Waterworks Industries, Inc. v. Aplex Industries, Inc.

GOLDEN, Justice. This appeal arises from a Wyoming action to enforce a Texas default judgment under the Enforcement of Foreign Judgments Act. W.S. 1-17-703 (June 1988 Repl.). The main question of law we address is whether a Texas court lacked jurisdiction to enter a default judgment under Texas law. — 895 — ISSUES Appellant Waterworks Industries, Inc. (Waterworks), a Wyoming corporation, asks: A. Whether the Texas court lacked jurisdiction to enter a default judgment in the absence of proof in the record of completion of service upon Waterworks by the Texas Secretary of State. B. Whether the trial court erred in considering the materials submitted after the court had taken the Waterworks’ motion under advisement. C. Whether Aplex is barred from proceeding to enforce the Texas judgment in Wyoming since it has not obtained a certificate of authority from the Wyoming Secretary of State. Appellee Aplex Industries, Inc. (Aplex), a Texas corporation, asks: 1. Did the trial court commit error in considering the affidavits filed on behalf of Appellee on March 28, 1990, in response to the affidavits filed on behalf of Appellant on March 27, 1990? 2. If there was error, did the Appellant waive said error? 3. Was the Texas court presented with proper proof of service of process before it entered a default judgment against Appellant? 4. Did the trial court commit error in finding that Appellee was within the exception of Section 17-16-1501(b), of the Wyoming statutes, and was not required to obtain a certificate of authority from the Wyoming Secretary of State before proceeding to collect the judgment? We agree with the trial court’s determination that the party filing the enforcement action qualified under a statutory exception to the certificate of authority requirement. We disagree, however, with the trial court’s decision, based on a late-filed affidavit, that the Texas court had jurisdiction in the underlying Texas action. Therefore, we reverse the judgment below. FACTS Aplex obtained • a default judgment against Waterworks in a Texas county court on September 18, 1987. A copy of the judgment was filed with the clerk of court of the Seventh Judicial District in Wyoming on February 20, 1990; the appropriate affidavit filed by Aplex’s Wyoming counsel accompanied the filing. W.S. 1-17-704 (June 1988 Repl.). Following the foreign judgment filing, Waterworks moved for relief from that judgment on the ground, among others, that the Texas county court had lacked jurisdiction over Waterworks to enter that judgment. W.S. 1 — 17— 703; and W.R.C.P. 55(c) and 60(b). Hearing was set for March 28, 1990. On March 22, 1990, Waterworks, relying on its president’s affidavit, filed a motion to dismiss or stay the proceedings, asserting that Aplex was barred from maintaining the enforcement action because it did not possess a certificate of authority to do business in the state as required by W.S. 17-16-1502 (Dec.1989 Repl.). The next day, Waterworks filed a notice of a certificate of the Wyoming Secretary of State evidencing that Aplex had not been issued a certificate of authority to do business in Wyoming. On March 26, 1990, Aplex filed its traverse to Waterworks’ motion for relief. The traverse was supported by several affidavits, one of which had been executed by Aplex’s Texas counsel in the Texas county court action in which the default judgment had been entered. Although Texas counsel recited in that affidavit certain matters pertaining to the service of process on Waterworks in that action, the affidavit contained no proof that the Texas Secretary of State had sent a copy of the process to Waterworks. See Tex.Civ.Prac. & Rem.Code Ann. § 17.045 (Vernon 1986). Nor was there any evidence the Texas county court judge had that proof before him when he entered default judgment against Waterworks. Aplex’s salesman also executed an affidavit attached to — 896 — Aplex’s traverse which stated that the salesman’s activity in Wyoming for Aplex consisted of contacting potential customers, taking a customer’s order and transmitting that order to Aplex’s home office in Texas. Aplex directly shipped its product to the ordering customer from the Texas office. On March 27, 1990, Waterworks filed its legal memorandum on the issues of the allegedly void Texas default judgment and Aplex’s lack of a certificate of authority to do business in the State of Wyoming. The same day Waterworks filed an affidavit executed by its Wyoming counsel which included the complete Texas county court record of the Texas action. That record did not contain proof that the Texas Secretary of State had sent a copy of the process in that action to Waterworks as required by Texas law, nor did it show