Rivenbark v. Southmark Corp.

378 S.E.2d 196 (1989)

A.J. RIVENBARK
v.
SOUTHMARK CORPORATION and Drexel Burnham Lambert Realty Company, Inc.

No. 8818SC607.

Court of Appeals of North Carolina.

April 18, 1989.

Tharrington, Smith & Hargrove by Wade M. Smith, Mark J. Prak, and Randall M. Roden, Raleigh, Kornegay, Lung & Angle by James W. Lung, Greensboro, for plaintiff-appellant.

Petree Stockton & Robinson by Norwood Robinson, Robert J. Lawing, and Jane C. Jackson, Winston-Salem, for defendants-appellees.

EAGLES, Judge.

Plaintiff argues on appeal that the trial court erred in dismissing with prejudice his breach of contract suit against defendants and in holding him in contempt for failing to comply with an interlocutory order. Plaintiff also contends that the evidence did not support the trial court's determination that plaintiff had the ability to pay the monies ordered. We hold that Judge Hobgood's 12 June 1984 order commanding plaintiff to pay a contested sum of money to the clerk of court was erroneous and must be reversed. We affirm the order finding plaintiff in contempt of court but hold that under Rule 41(b) of the North Carolina Rules of Civil Procedure the trial court erred in failing to consider whether a sanction less drastic then dismissal with prejudice would have assured plaintiff's compliance with Judge Hobgood's 12 June 1984 order.

We first address plaintiff's argument that the trial court violated his due process rights when he ordered his complaint dismissed as punishment for contempt. We note that no constitutional issue was raised below. We may not consider constitutional questions for the first time on appeal. Powe v. Odell, 312 N.C. 410, 322 S.E.2d 762 (1984).

A

We next address the validity of Judge Hobgood's order compelling plaintiff to pay into court the collected March and April rents. Plaintiff argues that Judge Hobgood was without statutory authority in making his 12 June 1984 order and, therefore, the order is void. Defendants contend that the Supreme Court's decision in Daniels v. Montgomery Mut. Ins. Co., 320 N.C. 669, 360 S.E.2d 772 (1987), states that only an order issued by a court without jurisdiction is void. Defendants also argue that, in any event, the 12 June 1984 order is valid under the court's inherent authority to clarify its own orders. We hold that the trial court erroneously entered its 12 June 1984 order and, accordingly, we reverse.

Defendants argue that Daniels limits void orders to those issued by a court without jurisdiction. We hold that Daniels is not controlling on this issue. Daniels addressed whether a plaintiff could collaterally attack an order without having properly preserved an appeal. The court there stated that under those circumstances a plaintiff could collaterally attack the trial court's order only if the order was void. Daniels at 676, 360 S.E.2d at 776-77. Here plaintiff attempted to appeal Judge Hobgood's order immediately, but this court dismissed the appeal as interlocutory. Rivenbark v. Southmark Corp., 77 N.C. App. 225, 334 S.E.2d 451 (1985), disc. rev. denied, 315 N.C. 391, 338 S.E.2d 880 (1986). Upon this appeal plaintiff does not attempt to collaterally attack Judge Hobgood's order, but rather he has properly preserved his exception for direct review on appeal.

Since the judgment here "is one which disposes of the cause as to all the parties, leaving nothing to be judicially determined between them in the trial court," Veazey v. Durham, 231 N.C. 357, 361-62, 57 S.E.2d 377, 381 (1950), the grant of dismissal with prejudice was a final judgment. Therefore, we may now address the validity of Judge Hobgood's 12 June 1984 interlocutory order. G.S. 1-278.

Defendants argue that the 12 June 1984 order was properly entered pursuant to Rule 60(a) of the North Carolina Rules of Civil Procedure, in that it was a clarification of Judge Hobgood's 5 March 1984 order. We disagree. Rule 60(a) does allow the trial court by motion of a party or on its own initiative to correct clerical errors, G.S. 1A-1, Rule 60(a), "but errors of a serious or substantial nature are not intended to be covered." W. Shuford, North Carolina Civil Practice and Procedure, section 60-3 (3d ed.1988). The issuance of an interlocutory order compelling a party to immediately pay into court almost $50,000 in rents collected is an order of a "serious or substantial nature," particularly when plaintiff's pleadings raise the issue of whether he is entitled to continue collecting rents until the final purchase price is agreed upon and paid.

We further note that G.S. 1-508 provides that

When it is admitted by the pleading or examination of a party that he has in his possession or under his control any money or other thing capable of delivery, which, being the subject of the litigation, is held by him as trustee for another party, or which belongs or is due to another party, the judge may order it deposited in court, or delivered to such party with or without security, subject to the further direction of the judge. [Emphasis added.]

