Farmers Elevator Co. of Humboldt v. Kapaun

• Decision Date: 29 April 1941
• Docket Number: 8435.
• Citation: 297 N.W. 678,67 S.D. 631
• Parties: FARMERS ELEVATOR CO. OF HUMBOLDT v. KAPAUN et al. (BANK OF HUMBOLDT et al., Garnishees).
• Court: South Dakota Supreme Court

297 N.W. 678

67 S.D. 631

FARMERS ELEVATOR CO. OF HUMBOLDT v. KAPAUN et al. (BANK OF HUMBOLDT et al., Garnishees).

No. 8435.

Supreme Court of South Dakota.

April 29, 1941

Appeal from Circuit Court, Minnehaha County, Second Circuit; John T Medin, Judge.

Garnishment proceedings by the Farmers Elevator Company of Humboldt South Dakota, against Jack Kapaun, wherein the Bank of Humboldt and others were summoned as garnishees. From an order denying an application of the Federal Deposit Insurance Corporation, receiver for Bank of Humboldt, to set aside a default judgment, Federal Deposit Insurance Corporation appeals.

Affirmed.

Coon & Coon and Owen T. Lewis, all of Sioux Falls, for appellant.

Charles E. Brewster and T. R. Johnson, both of Sioux Falls, for respondent.

WARREN, Judge.

This appeal is from an order denying an application upon an order to show cause based upon an affidavit in behalf of the Federal Deposit Insurance Corporation, receiver, setting forth and alleging that the record and judgment roll did not show that the garnishee summons and annexed affidavit were ever served on Jack Kapaun, defendant, and that the entry of said default judgment by reason of the failure to serve said garnishee summons and affidavit in garnishment on the principal defendant left the court without jurisdiction and that the default rendered was void, and that the judgment against the garnishee defendants should be set aside. More of the facts will develop in the opinion as the various assignments are considered.

Garnishee proceedings are statutory, and the statutes in force at the time the proceedings were instituted and the service of the processes and papers which took place in December, 1935, must therefore govern. The garnishee failed to make a disclosure as required by the existing statutes. The plaintiff did not for some time file any of the papers in the action, but waited until the 20th of December, 1937, when an affidavit in default containing the usual recitals charging default of appearance, answer or demurrer was made and filed asking the circuit court to enter a judgment against the defendant. The court thereupon entered a judgment which contained the usual recitals and statements pertaining as to the amount claimed, the service, and the fact that the defendant was in default.

On the same date plaintiff made application for a judgment against the garnishee. An affidavit of default and statement as to amount due including costs was presented to the circuit court showing that the garnishee defendants had failed to make disclosure and were in default thereof. An affidavit of service was presented without stating affirmatively that the affidavit and garnishee summons had been served on the defendant, but did contain the statement that service was made upon the garnishee defendants and named them. The circuit court entered a judgment against the garnishee defendants making the usual recitals that the summons had been personally served on the defendant, that the complaint had been filed and had been on file for more than 20 days in the clerk's office, and that a judgment had been theretofore rendered against the defendant in the sum of $1,319.23. The further recital that the affidavit of garnishment and the garnishment summons were served on the Bank of Humboldt; Bank of Humboldt, Clerk of Jack Kapaun Sale; and A. M. Stewart, trustee of Jack Kapaun Sale, and that the sum of one dollar ($1) had been paid and that Jack Kapaun had been personally served with both of said instruments.

There was no recital in the return before the court showing affirmatively that the garnishee summons and affidavit in garnishment had been served upon Jack Kapaun, the defendant, and in addition thereto, appellant charges that an examination of the record discloses no affidavit of service at all upon the defendant, Jack Kapaun.

In May, 1940, an application was made to the circuit court by the Federal Deposit Insurance Corporation who claimed that it was the receiver of the Bank of Humboldt, one of the garnishee defendants, for an order to show cause why an order should not be made declaring the judgment rendered by the court in the garnishment proceedings void and for the vacating and setting aside of the said judgment. Counter affidavits were filed, and upon hearing, the circuit court had before it the issue whether or not garnishee summons and annexed affidavit had been served upon the principal defendant, Jack Kapaun. The court recites in its order dated July 18, 1940, that there was evidence introduced, both orally and by affidavits, showing that such service had been made which casts considerable light upon the matters involved. The order also contains further recitals as follows:

" * * * on about the 8th day of June, 1940, Charles E Brewster, attorney for the Farmers Elevator Company of Humboldt, South Dakota, a corporation, plaintiff herein obtained an order out of this court returnable upon the 13th day of June, 1940, * * *, why an order should not be made and entered correcting the return of service on file in this action to conform with the affidavit of C. E. Brewster and the records herein, which application was heard and evidence introduced, both orally and by affidavit and all the records and files herein. The facts appearing as follows: that while the return of service on the Garnishee Summons and Affidavit, filed in the above entitled action, was defective in that through an oversight said return omitted the word 'Garnishee' before the word 'Summons' but that the garnishee summons and affidavit had in fact been served upon the principal defendant, Jack Kapaun, on the 19th day of December, 1935, and that the judgments against the Bank of Humboldt and the defendant had the jurisdictional requirements and that the Bank of Humboldt did not appear in any manner in this case but allowed a judgment to be taken by default against them and failed to make any appearance in any manner in this case even after notice of judgment had been sent to them, but on the hearing it was shown to the court that they had promised to take care of the judgments, but about nine months later the Bank closed and this is the first move by any party to open up these judgments, and the said Federal Deposit Insurance Corporation also having applied for a notice to vacate said judgments and for authority to answer on the merits, at this late date, now therefore, upon motion of Charles E. Brewster, attorney for the Farmers Elevator Company of Humboldt, South Dakota, a corporation, plaintiff herein, and upon all the files and records and proceedings herein, it is,

" Ordered, adjudged and decreed that the return of service on the garnishee summons herein shall be corrected to read as follows, by inserting the word 'Garnishee' before the word 'Summons' in the return of service on file and the 'Affidavit in Garnishment' added thereafter and that the motion to vacate the judgment made by the defendant The Federal Deposit Insurance Corporation hereby is in all things overruled and denied and that the motion of the Federal Deposit Insurance Corporation for authority to answer...