Nuttalburg Smokeless Fuel Co. v. First National Bank of Harrisville , 106 W. Va. 487 ( 1928 )

The opinion throughout treats the judgment recovered by the bank against Nuttalburg Smokeless Fuel Company and T. C. Beury as a default judgment. When the bill was filed to set it aside for want of service on, or notice to, the Fuel Company in any manner expressed or implied, it was proper to consider the judgment as one taken by default; but when it conclusively appeared in this suit that the Fuel Company had no notice of the action at law, and was in total ignorance of it until an execution was presented to it by the sheriff for payment, then that judgment could no longer be considered or treated as a judgment by default. In what way had the Fuel Company defaulted? One cannot be in default, in not appearing to answer a suit, the pendency of which he has no reason to suspect. This record shows without question that no duty was imposed upon the Fuel Company to defend that action at law, for it had no notice of its pendency either express or implied, and the court had no jurisdiction to pronounce judgment. True, it did have apparent jurisdiction on process purporting to have been served on defendant, but which in fact had not been so served. When that fact appeared beyond controversy in this suit, the judgment should have been considered as void. It is quite well settled that a judgment without process, or notice, is void; and when that fact became established, as above stated, the judgment could not be further treated as one by default, thus making it incumbent upon the defendant in the law suit to prove unequivocally that it did not owe the alleged debt before the void judgment could be set aside. To hold otherwise would allow an alleged creditor to sue at law, have process served on an entire stranger, and then by virtue of his void judgment so obtained force defendant to prove in a court of equity that he did not owe the alleged debt. That would deprive defendant of his constitutional right of trial by jury, by a sort of legal legerdemain, and shift the burden of proof from where it rightly belonged. To permit a litigant to obtain a judgment in that way, and then give it the force of a default judgment would invite fraud and surreptitious practices. Such a Pandora box should not be opened by the courts.

Neither Mathew Addy Company nor Nelson V. Kramer were parties to the law suit, or this suit, and it is quite immaterial in this proceeding whether the Fuel Company took or did not take a bond to protect it against debts which might come against the company when its stock was purchased by the Ford interests. That bond, if it has any relevancy here, was to protect against legitimate claims against the corporation. The Fuel Company says in its bill, sworn to, that it does not owe this claim. Moreover, where a suit is brought against a corporation on notes executed in its name by its president, payable to his order, and by him negotiated, and the proceeds received by him individually, a just defense is established as a rule of law, as in this case, until it is overthrown by evidence.Wheeling Ice Storage Company v. Connor, 61 W. Va. 111; Fletcher Cyc. Corporations, Vol. 3, section 1929. I cannot see why the existence of such a bond, even if the obligors be solvent, should preclude defendant from its day in court to defend against a spurious claim. The resolution of stockholders of February 20, 1920, would not bind the company to pay claims of which the stockholders had no notice. There must be knowledge before there can be ratification. Flannagan v. CoalCompany, 77 W. Va. 757; Henry G. Davis, et al. v. Davis Trust Company, 145 S.E. 588, handed down by this Court October 23, 1928. But the opinion only mentions this resolution as an indication of the loose methods on the part of its then officers.

This suit is to protect Nuttalburg Smokeless Fuel Company from the payment of an alleged debt which it says it does not owe, and which, on its face, puts the purchaser of it on notice, and which prima facie imports a just defense to it. It is not to protect Beury against whom the judgment stands, process having been served on him personally as endorser. No protection is afforded him by this suit. Nor do I view this suit as brought for the purpose of protecting Mathew Addy Company. If the Fuel Company should not resist payment of this void judgment and alleged spurious claim, it would be in a precarious situation to recover in a suit over against Mathew Addy Company on the indemnity bond. Why should the Fuel Company be forced to spend time and money in uncertain and precarious litigation, when it is not at fault?

The completed record accentuates the soundness of our former unanimous decision herein, 89 W. Va. 438, and the majority of this Court as now constituted unhesitatingly approve and affirm it. Besides it is "the law of the case," and discussion of it would be on ground too barren.

The right to assert its debt is not denied to the bank by this decision. No harm is done to it. It simply gives the Fuel Company its day in court, in the proper forum, in order to make its defense. It would be inequitable to hold otherwise.

JUDGES HATCHER and MAXWELL concur in this note.