Appeal by Plaintiffs from order entered 6 August 2004, by
Judge Albert A. Corbett, Jr., District Court, Harnett County.
Heard in the Court of Appeals 20 September 2005.
Morgan, Reeves & Gilchrist, by Robert B. Morgan for plaintiff-
appellants.
Bain, Buzzard & McRae, by Edgar R. Bain. No brief filed by
defendant-appellee.
WYNN, Judge.
Under North Carolina law, except in a Small Claims Division
action, “a corporation cannot appear and represent itself in proper
person or by its officers, but can do so only by an attorney
admitted to practice law.” Lexis-Nexis, Div. of Reed Elsevier,
Inc. v. Travishan Corp., 155 N.C. App. 205, 207-08, 573 S.E.2d 547,
549 (2002) (citation omitted). Here, Plaintiffs appeal an order
vacating a magistrate court's judgment because the corporation was
not properly served as a corporation. We hold that where a
corporation being sued in the Small Claims Division is represented
at trial, the corporation has made a general appearance before thecourt and has waived any right to challenge proper service. We
therefore reverse the order of the district court.
Since Defendant Billy's Automotive chose not to file a brief,
we must rely on the facts supplied to us by Plaintiffs. This
action arose from a dispute regarding the repair of Plaintiffs'
automobile that was damaged in a car accident. On 15 June 2004,
Plaintiffs filed a complaint in the Harnett County District Court -
Small Claims Division against Defendant seeking relief for
possession of personal property and monetary damages for loss of
use of their automobile. The complaint alleged that Billy's
Automotive is a corporation.
On 26 June 2004, summons was served on Defendant by delivering
a copy personally to William Gerald Ray, also known as “Billy Ray,”
at the address of the business. Mr. Ray is the owner and operator
of Billy's Automotive. On 30 June 2004, a hearing was held before
Magistrate John Todd. Mr. Ray testified and fully participated in
the trial on behalf of Defendant Billy's Automotive. Although
Defendant did not file a counterclaim in this action, Defendant
claimed orally that Plaintiffs owed approximately Four Thousand Two
Hundred Dollars ($4,200.00) for the repairs performed on
Plaintiffs' automobile. Neither party was represented by counsel
at the trial before the magistrate court.
Magistrate Todd entered judgment on 30 June 2004, ordering
Defendant (1) to deliver the automobile to Plaintiffs; and (2) to
pay the sum of Three Hundred Twenty-Five Dollars ($325.00) to
Plaintiffs for loss of use of their vehicle and Fifty-Five dollars($55.00) in court costs. Defendant did not appeal the magistrate
court's judgment.
On 8 July 2004, Defendant paid to the clerk of court the sum
of Three Hundred Eight-Five Dollars and Fifty-Seven cents
($385.57), as payment in full of the judgment and court costs.
Although Defendant complied with the monetary judgment, Defendant
did not deliver the automobile to Plaintiffs. Thus, on 13 July
2004, Plaintiffs requested that the clerk of court issue a Writ of
Possession for Personal Property and that it be served on
Defendant.
On 20 July 2004, Plaintiffs filed a Motion for Reissue of the
Writ of Possession. On that same day, Magistrate Todd filed a
Motion to Set Aside Magistrate Civil Judgment in the district
court, claiming lack of jurisdiction and incomplete judgment.
Magistrate Todd contended that the small claims court did not have
jurisdiction to hear the case because the value of the property to
be recovered was greater than Four Thousand Dollars ($4,000.00).
Magistrate Todd also contended that the written judgment rendered
was incomplete in that the portion where Plaintiffs were to pay
Defendant for the cost of repairs was not included in the written
judgment.
On 21 July 2004, Mr. Ray, through counsel, filed a separate
motion under Rule 60 of the North Carolina Rules of Civil Procedure
to set aside the magistrate court's judgment for improper service.
Mr. Ray alleged in his motion that the judgment should be set aside
because “[n]o legal entity is named as Defendant in the lawsuit[,]”and “[t]he pleadings and judgment entered in this case do not
identify the Defendant as being an individual trading as Billy's
Automotive, or as a partnership, or as a corporation, or as a
limited liability company.”
