Northwestern Nat. Cas. Co. v. Global Moving & Storage, Inc., 75-1902

• Decision Date: 14 April 1976
• Docket Number: No. 75-1902,75-1902
• Citation: 533 F.2d 320
• Parties: NORTHWESTERN NATIONAL CASUALTY CO., Plaintiff-Appellant, v. GLOBAL MOVING & STORAGE, INC., et al., Defendants-Third Party Plaintiffs- Appellees, v. FIRE LITE ALARMS, INC., et al., Third Party Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 320

533 F.2d 320

NORTHWESTERN NATIONAL CASUALTY CO., Plaintiff-Appellant, v. GLOBAL MOVING & STORAGE, INC., et al., Defendants-Third

Party Plaintiffs- Appellees, v. FIRE LITE ALARMS, INC., et al., Third Party Defendants-Appellees.

No. 75-1902.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 18, 1975.

Decided April 14, 1976.

Charles E. Brant, Dennis R. Newman, Glander, Brant, Ledman & Newman, Columbus, Ohio, for plaintiff-appellant.

James Friedt, Thomas M. Taggart, Vorys, Sater, Seymour & Pease, Columbus, Ohio, for Columbus Electronic Protection Co.

Arthur Sebastian, Columbus, Ohio, for Global Moving & Storage, Inc.

Charles E. Brown, Columbus, Ohio, for General Elec. Co.

James S. Monahan, Porter, Stanley, Platt & Arthur, Columbus, Ohio, for Ohio Bell Tel. Co.

William H. Schneider, S. Noel Melvin, Columbus, Ohio, for Fire Lite Alarms, Inc.

John L. Miller, McNamara & McNamara, Columbus, Ohio, for amicus curiae.

Before PECK, McCREE and MILLER, Circuit Judges.

McCREE, Circuit Judge.

This appeal in a diversity action tried in the Southern District of Ohio is taken from a judgment denying the subrogation claim of Northwestern National Casualty Co. against several defendants that it claimed were responsible for a warehouse fire. After Northwestern paid its insured $123,005.87 under a fire insurance policy covering the building, it was subrogated to his rights as the owner.

The complaint initially named as defendants Global Moving and Storage, Inc. (a lessee of a part of the warehouse); General Electric Company (the manufacturer of the ballast of a fluorescent lighting fixture in the bookkeeper's office in the warehouse); Columbus Electronic Protection Company (CEP) (the vendor and servicer of the fire alarm system purchased by Global); and Jess Howard Electric Company (the installer of the fluorescent lighting fixture). Later, Northwestern filed an amended complaint adding Lithonia Lighting, Inc. as a defendant. CEP named several third party defendants, including Fire Lite Alarms, Inc. and the Ohio Bell Telephone Company. Northwestern's amended complaint adopted for itself and incorporated all claims made by CEP against the third party defendants.

Before trial, the court entered a default judgment against Lithonia Lighting, Inc. because it had failed to file any responsive pleadings. Thereupon National Service Industries, Inc. and Lithonia Lighting Products of Cleveland (Lithonia-Cleveland) appeared solely to question service of process and to test the validity of the default judgment against Lithonia Lighting, Inc. They filed motions averring that Lithonia Lighting was an unincorporated division of National Service, not an entity subject to suit in its own name, and that Lithonia-Cleveland was a wholly owned subsidiary of National Service. They also averred that neither National Service nor Lithonia-Cleveland had been served with process and made party to the suit. National Service and Lithonia-Cleveland argued that if they did not contest the court's jurisdiction to enter the default judgment, they might later be held to be bound by it. Although it is not clear from the record on appeal, it appears that the motions were not finally resolved before trial. ¹

The case was tried before the district judge sitting without a jury. Howard Electric was dismissed by consent after the presentation of Northwestern's case. Dismissal motions by the other defendants were denied.

At the close of the trial, the court reasoned that Northwestern had presented two theories under which GE might be held liable: breach of the duty of reasonable care, and breach of implied warranty. The trial court found that although Northwestern had presented some evidence to support its contention that the fire originated in the GE ballast in the bookkeeper's office, Northwestern had "failed to prove by a preponderance of the evidence that the fire was caused by a GE ballast or that the fire even started in the bookkeeper's office." (Emphasis added.) The court reasoned that because Northwestern had failed to show that a malfunction of GE's ballast was the proximate cause of the fire, GE could not be held liable under either of these theories.

