Davis v. SchimmelDavis v. Schimmel
- Reporters:
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- Before:
- Fogleman
Appellant filed his petition in the chancery court on June BO, 1969, alleging that he was the owner of oil and gas leases covering an undivided .33517297 of the oil, gas and other minerals in certain lands in Lafayette County. He sought the appointment of a receiver to negotiate and execute leases on unleased interests in these lands. The proceedings were instituted under the provisions of
On the 22nd day of July, 1969, the chancery court appointed William McGill receiver to lease the entire unleased mineral interests. The receiver was directed to report his actions to the court for approval or rejection within 30 days after the execution and delivery of the lease. No bond was required of the receiver. This order was filed on July 24, 1969. McGill filed his report on the same date. He reported that he had granted to appellant an oil and gas lease of the interests of all the defendants for a five-year term for a consideration of $15 per acre for the unleased mineral interests, or $797.79. He paid the rental into the registry of the court, and asked that he be discharged. This report was approved by the court on August 1, 1969, and the order of approval filed August 4, 1969. No pleading was filed by any of the appellees until on June 30, 1971 and subsequent dates, they filed motions to vacate the orders of the court appointing the receiver and approving his report. Each of the motions alleged that the movant had been prevented from defending by unavoidable casualty or misfortune in that these orders and decrees were entered without notice. The basis of the motion of Frontier was that the constructive service on it was void because it had an agent for service in Arkansas which had not been served with summons. The other appellees alleged that constructive service upon them was void because it was issued upon an insufficient affidavit. Some alleged that their places of residence were recited in the deeds under which they held their interests in the land. All alleged as meritorious defenses that: the orders were void, the service was void; the lease was not “for the best interest of or compensation to” the defendants, in that appellant had paid a higher cash bonus and granted a royalty of one-fourth to other lessors having interests in the same lands; the lands were currently of greater value for oil and gas than previously; the consideration for lease was not “fair and equitable”; the receiver did not negotiate for the lease, but simply permitted appellant to dictate its terms.
Appellant responded, contending that appellees had entered their appearance by filing their respective motions, and thereby cured any lack of previous notice, that there was no unavoidable casualty or misfortune, or meritorious defense alleged. Appellant also denied that the warning order
It was stipulated that Frontier was prevented from appearing by unavoidable casualty or misfortune. Each of the individual appellees testified that he had no notice (from the attorney ad litem or any other person, or by any other means) or knowledge of the pendency of the action until after April 1, 1970. It was shown that drilling was commenced on a well approximately one mile from the lands involved at 11:30 p.m. on July 3, 1969, where the Buckner Anhydrite was encountered about 9:30 p.m. on July 19, 1969, the Smackover Limestone about 4:30 p.m. on July 23, 1969, and one core was recovered at about 7:30 p.m. on July 23, 1969. It was also shown that a report on file with the Oil and Gas Commission showed that the well was commenced August 18, 1970, and completed August 24, 1970. A test on August 26, 1970, showed 358 barrels of net oil produced and 247 MCE of gas produced. Davis admitted that he had agreed to assign Shell Oil Company one-eighth of the production of oil, gas and minerals on demand as consideration for a lease dated June 9, 1969, but denied that there was any money consideration for the lease.
The chancellor heard appellees’ motions on November 19, 1970, and the decree from which this appeal comes was filed April 5, 1971. In granting the motions, the court found that: the orders appointing the receiver and confirming his report were entered without notice, actual or constructive to appellees, and were void; the court lacked jurisdiction to enter them; all proceedings thereunder, including the receiver’s lease, were void. On these findings the court set aside the orders and the lease. The chancellor held that the showing of a meritorious defense was not required but that each of the appéllees had made a prima facie showing of a meritorious defense. In his memorandum opinion, the chancellor held that: under
Appellant contends that
Due process requires, at a minimum, that one be given a meaningful opportunity for a hearing, appropriate to the nature of the case and preceded by notice, before he is deprived of any significant property interest, except where some valid, overriding state interest justifies postponing the hearing until after the event. Boddie v. Connecticut, supra; Board of Levee Commissioners v. Johnson, 178 Ky. 287, 199 S.W. 8, L.R.A. 1918E 202 (1917). Due process requirements are satisfied if the property owner has reasonable notice and a reasonable opportunity to be heard and to present his claim or defense, or to protect and enforce his rights, before a tribunal having power to hear and rule his cause, due regard being had to the nature of the proceeding and the character of the rights which may be affected by it. Dohany v. Rogers, 281 U.S. 362, 50 S. Ct. 299, 74 L. Ed. 904, 68 A.L.R. 434 (1930); State ex rel Sweezer v. Green, 360 Mo. 1249, 232 S.W. 2d 897, 24 A.L.R. 2d 340 (1950), [overruled on another point, State v. Kirtley, 327 S.W. 2d 166 (Mo. 1959).]
