New Hampshire Ins. Co. v. Bey Corp., 1960
| Decision Date | 18 January 1993 |
| Docket Number | No. 1960,1960 |
| Citation | 312 S.C. 47,435 S.E.2d 377 |
| Court | South Carolina Court of Appeals |
| Parties | NEW HAMPSHIRE INSURANCE COMPANY, Respondent, v. The BEY CORPORATION, The Family Court of Darlington County and Judy Lyles Yarborough, Defendants, of whom The Bey Corporation is, Appellant. . Heard |
Frederick K. Jones, Florence, for appellant.
Royann Russ Murray and J. Douglas Nunn, Jr., Nelson, Mullins, Riley & Scarborough, Columbia, for respondent.
In this mortgage foreclosure action, the special referee granted foreclosure against the Bey Corporation (Bey). Bey appealed. In New Hampshire Insurance Co. v. Bey Corp., Op. No. 1960 (S.C.Ct.App. filed March 1, 1993) (Davis Adv.Sh. No. 6 at 11), this Court affirmed the trial court's finding that it had personal jurisdiction over the defendant. After rehearing this case on Bey's petition for rehearing, we withdraw that opinion and substitute this opinion.
Bey asserts the trial court did not have personal jurisdiction over it because James T. Yarborough, Jr. (Yarborough), its president, and sole officer and shareholder, was not personally served with process in accordance with Rule 4(d)(3), SCRCP, and S.C.Code Ann. § 15-9-210(c) (1976) as amended. In our prior opinion, we found it unnecessary to address that argument in view of our conclusion that Bey had made a voluntary appearance pursuant to Rule 4(d) by presenting evidence on the merits at the foreclosure hearing.
After hearing arguments at rehearing and a further review of the record, we are convinced Bey's appearance at the foreclosure hearing was limited to setting aside the default and was not a voluntary appearance as contemplated by Rule 4(d). At the foreclosure hearing, New Hampshire objected to Bey participating in the hearing because Bey was in default. 1 Thereafter, the thrust of Bey's presentation of evidence addressed the requirement of showing a basis for setting aside the default.
As pertains to the efficacy of service, New Hampshire attempted to serve Bey by leaving a copy of the summons and complaint with a person of discretion at Yarborough's residence. Although such service might have been effective against Yarborough as an individual, it was ineffective against Bey. Rule 4(d)(3), SCRCP; 4A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1101, at 103 (1987). Accordingly, the trial court's finding that Bey was properly served with process is erroneous and is reversed.
Having determined that service was defective and Bey did not make a voluntary appearance, we must consider whether the special referee should have set aside the default.
Under Rule 55(c), SCRCP, a default may be set aside "for good cause shown." On the other hand, the criteria for obtaining relief from judgment mandates a showing, inter alia, of mistake, inadvertence, excusable neglect, surprise, newly discovered evidence, fraud, misrepresentation, or "other misconduct of an adverse party." Rule 60(b), SCRCP. As a practical matter, these factors are relevant under both rules. "The promptness with which relief is sought, the reasons for the failure to act promptly, the existence of [a] meritorious defense, and the prejudice to the other parties are relevant." Harry M. Lightsey & James F. Flanagan, South Carolina Civil Procedure 82 (1985) (citation omitted). The decision to set aside a default is within the discretion of the trial judge and will not be reversed on appeal absent an abuse of discretion. Id.
Our decision is made more difficult because although the special referee denied Bey relief from "default" pursuant to "Rules 59 [sic] and 60," he nonetheless fully discusses the issues on the merits in his foreclosure order and his order disposing of Bey's Rule 59(e) motion. Nevertheless, because the special referee's assertion of personal jurisdiction over Bey was based on erroneous findings that Bey had been properly served with process and had made a voluntary appearance at the foreclosure hearing, his merit findings must be disregarded. See Mobley v. Bland, 200 S.C. 448, 459, 21 S.E.2d 22, 26 (1942) (); 21 C.J.S. Courts § 39 (1990) (). We, thus, hold the special referee abused his discretion in failing to relieve Bey of its default.
We recognize there may be some validity to New Hampshire's assertion that Bey fully presented its defenses to the special referee...
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...explanation for the default is important to the analysis of good cause under Rule 55(c). In fact, in New Hampshire Insurance Co. v. Bey Corp., 312 S.C. 47, 435 S.E.2d 377 (Ct. App. 1993), this court quoted Dean Lightsey and Professor Flanagan in listing four factors "relevant under" Rule 55......
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