Yale v. National Indem. Co.
| Decision Date | 11 July 1979 |
| Docket Number | No. 77-2493,77-2493 |
| Parties | Robert YALE, Ancillary Administrator of the Estate of Joseph Dudley Schofield, Deceased, Appellant, v. NATIONAL INDEMNITY COMPANY, Appellee. |
| Court | U.S. Court of Appeals — Fourth Circuit |
William C. Warden, Jr., North Wilkesboro, N. C. (John E. Hall, McElwee, Hall & McElwee, North Wilkesboro, N. C., on brief), for appellant.
William C. Raper, Winston-Salem, N. C. (Allan R. Gitter, Womble, Carlyle, Sandridge & Rice, Winston-Salem, N. C., on brief), for appellee.
Before BRYAN and FIELD, Senior Circuit Judges, and PHILLIPS, Circuit Judge.
Plaintiff Robert Yale (Yale), as Ancillary Administrator of the Estate of Joseph D. Schofield, appeals the grant of summary judgment for the defendant, National Indemnity Company (National), in an action brought by Yale to recover the amount of a judgment obtained in a state court wrongful death action against National's insureds, Van Helman and Big-H Shows, Inc. On National's motion for summary judgment, the district court determined that the state court judgment was void for lack of jurisdiction and granted the motion. We reverse and remand for further proceedings.
Plaintiff's intestate, Schofield, was allegedly shot to death in North Carolina in June 1973 by two men, Allen and Helman, who were then associated with Big-H Shows, Inc., a traveling carnival. Yale qualified as ancillary administrator and brought a wrongful death action in a North Carolina state court against Allen, Helman and Big-H Shows, Inc., alleging that Allen and Helman had killed Schofield in the course and scope of their employment by Big-H Shows, Inc.
In this state court wrongful death action, Yale obtained a substantial judgment for compensatory and punitive damages against Helman and Big-H Shows, Inc. 1 Armed with this judgment, Yale then commenced the instant action in a North Carolina state court against National as the liability insurer of Helman and Big-H Shows, Inc., alleging that the judgment was unsatisfied and that National was bound under its policy to pay it. National removed the action to the United States District Court for the Middle District of North Carolina under 28 U.S.C. § 1446, and in the removed action raised by answer both jurisdictional and substantive defenses. The substantive defenses were that the insurance policy did not cover the risk upon which liability had been adjudicated in the state court, and alternatively, that National was not bound on the risk because of the insured's failure to cooperate as required by the policy. The jurisdictional defenses were also two-fold: that the state judgment was void for lack of personal jurisdiction over either state defendant; and that because of procedural deficiencies leading to its entry following the state defendants' default, it was void because state law would so deem it.
As the district court rightly recognized, a federal court asked to entertain an attack upon a state court judgment must look to the law of the rendering state to determine the exposure of that state's judgments to the particular kind of attack being made. See Restatement of Judgments, § 7, comment A.; § 8, comments B., d. (1942). Here, as the district court further recognized, the attack by National was, in traditional terms, collateral, being raised as a defense to a claim one of whose essential elements was the existence of the judgment. Id. § 11, comment A. Powell v. Turpin, 224 N.C. 67, 29 S.E.2d 26 (1944). On this basis the district court then applied the traditional rule, Restatement of Judgments, § 11, comment B., as followed in North Carolina, E. g., Lumber Co. v. West, 247 N.C. 699, 102 S.E.2d 248 (1958), that only void judgments are subject to collateral attack, and that a void judgment is only one that is rendered by a court lacking jurisdiction over the defendant or over the subject matter, or in violation of a procedural requirement so substantial that it is deemed by the rendering state to be void, I. e., to be "jurisdictional." 2 As indicated, the district court then rejected National's contention that the judgment was void for lack of personal jurisdiction as to either state defendant, but found it void for "jurisdictional" deficiencies in the procedure leading to its entry. 3 We agree that it was not void for lack of personal jurisdiction, but hold that under state law it was not void either for the procedural deficiencies relied upon by the district court. Accordingly, we conclude that the state judgment was not subject to collateral attack in the district court and that that court erred in granting summary judgment on the basis that it was.
Because we review judgments, not reasons, Eltra Corp. v. Ringer, 579 F.2d 294, 298 (4th Cir. 1978), we consider first defendant's contention, rejected by the district court, that the state judgment was void for lack of personal jurisdiction over either of the state insured defendants.
The state court's personal jurisdiction was challenged for claimed defects in the form and mode of service of process as to each of the state defendants. The district court concluded that by reason of these defects service was ineffectual to subject either to personal jurisdiction. 4 It then concluded, however, that by posting a surety bond to secure release of its property attached by the plaintiff in ancillary proceedings, the state defendant Big-H Shows, Inc. had made a "general appearance" under North Carolina law that subjected it to personal jurisdiction.
We agree that under North Carolina statutory and decisional law the state court acquired personal jurisdiction over Big-H Shows, Inc. by reason of its "general appearance," if not by service of process. See N.C.Gen.Stat. § 1-75.7; Vestal v. Moseley Vending Machine Co., 219 N.C. 468, 14 S.E.2d 427 (1941); Bizzell v. Mitchell, 195 N.C. 484, 142 S.E. 706 (1928); And see Simms v. Mason's Stores, Inc., 285 N.C. 145, 203 S.E.2d 769 (1974).