A purely arbitrary or capricious exercise of legislative power, whereby a wrongful and highly injurious invasion of property rights is practically sanctioned and the owner stripped of all remedy is wholly at variance with the principles of due process. Truax v. Corrigan, 257 U.S. 312, 42 S. Ct. 124, 66 L. Ed. 254, 27 A.L.R. 375 (1921). In the concrete, due process means that in a contest concerning rights of life, liberty or property, a citizen will be given a reasonable opportunity to contest the propriety of each step in the proceedings against him. State v. Broaddus, 315 Mo. 1279, 289 S.W. 792 (1926); City of St. Louis v. Missouri Pacific R. Co., 278 Mo. 205, 211 S.W. 671 (1919). Since notice and an opportunity to be heard are prerequisites of jurisdiction and jurisdiction a prerequisite of a valid judgment, the legislature is without authority to dispense with these requirements of due process. Board of Commissioners of Roxboro v. Bumpass, 233 N.C. 190, 63 S.E. 2d 144 (1951); and see Leflar, American Conflicts Law 35, § 20 (2d Ed., 1968).
It will be noted that the statutory limitation on the attack on the validity of a lease approved by the court applies to nonresidents. Notice of appeal must be given within 30 days from the entry of any judgment or decree from which an appeal is taken.
Appellees have mounted a direct attack upon the action of the chancery court. We have long held that any proceeding or motion to have a judgment declared void upon the ground that it was entered without service or notice is a direct and not a collateral attack. Meserve v. Edmonds, 223 Ark. 297, 265 S.W. 2d 704; Morgan v. Leon, 178 Ark. 768, 12 S.W. 2d 404; Wilder v. Harris, 205 Ark. 341, 168 S.W. 2d 804; Brick v. Sovereign Grand Lodge, 196 Ark. 372, 117 S.W. 2d 1060; Brookfield v. Harahan Viaduct Improvement Dist., 186 Ark. 599, 54 S.W. 2d 689; Woods v. Quarles, 178 Ark. 1158, 13 S.W. 2d 617; Hall v. Huff, 122 Ark. 67, 182 S.W. 535.
Appellant next contends that by alleging a meritorious defense and praying that the orders of the court be set aside because of unavoidable casualty based on lack of previous notice of the proceedings, appellees entered their appearance in the action. With this argument, we agree, but we agree with the chancellor that this appearance does not cure any decrees previously entered in the case which are void for want of notice or process. Appellees contend that they have not entered their appearance at all, relying upon Southern Building & Loan Assn. v. Hallum, 59 Ark. 583, 28 S.W. 420. We do not agree with their analysis of that decision. It was there held that the filing of the motion to set aside a default judgment on the ground that defendant had not been served with process did not constitute an appearance or waiver of service, but this holding could not be said to relate to anything more than the validity of the default judgment, because that judgment was reversed and the cause remanded to the trial court to be proceeded with by that court as if the appellant (who had not been served) was duly served with process in the action. The identical action was taken under similar circumstances in St. Louis, I. M. & S. Ry. Co. v. State, 68 Ark. 561, 60 S.W. 654.
