Purser v. Corpus Christi State Nat. Bank, 73-308

• Decision Date: 29 April 1974
• Docket Number: No. 73-308,73-308
• Citation: 508 S.W.2d 549,256 Ark. 452
• Parties: , 86 A.L.R.3d 935 Harold S. PURSER, Appellant, v. CORPUS CHRISTI STATE NATIONAL BANK, Appellee.
• Court: Arkansas Supreme Court

Page 549

508 S.W.2d 549

256 Ark. 452, 86 A.L.R.3d 935

Harold S. PURSER, Appellant, v. CORPUS CHRISTI STATE NATIONAL BANK, Appellee.

No. 73-308.

Supreme Court of Arkansas.

April 29, 1974.

Rehearing Denied May 28, 1974.

Sam Goodkin, Fort Smith, for appellant.

Bethell, Callaway & Robertson, Fort Smith, for appellee.

FOGLEMAN, Justice.

This is an appeal from an order of the Sebastian County Circuit Court striking appellant's counterclaim and setoff in an action brought by appellee under Ark.Stat.Ann. § 29-801 et seq. (Repl.1962), the Uniform Enforcement of Foreign Judgments Act, to register an in personam default judgment rendered against appellant by a Texas court, August 29, 1972, after service pursuant to Article 2031b, Texas Revised Civil Statutes. The judgment, in the amount of $72,825.33 for principal, interest and attorney's fees, was based on certain past due and unpaid promissory notes, executed by appellant and payable to appellee.

On February 14, 1973, appellee filed a Petition for Registration of Foreign Judgment in the Sebastian County Circuit Court, alleging that appellee had obtained the Texas judgment, an authenticated copy of which was attached, and that it remained unsatisfied. Summons and a copy of the petition were served on appellant that same day. Appellant filed an answer denying the jurisdiction of the Texas court and a counterclaim and setoff which sought $75,000 compensatory damages for conversion of appellant's business and assets and $100,000 compensatory damages and $100,000 punitive damages for malicious prosecution. These torts were alleged to have been committed in the State of Texas, where appellant then had resided and engaged in business. The appellee responded by filing a motion to quash the counterclaim and setoff alleging that the Sebastian Circuit Court lacked jurisdiction over the subject matter and the parties. On September 13, 1973, the circuit judge sustained the motion and ordered the counterclaim and setoff dismissed without prejudice retaining jurisdiction over appellee's petition for registration of the foreign judgment. This appeal followed.

Before reaching the merits of appellant's contention that the trial court erred in dismissing his counterclaim and setoff, it is necessary to consider appellee's contention that the ruling by the trial judge is not an appealable order. For the order of a trial court to be appealable, it must be final. Ark.Stat.Ann. § 27-2101 (Repl.1962); Allred v. National Old Line Insurance Co., 245 Ark. 893, 435 S.W.2d 104. A final judgment is one which discharges a party from the action, operates to divest some right so as to put it beyond the power of the court to place the parties in their former condition after the expiration of the term and dismisses him from court or concludes his rights to the subject matter in controversy. McConnell & Son v. Sadle, 248 Ark. 1182, 455 S.W.2d 880; Johnson v. Johnson, 243 Ark. 656, 421 S.W.2d 605: Fox v. Pinson, 177 Ark. 381, 6 S.W.2d 518; Flanagan v. Drainage District No. 17, 176 Ark. 31, 2 S.W.2d 70.

The general rule that the dismissal of a counterclaim or setoff is not directly appealable is subject to exception where, under the circumstances of the case, the order has the effect of a final decision. Fox v. Pinson, supra; 4 Am.Jur.2d, Appeal & Error, §§ 98, 100. In determining what constitutes a final order, the requirements of finality must be given a practical rather than a technical approach. Gillespie v. United States Steel Corp., 379 U.S. 148, 85 S.Ct. 308, 13 L.Ed.2d 199 (1964). This is necessary because the question is sometimes so close that a decision either way can be supported with equally forceful arguments, making it impossible to devise a formula to resolve cases coming within the 'twilight zone.' This is really the approach taken in allowing exceptions to the rule that dismissal of a counterclaim is not appealable.

