Spartan Leasing, Inc. v. Brown

• Citation: 208 S.E.2d 649,285 N.C. 689
• Decision Date: 10 October 1974
• Docket Number: No. 7,7
• Court: North Carolina Supreme Court
• Parties: SPARTAN LEASING, INCORPORATED v. William W. BROWN, Jr., et al.

Page 649

208 S.E.2d 649

285 N.C. 689

SPARTAN LEASING, INCORPORATED v. William W. BROWN, Jr., et al.

No. 7.

Supreme Court of North Carolina.

Oct. 10, 1974.

Grier, Parker, Poe, Thompson, Bernstein, Gage & Preston, by Gaston H. Gage, Charlotte, for plaintiff appellant.

No counsel contra.

BRANCH, Justice.

Prior to the Judicial Department Act of 1965, which, Inter alia, established the Court of Appeals, it was well established in this jurisdiction that questions actually presented and determined on a former appeal became the law of the case and became binding on this Court and the trial courts when the same facts were subsequently presented in the cause at trial or on appeal. Hayes v. Wilmington, 243 N.C. 525, 91 S.E.2d 673; Bruce v. Flying Service, 234 N.C. 79, 66 S.E.2d 312; Maddox v. Brown 233 N.C. 519, 64 S.E.2d 864. Accord: Pulley v. Pulley, 256 N.C. 600, 124 S.E.2d 571; Stamey v. Membership Corp., 249 N.C. 90, 105 S.E.2d 282; Glenn v. Raleigh, 248 N.C. 378, 103 S.E.2d 482.

We recognize that the introduction of the Court of Appeals into the appellate scheme of this State adds a new dimension which we have not heretofore considered. We must therefore decide whether an interlocutory decision of the Court of Appeals constitutes the law of the case on review by this Court of a subsequent decision in the same case.

The various jurisdictions which have considered this question have differed. There appear to be six states whose highest courts have clearly held that the prior decision of the intermediate court becomes the law of the case. R. O. A. Motors, Inc. v. Taylor, 220 Ga. 122, 137 S.E.2d 459; South Bend Home Tel. Co. v. Beaning, 181 Ind. 586, 105 N.E. 52; Clore v. Davis, 19 Ky.L.Rptr. 353, 40 S.W. 380; Huntington v. Westerfield, 119 La. 615, 44 So. 317; Chandler v. Lafferty, 282 Pa. 550, 128 A. 507; Life & Cas. Ins. Co. v. Jett, 175 Tenn. 295, 133 S.W.2d 997. Nine other states, however, have held that such prior decisions do not become the law of the case and thereby bind the court of last resort. City of Pueblo v. Shutt Inv. Co., 28 Colo. 524, 67 P. 162; Weiner v. Pictorial Paper Package Corp., 303 Mass. 123, 20 N.E.2d 458; Jones v. Keetch, 388 Mich. 164, 200 N.W.2d 227; Orleans Dredging Co. v. Frazie, 179 Miss. 188, 173 So. 431; Grant v. Kansas City Southern Ry., 190 S.W. 586 (Mo.); New Amsterdam Cas. Co. v. Popovich, 18 N.J. 218, 113 A.2d 666; Walker Mem. Baptist Church, Inc. v. Saunders, 285 N.Y. 462, 35 N.E.2d 42; Pengelly v. Thomas, 151 Ohio St. 51, 84 N.E.2d 265; Roach v. Los Angeles & S.L.R.R., 74 Utah 545, 280 P. 1053. The State of Illinois has taken a still different position, that when the intermediate appellate decision is not reviewable on appeal by the State Supreme Court, such decision is not the law of the case. Linington v. Strong, 111 Ill. 152. Conversely, if the decision is reviewable by the Supreme Court, and appeal is not taken, the intermediate decision apparently becomes law, binding even the State Supreme Court on subsequent appeal. See Henning v. Eldridge, 146 Ill. 305, 33 N.E. 754. The strength of this intermediate position is diminished by a more recent pronouncement of the Illinois court on the subject, which, without expressly overruling prior cases, simply states that the law of the case doctrine is not applicable to the Supreme Court when it reviews the decision of the intermediate appellate court. Sjostrom v. Sproule, 33 Ill.2d 40, 210 N.E.2d 209.

The California court, one of the most rigid adherents of the strict law of the case view that even a court of last resort is bound by intermediate decision, has more recently indicated a less inflexible position. See Tomaier v. Tomaier, 23 Cal.2d 754, 146 P.2d 905; Allen v. California Mut. Bldg. & Loan Ass'n, 22 Cal.2d 474, 139 P.2d 321.