When the sole basis for attack upon the jurisdiction of the court to render a decree is want of service of process sufficient to enable a party to appear and defend but service obviously can be had without questions of venue or subject matter jurisdiction arising, it would be absurd to set aside the judgment and require an entirely new service of process. It is a different matter when the ability of the moving party to bring the objecting party within the jurisdiction of the court by the service of process is doubtful or where questions of venue would arise. No doubt exists here as to the power of the court to grant the relief sought, upon proper showing, after proper service of process, actual or constructive, has been had. No venue problems present themselves. Actually, the authority relied upon in Hallum recognized that a motion to set aside a judgment and continue the cause could operate as a waiver of notice when sustained, but not when overruled. Baskins v. Wylds, Admr., 39 Ark. 347. In Pennington’s Admrx. v. Gibson, 6 Ark. 447, this court said:
The appellant, by appearing and applying to have the default set aside, waived none of her legal rights, except that of notice. She appeared, as she had a right to do, to ask the court to set aside a mere nullity, and when that was done, she was in court for the first time, and consequently authorized to interpose any defence whatever.
A different situation prevails where there is a motion to quash service before judgment. Appellees were urging the court that they had a meritorious defense. They should be permitted to assert it, but new process or service is not required.
Appellant urges that there was no showing of unavoidable casualty because, he contends, the warning order was validly issued and published. We need not go into the sufficiency of the report of the attorney ad litem or of the availability or lack of information as to the wherabouts of appellees, because we agree with the chancellor that the warning order was void.
COMES C. G. Davis, plaintiff herein, and states on oath that he has made diligent search and inquiry as to the whereabouts of the defendants, V. G. Schimmel, Trustee, and Mrs. V. G. Schimmel, * * * Lewis W. Pollock and Mrs. Lewis W. Pollock, his wife, and/ or their unknown heirs, Jobar Royalties, Inc., * * * and Frontier Oil & Gas Co., Inc., or their unknown successors, Trustees in liquidation or any unknown stockholders, are, to the best of his information and belief, non-residents of the County of Columbia and State of Arkansas; and he prays that Warning Order issue for said defendants.
The only signature on the affidavit is that of the law firm representing appellant, by a member of the firm. 1
The proceeding under review is a statutory proceeding and the statute contemplates that the owners of interests other than those of the petitioner be made parties defendant, and that such owners as were nonresidents be served by warning order. The proceeding, in this respect, closely parallels the statutory action to quiet or confirm title. See Quertermous v. Bilby, 144 Ark. 98, 221 S.W. 856; Frank v. Frank, 175 Ark. 285, 298 S.W. 1026. In a statutory proceeding outside the scope of the common law every act which is jurisdictional or the essence of the proceeding or for the benefit of the party affected is mandatory, even when the proceedings are denominated as in rem by the terms of the statute, and it is necessary that the mode of obtaining jurisdiction prescribed by the statute be strictly pursued. Sinclair Refining Co. v. Bounds, 198 Ark. 149, 127 S.W. 2d 629; Frank v. Frank, supra; Quertermous v. Bilby, supra; Van Etten v. Daugherty, 83 Ark. 534, 103 S. W. 737. When the statutory requirements as to service are not strictly complied with, a judgment or decree affecting or divesting property rights of one not served has been called “absolutely null and void” and “utterly void.” Quertermous v. Bilby, supra; Van Etten v. Daugherty, supra. Arkansas Statutes Annotated § 29-107 provides that judgments, orders and decrees made against anyone without notice, actual or constructive, and all proceedings had thereunder are absolutely null and void. See also, Sinclair Refining Co. v. Bounds, supra; Frank v. Frank, supra.
A method of service required for nonresidents is by publication of warning order.
It has even been held that, where jurisdiction must be exercised by a court in a special manner, and not according to the course of the common law, the facts essential
Where an action is based on constructive service, no action is commenced or cause pending until the proceedings provided for in the governing statute are complied with and if there is no such compliance, the proceedings are void, and the court has no power to take affirmative action. Swartz v. Drinker, supra; Missouri Pacific R. Co. v. McLendon, supra; Sinclair Refining Co. v. Bounds, supra; Frank v. Frank, supra. It is only where the affidavit prescribed by
The affidavit for warning order must show that the plaintiff has made diligent inquiry and that it is his information and belief that the defendant is a nonresident. It must strictly comply with the statute. Holloway v. Holloway, 85 Ark. 431, 108 S.W. 837; Waggoner v. Fogleman, 53 Ark. 181, 13 S.W. 729; Turnage v. Fisk, Executor, 22 Ark. 286; Allen & Hill, Admrs. v. Smith, 25 Ark. 495.
