Schwilling v. Horne

669 P.2d 183, 105 Idaho 294, 36 U.C.C. Rep. Serv. (West) 1446, 1983 Ida. LEXIS 532

• Court: Idaho Supreme Court
• Decided: June 2, 1983
• Docket: 14225
• Status: Published

Opinions

BAKES, Justice.

This is an appeal from an order of the district court denying defendant appellant’s motion to strike a foreign judgment entered in Alaska and filed in Idaho pursuant to I.C. § 10-1301 et seq.

On October 24, 1979, Stephen Schwilling the plaintiff respondent, entered into an agreement with Brunner Horne, defendant appellant, for the purchase and sale of a small airplane, in which Horne agreed to sell the airplane in exchange for consideration consisting in part of a cash payment and in part of contract rights owned by Schwilling and his wife and brother. In addition to the agreement, the Schwillings executed a security agreement providing that the aircraft would be located in Adams County, Idaho.¹

In August, 1980, appellant learned that the airplane had been taken to Alaska and, claiming that the terms and conditions of the sale and security agreement had been violated, he requested the Adams County sheriff to contact state police officers in Alaska who confirmed the location of the airplane in Palmer, Alaska. Appellant then flew to Anchorage, Alaska, and engaged the assistance of Mr. Dave Klosterman, a representative of Alaska Bush Carriers, Inc., to repossess the aircraft. Appellant and Klosterman drove to Palmer, Alaska, and took possession of the airplane without the knowledge or consent of the respondent. Klosterman then flew the airplane back to Anchorage and met appellant, and appellant authorized the performance of certain maintenance work by Alaska Bush Carriers, Inc., necessary to transport the airplane back to Idaho.

Upon learning of the appellant’s repossession, respondent retained counsel in Anchorage and commenced a civil action against appellant in the Superior Court of the State of Alaska, Third Judicial District of Anchorage, Case No. 3AN-30-5887. The amended complaint alleged that appellant was in breach of the contract of sale, that the dispossession of the airplane had caused respondent to suffer loss of employment contracts, and that respondent had been required to pay for the maintenance work authorized by appellant. In the prayer for relief, respondent prayed for recovery of the damages he had suffered as a result of being dispossessed of the airplane. Notice of the amended complaint in Case No. 3AN-30-5887 was served at appellant’s residence in New Meadows, Idaho, and copies of the summons and complaint were allegedly left with appellant’s wife. The Alaska court ordered that possession of the airplane be returned to respondent pending a final determination. On November 20, 1980, the Alaska court entered a Judgment by Default for the failure of appellant to either plead or defend.² The Alaska court awarded damages, costs and attorney fees against appellant and made permanent its previous orders with regard to respondent’s possession of the airplane.

Respondent then filed an inadequately authenticated copy of the Alaska default judgment as a foreign judgment in Valley County on December 29, 1980, as Case No. 2451. After a series of proceedings, including motions to vacate the judgment and to restrain execution of the judgment against appellant, respondent, pursuant to court order, filed a properly authenticated copy of the Alaska judgment pursuant to I.C. §§ 10-1301 et seq. on February 12, 1981.

Appellant subsequently filed a motion in Case No. 2451 to strike the entry of the Alaska judgment, alleging that Alaska did not have personal jurisdiction over him and that the judgment was therefore not entitled to full faith and credit. The Idaho district court determined that Alaska’s long arm jurisdiction statute conferred jurisdiction over the appellant and that appellant had minimum contacts with Alaska so that maintenance of the Alaska suit did not violate due process and, in its Decision and Order filed on June 2, 1981, denied appellant’s motion to strike the entry of the foreign judgment. Appellant appeals from that order pursuant to I.A.R. 11(a)(5).

The issue on appeal is whether the district court’s denial of defendant’s motion to strike a foreign judgment, which denial was based upon the court’s determination as a matter of law that the Alaska court had personal jurisdiction over the defendant, was in error. For the reasons set forth below, we reverse and remand for further proceedings in the district court.

