Resolute Insurance Company v. State of North Carolina

• Decision Date: 20 June 1968
• Docket Number: No. 12156.,12156.
• Citation: 397 F.2d 586
• Parties: RESOLUTE INSURANCE COMPANY, Appellant, v. STATE OF NORTH CAROLINA, Edwin Lanier, Commissioner of Insurance of North Carolina, Union County, and Union County Board of Education, Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

397 F.2d 586 (1968)

RESOLUTE INSURANCE COMPANY, Appellant, v. STATE OF NORTH CAROLINA, Edwin Lanier, Commissioner of Insurance of North Carolina, Union County, and Union County Board of Education, Appellees.

No. 12156.

United States Court of Appeals Fourth Circuit.

Argued May 10, 1968.

Decided June 20, 1968.

Certiorari Denied December 9, 1968.

George W. Miller, Jr., Durham, N. C., for appellant.

Ralph Moody, Raleigh, N. C., and C. Frank Griffin, Monroe, N. C., Staff Attys., Office of the Atty. Gen. of North Carolina (Thomas Wade Bruton, Atty. Gen of North Carolina, on the brief) for appellees.

Before BOREMAN, BRYAN and BUTZNER, Circuit Judges.

Certiorari Denied December 9, 1968. See 89 S.Ct. 446.

BOREMAN, Circuit Judge:

Resolute Insurance Company (hereafter Resolute) brought this action in the district court seeking an injunction to restrain the selling of certain of its securities on deposit with the North Carolina Department of Insurance. The purpose of the proposed sale was to satisfy state court judgments against Resolute in the amount of $32,500.00, resulting from the forfeiture of appearance bonds, on which Resolute was surety, given by defendants in a criminal case in a North Carolina state court. Although the district court determined that it lacked jurisdiction it applied the doctrine of res judicata and dismissed the action. For the reasons hereinafter stated, we uphold the dismissal.

The facts may be briefly stated as follows. In early 1964, four persons were tried in the Superior Court of Union County, North Carolina, on indictments charging the offense of kidnapping. They were found guilty and were sentenced to prison terms. All appealed to the North Carolina Supreme Court, and at that time each individual defendant executed two documents, a Recognizance and an "Appearance Bond in Cases or Appeal to Supreme Court." Those bonds involved in the instant case were executed by three of the defendants as principals, and by Resolute as surety "by Richard F. Taylor, Attorney in Fact."¹ The bonds are identical, except as to amounts, and all contain the following conditions:

"Now, Therefore, if the above bounden defendant * * * shall make his appearance at the May 4th, 1964 Term of Union County Superior Court and at each succeeding term of said Court pending the final disposition of the above cases, and shall not depart the same without leave of the Court, then this obligation shall be void; otherwise to remain in full force and effect."

In January 1965, on appeals of the convicted defendants, the Supreme Court of North Carolina handed down its decision quashing the indictments and vacating the verdicts and judgments because of racial discrimination in the selection of the grand jury. State v. Lowry, 263 N.C. 536, 139 S.E.2d 870 (1965). The court's opinion closed with this brief paragraph:

"The indictments are quashed and the verdict and judgments are vacated for want of valid indictments to support them. It does not follow that defendants are entitled to discharge and dismissal of the charges. If the State so elects it may send new bills and if they are returned true bills by an unexceptionable grand jury, defendants may be tried thereon for the offenses alleged." 139 S.E.2d at 879.

Later, on May 4, 1965, another grand jury, properly constituted, returned new indictments on the same charge of kidnapping against all parties previously indicted. That same day the names of the defendants were called out in open court, and each failed to answer. As a consequence, a judgment nisi was entered against each defendant and against Resolute. Notice was served on Taylor, Attorney in Fact for Resolute, on May 28 commanding the surety to appear on August 30 and show cause why the judgment should not be made absolute. None of the individual defendants could be found, and no notice was served on them.

In its answer filed in the Superior Court, Resolute alleged that during the period between January 29, 1965, when the Supreme Court handed down its opinion, and May 4, 1965, when the new indictments were returned, the three defendants were not charged with any offense in North Carolina and neither they nor Resolute had been put on notice that they would be reindicted. The contention was that the bonds were discharged and the individual defendants were no longer required to appear in court. The individual defendants also made motions contending that their bonds had expired by virtue of the North Carolina Supreme Court's decision and that the failure of the state solicitor to notify them of the fact he was about to proceed with new indictments and his failure to take steps to admit them anew to bail amounted to a denial of their due process rights under the Fourteenth Amendment. All motions were overruled and judgments were entered forfeiting the appearance bonds. The individual defendants and Resolute again appealed to the North Carolina Supreme Court alleging that that court's prior decision had released them from all obligation on the bonds.

The North Carolina Supreme Court, however, did not agree, finding it "manifest" from the language of the appearance bonds and its earlier decision quoted above that the bonds were not discharged. Furthermore, the court rejected the arguments that the solicitor's failure to notify the individual defendants of his decision to proceed with new indictments and to require new bonds amounted to a denial of due process. Accordingly, the judgment was affirmed. State v. Mallory, 266 N.C. 31, 145 S.E.2d 335 (1965). A petition to the United States Supreme Court for a writ of certiorari was denied. Mallory v. North Carolina, 384 U.S. 928, 86 S.Ct. 1443, 16 L.Ed.2d 531 (1966), and on May 13, 1966, judgment was entered in the Union County Superior Court forfeiting absolutely the bonds of the defendants.

Following these proceedings Resolute brought this action in the court below alleging federal jurisdiction under 28 U.S.C. §§ 1331 and 1332. It complains that the proposed sale of its securities would constitute a taking of its property...