Investors Diversified Services, Inc. v. Bruner

• Decision Date: 28 March 1963
• Docket Number: No. 14082,14082
• Citation: 366 S.W.2d 810
• Parties: INVESTORS DIVERSIFIED SERVICES, INC., Appellant, v. Arnold H. BRUNER, Appellee.
• Court: Texas Court of Appeals

Page 810

366 S.W.2d 810

INVESTORS DIVERSIFIED SERVICES, INC., Appellant, v. Arnold H. BRUNER, Appellee.

No. 14082.

Court of Civil Appeals of Texas, Houston.

March 28, 1963.

Rehearing Denied April 18, 1963.

Morris Harrell, Marshall Simmons, John A. Gilliam, Thompson Knight, Wright & Simmons, Dallas, for appellant.

Lyne, Blanchette, Smith & Shelton, Erich F. Klein, Jr.; Ed. M. Brown, Dallas, Ralph Balasco, Houston, for appellee.

WERLEIN, Justice.

Appellee, Arnold H. Bruner, after obtaining a judgment against one Arvard R. Coe, Jr. et al., in the sum of $41,018.52, brought this garnishment suit on such judgment against Investors Diversified Services, Inc., individually and as manager of Investors Variable Payment Fund, Inc., Investors Stock Fund, Inc., Investors Mutual, Inc., Investors Group Canadian, Ltd., Investors Selective Fund, Inc., and Investors Syndicate Life Insurance Co., Inc., as garnishee. A writ of garnishment was served on H. M. Willis, 'Manager' of Investors Diversified Services, Inc., and thereafter a default judgment was taken against appellant. Appellant, contending that it did not answer the writ or participate either by person, agent or attorney in the trial resulting in the entry of such default judgment against it, has sued out this writ of error under Articles 2249, 2249a and 2255, Vernon's Annotated Texas Statutes, to have said judgment against it vacated.

The question presented for our consideration is whether the trial court had jurisdiction over appellant when entering the default judgment. It is appellant's contention that the record shows that service of citation and petition were not had upon it in accordance with law. The writ of garnishment was issued March 6, 1962 and executed the same day 'by summoning the Investors Diversified Services, Inc., a corporation, by delivering to H. M. Willis in person, Manager of the said Investors Diversified Services, Inc., a true copy of this garnishment.'

Appellant asserts that such service was insufficient and did not require appellant to answer the writ of garnishment which was sent to it at its domicile in Minneapolis Minnesota by appellant's divisional sales office in Houston. The record indicates that Diversified Services, Inc. is a Minnesota corporation qualified in Texas, and its registered agent for service is C. T. Corporation, Republic National Bank Building, Dallas 1, Texas. Appellant asserts that since it is a foreign corporation qualified to do business in this State, service would have to be made upon it under the provisions of Article 8.10 of the Texas Business Corporation Act, V.A.T.S., which provides:

'A. The president and all vice presidents of a foreign corporation authorized to transact business in this State and the registered agent to appointed by a foreign corporation shall be agents of such corporation upon whom any process, notice, or demand required or permitted by law to be served upon the corporation may be served.'

Article 8.10, subd. B. provides in part:

'Whenever a foreign corporation authorized to transact business in this State shall fail to appoint or maintain a registered agent in this State, or whenever any such registered agent cannot with reasonbale diligence be found at the registered office, or whenever the certificate of authority of a foreign corporation shall be revoked, then the Secretary of State shall be an agent of such corporation upon whom any such process, notice, or demand may be served. * * *'

Appellee takes the position that Articles 8.10, subd. A. and 8.10, subd. B. are merely cumulative of Article 2031, Vernon's Annotated Texas Civil Statutes, which provides:

'In any suit against a foreign corporation, joint stock company or association, or acting corporation or association, pending or hereafter filed in this State, to which any foreign corporation is a party or is to be made a party, process may be served on the President, Vice-President, Secretary, Treasurer, General Manager, or upon any local or travelling agent or travelling salesman of such corporation, joint stock company or association, or acting corporation or association in this State.'

Article 2031, which is a general article, has never been expressly repealed. It applies generally to any foreign corporation. Its language does not confine its application to corporations doing buisness within the State or to corporations authorized to do business within the State. Article 2031a provides in effect that no foreign corporation shall transact business in the State without first having filed in the office of the Secretary of State a designation of an agent for service of process. In the event it fails to designate and keep continually some resident agent for acceptance of service, then service of process may be made upon the Secretary of State. This article applies to a foreign corporation which 'shall transact or do any business in this State.' It is not by its terms confined in application to foreign corporations authorized to do business within the State. Article 8.10, however, expressly confines its application to foreign corporations 'authorized to transact business in this State.'

