Larson v. Fetherston
| Decision Date | 25 November 1969 |
| Docket Number | Nos. 151--153,s. 151--153 |
| Citation | 44 Wis.2d 712,172 N.W.2d 20 |
| Parties | Norman L. LARSON et al., Plaintiffs-Respondents, v. Frank T. FETHERSTON et al., Defendants, Commercial State Bank of Madison, Garnishee Defendant, Northwest Airlines, Inc., et al., Intervening Defendants-Respondents, Cephas Johnson et al., Intervening Defendants-Appellants. Norman L. LARSON et al., Plaintiffs-Respondents, v. MUELLER TRAVEL AGENCY, INC., Defendant, 1st Natl. Bank of Columbus, Garnishee Defendant, Northwest Airlines, Inc., et al., Intervening Defendants-Respondents, Cephas Johnson et al., Intervening Defendants-Appellants. NORTHWEST AIRLINES, INC., et al., Plaintiffs-Respondents, v. Frank T. FETHERSTON et al., Defendants, Norman L. Larson et al., Defendants-Respondents, Commercial State Bank of Madison, et al., Garnishee Defendants, Cephas Johnson et al., Intervening Defendants-Appellants. |
| Court | Wisconsin Supreme Court |
Actions in garnishment. The judgments appealed from dismissed the claims of all of the intervening defendants.
On June 11, 1965, a Mr. Frank T. Fetherston purchased the Mueller Travel Agency from Messrs. Larson and Meyer. Shortly thereafter the agency assets were transferred to the Mueller Travel Agency, Inc., which had been incorporated on or about June 8, 1965. The officers and directors of this corporation were Messrs. Fetherston, Johnson and Parker, the former also being its president.
All rights formerly held by Messrs. Larson and Meyer were thus ultimately transferred to the newly-organized corporation. Included among these rights was the right to sell tickets for several airlines, including Northwest Airlines, Inc., Eastern Airlines, Inc., Trans World Airlines, Inc., Delta Airlines, Inc., American Airlines, Inc., and North Central Airlines, Inc.
These airlines represented by the Air Traffic Conference of America (hereinafter 'ATC') had originally appointed Messrs. Larson and Meyer as selling agents. The agency agreement between it and the agents had provided that:
'All moneys, less applicable commissions * * * shall be the property of the Carrier, and shall be held in trust by the Agent until satisfactorily accounted for to the Carrier. * * *'
Originally this agreement had also required that all agents maintain special deposit accounts for the proceeds of ticket sales. However, this requirement was eliminated effective January 1, 1963, and replaced with the requirement that agents obtain fidelity bonds. Pursuant to this requirement a bond covering both Larson and Meyer was procured from the Insurance Company of North America (hereinafter 'ICNA'). Despite the elimination of special deposit requirements, the trust provision quoted above remained in effect.
Upon sale of the agency to Mr. Fetherston, Messrs. Larson and Meyer contacted ICNA to transfer coverage to the Mueller Travel Agency, Inc. Under the subsequently issued fidelity bond ICNA agreed that it would indemnify the ATC group for all defalcations of the Mueller Travel Agency, Inc., up to $50,000, but required that Messrs. Johnson, Parker and Fetherston agree to personally indemnify it, should such payment to the ATC group be required.
From the time of its inception in June of 1965 until January of 1967, the Mueller Travel Agency, Inc., (hereinafter 'Mueller') deposited the proceeds of its ticket sales, as well as all other funds into a single account in the First National Bank of Madison. Until January of 1967, it had also remitted from this account the proceeds of airline ticket sales. Such remittances were required on a regular basis under the terms of its agreement with ATC.
In January or early February of 1967, the First National Bank terminated its relationship with Mueller, and Mueller's remittances to ATC were likewise discontinued. Unknown to the ATC group Mueller had pledged the accounts receivable of its ticket sales to the bank as security for an outstanding loan. Thus, when the bank closed out Mueller's account, it offset the outstanding loan against Mueller's thenexisting deposit balance. Although Mueller's balance at that time was substantially composed of proceeds from ticket sales, the funds retained by the bank are not the subject of this action.
Shortly after termination of its relationship with the First National Bank of Madison, Mueller opened an account with the Commercial State Bank of Madison. On February 21, 1967, Messrs. Larson and Meyer, to whom Mueller was also indebted, commenced an action for the garnishment of the $18,794.72 then on deposit.
Upon learning of this action Mueller opened an account at the First National Bank of Columbus, but on July 10, 1967, Messrs. Larson and Meyer garnisheed this account as well. At the time of this action $12,775.69 had been in the Mueller account.
In each of these actions the ATC group, as well as Messrs. Johnson and Parker, subsequently intervened as parties defendant, claiming that the funds in both accounts were trust funds not belonging to Mueller. After intervening as parties defendant, Messrs. Johnson and Parker cross-complained against ATC, claiming that they were entitled to a pro rata share in the funds. Their basis for this claim was that subsequent to the default of Mueller, and the payment by ICNA to ATC, they had been required to indemnify ICNA.
On July 14, 1967, ATC also attempted to garnishee the funds on deposit with both the Commercial State Bank of Madison and the First National Bank of Columbus. Messrs. Johnson and Parker again intervened as parties defendants and, in addition, cross-complained against Mueller as well as Messrs. Larson and Meyer who had been named along with Mueller as parties defendant by ATC.
These three cases were then tried to the circuit court for Dane county wherein it was determined that Mueller was indebted to listed parties as follows:
Messrs. Larson and Meyer $24,352.44
Northwest Airlines, Inc. 7,720.21
Eastern Airlines, Inc. 2,454.79
Trans World Airlines, Inc. 8,734.23
Delta Airlines, Inc. 1,535.20
American
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...on the authority of Sniadach. (Jones Press Inc. v. Motor Travel Services, Inc. (1970) 286 Minn. 205, 176 N.W.2d 87; Larson v. Fetherston (1969) 44 Wis.2d 712, 172 N.W.2d 20.) The recent line of cases, commencing with Sniadach, reaffirms the principle that an individual must be afforded noti......
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