Fed. Land Bank Of Baltimore v. Birchfield

• Decision Date: 12 June 1939
• Citation: 3 S.E.2d 405
• Court: Virginia Supreme Court
• Parties: FEDERAL LAND BANK OF BALTIMORE. v. BIRCHFIELD.

3 S.E.2d 405

FEDERAL LAND BANK OF BALTIMORE.

v.BIRCHFIELD.

Supreme Court of Appeals of Virginia.

June 12, 1939.

Rehearing Denied Sept. 19, 1939.

Error to Circuit Court, Smyth County; Walter H. Robertson, Judge.

Action by William V. Birchfield against the Federal Land Bank of Baltimore for slander. To review an adverse judgment, defendant brings error.

Reversed and rendered.

Argued before CAMPBELL, C. J., and HOLT, HUDGINS, GREGORY, BROWNING, EGGLESTON, and SPRATLEY, JJ.

George E. Allen, of Richmond, and Peyton G. Jefferson and William Beasley, both of Baltimore, Md., for plaintiff in error.

L. Preston Collins, of Marion, and Stuart B. Campbell, of Wytheville, for defendant in error.

HUDGINS, Justice.

This action, based on defamatory statements, was instituted by W. V. Birchfield against the Federal Land Bank of Baltimore. The trial court entered judgment for $1,500 on the jury's verdict for plaintiff. To that judgment defendant in the trial court obtained this writ of error.

Plaintiff began the action by filing a petition for an attachment, on the ground that the Federal Land Bank of Baltimore was a non-resident corporation. All the attachments that were served upon the different parties, alleged in the petition to be indebted to the Federal Land Bank of Baltimore, were dismissed. The trial court retained jurisdiction of the case on the ground that process had been served upon J. Henry Johnson, a director of the defendant corporation who lived in Scott county. The validity of the service of process upon him is attacked on two grounds: One, because it was not served by the officer to whom it was directed, and two, because it was not served in accordance with Code, section 6063. The process commanding the principal defendant to answer the petition, or state its grounds of defense, was directed to the sheriff of Smyth county, the county wherein the cause of action arose. It was sent to the sheriff of Scott county, who made the following return:

"Executed by delivering a true copy of the within attachment to John Henry Johnson, Director of the Federal Land Bank, there being no other agent of the Federal Land Bank of Baltimore being found in my bailiwick.

"This March 6, 1937.

"J. E. Quillan, S. S. C."

On the return day named in the process, to-wit, April 26, 1937, defendant bank appeared specially, and made or presented numerous motions. The now pertinent motion was to dismiss the case because no valid service of process had been made and returned properly executed.

On the 26th day of March, 1938, some eleven months thereafter, plaintiff, over the objection of defendant, was given leave to have the sheriff of Scott county amend the return, which, as amended, is as follows: "Executed by delivering a true copy of the within attachment to John Henry Johnson, director of the Federal Land Bank of Baltimore, in my county of Scott in which county he resides, there being no other agent of the Federal Land Bank of Baltimore found in my bailiwick this March 6, 1937, J. E. Quillan, Sheriff, Scott County"

As this is "an action to recover damages for a wrong, " process might have been legally executed in Scott county (or any county or city within the Commonwealth), although the action was instituted in Smyth county. "If it appear to be duly served and good in other respects, it shall be deemed valid although not directed to any officer, or if directed to an officer, though executed by some other person." Code, section 6055.

There is no merit in the contention that the process was invalid because directed to the sheriff of Smyth county and executed by the sheriff of Scott county. It is elemental that the courts are liberal in permitting officers to amend their returns to conform to the actual facts. Especially is this true when a casual and an honest mistake has occurred.

Defendant's next contention is that the Federal Land Bank of Baltimore is a domestic corporation, and hence, service of process upon it is governed by the provisions of Code, section 6063.