The federal courts have consistently followed the view that prior decisions of intermediate appellate courts, state or federal, cannot bind the Supreme Court of the United States upon a subsequent appeal. Davis v. O'Hara, 266 U.S. 314, 45 S.Ct. 104, 69 L.Ed. 303; Diaz v. Patterson, 263 U.S. 399, 44 S.Ct. 151, 68 L.Ed. 356; Zeckendorf v. Steinfeld, 225 U.S. 445, 32 S.Ct. 728, 56 L.Ed. 1156; Messenger v. Anderson, 225 U.S. 436, 32 S.Ct. 739, 56 L.Ed. 1152; Galigher v. Jones, 129 U.S. 193, 9 S.Ct. 335, 32 L.Ed. 658; Williams v. Conger, 125 U.S. 397, 8 S.Ct. 933, 31 L.Ed. 778. This federal holding has particular efficacy with regard to interlocutory orders. A situation strikingly similar to the situation presented in the instant case was presented in United States v. United States Smelting, Refining & Mining Co., 339 U.S. 186, 70 S.Ct. 537, 94 L.Ed. 750. In that case, a three-judge federal district court held that certain orders of the Interstate Commerce Commission were not supported by the evidence and enjoined enforcement of the orders. The order of the district court, although interlocutory, was explicitly made appealable by 28 U.S.C. § 1253, but the Commission did not appeal. Instead, upon remand, it took no further evidence but restated essentially the same grounds for its action and entered cease and desist orders. On a second appeal to the three-judge court, that court again held the orders unlawful and permanently enjoined their enforcement. The Commission and the United States appealed, and the Supreme Court of the United States reversed. The appellees contended, Inter alia, that the judgment of the district court should be affirmed because there was no appeal from the first judgment and mandate of the three-judge court. The Court, rejecting this contention, stated in part:

'The rule of the law of the case is a rule of practice, based upon sound policy that when an issue is once litigated and decided, that should be the end of the matter. (Citations omitted.) It is not applicable here because when the case was first remanded, nothing was finally decided. The whole proceeding thereafter was in fieri. The Commission had a right on reconsideration to make a new record. (Citations omitted.) When finally decided, all questions were still open and could be presented. The fact that an appeal could have been taken from the first order of the District Court was not because it was a final adjudication but because a temporary injunction had been granted in order to maintain the status quo. This was an interlocutory order that was appealable because Congress, notwithstanding its interlocutory character, had made it appealable. . . . The appellants might have appealed, but they were not bound to. We think that it requires a final judgment to sustain the application of the rule of the law of the case just as it does for the kindred rule of res judicata. (Citations omitted.) And although the latter is a uniform rule, the 'law of the case' is only a discretionary rule of practice. It is not controlling here. (Citations omitted.)'

We are of the opinion that the better reasoned rule is that one adopted by the federal courts and a majority of the other jurisdictions which have considered the question. We therefore hold that the prior decision of the Court of Appeals in this case, filed 24 May 1972, does not constitute the law of the case so as to bind this Court.

Although not argued by either party to this appeal, the crucial question presented by the appeal is whether plaintiff lost its right to further review by reason of its failure to petition for writ of certiorari to review the initial decision of the Court of Appeals.

Plaintiff could not appeal as a matter of right from the initial decision of the Court of Appeals. G.S. § 7A--27(a); G.S. § 7A--30. Thus, the source for further review was the discretionary authority vested in this Court by G.S. § 7A--31, which provides in pertinent part:

'(a) In any cause in which appeal has been taken to the Court of Appeals, except a cause appealed from the North Carolina Utilities Commission or the North Carolina Industrial Commission, and except a cause involving review of a post-conviction proceeding under article 22, chapter 15, the Supreme Court may in its discretion, on motion of any party to the cause or on its own motion, certify the cause for review by the Supreme Court, either before or after it has been determined by the Court of Appeals. . . .

* * *

* * *

'(c) In causes subject to certification under subsection (a) of this section, certification may be made by the Supreme Court after determination of the cause by the Court of Appeals when in the opinion of the Supreme Court

(1) The subject matter of the appeal has significant public interest, or

(2) The cause involves legal principles of major significance to the jurisprudence of the State, or

(3) The decision of the Court of Appeals appears likely to be in conflict with a decision of the Supreme Court.

Interlocutory determinations by the Court of Appeals, including orders remanding the cause for a new trial or for other proceedings, shall be certified for review by the Supreme Court only upon a determination by the Supreme Court that failure to certify would cause a delay in final adjudication which would probably result in substantial harm.'

The second paragraph of our Supplementary Rule 2(a) contains language identical to the last-quoted paragraph. The rule also further provides in relevant part:

'A petition for writ of certiorari filed under subsection (a) of this rule shall be filed within fifteen days after the date of the certification to the trial tribunal of the determination of the Court of Appeals; in all other respects Rule 34 of the Rules of Practice in the Supreme Court shall apply.'

The rules do not provide an answer to this question of first impression in this jurisdiction. However, we do find guidance in the decisions of other courts.

In Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 251, 36 S.Ct. 269, 60 L.Ed. 629, this question was considered, and the Court stated:

'It is contended that this question is settled otherwise, at least as between these parties,...