On 26 July 2004, a hearing was held in the district court on
both Rule 60 motions. District Court Judge Albert Corbett, Jr.,
entered an order on 6 August 2004, setting aside the magistrate
court's judgment for lack of proper service on Defendant. The
district court found that the complaint was served on Defendant as
a corporation, but that service upon Defendant did not comply with
Rule 4 of the North Carolina Rules of Civil Procedure in that it
“was not delivered to an officer, director of managing agent of the
corporation or no copies left in the office of such officer,
director or managing agent of the office.” The district court
reserved ruling on Magistrate Todd's motion to set the judgment
aside on the basis of lack of subject matter jurisdiction and
incomplete judgment pending further proceedings.
______________________________________
On appeal,
Plaintiffs contend that the district court
committed reversible error in (1) finding that proper service had
not been had against Defendant; and (2) holding Magistrate Todd's
Rule 60 motion in abeyance pending further proceedings.
North Carolina Rule of Civil Procedure 60(b)(4) allows a trial
court to grant relief from a judgment that is void. N.C. Gen.
Stat. § 1A-1, Rule 60(b)(4) (2004). The granting of a Rule 60(b)
motion is within the trial court's sound discretion and isreviewable only for abuse of discretion.
Gentry v. Hill, 57 N.C.
App. 151, 154, 290 S.E.2d 777, 779 (1982). Abuse of discretion is
shown only when the challenged actions are manifestly unsupported
by reason.
Clark v. Clark, 301 N.C. 123, 129, 271 S.E.2d 58, 63
(1980) (citation omitted). “If there is 'competent evidence of
record on both sides' of the Rule 60(b) motion, it is the duty of
the trial court to evaluate such evidence, and the trial court's
findings supported by competent evidence are conclusive on appeal.”
Blankenship v. Town & Country Ford, Inc., 155 N.C. App. 161, 165,
574 S.E.2d 132, 134-35 (2002) (citation omitted),
disc. review
denied, 357 N.C. 61, 579 S.E.2d 384 (2003).
Here, the district court concluded that “[t]he summons does
not show that Billy Ray, Jr. was an officer, director or managing
agent of the corporation, or that the summons was left in the
office of such officer, director or managing agent with the person
who is apparently in charge of the office.” Therefore, “the
summon[s] as served is not legal service and the judgment herein
entered by Magistrate Todd should be set aside.”
Rule 4(j)(6)(a) of the North Carolina Rules of Civil Procedure
provides that service upon a domestic corporation may be
accomplished:
a. By delivering a copy of the summons and of
the complaint to an officer, director, or
managing agent of the corporation or by
leaving copies thereof in the office of such
officer, director, or managing agent with the
person who is apparently in charge of the
office.
N.C. Gen. Stat. § 1A-1, Rule 4(j)(6)(a) (2004). For a court torender a valid judgment against a defendant, it is essential that
jurisdiction of the party has been obtained by the court in some
way allowed by law.
See Guerin v. Guerin, 208 N.C. 457, 458, 181
S.E. 274, 274 (1935)
(“Jurisdiction of the party, obtained by the
court in some way allowed by law, is essential to enable the court
to give a valid judgment against him.”);
see also Carolina Plywood
Distribs., Inc. v. McAndrews, 270 N.C. 91, 153 S.E.2d 770 (1967).
“When a court of general jurisdiction undertakes to grant a
judgment in an action where it has not acquired jurisdiction of the
parties by voluntary appearance or the service of process the
judgment is absolutely void and has no effect.”
Monroe v. Niven,
221 N.C. 362, 364, 20 S.E.2d 311, 312 (1942).
In the case
sub judice, the complaint states that the
defendant is named “Billy's Automotive,” and that Defendant is a
corporation. Thus, service on Billy's Automotive must comply with
North Carolina Rule of Civil Procedure 4(j)(6). Summons was issued
to Billy's Automotive and served by delivering a copy to Mr. Ray on
26 June 2004. However, Mr. Ray is not an officer, director or
managing agent of Billy's Automotive. Thus, under the requirements
for service of a domestic corporation under North Carolina Rule of
Civil Procedure 4(j)(6), Mr. Ray cannot accept service on behalf of
Billy's Automotive. We therefore find that Defendant was not
properly served.