It is obvious that any relief to which appellant might be entitled in the courts of Arkansas on his counterclaim is effectively foreclosed by its dismissal, even without prejudice. It does not appear that there are any allegations which would ever justify service on appellee or the exercise of jurisdiction over it in Arkansas under the Uniform Interstate and International Procedure Act (Ark.Stat.Ann. § 27-2501 et seq. (Supp.1973)). This is the sort of case, then, that calls upon us to be practical rather than technical in testing the finality of the order dismissing the counterclaim. We took this kind of approach recently when we assumed that an order dismissing a counterclaim was appealable in Reynolds v. Bakem Credit Union (1973), 255 Ark. , 500 S.W.2d 355. In so doing, we referred to cases in which the practical effect of an order, unreviewed, was the death knell of a party's attempt to litigate his claim. See Eisen v. Carlisle & Jacquelin, 370 F.2d 119 (2nd Cir. 1966); Reader v. Magma-Superior Copper Co., 108 Ariz. 186, 494 P.2d 708 (1972); Miles v. N. J. Motors, 32 Ohio App.2d 350, 291 N.E.2d 758 (1972).

We find great similarity between this case and Fox v. Pinson, supra. In Fox this court had reversed a mortgage foreclosure decree and remanded the cause for further proceedings. See Fox v. Pinson, 172 Ark. 449, 289 S.W. 329. Appellant then filed a 'cross-complaint' against the plaintiffs (appellees here) for loss of rental value, wrongful conversion of property and for the value of a building on the property allegedly destroyed by appellees while in possession of the land. Appellant sought $74,640 in damages, admitted that $11,500, representing 23 promissory notes then due, should be set off against her recovery and prayed judgment for the balance. Appellees demurred to the 'cross-complaint.' After appellant refused to plead further, the court sustained the demurrer and dismissed the cross-complaint. Appellant sought to appeal the dismissal. We held that the dismissal effectively concluded appellant's rights to the subject matter in controversy and was therefore an appealable order. When we view the situation at hand practically, we must say that the dismissal of appellant's counterclaim, in effect, terminated a severable branch of the case and was a final and appealable order.

In deciding whether a counterclaim and setoff for damages arising from allegedly tortious conduct of appellee in a foreign jurisdiction may be pleaded in an action to register a foreign judgment in favor of appellee and against appellant, it is necessary to look to both the compulsory counterclaim statute (Ark.Stat.Ann. § 27-1121 (Repl.1962)) and the Uniform Enforcement of Foreign Judgments Act (Ark.Stat.Ann. § 29-801 et seq. (Repl.1962)) and ascertain the purpose of each of those acts.

The salient purpose of the Uniform Act is to provide for a summary judgment procedure in which a party in whose favor a judgment has been rendered may enforce that judgment promptly in any jurisdiction where the judgment debtor can be found, thereby enabling the judgment creditor to obtain relief in an expeditious manner. Ark.Stat.Ann. § 29-806 (Repl.1962); Commissioners' Note to the Uniform Act, Uniform Laws Annotated, Vol. 9A, p. 476; Leflar, the New Uniform Judgments Act, 3 Ark.L.Rev. 402, 415; Nunez v. O. K. Processors, 238 Ark. 429, 382 S.W.2d 384. The Uniform Act provides that any defense, setoff or counterclaim which, under the laws of this state, may be asserted by the defendant in an action on a foreign judgment may be raised in the proceedings pursuant to the act. Ark.Stat.Ann. § 29-808 (Repl.1962).

Dr. Leflar gave us the historical background of the act. In speaking of the rejection of a pure registration system and the adoption of the summary judgment procedure by the National Conference of Commissioners on Uniform State Laws, he said:

The alternative solution which naturally suggested itself was a summary judgment procedure. A few states had already made such a procedure available for suits on foreign judgments, in connection with comprehensive summary judgment enactments, but a number of states which had set up summary judgment procedures for some purposes had not specifically included actions on foreign judgments among the causes of action for which the summary procedure was provided.

Analysis of the problem indicated that a summary procedure devised specially for rendering new judgments on extra-state judgments might be more speedy and efficacious in operation than summary judgment procedures usually are, yet just as fair to all concerned. Further, it became apparent that most of the advantages of a direct registration procedure could be achieved under such a quick judgment procedure. Accordingly, at the Philadelphia meeting of the National Conference of Commissioners on Uniform State Laws in October, 1946, when alternative tentative drafts of a proposed act were presented to the Conference, one prescribing a registration system and the other a summary judgment procedure, preference for the latter was indicated and this preference was made final by formal vote of the Conference at the Cleveland meeting in 1947. Then at the Seattle meeting in September, 1948, a final draft on an act drawn on the summary judgment theory was adopted, the following week was approved by the House of Delegates of the American Bar Association, and thus was formally promulgated and made available for adoption by the states.

This section of the act was intended to do no more than recognize that a judgment debtor should have the right to raise any defense, counterclaim or cross-complaint which, under the law of this state, he might have asserted in the pre-existing...