National Equipment Rental, Ltd. v. Taylor

• Decision Date: 09 December 1978
• Docket Number: No. 48947,48947
• Citation: 587 P.2d 870,225 Kan. 58
• Parties: , 26 UCC Rep.Serv. 608 NATIONAL EQUIPMENT RENTAL, LTD., Appellant, v. William E. TAYLOR d/b/a Liberal Import Center, Appellee.
• Court: Kansas Supreme Court

Page 870

587 P.2d 870

225 Kan. 58, 26 UCC Rep.Serv. 608

NATIONAL EQUIPMENT RENTAL, LTD., Appellant, v. William E. TAYLOR d/b/a Liberal Import Center, Appellee.

No. 48947.

Supreme Court of Kansas.

Dec. 9, 1978.

Syllabus by the Court

In an appeal from an order dismissing an action to enforce a foreign judgment, the record is examined and it is Held : (1) the foreign court had jurisdiction over the subject matter of the action; (2) service of process in the foreign court was not completed in accordance with the contract provisions, and, accordingly, the foreign court did not acquire jurisdiction over the defendant; (3) the foreign default judgment was therefore void and not entitled to full faith and credit in the courts of this state; and (4) the trial court properly dismissed the action, although for the wrong reason.

Bert Hopper, of Ramey & Hopper, Liberal, argued the cause and was on the brief for appellant.

J. Douglas Miller, of Bryan & Miller, Liberal, argued the cause and was on the brief for appellee.

McFARLAND, Justice:

This is an appeal by plaintiff National Equipment Rental, Ltd. (hereinafter referred to as National) from an order of dismissal granted on the motion of the defendant, William E. Taylor d/b/a Liberal Import Center (hereinafter referred to as Taylor). The action is based on a foreign judgment entered by default against Taylor by the Supreme Court of New York, Nassau County. The trial court granted the motion on the grounds that there were "insufficient contacts with the Defendant for the New York court to acquire jurisdiction and the contract purporting to grant such jurisdiction was commercial paper between the Defendant required by a Florida corporation with whom he did business." The trial court further adopted the defendant's brief as the court's findings of fact and conclusions of law.

The factual situation in this case is complex and must be set forth in some detail in order to understand the issues presented before this court. It should be noted that the facts do not appear to be seriously in dispute. Early in 1974 Taylor entered into negotiations with a corporation by the name of E. Q. Muffler, Inc., of Dadeland, Florida, for the acquisition of a franchise to establish an E. Q. Muffler shop within an exclusive territory. E. Q. Muffler sold franchises for the operation of such shops. On April 24, 1974, the negotiations concluded and Taylor entered into a contract with E. Q. Muffler. By the terms of the agreement, Taylor received an exclusive territory to operate E. Q. Muffler Shops and was to receive a training program, parts, supplies, advertising, and a pipe bending machine. Taylor was to pay $1,500 initially with the "balance by lease." All of these negotiations and the resultant contract were between Taylor and E. Q. Muffler, Inc., a Florida corporation. The pipe bending machine was received by Taylor, and subsequently Taylor received from E. Q. Muffler a form lease agreement for the pipe bending machine. Taylor read it, signed it, and mailed it back to E. Q. Muffler in Florida. The lease was on a printed form provided E. Q. Muffler by National and was a lease between Taylor and National. At this time, defendant had had no personal dealings with National. Taylor made the first few payments on the lease to E. Q. Muffler in Florida and then received notice that all future payments were to be made to National in New York. In accordance with the notice, Taylor sent his later payments to New York. E. Q. Muffler subsequently failed to comply with its obligation under the franchise agreement, and Taylor ceased making lease payments. Taylor filed suit and obtained a default judgment against E. Q. Muffler in the Seward County District Court in the amount of $91,875.22. Shortly thereafter, E. Q. Muffler, Inc., went into bankruptcy and Taylor received nothing from his judgment.

National subsequently filed suit against Taylor in New York on the lease agreement for the pipe bending machine, plus attorney's fees. Summonses were sent certified mail to Taylor (one to Taylor individually and one to Taylor d/b/a Liberal Import Center, both being mailed the same day) but were returned "unclaimed." This is to be distinguished from being returned as "refused." Taylor testified that he had no knowledge of the existence of the certified letters and there was no evidence in opposition to this statement. The summonses were sent to Taylor October 15, 1975. On December 22, 1975, National took a default judgment against Taylor in New York in the amount of $15,004. On June 24, 1976, the foreign judgment was filed in Seward County District Court under the provisions of the Uniform Enforcement of Foreign Judgments Act, K.S.A. 60-3001 Et seq. Taylor filed a motion to dismiss which was granted on November 5, 1975.

The lease agreement between Taylor and National contained the following provisions:

"4. EXECUTION; LAWS GOVERNING; SERVICE: This lease shall only be binding when accepted by the Lessor at its North New Hyde Park, N.Y. office and shall be deemed to have been made in Nassau County, New York and shall be governed by the laws of the State of New York except for local recording statutes. As part of the consideration for the Lessor's executing this lease, Lessee agrees that all actions or proceedings arising directly or indirectly from this lease shall be litigated only in courts having situs within the State of New York and the Lessee hereby consents to the jurisdiction of any local, state or federal court located within the State of New York and waives personal service of any and all process upon the Lessee herein, and consents that all such service or process shall be made by certified mail, return receipt requested, directed to the Lessee at the address hereinabove stated; and service so made...