North State Finance Co. v. Leonard, 537

• Decision Date: 16 December 1964
• Docket Number: No. 537,537
• Court: North Carolina Supreme Court
• Parties: NORTH STATE FINANCE COMPANY, Inc. v. H. L. LEONARD and Eloise G. Leonard.

Page 356

139 S.E.2d 356

263 N.C. 167

NORTH STATE FINANCE COMPANY, Inc. v. H. L. LEONARD and Eloise G. Leonard.

No. 537.

Supreme Court of North Carolina.

Dec. 16, 1964.

Ferree, Anderson & Ogburn, Asheboro, for plaintiff appellee.

Charles F. Lambeth, Jr., Thomasville, for defendant appellants.

BOBBITT, Justice.

Appeal of H. L. Leonard

H. L. Leonard's assignments of error are based on his exceptions (1) to the court's finding that he 'was served with summons and other process * * * on July 30, 1960,' and (2) to the judgment.

When the return shows legal service by an authorized officer, nothing else appearing, the law presumes service. The service is deemed established unless, upon motion in the cause, the legal presumption is rebutted by evidence upon which a finding of nonservice is properly based. Downing v. White, 211 N.C. 40, 188 S.E. 815; Smathers v. Sprouse, 144 N.C. 637, 57 S.E. 392. Upon hearing such motion, the burden of proof is upon the party who seeks to set aside the officer's return or the judgment based thereon to establish nonservice as a fact; and, notwithstanding positive evidence of nonservice, the officer's return is evidence upon which the court may base a finding that service was made as shown by the return. Downing v. White, supra; Long v. Town of Rockingham, 187 N.C. 199, 121 S.E. 461; G.S. § 1-592. For a more extended review of pertinent legal principles, see Harrington v. Rice, 245 N.C. 640, 97 S.E.2d 239, and cases cited therein.

Notwithstanding there was positive evidence of nonservice, the officer's return and corroborating testimony afford ample basis for Judge Walker's finding of fact that service was made on H. L. Leonard as shown by the return. The credibility of the witnesses and the weight of the evidence were for determination by Judge Walker in discharging his duty to find the facts. Harrington v. Rice, supra.

Since nonservice of process is the sole ground on which the motion of H. L. Leonard is based, his assignments of error are overruled. Hence, as to H. L. Leonard, Judge Walker's order is affirmed.

Appeal of Eloise G. Leonard

Eloise G. Leonard's assignments of error are based on her exceptions (1) to the conclusion of law that she is bound by the judgment 'by reason of the statutory provisions of GS 1-113,' and (2) to the judgment.

The erroneous recital, referred to in our preliminary statement, indicates the clerk, when he signed the default judgment of September 27, 1960, was under the impression process had been personally served July 30, 1960, on both defendants.

Judge Walker found as a fact 'that the defendant Eloise G. Leonard was not served with summons or other process on July 30th.' Nothing in the record indicates she was at any time served with any process.

'When a court of general jurisdiction undertakes to grant a judgment in an action where it has not acquired jurisdiction of the parties by voluntary appearance or the service of process, the judgment is absolutely void and has no effect. It may, therefore, be disregarded and treated as a nullity everywhere.' City of Monroe v. Niven, 221 N.C. 362, 364, 20 S.E.2d 311, 312; Jones v. Jones, 243 N.C. 557, 563, 91 S.E.2d 562, and cases cited. 'Notice and an opportunity to be heard are prerequisites of jurisdiction (citations), and jurisdiction is a prerequisite of a valid judgment. (Citation) The Legislature is without authority to dispense with these requirements of due process, * * *.' Board of Comrs. of Roxboro v. Bumpass, 233 N.C. 190, 195, 63 S.E.2d 114, 147.

Does G.S. § 1-113, when properly interpreted, purport to authorize a judgment by default or otherwise against Eloise G. Leonard? If so, it would seem violative of constitutional guaranties as to due process of law. For decisions bearing upon the constitutionality of provisions of 'Joint Debtor Acts,' see 50 L.R.A. 595 et seq. We consider the original purpose and history of the statute now codified as G.S. § 1-113 in the light of this legal principle: 'If a statute is susceptible of two interpretations, one constitutional and the other not, the former will be adopted.' Nesbitt v. Gill, Comr. of Revenue, 227 N.C. 174, 181, 41 S.E.2d 646, 651, and cases cited.

