Brewster v. F. C. Russell Co.

Decision Date04 November 1959
Docket NumberNo. 9765-,9765-
PartiesCharles L. BREWSTER, Plaintiff and Appellant, v. F. C. RUSSELL COMPANY, a corporation, Defendant and Respondent. r-FB.
CourtSouth Dakota Supreme Court

Paul E. Mundt, Sioux Falls, for plaintiff-appellant.

Blaine Rudolph (of Bogue & Rudolph), Canton, for defendant-respondent.

BIEGELMEIER, Judge.

This appeal involves questions of the sufficiency of service of the summons and of the jurisdiction of the courts of South Dakota. Plaintiff's verified complaint alleges that defendant is an Ohio corporation which is engaged in the manufacture, distribution and promotion of the Rusco products; that it does business in South Dakota through authorized representatives; that plaintiff for several years worked as a Rusco salesman and sold its products through H. S. Price Company; that defendant sponsored a contest for all salesmen engaged in the sale of its products; that plaintiff did considerable work in preparing for the contest; that defendant abruptly terminated the contest; that plaintiff received payment for part of the work he did in the contest and requests various damages, the validity of which are not involved in this appeal. This complaint and a summons were served in Minnehaha County, South Dakota, on one Johnson, stated in the affidavit of service to be the Division Manager and Agent of the defendant. Defendant made a special appearance and moved the court to set aside, vacate and quash the service of the summons and complaint for the insufficiency of service of process in that the defendant was a foreign corporation not doing business in South Dakota and not subject to the jurisdiction of the courts thereof and no service of such papers had been made upon it by service upon the persons or in the manner provided by statute, the motion being based upon the affidavit of H. S. Price. This motion and order to show cause issued for hearing thereon stated they were made on this affidavit and the order was made returnable in three days; the settled record includes an answering affidavit of the plaintiff, Charles L. Brewster, and an affidavit of S. S. Mills; the record does not show that any of these affidavits or the order to show cause were served on the opposing parties or their attorneys but as it shows that the parties appeared at the hearing and no objection was made at that time, or in this court, we assume they were duly served. The circuit court entered its order quashing service of the summons and complaint in which it found that the defendant corporation was not doing business in this state at the time of the alleged service thereof so as to subject itself to the jurisdiction of the State of South Dakota for the purpose of service of process, from which order plaintiff appealed.

SDC 33.0807 provides the methods of service of a summons and so far as pertinent here states:

'The summons shall be served by delivering a copy thereof. Service shall be made as follows: * * * (2) If the action be against a foreign private corporation, on the * * * managing agent thereof; but such service can be made as to a foreign corporation only when * * * the cause of action arose within * * * this state * * *;'

Defendant did not in the lower court, nor here, rely upon the failure of the affidavit of service to state that service was made on a 'Managing Agent' thereof as Mars v. Oro Fino Mining Co., 1895, 7 S.D. 607, 65 N.W. 19, indicates and so we consider this question on the whole record in the same manner as the court did on that appeal. As we read the order the circuit court based its decision on the issue that the defendant corporation 'was not doing business' in this state at the time the summons and complaint were served and not on the issue of whether Johnson was the Managing Agent; the written opinion of the circuit judge confirms this and while we might pass over this Managing Agent question in that state of the record, we believe it should be considered on this appeal.

Affidavits are unsatisfactory as forms of evidence; they are not subject to cross-examination, combine facts and conclusions and, unintentionally or sometimes even intentionally, may omit important facts or give a distorted picture of them. As to this, Judge Haney in Christiernson v. Hendrie & Bolthoff Mfg. & Supply Co., 1910, 26 S.D. 519, 128 N.W. 603, 604, stated:

'Hence, the difficulty of drawing the line between one who is and one who is not vested with such powers as constitute a 'managing' agent within the meaning of the statute, and this difficulty is immeasurably enhanced when, as in this instance, the nature of the agency must be ascertained from ex parte affidavits, the most unsatisfactory of all forms of evidence.'