This would suffice to dispose of defendant's contention that the state court judgment was void for lack of personal jurisdiction over either of its insured judgment debtors. We note however that the North Carolina case, Russell v. Bea Staple Mfg. Co., 266 N.C. 531, 146 S.E.2d 459 (1966), relied upon by the district court in finding service of process ineffectual as to both state defendants, was subsequently overruled by the Supreme Court of North Carolina in Wiles v. Welparnel Constr. Co., Inc., 295 N.C. 81, 243 S.E.2d 756 (1978), to the extent that Russell and the line of cases it represented were inconsistent with the facts in Wiles. In view of our holding that in any event personal jurisdiction was acquired over one of the insured state defendants, it may be that plaintiff has no interest in having the service of process question reconsidered. 5 Because the case is to be remanded, however, we think that it would be appropriate, if the plaintiff desires and if it becomes critical to decision, for the issue to be reconsidered by the district court in light of the intervening decision in Wiles. If it is reconsidered, we express no opinion on whether the Wiles decision should be held retroactively applicable to the facts of this case, nor if so whether it would dictate a contrary conclusion on the service of process issue. Those difficult questions of state law may not have to be addressed in this federal action, and if they must, they are better addressed in the first instance by the district court.
The state court action was commenced on June 14, 1974. Although the state defendants made the general appearance noted above on June 19, 1974, no defendant had filed answer by August 28, 1974. On that date, the time for filing answer under state law having expired, an assistant clerk of the State Superior Court in which the action was pending entered an order entitled "Judgment by Default and Inquiry" against the state defendants. In the same order the clerk directed trial in the Superior Court "on the issue of damages only." The case was then duly calendared and was called for trial at the September 1974 session of the proper superior court. No specific notice of this setting was given the state defendants, and none appeared in person or by counsel when the case was called for trial. A regularly assigned judge of the Superior Court proceeded to hear the case and took evidence adduced by the plaintiff Yale respecting the death, life expectancy, and statutory beneficiaries of the wrongful death decedent. The state judge found as fact that the state defendants had been served with process, 6 that a "default judgment" had been theretofore entered against them, that the matter was properly before the court on plaintiff's waiver of jury trial and following its proper calendaring for trial, and that no one had appeared for the defendants. He made further findings and conclusions respecting the merits of the case and entered judgment for the plaintiff awarding compensatory and punitive damages.
In the district court, National contended that the procedures leading to this judgment of the state superior court were deficient in two respects that independently made it void under North Carolina law. First, because North Carolina law in the form of its civil rule counterpart to Fed.R.Civ.P. 55(b)(1) does not authorize a clerk's entry of default judgment when the claim is for unliquidated damages as here, or against a defendant who has appeared in the action, as had the state defendants here. The district court agreed, citing Roland v. W & L Motor Lines, Inc., 32 N.C.App. 288, 231 S.E.2d 685 (1977), a decision of North Carolina's intermediate appellate court. Secondly, because defendants were not given the three-day notice of hearing after entry of default that is required by North Carolina's civil rule counterpart to Fed.R.Civ.P. 55(b)(2). Again the district...
To continue reading
Request your trial
-
Fehlhaber v. Fehlhaber
... ... of full faith and credit is tempered, however, by "some basic limitations." Underwriters National Assurance Co. v. North Carolina Life and Accident and Health Insurance Guaranty Assoc., --- U.S ... ), or where the procedural irregularities are serious enough to be deemed "jurisdictional," Yale v. National Indemnity Co., 602 F.2d 642, 644 (4th Cir. 1979); Recent Cases, 62 Harv.L.Rev. 1400, ... ...
-
Budget Blinds, Inc. v. White
... ... In Indian Head National Bank v. Brunelle, 689 F.2d 245 (1st Cir.1982), the First Circuit held that "a registration court ... — though jurisdiction is the only issue thus preserved") (emphasis in original); Yale v. Nat'l Indem. Co., 602 F.2d 642, 644 (4th Cir.1979) ("only void judgments are subject to ... ...
-
Owens v. Aetna Life & Cas. Co.
... ... v. Royal Drug Co., 440 U.S. 205, 211, 99 S.Ct. 1067, 1073, 59 L.Ed.2d 261 (1979); SEC v. National Securities, Inc., 393 U.S. 453, 459-60, 89 S.Ct. 564, 568, 21 L.Ed.2d 668 (1969). The earmark of ... 1979); Paskaly v. Seale, 506 F.2d 1209, 1211 n.4 (9th Cir. 1974). See also Yale v. National Indemnity Co., 602 F.2d 642, 650 n.18 (4th Cir. 1979); Lee Moore Oil Co. v. Union Oil ... ...
-
Reid v. North Carolina, 3:11cv422.
... ... of the decision of the state supreme court; (4) the recommendation is wrong because the Yale defense allows federal district courts to attain jurisdiction over collateral and direct attacks ... Plaintiff cites the court to Yale v. National Indem. Co., 602 F.2d 642 (4th Cir.1979). Plaintiff fails to note, however, that Yale was a ... ...