Nuttallburg Smokeless Fuel Co. v. First Nat. Bank of Harrisville

• Decision Date: 08 November 1921
• Docket Number: 4343-4345.
• Citation: 109 S.E. 766,89 W.Va. 438
• Parties: NUTTALLBURG SMOKELESS FUEL CO. v. FIRST NAT. BANK OF HARRISVILLE ET AL. (TWO CASES). NUTTALLBURG SMOKELESS FUEL CO. v. PULLMAN STATE BANK ET AL.
• Court: West Virginia Supreme Court

109 S.E. 766

89 W.Va. 438

NUTTALLBURG SMOKELESS FUEL CO. v. FIRST NAT. BANK OF HARRISVILLE ET AL. (TWO CASES).

NUTTALLBURG SMOKELESS FUEL CO. v. PULLMAN STATE BANK ET AL.

Nos. 4343-4345.

Supreme Court of Appeals of West Virginia.

November 8, 1921

Submitted November 1, 1921.

Rehearing Denied Dec. 9, 1921.

Syllabus by the Court.

Upon a proceeding to vacate a judgment taken by default, in a case in which the defendant had no notice of the pendency of the action in any manner or form, the return of the officer indorsed upon the summons is only prima facie evidence of service, and may be overthrown by proof of such lack of notice.

A bill in equity will lie to vacate a judgment rendered in consequence of such return, upon proper allegations that the return was in fact false, that the person so served was not the president of such corporation, that no notice, actual or constructive, was received by the corporation of the pendency of such action at law, and that the corporation had a just defense to the action at law, and was prevented by such false return from asserting it.

Appeal from Circuit Court, Kanawha County.

Two suits by the Nuttallburg Smokeless Fuel Company against the First National Bank of Harrisville and others, and one by the same plaintiff against the Pullman State Bank and others. Bills dismissed, and the plaintiff appeals. Suits considered together. Decree reversed, demurrer overruled, and remanded in each case.

E. B Dyer and Morgan Owen, both of Charleston, for appellant.

S. A Powell, of Harrisville, for appellees.

LIVELY J.

From decrees of the circuit court sustaining demurrers to and dismissing its bills, plaintiff obtained appeals.

The same questions arise in each of these three cases, and they will all be considered together. A discussion of and decision in the Bank of Harrisville Case will dispose of the others.

Plaintiff a corporation, alleges that defendant, on the 10th of November, 1920, obtained a judgment against it and T. C. Beury for $5,253.45 in an action of debt, in the circuit court of Kanawha county, without any appearance by or knowledge of plaintiff, on certain notes claimed to have been signed by plaintiff, payable to T. C. Beury, and by him indorsed to defendant; that no process was served on plaintiff; and that execution was issued and levied on plaintiff's property. The bill further alleges that on March 9, 1920, T. C. Beury was president of plaintiff corporation, and then issued said notes, payable to himself, and sold and indorsed the same to defendant bank, without the knowledge or consent of plaintiff corporation, and received and used the proceeds for his own personal ends, without knowledge of plaintiff; that the defendant bank knew that such notes were not authorized by the corporation; that Beury had no authority to so issue or use them, and that the money derived therefrom was to be used by him for his personal ends. It is charged that the making of the notes was ultra vires, the notes void, and the defendant bank had knowledge of these facts. It is alleged that the judgment was obtained solely on the affidavit filed with the declaration; that the notes were not produced in court; and that a fraud was practiced on the court in obtaining judgment without producing the notes; that, after the notes were so negotiated, and before said suit in debt was begun, the entire stock and assets of plaintiff corporation were sold and transferred to the Ford Motor Company and new directors and a new president of the corporation were elected on July 7, 1920, and that T. C. Beury was not the president of the corporation at the time service of process in said action in debt was served on him as such on the 26th of July, 1920; that no process was served on plaintiff and it knew nothing of said suit until the execution was levied as aforesaid. The bill prayed that the judgment be annulled and declared void as to plaintiff, the sheriff be enjoined from selling under the execution, and for general relief. A demurrer was interposed by the bank and sustained, and the bill dismissed on May 16, 1921.

The return of the sheriff on the summons in debt reads:

"Executed the within process on the within named Nuttleburg Smokeless Fuel Company, a corporation, on the 26 day of July, 1920, by delivering a true copy thereof in writing in Kanawha county, West Virginia, wherein he resides, to Thos. C. Beury, the president of said corporation.