This order being based on affidavits, the decisions stating that the circuit judge is in the better position to observe the witnesses, their manner and demeanor while testifying etc., do not apply; this court is in the same position in that regard as the circuit court. Credit Management Service, Inc. v. Wendbourne, 1955, 76 S.D. 80 72 N.W.2d 926. Thus they are considered much the same as they were there.

The affidavit of service states that the summons and complaint were served on the defendant by delivering and leaving the same with one Johnson, knowing that he was at that time the Division Manager and Agent of the defendant, this service being made in the offices of H. S. Price Company, an authorized distributor of the defendant in Minnehaha County, South Dakota. The affidavit of H. S. Price on defendant's behalf stated that he was president of H. S. Price Rusco Window Company, which is a distributor of metal combination windows known by the trade name Rusco; that Price has various dealers in South Dakota who handle these products; that defendant company does not deal with or sell directly to these dealers but only through Price; that Price buys directly from the defendant and is completely independent of it; all Price's purchases are made directly from and payments are made to the defendant's offices in Ohio; that defendant company maintains no office, sales person or other employees, stock of goods or merchandise in South Dakota, but all installation of defendant company's products are made in South Dakota by the Price Company and none by the defendant; that he is acquainted with said Johnson, an employee of the defendant company who calls on Price about every ninety days at which times he explains new developments concerning defendant's productions, answers questions which may have come up regarding assembly, installation, handling sales or other problems concerning such production; that Johnson does not solicit orders for the defendant company's products nor does he negotiate contracts, prices or other business relating to the purchase by Price of the defendant's products. The Mills' affidavit on defendant's behalf states that he is secretary and assistant treasurer of defendant company; that defendant corporation is not qualified to do business in South Dakota and does not do business therein; that it has no resident manager, agent or sales personnel in South Dakota and maintains no office therein; that it makes sales in interstate commerce to the Price Company in which defendant has no interest or control; that the defendant 'maintains a District Manager by the name of E. P. Johnson who is a resident of the State of Minnesota and maintains his office in that state; that the sole activity of said E. P. Johnson in the State of South Dakota was and is the solicitation of sales in interstate commerce by the F. C. Russell Company to the H. S. Price Company; that the State of South Dakota is one of the states in the territory of said E. P. Johnson as such District Manager; that on or about August 28, 1958 said E. P. Johnson was on a business trip through his territory when a Complaint filed by plaintiff, one Charles L. Brewster, against the F. C. Russell Company' was served on Johnson; that Johnson was and is not an agent for defendant for the service of process in South Dakota and has no authority to accept service thereon. Plaintiff's answering affidavit stated among other things that Johnson makes regular trips to South Dakota and to the Price Company; that he is the only representative of the defendant authorized to do the business of said company in South Dakota and that in his duties Johnson solicits sales for the defendant company, consults with H. S. Price about new developments of the company, explains any problems of assembly encountered by the Price Company on defendant's products, conveys information on installation of these products to the Price Company; explains any handling difficulties or aid to the Price Company concerning such merchandise, gives sales talks to salesmen employed by the Price Company using defendant's suggested material, and has sponsored sales contests for the Price Company salesmen promoting the sale of defendant's products; that defendant corporation is doing a regular and thriving business in South Dakota because of the regular shipment of defendant's products into South Dakota and because of the regular solicitation and assistance of Johnson to the Price Company.

In the Mars case this court held that an attorney in fact authorized to sign papers and take necessary steps to secure patents for mining claims was not a 'managing agent' for the service of process under Section 4898, Compiled Laws, the predecessor of SDC 33.0807. Black Hills Brewing Co. v. Middle West Fire Ins. Co., 1915, 35 S.D. 130, 151 N.W. 44, held that the term 'managing agent' upon whom a notice of levy was required to be served included a general agent for the company authorized to write risks and issue policies for it. Christiernson v. Hendrie & Bolthoff Mfg. Supply Co., supra, presented a similar situation to the case at bar. There the president of the defendant corporation made an affidavit that the only business it did in South Dakota was...

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