Northwestern argued that Global was liable either under the terms of its lease, or for breach of a common law duty. The district court concluded that Global was not liable because there was no proof of its negligence, and because the lease did not explicitly assign to Global the risk of destruction by fire.

Finally, the court concluded that CEP was not liable to Doyle (and therefore to Northwestern) because Doyle was an incidental, instead of an intended, beneficiary of the contract between CEP and Global for the purchase and installation of the fire alarm. Nor did CEP owe Doyle any other duty the violation of which could serve as the basis for tort liability if CEP had acted unreasonably.

Accordingly, the court entered judgment in favor of the principal and third party defendants. By a separate order the court also entered judgment on the merits in favor of Lithonia Lighting, Inc. Northwestern appeals from these judgments.

The first issue presented by Northwestern is whether the court had jurisdiction to enter judgment on the merits in favor of "Lithonia Lighting, Inc." After entering judgment in favor of the other defendants, the court granted the reserved pretrial motions to set aside the default judgment. The motions were not granted, however, on the grounds asserted, viz., that Lithonia Lighting, Inc. was not an entity subject to suit, and that the court lacked jurisdiction over its parent corporation. Having previously determined that the fire had not started in the bookkeeper's office, the court found that the Lithonia fixture in the office could not have been responsible for the fire, and it thereupon entered judgment on the merits in favor of "Lithonia Lighting, Inc." without considering the jurisdictional issues.

Northwestern argues that according to the motions and supporting affidavits filed by National Service and Lithonia-Cleveland, Lithonia Lighting was an unincorporated division of National Service, and hence not subject to suit. Neither National Service nor Lithonia-Cleveland (the entities that were subject to suit) had been served by a summons, nor did they have actual notice of the suit until after the entry of the default judgment. Moreover, they did not submit themselves to the court's general jurisdiction, instead they appeared specially only to contest the court's jurisdiction to enter judgment against Lithonia Lighting, Inc.

An in personam judgment is not valid against a defendant unless the court entering it has jurisdiction over him. As the Supreme Court stated in Zenith Radio Corp. v Hazeltine Research, Inc., 395 U.S. 100 110, 89 S.Ct. 1562, 1569, 23 L.Ed.2d 129, 140 (1969):

The Court of Appeals was quite right in vacating the judgments against Hazeltine. It is elementary that one is not bound by a judgment in personam resulting from litigation in which he is not designated as a party or to which he has not been made a party by service of process. Hansberry v. Lee, 311 U.S. 32, 40-41 (61 S.Ct. 115, 85 L.Ed. 22) (1940). The consistent constitutional rule has been that a court has no power to adjudicate a personal claim or obligation unless it has jurisdiction over the person of the defendant. E. g., Pennoyer v. Neff, 95 U.S. 714, (24 L.Ed. 565) (1878); Vanderbilt v. Vanderbilt, 354 U.S. 416, 418, (77 S.Ct. 1360, 1362, 1 L.Ed.2d 1456) (1957). (Emphasis added.)

Accordingly, the trial court erred in entering judgment in favor of Lithonia Lighting, Inc. before it determined that it had the requisite personal jurisdiction. Since the district court made no findings of fact or conclusions of law on the jurisdictional issues raised in the motions to set aside the default judgment, the case will be remanded to permit the court to determine whether it has personal jurisdiction over a Lithonia entity subject to suit. Of course, Rule 4 of the Federal Rules of Civil Procedure governs the requirements for service of process.

The second issue presented by Northwestern is whether the trial court committed reversible error in taking a view of the warehouse just before trial. Although Northwestern's counsel was notified before the view and was present when it occurred, appellant claims error on several grounds. First, it complains that it was given no notice of the request that the court take the view, and that no hearing was held on the request to permit Northwestern to state its objections. Second, Northwestern complains that although the court toured the building and asked questions first of the owner, Mr. Doyle, and later of counsel, no court reporter was present, and no oaths were administered. In addition, Northwestern complains that Doyle had placed tape outlines on the walls to illustrate some features that had been altered, although defense counsel stated that this had been done without his knowledge. When the court arrived at the warehouse, Northwestern objected to the view on the ground of lack of sufficient advance notice and because there had been alterations of the building during reconstruction. The trial judge overruled these objections and stated that he could determine how the building looked at the time of the fire. When Northwestern objected to the court's questions of Doyle because he was to be called as a defense witness, the court ceased questioning him.

The trial court has discretion whether to permit a view of premises that are the subject of litigation. E....