The affidavit here is not in strict compliance with statutory requirements. Even though
Because of the invalidity of the affidavit for warning order for failure to comply strictly with statutory requirements, the warning order was void, no action was commenced or pending as to the defendants to be constructively served thereby, and the order appointing the receiver and confirming the lease made to the plaintiff was void. Sinclair Refining Co. v. Bounds, supra; Frank v. Frank, supra. See also, Monks v. Duffle, supra. As we said in Frank, the defendants were not in court and the case was prematurely submitted to the court.
Of course, the decrees are also void as to Frontier because it had a properly designated agent for service in the state. Sinclair Refining Co. v. Bounds, supra. Furthermore, since the lease was made to appellant, he is in no position to assert that it is impervious to attack by appellees. In Beidler v. Beidler, supra, we held that an attachment plaintiff, purchasing at an attachment sale in the action instituted by him, was in no position to assert his title thereunder against the rights and equities of a defendant on whom constructive service was invalid. The same rule should apply here.
This brings us to appellant’s contention that, before appellees could have the judgment vacated, it was necessary that they make a prima facie showing of a meritorious defense and that they failed to do so. Appellees contend, however, that they did show a meritorious defense by showing that the judgment was void for want of jurisdiction, that they had a right to object to the appointment of McGill, that the evidence showed an inadequate consideration for the lease which was fixed by appellant himself and that appellant failed to reveal to McGill the discovery of oil by appellant in the nearby well, and that appellees had the right to protect their interest at every step during the receivership, which would be particularly meaningful since some of the appellees were engaged in oil operations themselves.
The receiver reported that the lease was for the best interest of the parties to the action. The receiver never appeared before the court. His report was approved, with the court’s routinely accepting the report at face value. The receiver testified that he served as such at the request of appellant, his close personal friend and associate in the oil business. He said that thereafter he dealt only with appellant’s attorney. He signed papers previously prepared by appellant’s attorney after only 15 to 50 minutes of conversation with the attorney and without knowledge of significant developments that had taken place with respect to the drilling of a well about one mile away. He said that he would personally prefer an 1/8 override, such as was given one of Davis’ lessors, to a $15 per acre paid up lease.
We are inclined to agree with the chancellor that prima facie evidence showing a meritorious defense was not necessary in this direct attack upon the court’s orders in which it was clearly shown that they were absolutely and completely null and void, not voidable, because they were rendered in a statutory action or proceeding which was not actually pending because it had not even been commenced. We say this in spite of the fact that language in opinions in some of our decisions would indicate that such a showing is required. Those decisions where the attack was collateral or where the proceedings were not in a statutory action are not governing in this situation. Those involving judgments rendered when an action was actually pending are also inapplicable to this situation.
It is widely recognized that there are many exceptions to the rule requiring that a meritorious defense be shown before a judgment is vacated. In 49 C.J.S. 644, Judgments § 336, we read:
Exceptions to the rule have been made in a variety of cases. * * * It hasbeen held that a meritorious defense need not be shown where the judgment is void, or at least where it is void on the face of the record, or where the judgment is void for want of jurisdiction, as where defendant was never served; but it has been held that a meritorious defense must be shown where the judgment recites facts sustaining jurisdiction, or where the judgment is voidable. It has been held that, a meritorious defense need not be shown where the default judgment was entered without authority, by mistake, irregularity, or improvidently, as where a judgment was taken by default before defendant’s time to answer had expired or after the case was at issue; but it has also been held that the fact that the judgment was irregularly entered does not dispense with the need of showing a meritorious defense. It has been held that a meritorious defense need not be shown where the judgment is fundamentally erroneous.
See also, 49 C.J.S. 537, Judgments § 290; 46 Am. Jur. 2d 901, Judgments §740.