There is no admission here that plaintiff holds the money as trustee for another party or that the money belongs to another party. In fact, plaintiff contends that these funds belong to him. He argues that under the master lease Southmark's failure to pay the final purchase price when due started an additional lease period during which he could continue to act as landlord and collect rents. Furthermore, plaintiff argues that under the 5 March 1984 order he was not required to terminate his possession of the property until defendant "plac[ed] the letter of credit with the Court." The letter of credit was not filed by defendant until 6 April 1984.

Accordingly, we conclude that Judge Hobgood's order was an erroneous order "rendered according to the course and practice of the court, but contrary to law, or upon a mistaken view of the law." Wynne v. Conrad, 220 N.C. 355, 360, 17 S.E.2d 514, 518 (1941). We reverse Judge Hobgood's 12 June 1984 order.

Having determined that the 12 June 1984 order was erroneous rather than void, we next address the trial court's order finding plaintiff in contempt. An erroneous order is valid until corrected on appeal while a void order binds no one. State v. Sams, 317 N.C. 230, 345 S.E.2d 179 (1986). Because an erroneous order is valid until corrected, plaintiff must comply with the order. See Daniels, 320 N.C. at 677, 360 S.E.2d at 777. Plaintiff did not pay into court the sums ordered nor did he request a stay or writ of supersedeas. In addition, the evidence presented at the show cause hearing demonstrates plaintiff's financial ability to pay the persons ordered. Accordingly, we affirm the trial court's finding of contempt.

B

Plaintiff next argues that before the trial court may dismiss his complaint it must first consider other, less drastic alternatives. We agree. We first note that Rule 41(b) of our Rules of Civil Procedure states, in part, that "[f]or failure of the plaintiff to prosecute or to comply with these rules or any order of court, a defendant may move for dismissal of an action or of any claim therein against him." [Emphasis added.] G.S. 1A-1, Rule 41(b). However, our Supreme Court has ruled that the trial court may invoke less severe sanctions against a party who violates a court order. Daniels at 674, 360 S.E.2d at 776.

In Harris v. Maready, 311 N.C. 536, 319 S.E.2d 912 (1984), the Supreme Court reversed this court's decision holding that the trial court must grant a motion to dismiss for violation of Rule 8(a)(2) of the Rules of Civil Procedure. The Supreme Court determined that a party's motion for dismissal because the opposing party has violated a rule or court order is directed to the trial court's discretion. Id. at 550, 319 S.E.2d at 921. Additionally, the court noted that "[a]lthough an action may be dismissed under Rule 41(b) for a plaintiff's failure to comply with Rule 8(a)(2), this extreme sanction is to be applied only when the trial court determines that less drastic sanctions will not suffice." Id. at 551, 319 S.E.2d at 922.

Our court in Miller v. Ferree, 84 N.C. App. 135, 351 S.E.2d 845 (1987), affirmed a trial court's ruling of dismissal without prejudice for a violation of Rule 8(a)(2). There we noted that the trial court found "sanctions less than a dismissal without prejudice are inappropriate in this action." Id. at 137, 351 S.E.2d at 847. We indicated that this finding showed that the trial court had "considered the various sanctions available" and considered dismissal with prejudice the proper sanction. Id. We hold that sanctions may not be imposed mechanically. Rather, the circumstances of each case must be carefully weighed so that the sanction properly takes into account the severity of the party's disobedience. See also Daniels v. Montgomery Mut. Ins. Co., 81 N.C.App. 600, 344 S.E.2d 847 (1986), reversed in part and affirmed in part, 320 N.C. 669, 360 S.E.2d 772 (1987) (in determining whether to dismiss a case for violation of motion in limine trial court must determine the effectiveness of alternative sanctions.)

Defendants argue that our Supreme Court's decision in Daniels allows the trial court to order whatever sanction, in its discretion, it deems appropriate without first considering alternative sanctions. We disagree. The Supreme Court pointed out that the dismissal in Daniels arose "from plaintiff's previous refusal to comply with a lesser sanction, taxing him with costs." Daniels at 681, 360 S.E.2d at 780. It was plaintiff's noncompliance with this lesser sanction which allowed the trial court to then dismiss the case. Id.

Here the trial court made no findings of fact or conclusions of law which address whether less drastic sanctions would be effective in ensuring compliance with the court's order or would best serve the interests of justice. Accordingly, we vacate and remand that portion of the court's 10 March 1986 order dismissing plaintiff's complaint.

For the foregoing reasons, we vacate and remand that portion of the trial court's 10 March 1986 order dismissing plaintiff's complaint for additional findings of fact. The 12 June 1984 order compelling plaintiff to pay the collected rents into court is reversed and we affirm that portion of the 10 March 1986 order finding plaintiff in contempt.

Affirmed in part; reversed in part; vacated and remanded in part.

PARKER and LEWIS, JJ., concur.