that the county court judge had that proof before him when he entered the default judgment against Waterworks. The parties appeared before the trial court at a hearing on March 28, 1990, to consider Waterworks’ motions. The record in the hearing does not show that Aplex moved for a continuance to meet Waterworks’ evidence that the Texas county court lacked jurisdiction over Waterworks when the default judgment was entered. Also, the record does not show that Aplex objected to the trial court’s receiving that evidence. Several hours after the hearing concluded Aplex filed a motion to file another affidavit executed by its Texas counsel. Attached to that affidavit was a copy of a purported certification signed on August 17, 1987, by the Texas Secretary of State which recited that the Secretary of State sent process in the Texas action to Waterworks on August 10, 1987, and received the return receipt bearing the signature of Waterworks’ agent on August 13, 1987. In his affidavit, Texas counsel stated that on September 10, 1987, when he obtained the default judgment, he had presented the court with a copy of the Texas Secretary of State’s certification and that the county court judge signed the entry of default judgment only after Texas counsel had provided that certification. So far as we can tell from the record and the briefs, Aplex did not request a setting on its post-hearing motion, and the court did not hold a hearing on that motion. On April 4, 1990, the court filed its decision letter; on April 26, 1990, the court entered its order which incorporated by reference the earlier decision letter and which enforced the Texas judgment. This appeal followed. DISCUSSION Waterworks claimed that Aplex was prohibited by Wyoming law from initiating and maintaining its foreign judgment enforcement action. W.S. 17-16-1502 requires a foreign corporation transacting business in this state to obtain a certificate of authority before maintaining a court proceeding in this state. As mentioned earlier, Aplex presented the affidavit of its Wyoming salesman which recited the salesman’s activities in Wyoming. Relying on that affidavit, Aplex contended that its sales activity did not constitute “transacting business” as set forth in W.S. 17-16-1501(b) (Dec.1989 Repl.). The trial court agreed, and we agree. Specifically, W.S. 17-16-1501(b)(vi) provides that a foreign corporation, like Aplex, need not obtain a certificate of authority if it solicits or obtains orders which require acceptance outside this state before they become contracts. W.S. 17 — 16—1501(b)(xi) provides that a foreign corporation like Aplex need not obtain a certificate of authority if it transacts business in interstate commerce. Accordingly, the trial court was correct in its ruling allowing Aplex to initiate and maintain its enforcement action. The trial court, however, incorrectly relied on Aplex’s late-filed affidavit of Texas counsel to hold that the Texas county court had jurisdiction over Waterworks when it entered default judgment in September, 1987.1 It is clear that at the time — 897 — of the March 28 hearing on Aplex’s enforcement action, the Texas county court record contained neither evidence that the Texas Secretary of State had sent a copy of process to Waterworks nor proof that the Texas county court judge had that evidence before him when he entered default judgment. Such proof is required under Texas law. Tex.Civ.Prac. & Rem.Code Ann. § 17.045 (Vernon 1986). See also Verges v. Lomas & Nettleton Financial Corporation, 642 S.W.2d 820, 821, 822 (Tex.App.1982); Prine v. American Hydrocarbons, Inc., 519 S.W.2d 520, 522 (Tex.App.1975); Whitney v. L & L Realty Corporation, 500 S.W.2d 94, 95-96 (Tex.1973). Aplex’s late-filed affidavit did not and could not cure the fatal deficiency of the Texas county court record. Aplex did not request a hearing on its motion to supplement the record, nor did the court hold such a hearing. Therefore, the trial court could not properly consider the untimely affidavit. The Texas county court did not have jurisdiction to enter the default judgment, and we will not enforce a judgment entered where no jurisdiction exists. The judgment of the trial court is reversed. URBIGKIT, C.J., filed a specially concurring opinion. Footnotes [1] Here, counsel faced an evidentiary problem at the beginning of the trial, but failed to apprise — 897 — the court and opposing counsel and did not request a continuance. Counsel also failed to request a hearing setting on his post-trial motion, perhaps relying on a benevolent court. Consequently, favorable court action on the late-filed post-trial motions resulted in an appearance of unfairness. This is something that could be avoided by more vigilance on the part of counsel.