It is our view that Article 8.10 of the Business Corporation Act, which is a specific article, providing for process in the case of foreign corporations 'authorized to transact business in this State,' rather than Articles 2031 and 2031a, V.A.T.S., applies in the instant case, since investors Diversified Services, Inc., is a foreign corporation qualified and authorized to do business within this State. It is further our view that since service of process was not made upon any officer designated in Article 8.10 of the Business Corporation Act, service was not properly made, and appellee was not required to file an answer or make an appearance in the case.

We can conceive of no reason for the legislature enacting Article 8.10 of the Business Corporation Act if service of process on a foreign corporation authorized to do business in this State and with a registered designated agent for service may be served under Article 2031, V.A.T.S. We think the obvious purpose of enacting Article 8.10 was to provide a definite and specific manner of service that would remove doubt and uncertainty as to whether legal service of process was made, and proptect foreign corporations authorized to do business in this State having a designated agent for service, from the risk incident to deciding whether the person served came within the provisions of Article 2031. If we are mistaken in this view, we think the service of process in this case was also not proper service under Article 2031 since it was not made on the 'General Manager' of said corporation or any other person designated in such article, but upon one shown to be, in the sheriff's return dated March 6, 1962, 'Manager' of said Investors Diversified Services, Inc., and who in fact was only appellee's divisional sales manager according to the record. The law is well settled in this State that the record must show affirmatively a strict compliance with the mode of service provided, in order to authorize a default judgment. Texaco, Inc. v. McEwen, Tex.Civ.App., 1962, 356 S.W.2d 809, ref., n. r. e.; Household Furniture Co. v. Alvarado, Tex.Civ.App.1923, 246 S.W. 1111; United States Fidelity & Guaranty Co. v. Daniel, Tex.Civ.App.1932, 52 S.W.2d 108; Latham Co. v. J. M. Radford Grocery Co., 1909, 54 Tex.Civ.App. 510, 117 S.W. 909; Tompkins Machinery & Implement Co. v. Schmidt, Tex.Civ.App., 4 Willson, Civ.Cas.Ct.App. Sec. 134, 16 S.W. 174.

It is immaterial that appellant had actual knowledge of the existence of the suit and the issuance of the writ of garnishment. It is not bound to take action until it has been duly served. Harrell v. Mexico Cattle Co., 1889, 73 Tex. 612, 11 S.W. 863; Ellis v. Lamb-McAshan Co., Tex.Civ.App., 264 S.W. 241, aff'd Tex.Com.App., 270 S.W. 547; Shaffer v. Schaleben, Tex.Civ.App.1951, 236 S.W.2d 234, writ ref., n. r. e.

Appellee takes the position, however, that regardless of the validity and sufficiency of the service of process in question, appellant cannot complain of the default judgment rendered against it because it made an appearance in this cause. After appellant learned of this garnishment proceeding, its counsel, James H. Collins, wrote appellee's attorney, Ralph Balasco, a letter dated March 26, 1962, reading as follows:

'Founded in 1894

INVESTORS

Diversified Services, Inc.

INVESTORS DIVERSIFIED SERVICES, INC.

March 26, 1962

Mr. Ralph Balasco, Attorney

Americana Building

Houston, Texas

Dear Mr. Balasco:

Our divisional sales office in Houston has sent us what appears to be a writ of garnishment issued to a judgment recovered by Arnold H. Bruner against Arvard R. Coe, Jr. et al. one of the holders of shares of Investors Stock Fund, Inc. a mutual fund investment company for which Investors Diversified Services, Inc. acts as investment manager. This account is in the process of being transferred to Mrs. Bernice C. Coe.

Please be advised that our Houston Office is not a general business office nor are the personnel there, including the Divisional Sales Manager, Mr. H. M. Willis authorized to accept service on behalf of any of the companies which you have shown as direct or indirect garnishees in the writ.

Investors Diversified Services, Inc. is a Minnesota corporation qualified in Texas and its registered agent for service is C T Corporation, Republic National Bank Building, Dallas 1, Texas. Investors Variable Payment Fund, Inc., Investors Stock Fund, Inc., Investors Mutual, Inc., Investors Group Canadian Fund Ltd., Investors Selective Fund, Inc. are mutual investment companies not doing business in Texas but registered under the Texas securities laws.

Investors Syndicate Life Insurance and Annuity Company is qualified in Texas and its agent for service in the state is Texas Insurance Commissioner. Mr. Coe owns no policies of Investors Syndicate Life...