 578 (1969).³ Criteria for resolving this issue are set forth in Goldthwaite:

* * * (1) the nonresident must purposefully do some act or consummate some transaction in the forum state; (2) the claim for relief must arise from, or be connected with, such act or transaction; and (3) the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice, consideration being given to the quality, nature and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation. * * * (Emphasis supplied.)⁴ 460 P.2d at 582.

Since Keller had no physical contact with Kansas, and since there was no contact through an agent, jurisdiction is wholly dependent on his execution of the guaranty contract in Oklahoma. This is insufficient basis for holding that he transacted business so as to be subject to the operation of the long arm statute.

The provision that the basic lease was to be governed by Kansas law does not constitute a personal submission to Kansas jurisdiction on the part of Keller.⁵ The fact that the lease rentals were payable in Kansas also fails to furnish a contact whereby it can be said that Keller has submitted to the jurisdiction of Kansas.⁶

Appellant advances the following additional points:

1. That the defendant is barred from relief under Federal Rule of Civil Procedure 60(b)(4) because he did not move to vacate the judgment within a reasonable time after its entry.

2. That he ratified the judgment by indicating his desire to settle.

3. That he is barred or estopped from raising jurisdictional defects which the trial court resolved against his codefendants.

As to point 1, it does not appear that the motion under Rule 60(b) must be filed within any particular time limit if the judgment is indeed a nullity due to a complete lack of personal jurisdiction over the defendant. The cases say that a void judgment acquires no validity as the result of laches on the part of the adverse party.⁷ We are not asked to consider whether under any particular circumstances a...