Plaintiffs contend, however, that Defendant waived any
challenges to service of process because Mr. Ray actively
represented Defendant at trial and Defendant subsequently paid theordered judgment. Although “[t]he prevailing rule is that a
corporation cannot appear and represent itself either in proper
person or by its officers, but can do so only by an attorney
admitted to practice law[,]”
Lexis-Nexis, Div. of Reed Elsevier,
155 N.C. App. at 207, 573 S.E.2d at 549 (citation omitted), this
Court has recognized an exception for a corporation
representing
itself
pro se in the Small Claims Division.
Id. at 208, 573 S.E.2d
at 549.
“'[I]n enacting our small claims court system ... the
General Assembly apparently intended to provide our citizens,
corporate, as well as individual, with an expedient, inexpensive,
speedy forum in which they can process litigation involving small
sums without obtaining a lawyer.'”
Id. (quoting
Duke Power Co. v.
Daniels, 86 N.C. App. 469, 472, 358 S.E.2d 87, 89 (1987)).
Therefore, Mr. Ray could represent Billy's Automotive in the Small
Claims Division without obtaining an attorney. The threshold
question is whether Defendant made a general appearance before the
court and waived any challenges to service of process by actively
participating in trial and paying the ordered judgment. We find
that it did.
North Carolina General Statute section 1-75.7(1) provides:
A court of this State having jurisdiction of
the subject matter may, without serving
summons upon him, exercise jurisdiction in an
action over a person:
(1) Who makes a general appearance in an action;
provided that obtaining an extension of time
within which to answer or otherwise plead
shall not be considered a general
appearance[.]
N.C. Gen. Stat. § 1-75.7(1) (2004). Section 1-75.2(3) defines the
term “defendant” as “the person named as a defendant in a civil
action.” N.C. Gen. Stat. § 1-75.2(3) (2004). The term “person” is
defined as “any natural person, partnership, corporation, body
politic, and any unincorporated association, organization or
society which may sue or be sued under a common name.” N.C. Gen.
Stat. § 1-75.2(1).
Courts have interpreted the concept of “general appearance”
liberally. Our Supreme Court discussed the application of section
1-75.7 and the concept of “general appearance” in North Carolina
law in
Simms v. Mason's Stores, Inc., 285 N.C. 145, 203 S.E.2d 769
(1974)
. In
Simms, the Court made clear that if a party “invoked
the judgment of the court for any other purpose [than contesting
service of process] he made a general appearance and by so doing he
submitted himself to the jurisdiction of the court whether he
intended to do so or not.”
Id. at 151, 203 S.E.2d at 773;
see also
Vestal v. Moseley Vending Mach. Exch., Inc., 219 N.C. 468, 14
S.E.2d 427 (1941) (a corporate defendant's appearance and filing of
a demurrer constituted a general appearance)
; Alexiou v. O. R. I.
P., Ltd., 36 N.C. App. 246, 248,
243 S.E.2d 412, 414 (1978)
(defendant made a general appearance where he gave notice of appeal
of magistrate court's judgment)
. In short, “[a]n appearance for
any purpose other than to question the jurisdiction of the court is
general[.]”
Dailey Motor Co. v. Reaves, 184 N.C. 260, 264, 114
S.E. 175, 177 (1922) (citation omitted).
Here
, the evidence shows that Mr. Ray received
the summons by
service of a county sheriff, addressed to Billy's Automotive, with
the company's name, “Billy's Automotive,” appearing on the
complaint contained therein. Pursuant to the summons, Mr. Ray, the
owner and operator of “Billy's Automotive,” attended the magistrate
court proceedings and fully participated on Defendant's behalf. In
doing so, Defendant made a general appearance and thus waived its
right to challenge proper service of process. Accordingly, we
reverse the trial court's vacation of the magistrate's judgment.
Reversed and remanded.
Judges CALABRIA and LEVINSON concur.
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