We have acknowledged that there are exceptions to the rule. Even though the decision was rendered before the adoption of the civil code, it was recognized in Browning v. Roane, 9 Ark. 354, that we followed the general rule requiring that a party seeking relief from a default judgment show a meritorious defense, but it was also stated that there are proper exceptions. This court said:
We refer to these decisions not to adopt or approve them, but only to show that this general rule, requiring merits to be shown in order to relieve a party against a default, like most of the general rules of law, has been sometimes held to have exceptions, not only in an entire class of cases, but in other cases depending upon their own peculiar circumstances, and, although we are unwilling to go to the length of all the New York decisions on this subject, it is obvious that the rule must have some exceptions, as it is easy to conceive of cases, as for instance, where a default is taken against a defendant before the ■ expiratiom of the time allowed him to plead, where every possible presumption of law that a default could raise against him would be entirely removed by merely pointing out such gross irregularity as that indicated in the case supposed whereby he has been deprived of a substantive right. And while, by deciding the case before us, we design to declare no rule to embrace numerous cases of exceptions, we are of opinion that this case, under its peculiar circumstances, is as fully without the general rule as the case supposed.
Lately, in Halliman v. Stiles, 250 Ark. 249, 464 S.W. 2d 575, we recognized that in the absence of actual notice the due process impact upon statutory service requirements necessitated that there be strict construction of the statutes and exact compliance with their terms. In Halliman, where a direct attack upon a personal judgment was made, we specifically held that when personal jurisdiction is essential to a judgment in personam any adjudication based upon service which did not give the court personal jurisdiction over the judgment defendant was void, without regard to whether a meritorious defense was shown. We recognize that Halliman might be distinguished from this case because no personal judgment was rendered or sought here. Still, property rights are materially affected and our decisions have said that similar judgments, orders and decrees affecting property rights are void in terms that clearly do imply that they are not voidable only. We have recognized, as previously indicated, that due process requirements do also affect proceedings involving property rights.
We have also recognized exceptions in cases involving property rights. In Woolfolk v. Davis, 225 Ark. 722, 285 S.W. 2d 321, when a judgment was asserted as res judicata of certain issues before the court, we said that it was unnecessary to decide
We have long recognized that there is a difference between void and voidable judgments. In McDonald v. Ft. Smith & W. R. Co., 105 Ark. 5, 150 S.W. 135, the attack was held to be collateral, but we emphasized the distinction, saying:
When a judgment is not a mere nullity, but only contains some defect which may become fatal and render it invalid, then it is only voidable, and, until it is actually annulled, it has all the force and effect of a perfectly valid judgment. Until by a proper proceeding, such judgment is reversed or vacated, it will be effective # * * as an estoppel or as a source of title. A judgment rendered by a court without jurisdiction is void; and, to have such jurisdiction, the court must have jurisdiction both over the subject-matter of the suit and the parties thereto.
* * * A judgment pronounced against one without notice is void; and section 4424 of Kirby’s Digest [Ark. Stat. Ann. § 29-107 ] is a statutory declaration of that principle.
In Nickles v. Wood, 221 Ark. 630, 255 S.W. 2d 433, we repeated the above language, and stated that the decision in McDonald had been cited with approval many times and never overruled.
Many of the decisions requiring the prima facie showing of a meritorious defense before a judgment is set aside for want of notice may spring from a misapplication of precedent in Sovereign Camp, Woodmen of the World v. Wilson, 136 Ark. 546, 207 S.W. 45. There we said that the presumption of regularity attending a judgment of a court of general jurisdiction could not be controverted except by showing that there was in fact no notice and that there existed a meritorious defense. The first case cited, Boyd v. Roane, 49 Ark. 397, 5 S.W. 704, was only relied upon to sustain the statement that there was a presumption of regularity attending a judgment of superior courts of general jurisdiction. In that case the court classified the attack as collateral because the suit was against a stranger to the decree and stated that the record in the case in which the decree attacked was entered showed that process was issued for the attacking minor and the decree recited an appearance of the parties. One of the cases relied upon as requiring the showing of a meritorious defense was State v. Hill, 50 Ark. 458, 8 S.W. 401, in which the court only treated the requirements to be met before a court of equity would vacate a judgment at law because of an officer’s false return of service of process. The other, Quigley v. Hammond, 104 Ark. 449, 148 S.W. 275, had nothing to do with lack of service of process, but related only to a proceeding to vacate a judgment on the ground that it was obtained through fraud. In Wilson, a summons was issued, so a cause of action was pending when the judgment was rendered.
