Legal Document

455 U.S. 691 102 Supreme Court Reporter 1357 71 United States Reports Lawyer’s Edition 2d Series KF101.8 U54 558 UNDERWRITERS NATIONAL ASSURANCE COMPANY, Petitionerv.NORTH CAROLINA LIFE AND ACCIDENT HEALTH INSURANCE GUARANTY ASSOCIATION, et al. Number 80-1496. Argued Nov. 9, 1981. Decided March 24, 1982. Syllabus Petitioner, an Indiana stock insurance corporation, as required by law to do business in North Carolina, was a member of respondent Carolina Life and Accident Health Insurance Guaranty Association (North Association), which, under statute, is ultimately responsible for fulfilling the policy obligations members that become insolvent or otherwise fail meet their obligations. Because its questionable financial condition, petitioner Commissioner post $100,000 deposit benefit policyholders. Subsequently, rehabilitation proceedings were brought against state court (Rehabilitation Court), which intervened certified class consisting all past present The Rehabilitation ruled 1978 pre-rehabilitation claims compromised, settled, dismissed court's 1976 order adopted plan had jurisdiction over subject matter parties. In meantime, when dispute arose between plan's effect on use deposit, filed suit court, seeking declaratory judgment it entitled fulfill contractual policyowners been compromised proceeding. Holding statutes governing deprived subject-matter determine rights refused honor Court's prior ruling deposit. Appeals affirmed. Held : Under Full Faith Credit Clause, one State conclusive upon merits another only if first power pass merits—that is, relevant Cf. Durfee versus Duke, 375 106, 84 242, 11 186. this case, courts violated Clause refusing treat judgments res judicata. Pp. 703-716. (a) Regardless validity, law, courts' holding did not have appropriate ground accord full faith credit. principles judicata apply questions jurisdiction, "a credit—even jurisdiction—when second inquiry discloses those fully fairly litigated finally decided rendered original judgment." supra, at 111, 245. record here establishes considered whether settle parties before As intervening party, obliged advance argument authority given opportunity so. 705-710. (b) refusal give credit cannot be supported asserted lacked personam because no policyowner actually appeared representatives could adequately represent both nondeposit States. Respondents identified any current interest might have, independent interests Association. requires provide with coverage even finance obligation. Therefore, these allowed liquidate 711-713. (c) Nor can officials. Although attempt exercise trustees purport trust corpus; specified determined asset petitioner, jurisdiction. conclusion erroneous jurisdictional issue Court, determination. A competent two competing specific property though third party may claim same res. 713-715. (d) There merit, respondent's arguments honoring determination would negate Carolina's comprehensive statutory scheme ensure protection has right segregate assets foreign company used sole State's policyowners. However, forums respondents challenge assertion such grounds are Indiana, Carolina. 715-716. 48 N.C.App. 508, 269 South Eastern Reporter, 2nd 688, reversed remanded. Theodore R. Boehm, Indianapolis, Ind., petitioner. William S. Patterson, Washington, D. C., respondents. Justice MARSHALL delivered opinion Court. 1 held without adjudicate various certain found recognize final entered during We granted certiorari decide whether, judicata, Constitution implementing federal statute. 451 982, 101 2312, 68 838 (1981). For reasons stated below, we reverse decision Appeals. 2 * Petitioner Underwriters National Assurance (Underwriters) corporation specializing life disability high-income professional groups. 1973 licensed 45 States, including administering 50,000 policies. To qualify join state-created association domestic companies operating See Act, N.C.Gen.Stat. § 58-155.65 seq. (1975) (Guaranty Act). terms becomes fails 58-155.72(4) (Supp.1981). 3 June 1973, after determining Underwriters' condition questionable, informed must "for policyholders," continue State. Shortly thereafter, deposited bond registered "Treasurer Company respective appear Article 20, Chapter 58-188.5 General Statutes." 58-182 (Deposit 4 Commissioner's fears about proved well founded. Approximately year posted bond, Department commenced reserves inadequate future By dated August 5, 1974, Superior Marion County Court)1 appointed Rehabilitator directed him "take possession . conduct thereof appoint personnel necessary rehabilitate Underwriters." Notice action sent commissioners, Commissioner. immediately undergoing title transferred Rehabilitator. 5 entering rehabilitation, enjoined commencement prosecution This injunction stayed several policyholder actions Underwriters, person who desired institute prosecute proceeding.2 plaintiffs subsequently permission intervene October 1975, policyholders, from representatives.3 6 notice proceeding informing them certified, requesting exclusion bound concluded stating "[t]he entire file" available member.4 7 Over next one-half years, supervised efforts other interested return sound footing. After extensive negotiations representatives, parties, submitted Proposed Plan April 1976. preserve health continuing proposed reform policies require increased premiums reduced benefits.5 Of particular litigation, "[will have] liability guaranty itself [Underwriters'] policyowners." Plan, I(J), Exhibit Binder 79 (E.B.). Part X(C) further provided: 8 "The associations some states result [Underwriters] Moreover, extent obligations, there possibility seek recover sums paid should resolve contingent obligation association." Id., 89 (emphasis added). 