Montague v. Wilder

337 S.E.2d 627, 78 N.C. App. 306, 1985 N.C. App. LEXIS 4307
CourtCourt of Appeals of North Carolina
DecidedDecember 17, 1985
DocketNo. 8518SC209
StatusPublished
Cited by2 cases

This text of 337 S.E.2d 627 (Montague v. Wilder) is published on Counsel Stack Legal Research, covering Court of Appeals of North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Montague v. Wilder, 337 S.E.2d 627, 78 N.C. App. 306, 1985 N.C. App. LEXIS 4307 (N.C. Ct. App. 1985).

Opinions

JOHNSON, Judge.

The ultimate issue that is presented is whether a North Carolina court must accord full faith and credit to the default judgment for a deficiency entered in Virginia flowing from a Virginia foreclosure action when the plaintiffs did not adhere to the notice requirements of the Virginia notice statute at the time they initiated the action. We think not.

In March 1972, defendant signed two notes as one of three makers. Both notes were secured by a purchase money deed of trust for the purchase of a tract of land in Virginia. In April 1972, the property was sold to a Virginia corporation. The deed of sale provided that the corporation assume all obligations under the notes and purchase money deed of trust. At the time of this purchase, and a short time thereafter, defendant had a partial interest in the corporation but subsequently sold his interest. The payments under the note were payable annually. When the annual payment due 4 June 1976 was not paid by the current owner of the property the plaintiffs initiated foreclosure proceedings. The foreclosure occurred 11 December 1976. Virginia foreclosure law required notice to only the present owner of the property. Defendant, a North Carolina resident, had no knowledge of the foreclosure until plaintiffs’ Virginia attorney notified him by letter dated 7 October 1982, almost six years later. In this letter, plaintiffs’ attorney informed defendant of the events surrounding the [308]*308foreclosure and the amount of the deficiency, and requested that defendant pay the deficiency. Two weeks later, defendant’s attorney responded, acknowledging receipt of the letter and requesting copies of documents pertinent to the foreclosure.

Meanwhile, plaintiffs commenced an action against the defendant in Virginia seeking a deficiency judgment. Plaintiffs attempted service as to defendant pursuant to Va. Code sec. 8.01-329 (1984). This statute allows for substitute service of a nonresident by service on the Secretary of the Commonwealth of Virginia, the fictional agent for nonresident persons. In keeping with the statute, a copy of process was sent by certified mail, return receipt requested, to the same address where defendant had received the October 1982 letter from plaintiffs’ attorney. The Secretary submitted to the court an affidavit of compliance. The receipt was returned to the Secretary unsigned with the letter marked “return to sender, moved, left no address.” Defendant received no actual notice of this action. Defendant filed no pleadings. Default judgment was entered 9 November 1983. In February 1984 defendant was served in North Carolina with a summons and complaint requesting that full faith and credit be extended to the Virginia judgment. Defendant filed an affidavit with the North Carolina court stating he had had no knowledge of either the 1976 foreclosure or the 1983 deficiency action; nonetheless, the trial court granted the Virginia judgment full faith and credit. Defendant moved for a new trial or for an order amending the North Carolina judgment. Plaintiffs moved for summary judgment. Defendant’s motions were denied and plaintiffs were granted summary judgment against defendant.

The United States Constitution provides, “Full faith and credit shall be given in each state to the public acts, records, and judicial proceedings of every other state.” U.S. Const, art. IV, sec. 1. It has long been held that a judgment from a rendering state is entitled to the “same credit, validity and effect” in a sister state that it has in the state where it was pronounced. Boyles v. Boyles, 308 N.C. 488, 490, 302 S.E. 2d 790, 792 (1983), quoting Hampton v. M’Connel, 3 (Wheat.) 234, 235, 4 L.Ed. 378, 379 (1818). The foreign judgment need be valid in the state where it was rendered to be accorded full faith and credit — to require less would result in giving the foreign judgment more force than it would receive in the rendering state. Boyles v. Boyles, supra at 491, 302 [309]*309S.E. 2d at 793. The judgment is deemed by the second court to be valid in the rendering state if the minimal requirements of proper subject matter jurisdiction, see Underwriters Nat’l Assur. Co. v. North Carolina Life and Accident and Health Ins. Guar. Ass’n, 455 U.S. 691, 704, 102 S.Ct. 1357, 1365, 71 L.Ed. 2d 558, 570 (1982), and the due process concerns of personal jurisdiction, see Int’l Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), and adequate notice, see Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), were satisfied. Boyles v. Boyles, supra at 491, 302 S.E. 2d at 793. The second court’s scope of review concerning the rendering court’s jurisdiction is very limited. Id. “[A] judgment is entitled to full faith and credit — even as to questions of jurisdiction — when the second court’s inquiry discloses that those questions have been fully and fairly litigated and finally decided in the court which rendered the judgment.” Id., quoting Durfee v. Duke, 375 U.S. 106, 111, 84 S.Ct. 242, 245, 11 L.Ed. 2d 186, 191 (1963). A “mere recital in the [Virginia] judgment,” Boyles v. Boyles, supra at 500, 302 S.E. 2d at 798 (Martin, J., dissenting), that the court had proper jurisdiction and proper service is not deemed by the majority in Boyles to be a full and fair litigation of these issues. Id. at 491-92, 302 S.E. 2d at 793. The limited review by the second court “rests on the presupposition that the requirement of adequate notice had been met in the original proceeding.” Id. When the judgment from the rendering state is a default judgment and the defendant later challenges the validity of the original proceeding based on inadequate notice of these proceedings, “the reviewing court ordinarily must examine the underlying facts in the record to determine if they support the conclusion that the notice given of the original proceeding was adequate.” Id. While conducting this examination the statutes and decisions of the rendering state must be applied. Id. at 494, 302 S.E. 2d at 795.

In the instant case, the parties do not dispute that the Virginia court had proper subject matter jurisdiction. Consequently the proper scope of review for a North Carolina court is confined on these facts to the questions: (1) whether the Virginia court properly applied the pertinent statute regarding personal jurisdiction and notice; and (2) whether the applicable Virginia statutes satisfied the due process requirements of the fourteenth amendment.

[310]*310First we address this two-fold inquiry to the question of personal jurisdiction. Plaintiffs claim the Virginia court had personal jurisdiction over the defendant based on Virginia’s long-arm statute. Sec. 8.01-328 provides a nonresident is subject to the personal jurisdiction of Virginia on the grounds of his having transacted business in Virginia or having had an interest in real property located in Virginia. Va. Code secs. 8.01-308(1) and (6) (1984). Based on defendant’s own affidavit, he did buy a tract of land in Virginia and, in connection with this purchase, signed a note in Virginia secured by a purchase money deed of trust.

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Cite This Page — Counsel Stack

Bluebook (online)
337 S.E.2d 627, 78 N.C. App. 306, 1985 N.C. App. LEXIS 4307, Counsel Stack Legal Research, https://law.counselstack.com/opinion/montague-v-wilder-ncctapp-1985.