Smith v. Those Certain Ins. Companies Subscribing to Aircraft Hull Ins. Policy No. Reinco 57
| Decision Date | 26 May 1982 |
| Docket Number | CA-CIV,No. 2,2 |
| Citation | 132 Ariz. 371,645 P.2d 1285 |
| Parties | David L. SMITH and Carol E. Smith, his wife, Plaintiffs/Appellants, v. THOSE CERTAIN INSURANCE COMPANIES SUBSCRIBING TO AIRCRAFT HULL INSURANCE POLICY NO. REINCO 57, identified as CAMAT (Groupe Aerofrancassure), CFAE (Groupe Sprinks), GROOUPE PATERNELLE (Aviafrance), and FONCIERE, Defendants/Appellees. 4121. |
| Court | Arizona Court of Appeals |
This is an appeal from a superior court order setting aside a $353,000 default judgment against appellees, foreign insurance companies named in the security endorsement to a policy of insurance issued to appellants by Bayly, Martin and Faye Aviation Insurance Services, Inc., on behalf of the appellees. The policy provided aircraft hull and liability insurance to Mr. Smith and included a loss payable clause to New Mexico Bank & Trust Company, the mortgagee. It included the following provision:
"15. SERVICE OF SUIT
It is agreed that in the event of the failure of Underwriters hereon to pay any amount claimed to be due hereunder, Underwriters hereon, at the request of the insured (or reinsured), will submit to the jurisdiction of any Court of competent jurisdiction within the United States and will comply with all requirements necessary to give such Court jurisdiction and all matters arising hereunder shall be determined in accordance with the law and practice of such Court.
It is further agreed that service of process in such suit may be made upon ______ and that in any suit instituted against any one of them upon this contract, Underwriters will abide by the final decision of such court or of any Appellate Court in the event of an appeal.
______ is authorized and directed to accept service of process on behalf of Underwriters in any such suit and/or upon the request of the insured (or reinsured) to give a written undertaking to the insured (or reinsured) that he will enter a general appearance upon Underwriters' behalf in the event such a suit shall be instituted.
Further pursuant to any statute of any state, territory or district of the United States which makes provision therefor, Underwriters hereon hereby designate the Superintendent, Commissioner or Director of Insurance or other officer specified for that purpose in the statute, or his successor or successors in office, as their true and lawful attorney upon whom may be served any lawful process in any action, suit or proceeding instituted by or on behalf of the insured (or reinsured) or any beneficiary here under (sic) arising out of this contract of insurance (or reinsurance), and hereby designate the above-named as the person to whom the said officer is authorized to mail such process or a true copy thereof. " (Emphasis added)
The affidavit of the process server indicates that he served two copies of the alias summons, first amended complaint, and the insurance policy and a fee of $5.00 with the Arizona Director of Insurance on December 12, 1980. Appellants' attorney filed an affidavit of default on January 26, 1981, which recited the fact of service on those certain insurance companies subscribing to aircraft hull insurance policy number Reinco 57, by service on the Director of Insurance and that the time within which an answer or defense might be filed had passed. Entry of default was made the same day; on February 20, default judgment was entered. Seven days later, appellees moved to set aside the judgment, challenging the sufficiency of service of process. In support of their opposition to the motion to vacate, appellants' counsel filed his affidavit claiming that service of process was made pursuant to and in accordance with the terms and provisions of the insurance policy. An affidavit executed by an employee of the Director of Insurance stated that she had sent a copy of process to Bayly's address. Appellees' reply was supported by the affidavit of the president of Bayly stating that Bayly had not been authorized to accept service of process on behalf of appellees and had not received a notice of service and copy of process from appellants' counsel.
The trial court, in granting the motion to vacate the default judgment and entry of default, found that service of process was insufficient. We agree and affirm.
Proper service of process was essential for the court to have jurisdiction over appellees. Koven v. Saberdyne Systems, Inc., 128 Ariz. 318, 625 P.2d 907 (App.1980). Appellees are...
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