9 direction mailed copy commissioners. hearing consider plans, explicitly although eight associations, Association, "may proceeding," either proceeding, made suggestions changes Plan. information contentions 1976, hearing. Unless intervened, writing they waived Rehabilitator, summons bring 59-61. 10 On 8, motion intervene, "unacceptable," through negotiations, agreed modification "protect Associations." part,6 changed read follows: "[Underwriters shall than valid assignment policyowner's treated policyowner; provided, however, makes payment behalf reimbursed pursuant foregoing provisions, receive each until portion net gain operations dividends policyowners, income taxes payments XI equal annual premium force basic divided total 1974." 105 12 participated, tentatively approved above modification. send persons 14, settlement Underwriters. Insurance, provides part XIII [its] approval ., others dismissed." At request special mailing policyholders explaining statutorily obligated circumstances benefits 13 November hearings Rehabilitation, was, respect issues here, identical adopting "jurisdiction [and] associations." App. 38. Further, "[t]o claim, objection proposal presented inconsistent overruled relief denied." 40 went "[t]his Order matters occurring date Order." Finally, retained "to interpretation Plan," modify light developments." 42. associations. No appeal taken order, released February 1977. 14 1977, invoked approve "Service Contract," service residing levels fee contract execute agreement "in substantially form" court.7 Pursuant seven executed Service Contract incident. Before Contract, addition document previously court. Specifically referring time since 16 months before, added following paragraph court: 15 "It expressly agreed, reserve remedies connection deposits understood One Hundred Thousand Dollars ($100,000.00), governed law." E.B. 34. signed revised agreement, but clear cover letter accompanying understanding intended Any paragraph, concluded, unacceptable "Plan shutting off citizens and/or deposits" rehabilitation. 35. 17 responded filing Treasurer, Wake County, N.C. complaint prayed Treasurer cross-claim also liquidated answered, asserting therefore courts. 18 Invoking involving petition instructions July 1978. petition, September 22, 1978, hearing, full-faith-and-credit claims. "fully adjudicated existing adoption settled Plan." Pet. Certiorari 38A. reaching conclusion, specifically noted never included, objection, general listed V n. 4, supra. that, probably enjoin declined so believed binding.8 19 receiving ruling, moved summary trial respondents, favor reasoning "requisite protection." 25A. While noting officials "[a]n appearance insolvency having constitute waiver lack regard deposit." Ibid. result, reimburse satisfying 20 appeal, affirmed, expressed 688 (1980). emphasized sought protect "statutory," opposed "contractual," rights; vested thus depriving deposit; 517, S.E.2d, 694. contrary grant discretionary review. 301 527, 273 453 II 21 concept central our system jurisprudence. Ours union own judicial capable adjudicating responsibilities it. Given structure, always risk more will case controversy, uncertainty, confusion, delay necessarily accompany relitigation issue. Sherrer Sherrer, 334 343, 355, 1087, 1092, 92 L.Ed. 1429 (1948); Riley New York Trust Co., 315 348-349, 62 608, 611-612, 86 885 (1942). Recognizing inheres system, Framers provided "Full public Acts, Records, Proceedings every State." U.S.Const., IV, 1. consistently recognized constitutional mandate, "the credit, effect, where pronounced." Hampton McConnel, Wheat. 234, 235, 378 (1818) (Marshall, C.J.); U.S., 353, S.Ct., 614.9 22 sure, structure Nation possessing sovereign powers, dictates limitations enumerated above. Chief among caveat, merits—had render 110, 244, 186 (1963).10 Consequently, State, inquire into basis decree. If need given. Nevada Hall, 440 410, 421, 99 1182, 1188, 59 416 (1979). 23 relied limitation argue, held, powerless Specifically, contend Atlantic 24 Act Deposit validity law,11 facts case. relying ground, below failed limited scope review challenged judgment.12 25 long issues." American Surety Baldwin, 287 156, 166, 53 98, 101, 77 231 (1932). Treinies Sunshine Mining 308 66, 78, 60 44, 50, 85 (1939); Davis Davis, 305 32, 3, 83 26 (1938). doubt proposition definitively laid rest inDurfee 245, judgment."13 courts, therefore, instance question proceedings, From examination record, little difficulty concluding earlier, being duties companies. 1, approving personal 39, 53. Furthermore, recitation events leading up indicates, aware potential assert resolved notified make objections to, suggest in, waive 698. indicates negotiated concerning policyowners.14 698-699. 