In spite of the distinction between void and voidable judgments, we have decisions that can only be construed as requiring prima facie evidence of a meritorious judgment, even when the judgment is void for want of service of process. See, e.g.:
Chambliss v. Reppy, 54 Ark. 539, 16 S.W. 571(the ground alleged as a basis for relief appears to have been fraud practiced by the successful party by falsely representing that there had been a proper returnof service of process upon the defendant, and the proceeding was brought under Ark. Stat. Ann. 29-506);
Nelson v. Freeman, 136 Ark. 396, 206 S.W. 667 (where the court held first that the party attacking the judgment was conclusively bound by a finding that he had been properly served);
Royal v. McVay, 180 Ark. 973, 23 S.W. 2d 983 (the court first held that the appellants were actually parties to an ex parte partition and then added that the decree was not void but voidable, even if appellants had not been parties to the proceeding and had been without knowledge of it);
Nichols v. Arkansas Trust Co., 207 Ark. 174, 179 S.W. 2d 857;
Haville v. Pearrow, 233 Ark. 586, 346 S.W. 2d 204.
There is a basis upon which many cases relied upon by appellant can be distinguished. First, there are those in which the question as to issuance or service of process was not raised:
Citizens Bank of Lavaca v. Barr, 123 Ark. 443, 185 S.W. 773; Hill v. Teague, 194 Ark. 552, 108 S.W. 2d 889; Overton v. Alston, 199 Ark. 96, 132 S.W. 2d 834; Abercrombie v. Richards, 248 Ark. 1322, 455 S.W. 2d 887; in Agee v. Wildman, 240 Ark. 1111, 398 S.W. 2d 542, appellant did not argue on appeal that there was no service. He argued that the service was constructive but we said that it was personal. The failure to prove a meritorious defense was considered fatal on appellant’s assertion that his failure to make timely appearance was unavoidable because he had no notice of the pendency of the action, service having been had on the Secretary of State underArk. Stat. Ann. § 27-342.1 (Supp. 1971).
Then there are those cases in which this court classified the attack as collateral:
O’Neal v. B. F. Goodrich Rubber Co., 204 Ark. 371, 162 S.W. 2d 52; Davis v. Bank of Atkins, 205 Ark. 144, 167 S.W. 2d 876.
In some cases knowledge of the pendency of the action by the moving party was considered material, e.g., Merriott v. Kilgore, 200 Ark. 394, 139 S.W. 2d 387.
We are unable to ascertain the ground alleged for the vacation of the judgment in Osborne v. Lawrence, 123 Ark. 447, 185 S.W. 2d 774.
Other precedents may have sprung from a disregard, or misapplication of the distinction between a void judgment and a voidable one. See Royal v. McVay, supra; Davis v. Bank of Atkins, supra (where the court declared the judgment voidable without analysis of the distinction, over the strong protest of two dissenting justices).
There are also cases which seem to apply the requirement of a showing of meritorious defense stated in
This continued requirement of the showing of a meritorious defense to a void judgment now impresses us as somewhat inconsistent with our following the rule stated in McDonald v. Fort Smith & Western R. Co., 105 Ark. 5, 150 S.W. 135, to permit a judgment to be disregarded as void on collateral attack. See Anderson v. Walker, 228 Ark. 113, 306 S.W. 2d 318. If a judgment can be disregarded on collateral attack, there is no sound reason why it should not be set aside on direct attack.
Appellant contends that
We conclude that the chancery court did have the power to declare its own orders in this case to be null and void and that it properly did so. Accordingly, the decree is affirmed.
Byrd, J., dissents. George Rose Smith, J., concurs.
Notes
Appellant was not then represented by any of the attorneys representing him in the present proceeding.
The proof of publication in the transcript so reflects. The transcript does not reflect that there is actually a warning order in the files in the case.
In that case, one of the judges, who dissented in Davis, concurred, pointing out that the court was actually following his dissent in Davis, mentioned infra.