Lea v. Dudley

202 S.E.2d 799 (1974) 20 N.C. App. 702

Lois G. LEA and Frank D. Cummings
v.
Garland (Garfield) Walter DUDLEY et al.

No. 731SC738.

Court of Appeals of North Carolina.

February 20, 1974.

J. Kenyon Wilson, Jr., Elizabeth City, for the plaintiffs appellants.

Leroy, Wells, Shaw, Hornthal & Riley by Dewey W. Wells, Elizabeth City, for defendants appellees.

CAMPBELL, Judge.

It is accepted law in North Carolina that the courts of one state cannot determine title to real property located in another state. McRary v. McRary, 228 N.C. 714, 47 S.E.2d 27 (1948); Noble v. Pittman, 241 N.C. 601, 86 S.E.2d 89 (1955); Fall v. Eastin, 215 U.S. 1, 30 S.Ct. 3, 54 L.Ed. 65 (1909). Therefore, any part of the Virginia decree which attempted to determine ultimate title to North Carolina real estate is void.

However, a court of competent jurisdiction in the state of incorporation with all necessary parties properly before it in an action for the dissolution of a corporation generally has the power and authority to render a decree ordering the execution and delivery of a deed to property in another state to the shareholders of the corporation as successors in title to the assets of the corporation. Such an order must be considered to be in personam in character as the Virginia court could not have in rem jurisdiction over a res located in North Carolina. As between the parties to the Virginia litigation the decree is res judicata. There is, therefore, no necessity to relitigate in North Carolina the question of rights to the assets of the corporation as between the corporation and the shareholders. It is possible that full faith and credit should be given the Virginia decree finding the plaintiffs in this action to be the successors to the corporation and endowed with all the rights and privileges to which this determination entitles them. See generally Wurfel, "Recognition of Foreign Judgments", 50 N.C.L.Rev. 21 (1971); Currie, "Full Faith and Credit to Foreign Land Decrees", 21 U.Chi.L.Rev. 620 (1954); Lorenzen, "Application of Full Faith and Credit Clause to Equitable Decrees for the Conveyance of Foreign Land", 34 Yale L.J. 591 (1925); Barbour, "The Extra-Territorial Effect of the Equitable Decree," 17 Mich.L.Rev. 527 (1919); Leflar, American Conflicts Law, § 83 (1968); Ehrenzweig, On Conflict of Laws, § 58 (1962); Restatement 2d, Conflict of Laws, § 102 (1971). However, we choose to hold that as a matter of comity the Virginia decree will be accepted and that the plaintiffs stand in the shoes of the corporation. McElreath v. McElreath, 162 Tex. 190, 345 S.W.2d 722 (1961). See also, Tolley v. Tolley, 210 Ark. 144, 194 S.W.2d 687 (1946); Redwood Investment Co. v. Exley, 64 Cal.App. 455, 221 P. 973 (1923); Rozan v. Rozan, 49 Cal.2d 322, 317 P.2d 11 (1957); Matson v. Matson, 186 Iowa 607, 173 N.W. 127 (1919); Putnam & Norman v. Conner, 144 La. 231, 80 So. 265 (1918); Dunlap v. Byers, 110 Mich. 109, 67 N.W. 1067 (1896); Lyle Cashion Co. v. McKendrick, 227 Miss. 894, 87 So.2d 289 (1956); McCune v. Goodwillie, 204 Mo. 306, 102 S.W. 997 (1907); Burnley et al. v. Stevenson, 24 Ohio St. 474, 15 Am.Rep. 621 (1873); Beebe v. Brownlee, Ohio Com.Pl., 63 Ohio Law Abst. 377, 110 N.E. 2d 64 (1951); Weesner v. Weesner, 168 Neb. 346, 95 N.W.2d 682 (1959); Sharp v. Sharp, 65 Okl. 76, 166 P. 175 (1916); Mallette v. Scheerer, 164 Wis. 415, 160 N.W. 182 (1916); Bailey v. Tully, 242 Wis. 226, 7 N.W.2d 837 (1943). The Virginia decree, of course, did not decide any issue of title as between the defendants in this action and the corporation or as between the defendants and the plaintiff shareholders as successors to the interest of the corporation.

The trial court, at the close of the plaintiffs' evidence, found as a matter of law that the plaintiffs had not made out a prima facie case and granted the defendants' motion for a directed verdict. We find this determination to be in error in that the trial court should have given effect to the Virginia decree. We note that the plaintiff introduced into evidence a stipulation that the corporation, Deal's Island Ducking Club, was the owner of the land in question as of 30 June 1914, as well as the Virginia proceedings, decree and deed. The plaintiffs also put forward record proof of a conveyance of the land in question by defendant Garland W. Dudley, et al. to W. L. Cogswell dated 1 October 1964 and a conveyance of the same land back to Garland W. Dudley, et al., dated 15 October 1964. The plaintiffs' evidence would seem to satisfy at least the first of the possible methods of establishing a prima facie showing of title enumerated in Mobley v. Griffin, 104 N.C. 112, 10 S.E. 142 (1889). See also, Allen v. Hunting Club, 14 N.C. App. 697, 189 S.E.2d 532 (1972), since the common source doctrine, which would also satisfy Mobley v. Griffin, supra, might be applicable. See also Marketable Title Act, G.S. Chapter 47B.

Reversed.

BROCK, C. J., and PARKER, J., concur.