27 relies failure specify extinguishing Association's satisfy address reliance misplaced. First, doubts purported ruling. Supra, 702. considering now advanced Plan."15 28 Second, undisputed included Rehabilitation.16 listing asset, announced intention deposit.17 escape requirements raise clearly within 352, 1091. gave sufficient extinguish made, Plan,18 "overruled 40. Carolina.19 B 29 Alternatively, argue different us pause, out 30 States.20 preliminary matter, note complained nor directly participate litigation Court.21 instructed asserts inadequate, explains why compared care unavailable Gen.Stat. accordingly, alleged representation unidentified interest. 31 complex.22 trustees. Citing Hanson Denckla, 357 78 1228, 1283 (1958), absent corpus trustee, admittedly 32 Respondents' Hanson, Florida direct review, Delaware judgment. free trustee appropriate. who, trust. course 33 compromise express propriety conclusion. trustees, corpus.23 specifies law. ex rel. Ingram Reserve 303 623, 629, 281 16, Erroneous not, (1963), progeny, once claims, determination, 706-707. 16. It beyond Morris Jones, 329 545, 67 451, 91 488 (1947). extinguished asserting, erred 34 requiring commentators virtually unanimous support G. Couch, Law 22:96 (2d ed. 1959); Judge Joyce, 3595 1918). Blake McClung, 172 239, 257, 165, 172, 43 432 (1898). equitable, conclude, result. merit legal equitable Indiana.24 separate resulted mutually precisely situation designed prevent. find remand opinion.25 35 ordered. 36 WHITE, whom Justices POWELL STEVENS join, concurring 37 & N Dec. Immigration Nationality Decisions agree much discussion majority function "it Ante, 711. 38 needed prohibit moving Corporation (UNAC). latter incorporation; because, amply demonstrates I, participated With UNAC amount character UNAC, 39 true regardless controversial least parties: my view, controverted fund. Neither am quite unconvinced sense scale down lien fund nonappearing majority, proper "have Court." 716, 25. understand subrogated undertook whole. longer deposit.* 649 existed Riehle Margolies, 279 218, 49 310, 73 669 (1929), creditor received creditor's receiver corporation's property. regarding despite fact neither undertaken defend twofold distinction control assets: 41 "In far [a order] determines, recognizes existence indebtedness defendant creditors participate, does deal [This] function, spoken liquidation strictly personam. inherent reason adjudication debtor res." 224, 312. 42 applied 549, 454, (1947): "[T]he distribution ordinarily 'twofold aspect.' deals 'directly property' fixes manner distribution. But proof allowance distinct distribution." 548-549, 454. Thus, simply nature established collect 698-700. That vis-a-vis unless follow procedural Due Process Clause. believe met and, concur reversing below. addition, authorized statute oversee formulating enter injunctions prevent interference Ind.Code 27-1-4-1 (1976). Three individual lawsuit order. Schultz Civ. Action 74 2550 (ND Ill.) (class Illinois policyowners); Honeycutt 482-74-A (ED Va.) Virginia Hall 75-L-1589-NE Ala.) Madison Ala.); Meyer Guarantee Cause 786-532 (Super.Ct. King Wash.). These lawsuits alleged, inter alia, fraudulently misled company. Trial Rule 23(B)(3). Rules Federal Civil Procedure actions. file assets. concedes Brief 11-12. underwritten large block "noncancelable" guaranteed renewable experience, refund 80% 10-year period. eliminated refund, converted "guaranteed renewable," meaning option, increase premium. requested ways instant joint Rehabilitation. 11. appealed consideration pending resolution construction compelled Code KF62 1738, codification guarantee. provision "Acts, records usage taken." flows underlying axiomatic showing enforce void merely gives "credit, effect" rendering exclusive Even accept rule finality still apply. infra, 1336. analogize administration real borders. Fall Eastin, 215 54 65 (1909); Clarke Clarke, 178 186, 873, 44 1028 (1900). recognize, exception cases 115, 247. collaterally attacking see (1939), application litigation: 703-704, applies Stoll Gottlieb, 134, 137, 104 (1938): "After his day evidence view collateral attack retries determined. expect satisfactory first." argues violate Whether correct attack. de novo reexamination question, significance. misperceives addressed interpretation, implementation, thereby compromising implementation specifying disposed prerehabilitation binding 1B Moore T. Currier, Moore's Practice ¶ 0.416[3] incorrectly rather reserved exclusively irrelevant attention error deprive Express Mullins, 212 311, 381, 525 (1909). wished consequently done Having so, recourse courts; called early 11, 1975. 26. believing very erroneously alerted purporting approved, extinguished. object listing, erroneous, suffer consequences. "inconsistent plan" pool resources continued based. concurrence unnecessary disposition post, 718. They preclude (1947), inapposite situation. cases, correctly notes, debtor's legitimate debtor. Those decisions hold, belonging bar determined, rightly wrongly, asset. indicate text, barring 38A None opted class. advocated representatives. significant, representative empowered purposes decision. intentionally unreachable contends true, violates Commerce reach trust, respondents' like compromised. arguing litigating seems imply dispositive point. Indeed, appellate urges dismiss mere "stakeholders" reply vital control. relitigate absence hand, joined identify purely consistent opinion, Since possible beneficiaries beneficial protect. This, however remains

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