G.S. § 1-113, in pertinent part, provides: 'Defendants jointly or severally liable.--Where the action is against two or more defendants, and the summons is served on one or more, but not on all of them, the plaintiff may proceed as follows: 1. If the action is against defendants jointly indebted upon contract, he may proceed against the defendants served, unless the court otherwise directs, and if he recovers judgment it may be entered against all the defendants thus jointly indebted, so far only as that it may be enforced against the joint property of all and the separate property of the defendants served, and if they are subject to arrest, against the persons of the defendants served.'

G.S. § 1-114 provides: 'Summond after judgment; defense.--When a judgment is recovered against one or more of several persons jointly indebted upon a contract in accordance with the proceding section, those who were not originally summoned to answer the complaint may be summoned to show cause why they should not be bound by the judgment, in the same manner as if they had been originally summoned. A party so summoned may answer within the time specified denying the judgment, or setting up any defense thereto which has arisen subsequent to such judgment; and may make any defense which he might have made to the action if the summons had been served on him originally.'

G.S. § 1-115 provides: 'Pleadings and proceedings same as in action.--The party issuing the summons may demur or reply to the answer, and the party summoned may demur to the reply. The answer and reply must be verified in like cases and manner and be subject to the same rules that apply in an action, and the issues may be tried and judgment given in the same manner as in action and enforced by execution if necessary.'

'In the absence of statute to the contrary, whenever two or more persons are jointly liable, so that if an action is commenced against any less than the whole number the nonjoinder of the others will sustain a plea in abatement, a judgment against any of those so jointly bound merges the entire cause of action. The cause of action being joint, the plaintiff cannot be allowed to sever it against the objection of any of the defendants. By taking judgment against one, he merges the cause of action as to that one, and puts it out of his power to maintain any further suit, either against the others severally or against all combined.' (Our italics.) Freeman on Judgments, Fifth Edition (1925), Vol. II, § 567; Annotation: 1 A.L.R. 1601; Rufty v. Claywell, Powell & Co., 93 N.C. 306.

'At common law in actions ex contractu, the general rule is, if the contract be joint the plaintiff must sue all the persons who either expressly or by implication of law made the contract. * * * In such actions brought against some only of several persons who should have been jointly sued, the defendants must plead the non-joinder in abatement, there being no other way of taking advantage of it, unless it appear on the face of the declaration or some other pleading of the plaintiff that the party omitted is still living, as well as that he jointly contracted, in which case the defendant may demur, etc.' (Our italics.) Merwin v. Ballard, 65 N.C. 168 (1871).

In discussing 'Joint Debtor Acts,' Freeman, op. cit., § 569, states: 'In some states, however, statutes have been enacted by which, in effect, liabilities otherwise joint have been made joint and several. Where such is the case, an unsatisfied judgment against one obligor cannot merge or extinguish the liability of another.' Decisions cited in support of this statement include Rufty v. Claywell, Powell & Co., supra.

In Rufty, three individuals, partners, were named as defendants in an action instituted February 10, 1880, to recover on a promissory note 'given on 30 September, 1878.' Process for one (Claywell) was not served. A consent (compromise) judgment was entered against 'the defendants' at Spring Term 1881. In July 1883, plaintiff 'sued out a summons under sec. 223 of The Code (now incorporated in G.S. 1-114) against the partner Claywell.' This Court held the issuance of said summons in July 1883 constituted the commencement of a new action and as such was barred by the statute of limitations.

Rufty was decided at October Term 1885. The ground of decision (with references in parentheses inserted by us) is set forth in the opinion of Smith, C. J., as follows:

'The preceding section (222) of The Code (of 1883) makes separate provisions for prosecuting the action on liabilities that are joint and liabilities that are several, and it is to the former (222(1), now G.S. § 1-113(1)) that the four following sections (223, 224, 225 and 226, now incorporated in G.S. § 1-114 and G.S. § 1-115) apply. Under the rules of pleading, according to our former system, if the action was upon a joint contract and the plaintiff took judgment against a part only of those liable, there could be no recovery in a subsequent suit against those omitted, for the reason that the contract was merged in the judgment, while not being parties to the judgment, they were not bound by its rendition.

'It was otherwise as to contracts that created a several liability, and to such, as in case of torts, a judgment against one or more, left their separate liabilities in force, and then exposed to a subsequent action in like manner as if no judgment had been rendered against the others.

'To obviate the legal consequences of a judgment against some of the joint obligors in extinguishing, through the merger, the cause of action against the others, is the manifest purpose of this innovating legislation introduced in the new system of pleading and practice. Such is the view taken by Mr. Freeman in his work on Judgments, and in...