A valid final judgment entered in a state having jurisdiction over the parties and subject matter is entitled to full faith and credit in the courts of another state to the same extent it has by law in the courts of the state where the judgment was rendered. United States Constitution Art. 4, § 1; Nevada v. Hall, 440 U.S. 410, 99 S.Ct. , 59 L.Ed.2d 416, rehear, den., 441 U.S. 917, 99 S.Ct. 2018, 60 L.Ed.2d 389 (1979). A judgment of a sister state, however, is not entitled to full faith and credit in the foreign state, where such judgment would be void in the state in which the judgment was entered for lack of in personam jurisdiction. Cf., Kremer v. Chemical Const. Corp., 456 U.S. 461, 102 S.Ct. 1883, 1898, 72 L.Ed.2d 262, rehear. den.,-U.S.-, 103 S.Ct. 20, 73 L.Ed.2d 1405 (1982) (states not required to accord full faith and credit to judgment rendered in another state which is constitutionally infirm); Sierra Life Ins. Co. v. Granata, 99 Idaho 624, 586 P.2d 1068 (1978) (judgment entered by court without jurisdiction over subject matter is void). See generally 47 Am.Jur.2d Judgments § 1236 (1969).

Appellant argues that the district court erred in denying his motion to strike the Alaska judgment because the Alaska court did not have personal jurisdiction over him, and a personal judgment rendered without in personam jurisdiction over a defendant is in violation of the due process clause of the fourteenth amendment of the United States Constitution and, hence, is void. See Hess v. Pawloski, 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927); Sierra Life Ins. Co. v. Granata, supra; Nalder v. Crest Corp., 93 Idaho 744, 472 P.2d 310 (1970) (rendition of judgment without jurisdiction is void); Garren v. Rollis, 85 Idaho 86, 375 P.2d 994 (1962) (personal judgment entered without service of process on defendant is void).

When a court is called upon to enforce a foreign judgment, “it may inquire into the jurisdictional basis of the foreign court’s decree” to determine whether full faith and credit must be accorded. Underwriters Nat’l Assurance Co. v. North Carolina Life & Accident & Health Ins. Guaranty Assoc., 455 U.S. 691, 102 S.Ct. 1357, 1365, 71 L.Ed.2d 558 (1982). Appellant apparently chose not to appear in the Alaska action either to defend on the merits of respondent’s claim or to challenge the assertion of jurisdiction by the Alaska court. Therefore, the jurisdictional question has not been previously litigated, and the district court in Idaho properly proceeded to determine the jurisdictional basis for the judgment entered by the Alaska court. See Underwriters Nat’l Assurance Co. v. North Carolina Life, supra; Durfee v. Duke, 375 U.S. 106, 111, 84 S.Ct. 242, 245, 11 L.Ed.2d 186 (1963) (although court may inquire into jurisdiction, where question of jurisdiction has been fully and fairly litigated and finally decided, judgment is entitled to full faith and credit).

A challenge to the jurisdiction of a state court over a non-resident defendant not personally served within the state involves a two part analysis. First, the defendant’s alleged conduct must fall within the terms of the long arm statute in question; and, secondly, the defendant must have had minimum contacts with the forum so that assertion of jurisdiction through application of that statute will not violate defendant’s right to due process of law guaranteed by the fifth and fourteenth amendments to the United States Constitution. See International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Modem Trailer Sales, Inc. v. Traweek, 561 P.2d 1192, 1195 (Alaska 1977); Jonz v. Garrett/Airesearch Corp., 490 P.2d 1197, 1199 (1971); Schneider v. Sverdsten Logging Co., Inc., 104 Idaho 210, 657 P.2d 1078 (1983). The respondent argues that the appellant’s activities within the State of Alaska are embraced by two separate subsections of Alaska Stat. § 09.05.015, which provides in part relevant to this decision:

“(a) A court of this state having jurisdiction over the subject matter has jurisdiction over a person served in an action according to the rules of civil procedure

“(3) in an action claiming injury to person or property in or out of this state arising out of an action or omission in this state by the defendant;

“(6) in an action which arises out of “(C) a claim that the defendant return, restore, or account to the plaintiff for an asset or thing of value which was in this state at the time the defendant acquired possession or control over it .... ”

The district court focused upon Alaska Stat. § 09.05.015(a)(3) and noted that the phrase “injury to property” has been construed to mean “not much more than mere pecuniary loss.” See Fairbanks Air Service, Inc. v. Air Operations Intl. Corp., 378 F.Supp. 1405, 1406 (D.C.Alaska 1974). The district court stated that it was not questioned that plaintiff had suffered pecuniary loss as a result of defendant’s actions in taking possession of the plane, namely loss of employment contracts and the cost of repairs, and concluded that “defendant’s willful acts in dispossessing plaintiff of the airplane appear to be sufficient ‘minimum contacts with (Alaska) such that maintenance of the suit does not offend traditional notions of fair play and substantial justice.’ ” Assuming that the district court correctly interpreted Alaska Stat. § 09.05.015(a)(3), as construed by Alaska courts, to include appellant’s activities in Alaska, or that appellant’s activity was encompassed by the conduct outlined by Alaska Stat. § 09.05.-015(a)(6)(C), the next question is whether the district court improperly determined the existence of minimum contacts sufficient to satisfy the requirements of due process as a matter of law, rather than as a question of fact.

