Shelton v. Fairley

• Decision Date: 18 December 1984
• Docket Number: No. 8426SC164,8426SC164
• Citation: 323 S.E.2d 410,72 N.C.App. 1
• Court: North Carolina Court of Appeals
• Parties: Thomas M. SHELTON, III, Alan Craig Shelton and George C. Collie, Successor Trustee, of the Trust of Thomas M. Shelton, Deceased, Plaintiffs, v. Francis H. FAIRLEY, Individually and as Executor of the Estate of Thomas M. Shelton, Deceased; Francis H. Fairley, S. Dean Hamrick, James D. Monteith and Lawrence A. Cobb, Individually and as Fairley, Hamrick, Monteith & Cobb, a North Carolina Partnership, Defendants, and Lois Holt Shelton Wilson and Catherine Norell Shelton Einhaus, Additional Defendants.

Page 410

323 S.E.2d 410

72 N.C.App. 1

Thomas M. SHELTON, III, Alan Craig Shelton and George C.

Collie, Successor Trustee, of the Trust of Thomas

M. Shelton, Deceased, Plaintiffs, v. Francis H. FAIRLEY, Individually and as Executor of the

Estate of Thomas M. Shelton, Deceased; Francis H. Fairley,

S. Dean Hamrick, James D. Monteith and Lawrence A. Cobb,

Individually and as Fairley, Hamrick, Monteith & Cobb, a

North Carolina Partnership, Defendants,

and

Lois Holt Shelton Wilson and Catherine Norell Shelton

Einhaus, Additional Defendants.

No. 8426SC164.

Court of Appeals of North Carolina.

Dec. 18, 1984.

George C. Collie and Charles M. Welling, Charlotte, for plaintiffs, appellants.

Golding, Crews, Meekins, Gordon & Gray, by John G. Golding and Harvey L. Cosper, Jr., Charlotte, for defendants, appellees.

WHICHARD, Judge.

I.

The first issue concerns service of process on defendants Fairley, Monteith and Cobb. To exercise personal jurisdiction over a natural person, process must be served in compliance with N.C.Gen.Stat. 1A-1, Rule 4(j)(1). "Where a statute provides for service of summons by designated methods, the specified requirements must be complied with or there is no valid service." Long v. Board of Education, 52 N.C.App. 625, 626, 279 S.E.2d 95, 96 (1981), quoting Broughton v. DuMont, 43 N.C.App. 512, 514, 259 S.E.2d 361, 363 (1979), disc. rev. denied, 299 N.C. 120, 262 S.E.2d 5 (1980). Rule 4(j)(1)a provides for service "[b]y delivering a copy of the summons and of the complaint to [defendant] or by leaving copies thereof at the defendant's dwelling house or usual place of abode with some person of suitable age and discretion then residing therein[.]"

Summons issued 30 July 1982 to each of the defendants individually were delivered to defendant Hamrick at the law offices of defendant partnership. This did not accord with the clearly stated provision of Rule 4(j)(1)a requiring personal delivery or delivery at each defendant's residence.

Citing Wiles v. Construction Co., 295 N.C. 81, 243 S.E.2d 756 (1978), plaintiffs contend that actual notice of the suit cures deficiencies in service of process. In Hall v. Lassiter, 44 N.C.App. 23, 25, 260 S.E.2d 155, 157 (1979), disc. rev. denied, 299 N.C. 330, 265 S.E.2d 395 (1980), this Court held otherwise. It stated, "[W]e do not believe [the Supreme Court in Wiles, 295 N.C. 81, 243 S.E.2d 756,] intended, by judicial decree, completely to abolish the clearly stated statutory requirements for the service of process in favor of some nebulous concept of actual notice." Id. It noted that the defect in Wiles was in the form of the summons, not in the manner in which it was served. Id.

While Harris v. Maready, 311 N.C. 536, 319 S.E.2d 912 (1984) suggests a movement away from strict compliance with N.C.Gen.Stat. 1A-1, Rule 4(b), we do not believe it changes plaintiffs' obligation in this case to comply with N.C.Gen.Stat. 1A-1, Rule 4(j)(1)a. In Harris defendant was personally served with a copy of the summons directed to a co-defendant in the action. The caption of the summons listed defendant's name first among the individual defendants being sued. Because defendant was personally served, the court stated that there was no substantial confusion about the identity of defendant as a party being sued. Id. at 544, 319 S.E.2d at 917. In so doing it specifically did not overrule Philpott v. Kerns, 285 N.C. 225, 203 S.E.2d 778 (1974), which "held that actual notice given in a manner other than that prescribed by statute cannot supply constitutional validity." Harris, 311 N.C. at 544 319 S.E.2d at 917. It found, rather, that facts which showed personal service on the defendant there were sufficient to meet the requirements of Rule 4. Id. at 545, 319 S.E.2d at 920.

In this case defendants Fairley, Monteith and Cobb were not personally served until they received Alias & Pluries summons issued on 7 June 1983. We conclude that jurisdiction over these defendants was not obtained by delivery of the summons issued 30 July 1982 to their law partner, defendant Hamrick, at the offices of defendant partnership. As to these defendants the action was therefore discontinued until the issuance of Alias and Pluries summons on 7 June 1983, and the statute of limitations was not tolled until that date.

