Motion for Rehearing Overruled; Reversed and Remanded; Majority and Dissenting Opinions issued October 31, 2006 Withdrawn and Substitute Majority and Dissenting Opinions filed January 11, 2007.
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In The
Fourteenth Court of Appeals
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NO. 14-05-00206-CV
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HARVESTONS SECURITIES, INC., Appellant
V.
NARNIA INVESTMENTS, LTD., Appellee
On Appeal from the 270th Judicial District
Harris County, Texas
Trial Court Cause No. 00-39672-A
S U B S T I T U T E D I S S E N T I N G O P I N I O N
The dissenting opinion issued in this case on October 31, 2006 is withdrawn, and the following substitute dissenting opinion is issued in its place.
A default judgment can be upheld only if, among other things, the record affirmatively shows strict compliance with the rules for service of citation. Primate Constr., Inc. v. Silver, 884 S.W.2d 151, 151 (Tex. 1994). Although a proper return of service can often be prima facie proof of such compliance, there are instances in which it is not sufficient to do so and therefore irrelevant to the issue.
One example of this is where the Secretary of State is deemed to be a defendant corporation=s agent for service of process under article 2.11(B) of the Business Corporation Act (ABCA@).[1] Upon being served with process pursuant to this provision, the Secretary of State is required to immediately forward a copy by registered mail to the corporation at its registered office address.[2] However, to obtain a default judgment after such service, it is not sufficient for the record to merely show proper service of citation on the Secretary of State. Whitney v. L & L Realty Corp., 500 S.W.2d 94, 96 (Tex. 1973). Instead, the record must show that the Secretary of State received and forwarded a copy of the process to the defendant in accordance with the statute. Id. This requirement can be conclusively satisfied with a certificate from the Secretary of State indicating that he received and forwarded a copy of the citation and petition to the defendant in the manner prescribed. Campus Invs., Inc. v. Cullever, 144 S.W.3d 464, 465B66 (Tex. 2004).[3] A default judgment issued after such service will be upheld even if the record affirmatively shows that the process forwarded by the Secretary of State was returned undelivered and was therefore never received by the defendant. Id. In addition, where the record reflects such receipt and forwarding by the Secretary of State, it dispenses with any requirement that the default judgment record even include the citation and return. Id.
In recognizing that a certificate from the Secretary of State is a sufficient form of evidence to reflect the required information, the opinion in Campus Investments cited the following provision:
All certificates issued by the Secretary of State in accordance with the provisions of this [Business Corporation] Act, and all copies of documents filed in his office in accordance with the provisions of this Act, when certified by him, shall be taken and received in all courts, public offices, and official bodies as prima facie evidence of the facts therein stated . . . .
Id. at 465 (citing Tex. Bus. Corp. Act Ann. art. 9.05(A) (Vernon 2003) (emphasis added)). Therefore, although a certificate was used in that case, it logically follows from the language of article 9.05(B) that a certified copy of another document, containing the necessary information and filed with the Secretary of State, would have also been sufficient.
In this case, as a securities dealer registered in the State of Texas, Harvestons was required to, and did, file an irrevocable power-of-attorney, appointing the Securities Commissioner its attorney-in-fact upon whom service of process could be served and further stating:[4]
that any and all lawful processes against it which may be served upon its said attorney-in-fact shall be deemed valid personal service upon said corporation, and that all process served upon the said Securities Commissioner shall be and have the same effect as if such corporation were organized and created under the laws of the State of Texas, and had been lawfully served with process therein.
See Texas Securities Act, 55th Leg., R.S., ch. 269, _ 16, 1957 Tex. Gen. Laws 575, 593, repealed by Act of June 15, 2001, 77th Leg., R.S., ch. 1091, _ 2.24, 2001 Tex. Gen. Laws 2399, 2419 (current version at Tex. Rev. Civ. Stat. Ann. art. 581B8 (Vernon Supp. 2006-2007)).[5] Like article 2.11(B) of the BCA, the Securities Act requires the Securities Commissioner, when served with such process, to forward it by United States (not certified) mail to the last known address of the dealer. Tex. Rev. Civ. Stat. Ann. art. 581B8 (Vernon Supp. 2006-2007). In addition, like article 9.05(A) of the BCA, the Securities Act provides:
Copies of all papers, instruments, or documents filed in the office of the Commissioner, certified by the Commissioner, shall be admitted to be read in evidence in all courts of law and elsewhere in this state in all cases where the original would be admitted in evidence.
Id. art. 581B30 (Vernon Supp. 2006-2007). However, unlike article 9.05(A), article 581B30 of the Securities Act makes no specific reference to issuance of a certificate.[6]
As evidence of compliance with the requirements for service of process, the default judgment record in this case contains a certified copy of a letter (the Aletter@) from the Securities Commissioner to Harvestons. This letter references the style and case number of this case in the trial court and states: AThe Securities Commissioner has received process in the above-referenced lawsuit. Since HARVESTON SECURITIES, INC. [sic] is named as a defendant, we are forwarding process to you.@ The letter thus reflects that service of process was received by the Commissioner and forwarded to Harvestons in accordance with article 581-8[7] and is sufficient evidence of these facts under article 581B30. Because the default judgment record thereby reflects compliance with the rules for service of process that apply in this case, the sufficiency of the return of citation showing service on the Commissioner is immaterial. Accordingly, I would not reverse the judgment of the trial court for a defective showing of service of process.
/s/ Richard H. Edelman
Justice
Judgment rendered and Majority and Dissenting Opinions filed January 11, 2007.
Panel consists of Justices Anderson, Edelman, and Frost. (Frost, J., majority).
[1] See Tex. Bus. Corp. Act Ann. art. 2.11(B) (Vernon Supp. 2006) (AWhenever a corporation shall fail to appoint or maintain a registered agent in this State, or whenever its registered agent cannot with reasonable diligence be found at the registered office, then the Secretary of State shall be an agent of such corporation upon whom any such process, notice, or demand may be served.@).
[2] Id. (AIn the event any such process, notice, or demand is served on the Secretary of State, he shall immediately cause one of the copies thereof to be forwarded by registered mail, addressed to the corporation at its registered office.@).
[3] Although article 2.11 requires the Secretary of State to forward the process to the corporation at its registered office, the opinion in Campus Investments does not indicate that the certificate in that case recited that the address to which process had been sent was the defendant=s registered address or that recitation of that fact was required. 144 S.W.3d at 465B66. If compliance with the rules for service of process is shown by the record, a defendant can overturn a default judgment by developing evidence in a motion for new trial or bill of review of either a lack of receipt of service or the Craddock elements. See Fid. & Guar. Ins. Co. v. Drewery Constr. Co., 186 S.W.3d 571, 573B74 (Tex. 2006).
[4] A certified copy of this power-of-attorney was included in the default judgment record.
[5] Although not material to the disposition, this suit was filed in 2000, before former article 581B16 was repealed.
[6] Although article 9.05(A) also uses the term, Aevidence@ rather than Aprima facie evidence,@ it is not apparent how facts stated in a document can be admissible evidence of those facts without also being prima facie evidence thereof, such that this difference in phrasing would indicate a difference in effect. Nor is it logical that certified copies of documents from the Secretary of State=s office would somehow have any greater evidentiary value than those from the Securities Commissioner=s office.
[7] Although not required by article 581B8, this letter was sent by certified mail.