Alaska courts have held, as have courts in the majority of jurisdictions in relation to their own long arm statutes, including Idaho, that its long arm jurisdiction statute is to be interpreted as broadly as possible to extend jurisdiction to the maximum extent permitted by due process under the fourteenth amendment of the United States Constitution. Jonz v. Garrett/Airesearch Corp., supra; Volkswagenwerk v. Klippan, 611 P.2d 498, 500 (Alaska 1980), cert. den. 449 U.S. 974, 101 S.Ct. 385, 66 L.Ed.2d 236 (1980); Akichika v. Kelleher, 96 Idaho 930, 932, 539 P.2d 283, 285 (1975): see e.g., Waterval v. Dist. Ct., 620 P.2d 5 (Colo.1980), cert. den. 452 U.S. 960, 101 S.Ct. 3108, 69 L.Ed.2d 971 (1981); Cowan v. First Ins. Co. of Hawaii, Ltd., 61 Hawaii 644, 608 P.2d 394 (Haw.1980). The question of whether Alaska could properly assert personal jurisdiction over the appellant, then, depends on whether the assertion of such jurisdiction in this case would violate the due process clause of the fourteenth amendment.

In International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945), the United States Supreme Court established that:

“[D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” Id. at 316, 66 S.Ct. at 158, quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940).

The test requiring that a non-resident defendant have sufficient minimum contacts with the forum state is not susceptible of mechanical application. See Kulko v. Superior Ct. of Calif., 436 U.S. 84, 92, 98 S.Ct. 1690, 1697, 56 L.Ed.2d 132, rehear. den. 438 U.S. 908, 98 S.Ct. 3127, 57 L.Ed.2d 1150 (1978); Intermountain Bus. Forms, Inc. v. Shepard Bus. Forms Co., 96 Idaho 538, 542, 531 P.2d 1183, 1187 (1975). Instead, it involves an ad hoc analysis of the facts of each case. Fleet Leasing, Inc. v. District Court, 649 P.2d 1074, 1079 (Colo.1982). Thus, the inquiry into whether appellant had sufficient minimum contacts with the State of Alaska such that maintenance of the suit did not offend “ ‘traditional notions of fair play and substantial justice,’ ” see International Shoe Co. v. Washington, supra, required a review of factors that bear upon the reasonableness of the Alaska court’s assertion of personal jurisdiction.

Before a state may assert personal jurisdiction over a non-resident defendant, he must purposely avail himself “of the privilege of conducting activity within the forum state, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958): see Schneider v. Sverdsten Logging Co., Inc., supra. “The extent of purposeful submission to the laws of the forum state necessary to satisfy this requirement, however, depends upon the nature of the activity giving rise to the suit.” Jones Enterprises, Inc. v. Atlas Service Corp., 442 F.2d 1136, 1140 (9th Cir.1971). Indeed, essential criteria in all cases challenging the jurisdiction over a non-resident defendant are whether the quality and nature of defendant’s activity is such that it is reasonable and fair to require him to conduct his defense in that state. Kulko v. Superior Ct. of California, supra, 436 U.S. at 92, 98 S.Ct. at 1697; Insurance Co. of North America v. Marina Salina Cruz, 649 F.2d 1266, 1270 (9th Cir.1981); see Cowan v. First Ins. Co. of Hawaii, Ltd., 61 Hawaii 644, 608 P.2d 394 (Hawaii 1980). The burden on a non-resident defendant in requiring him to defend in a distant jurisdiction is to be considered in light of other relevant factors such as the interest of the forum state in adjudicating disputes, plaintiff’s interest in obtaining a convenient and effective relief, the interstate judicial system’s interest in obtaining the most efficient resolution of controversies, and the shared interest of several states in furthering fundamental substantive social policies. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980), and authorities cited therein. The district court decision fails to disclose the consideration of any of the aforementioned factors in its determination as a matter of law that the Alaska court had personal jurisdiction over the defendant.