We note that given our disposition of the statute of limitations issue, infra, tolling the statute on 7 June 1983 instead of on 30 July 1982 affects only one of plaintiffs' nine claims for relief, barring as to defendants Fairley, Monteith and Cobb the fifth claim which alleges damages in excess of $10,000 for the deterioration of improved real property known as "the Queens Road property."

II.

The second issue concerns the defense of res judicata and collateral estoppel raised by defendants. Defendants contend that this action for damages is barred by the earlier proceeding to remove the executor and revoke his letters of administration pursuant to N.C.Gen.Stat. 28-32. We hold that orders entered in a proceeding under N.C.Gen.Stat. 28-32, in which an executor must show cause why he should not be removed, do not constitute res judicata as to a later civil action for damages between the parties or collaterally estop the bringing of such an action.

Under the doctrine of res judicata a final judgment on the merits by a court of competent jurisdiction is conclusive of rights and facts or issues thereby litigated as to the parties and those in privity with them. King v. Grindstaff, 284 N.C. 348, 355, 200 S.E.2d 799, 804 (1973); Kabatnik v. Westminster Co., 63 N.C.App. 708, 711-12, 306 S.E.2d 513, 515 (1983). It bars all subsequent actions between the same parties on the same matter. Id. It is not a doctrine without limits, however, and its applicability may often be a close question. Commentators have noted that

[i]n limiting the doctrine, there is support for the rule that judgments relied upon as creating a bar or preclusion are to be construed with strictness (citations omitted) .... Hence, the position has been taken that the doctrine of res judicata is to be applied in particular situations as fairness and justice require ... (citations omitted).

46 Am.Jur.2d §§ 401, 402, at 568-69.

Reasoning as above, courts have carved out exceptions to the doctrine of res judicata based upon policy reasons. See, e.g., Spilker v. Hankin, 188 F.2d 35 (D.C.App.1951) (fiduciary relationship between attorney and client supports policy of courts examining closely any transaction between them, which policy should be weighed against that supporting doctrine of res judicata). Our Supreme Court has recognized an exception in instances where a statutory proceeding to remove an executor may be followed by a later civil action. We are instructed by three cases in particular: Jones v. Palmer, 215 N.C. 696, 2 S.E.2d 850 (1939); In re Estate of Galloway, 229 N.C. 547, 50 S.E.2d 563 (1948); and In re Estate of Lowther, 271 N.C. 345, 156 S.E.2d 693 (1967).

In Jones v. Palmer, 215 N.C. 696, 2 S.E.2d 850, beneficiaries sought to remove administrators by petition pursuant to N.C.Gen.Stat. 28-32. The Court denied removal on the ground that the estate was practically administered. It stated:

In sustaining the conclusion reached by the court below denying the petition to revoke the letters of administration ..., this Court does not intend to make the findings of fact and conclusions of the clerk ... or the judge reviewing them on appeal effective for any other purpose.

They are confined to a consideration of that question alone and do not constitute res judicata in any other proceeding between the parties which the petitioners may be entitled to pursue, and are not to be taken to the prejudice of either party therein.

Jones v. Palmer, 215 N.C. at 699, 2 S.E.2d at 853 (emphasis supplied).

Jones thus clearly states that a statutory action to remove administrators or executors is not res judicata in any other proceeding which the parties are entitled to pursue. Defendants have not cited, and we have not found, any case which overrules Jones and its progeny or holds to the contrary.

Defendants argue the inapplicability of Jones on the ground that the proceedings here were broader than those there. The Jones opinion suggests otherwise. The Court there refers to the "voluminous evidence presented to the court in support of [the] contentions." Id. at 697, 2 S.E.2d at 851. The allegations there, moreover, are substantially similar to those here. Plaintiffs in Jones alleged payment of excessive commissions, failure to make timely filings, delay in collection of assets, losses due to unnecessary interest charges, sales of property at a loss, unauthorized payment of fees and other losses. These claims are similar to plaintiffs' claims here, infra. Nothing in the facts in Jones suggests that it should be distinguished from this case. It is true, as defendants note, that its procedural posture is different, but that alone does not persuade us that the legal principles it states are not applicable.

Galloway, 229 N.C. 547, 50 S.E.2d 563, also concerns a proceeding under N.C.Gen.Stat. 28-32 for revocation of letters of administration. The significant language there is:

'This proceeding ... is neither a civil action nor a special proceeding under the code of civil procedure. Its purpose is not to litigate the alleged rights and liabilities of adverse parties, settle the same, and give judgment against one party in favor of another, but is to require one who is charged by the law with special duties and trusts ... to show cause ... why he shall not be removed from his office ....'

Galloway, 229 N.C. at 551, 50 S.E.2d at 566, quoting Edwards v. Cobb, 95 N.C. 4, 5 at 9 (1886).

Lowther, 271 N.C. 345, 156 S.E.2d 693, reaffirms Galloway and states, further, than an adjudication of fact by the clerk in a proceeding under N.C.Gen.Stat. 28-32 is not res judicata in any other proceeding between the parties which they may be able to...