S. B. Jarrett, S. K. C.,

By J. H. Windell, D. S. K. C."

This record presents one controlling question: Is the return of the sheriff conclusive, having been served on Beury as president of the corporation, when in fact he was not president and had no connection with the corporation? If the service of process is conclusive, then plaintiff had legal notice of the action in debt, and its defenses of fraud and want of consideration should have been pleaded in that suit, and, if sustained, would have prevented recovery. Prewett v. Bank, 66 W.Va. 184, 66 S.E. 231, 135 Am.St.Rep. 1019. If it was legally summoned, and neglected to set up these defenses, it can receive no relief in equity for its neglect. The decisions of the states of Virginia and West Virginia have held to the common-law doctrine that a sheriff's return of process in a suit is conclusive, if sufficient on its face, and cannot be attacked by parties and privies to the suit. Milling Co. v. Read, 76 W.Va. 557, 85 S.E. 726; Talbott v. Oil Co., 60 W.Va. 423, 55 S.E. 1009; McClung v. McWhorter, 47 W.Va. 151, 34 S.E. 740, 81 Am.St.Rep. 785; Rader v. Adamson, 37 W.Va. 582, 16 S.E. 808; Stewart v. Stewart, 27 W.Va. 167; Bowyer v. Knapp, 15 W.Va. 290; Sutherland v. Bank, 111 Va. 515, 69 S.E. 341, and Virginia cases cited there.

The reason for the rule given in our decisions does not seem to have been examined at length. They recognize it as a harsh rule, but it is said, its harshness is "offset by the great inconvenience that would arise from uncertainty of judicial judgments and decrees." Milling Co. v. Read, supra, 76 W.Va. 569, 85 S.E. 731. In Stewart v. Stewart, supra, it is stated that others besides the defendants are interested that the return should be regarded as true; that rights of property would suffer under any other rule; and that sufficient protection to the injured is conserved by right of action against the officer for false return. In that case the rights of others had intervened. It is asserted there that the rule at common law should be followed, and if it is thought wise to change the rule, the Legislature should furnish the remedy. The evils and great inconvenience which would arise from the uncertainty of judicial judgments and decrees seems to be more imaginative than real. Experience, the great practical test, has demonstrated that no harm to the stability and certainty of judgments and decrees has resulted in the jurisdictions where the common-law rule of verity in the return has been abolished. On the contrary, we hear no challenge or outcry for that reason, or for any other reasons, from the 34 states which have either abolished or modified the verity rule, and the bench and bar of those states seem to be well satisfied. This rule is a heritage from ancient English law, formulated in times and under conditions which have very little resemblance to modern times and affairs; and, like a great many other ancient rules, has been meeting with disapproval in the transition of modern progressive jurisprudence. It has been abandoned by the courts in 21 of the states, by the federal courts, abolished by legislation in six others, and modified materially by the courts in seven other states. Eight states, including West Virginia, yet retain it. Another reason for the rule, not stressed by our decisions, is that the sheriff is a sworn officer to whom the law gives credit, and that he and his bondsmen are liable for damages caused by a false return. It seems somewhat anomalous, in present-day affairs, that the law should give more credit to a statement of the sworn officer in his return than it does in the suit against him for damages for false return. In the latter instance his oath is of no superior sanctity than that of the complainant and his witnesses, and there it becomes a jury question to be decided according to the rules for ascertainment of fact as in other cases. His return is as much of an official act in case of a suit on his bond as when questioned by a plea in abatement in the original suit, or in any other suit between the litigants relating thereto. If the law gives credit in the first instance, it seems logical that it should give the same measure of credit in the other instance, where the exact question is at issue. The remedy on the bond is a confession of the weakness of the verity rule; for it is an admission that the officer might make a false return; that he is not made infallible by being selected and sworn as an officer. The selection of officers by modern election methods is no index of sanctity or infallibility.

When the verity rule was anciently formulated, the sheriff was a high and important officer, the king's own representative, armed with the king's writ, and partaking of the king's fiction that he could do no wrong. He was the king's emissary, rather than the court's officer. When the verity doctrine made its bid to be embodied in judicial procedure, the times were feudal, the sovereigns were supreme, with almost unrestricted powers over life and property. The high sheriff was his agent and executive officer. His acts were, in a sense, the acts of the king, and not to be questioned. Having become adopted and followed for many years, and transmitted to America, it was first followed as a matter of course by many of the states including Virginia,...