The application of the provisions of this section is expressly limited to municipalities and "other corporations created by the laws of this State." Defendant is a corporation created by an act of the Congress of the United States, and authorized to do business in a number of States including Virginia. By the act of its creation it was empowered, "To sue and be sued, complain, interplead, and defend, in any court of law or equity, as fully as natural persons." 12 U.S.C.A. § 676. While defendant corporation was created by another sovereign, and in that sense it is a foreign corporation, it has not appointed a statutory agent upon whom process may be served in this jurisdiction. This being true, process may be served upon it in accordance with Code, section 6064, providing: "If there be no statutory agent, the process or notice may be served on any other agent of such corporation in the county or city in which he resides or in which his place of business is. Service upon either [that is, the statutory agent or the resident agent], when duly made, shall constitute sufficient foundation for a per-sonal judgment against such corporation when the other requisites therefor exist."

John Henry Johnson, being a director of defendant corporation who resided in Scott county, was a proper person within the provisions of this statute upon whom process against the corporation could be legally served.

The Federal Land Bank of Baltimore is one of the 12 land banks of the nation created by the Federal Farm Loan Act of 1916, 39 Stat. 360. This bank, with its principal office in Baltimore, was organized for the purpose of loaning money, with farm land as security, in Virginia, West Virginia, Maryland, Pennsylvania, Delaware, District of Columbia and the island of Puerto Rico. Originally loans were made almost exclusively through county national farm loan associations, authorized to be chartered under the farm loan act, but as separate and distinct corporations with their own officers, boards of directors and secretary-treasurers.

Smyth County National Farm Loan Association was so organized for the purpose of submitting applications of its members for loans to the Federal Land Bank of Baltimore, such loans to be secured by a first mortgage on the farm land of the individual borrower. When a borrower secures a loan through this organization he is required to subscribe to stock in the association to an amount equal to 5% of the amount of the loan allowed. The association in turn is required to take out a like amount of stock in the bank, which stock is retained by the bank as collateral to the loan which the association has endorsed. The borrower thus becomes a stockholder in his loan association, and the association becomes a stockholder for a like amount of stock in the bank.

When the stock of a loan association becomes substantially impaired by reason of losses, the bank is prohibited by the regulations of the Farm Credit Administration, which now has the supervision of all land banks, from making further loans through the association. The bank is permitted and does make direct loans through a Direct Loan Correspondent, appointed for that purpose, when the association, because of its losses, is unable to function. For several years prior to 1936 the capital stock of the Smyth County Association had become so impaired that it had become unable to accept applications for loans and, hence loans in that territory were made by the bank through a local correspondent. However, the association remained in existence for the purpose of gradual liquidation, during which period it continued to assist in collecting the amortization payments and to make reports to the Federal Land Bank of Baltimore on the financial condition of borrowers.

W. V. Birchfield was the secretary-treasurer of the Smyth County National Farm Loan Association. He was an approved attorney for the Federal Land Bank of Baltimore to make abstracts and perform such other legal services as the Federal Land Bank might direct. He was also the Direct Loan Correspondent through whom farmers in Smyth County might obtain money directly from the Federal Farm Loan co-operative system.

While it is one of the primary duties of the secretary-treasurer of the local association to collect and transmit to the bank amortization payments due by the members of the association, during the past ten years or more, delinquents had increased to such an extent that the bank sent numerous agents and representatives to visit different borrowers, to make collections and to report upon the conditions of the land covered by the mortgages held by it. The bank found by experience that collections and what it termed "servicing the loans" could be better accomplished through the local association than it could through independent agents sent from Baltimore. The loan associations have very little, if any, surplus money, and have practically no means of obtaining funds. As this work was important, the bank, from time to time prior to 1937, had allotted to the association limited sums with which to pay for this work.

In 1936 the directors of the bank adopted what they termed a "new allowance plan." The purpose of this plan was to place additional responsibility upon the associations to collect the amortization payments, inspect the lands, see that the taxes and insurance premiums were paid, and to furnish the bank with such other pertinent information regarding the borrowers and farms covered by the mortgages held by it, as the bank might require. Under this plan the compensation of the secretary-treasurer was considerably increased, as he would be required to do most of the work. Inasmuch as the bank was furnishing the compensation, one of the conditions imposed upon the associations was that the boardof directors should elect a secretary-treasurer acceptable to the bank.

While the acceptance of this plan was optional with the association, it provided that no...