The appellant’s activities within or connected to the State of Alaska that are related to this cause of action are limited to the following: appellant sought assistance from Alaska State Police officers in confirming the location of the airplane in Palmer, Alaska; appellant flew to Anchorage, Alaska, hired a representative of Alaska Bush Carriers, Inc., and together they drove to Palmer, Alaska, where appellant took possession of the airplane. At appellant’s request, the representative flew the airplane to Anchorage, Alaska, where appellant authorized the performance of certain maintenance work necessary to prepare the airplane so it could be transported back to Idaho. The record “does not establish the length of appellant’s stay in Alaska or the existence of any prior or subsequent contacts with Alaska.

The appellant claims that the nature of his contact with Alaska, one of the factors to be considered in determining whether Alaska was entitled to assert personal jurisdiction over him, was merely a valid exercise of his right to self-help repossession under the security agreement executed in his favor in conjunction with the sale of the airplane. We note that at the time respondent executed the security agreement both Idaho and Alaska had adopted Section 9-503 of the UCC, which provides that a secured party may take possession of collateral without resort to judicial process upon default. See I.C. § 28-9-503 and Alaska Stat. § 45.05.786 (presently renumbered as Alaska Stat. § 45.09.503): see also Massey Ferguson Credit Corp. v. Peterson, 102 Idaho 111, 626 P.2d 767 (1980). We note that in Akichika v. Kellerher, 96 Idaho 930, 539 P.2d 283 (1975), we held that the terms of Idaho’s long arm jurisdiction statute, I.C. § 5-514, did not encompass the conduct of a vendor of a truck in Oregon who subsequently came into Idaho and attempted a self-help repossession, and affirmed the trial court’s ruling that it was without personal jurisdiction over the vendor. As stated above, both Idaho and Alaska construe their long arm statutes as broadly as possible to extend jurisdiction to the maximum extent permitted by due process. Therefore, consistent with our opinion in Akichika, if all that appellant did in Alaska was attempt a self-help UCC repossession, and if he had a valid legal right to do so, then that conduct alone would be insufficient to subject appellant to jurisdiction under the Alaska long arm statute.

However, even if entitled to effect a self-help repossession, a secured party may only exercise his right of self-help repossession so long as repossession may be accomplished without breach of peace. See I.C. § 28-9-503 and Alaska Stat. § 45.05.-786. Whether possession occurred lawfully and without breach of peace is determined by the law of the jurisdiction where the collateral is located, see Chischilly v. General Motors Acceptance Corp., 96 N.M. 264, 629 P.2d 340, 344 (N.M.App.1980), which, in this action, is the law of Alaska. See, e.g., Kelly v. Miller, 575 P.2d 1221 (Alaska 1978); Kupka v. Morey, 541 P.2d 740 (Alaska 1975); Weaver v. O'Meara Motor Co., 452 P.2d 87 (Alaska 1969).

There is a conflict in the evidence set out in the affidavits and counter-affidavits in the record over whether or not respondents had breached the security agreement, and whether or not appellant was justified in attempting to exercise the UCC right of self-help repossession. These factual issues regarding the nature of appellant’s contact with Alaska can only be resolved by trial, and the district court erred in deciding the case on the motions and affidavits with their conflicting factual allegations.

On remand, the district court, in determining whether appellant had sufficient minimum contacts with the State of Alaska, such that assertion of personal jurisdiction over the appellant does not offend “notions of fair play and substantial justice,” is directed to consider the above mentioned factors, including the nature of appellant’s contact with Alaska.

The judgment of the district court is reversed and the cause remanded for further proceedings. Costs to appellant; no attorney fees allowed.

DONALDSON, C.J., and SHEPARD and HUNTLEY, JJ., concur.

1 . The respondents filed an affidavit which had attached thereto a purported consent for the purchasers to remove the aircraft from Adams County to Central and South America. Appellant responded that his signature on the consent was forged.

2 . On October 1, 1980, subsequent to the commencement of the Alaska action, but prior to entry of the default judgment in that action, appellant commenced an action on the contract in the Fourth Judicial District of the State of Idaho as Case No. 2439. For a reason not shown in the record, no proceedings were had in that action, and it was apparently subsequently dismissed.