Johanson v. United Truck Lines

• Court: Washington Supreme Court
• Writing for the Court: HILL; OTT
• Citation: Johanson v. United Truck Lines, 383 P.2d 512, 62 Wn.2d 437 (Wash. 1963)
• Decision Date: 27 June 1963
• Docket Number: No. 36491
• Parties: Richard E. JOHANSON, Plaintiff and Respondent, v. UNITED TRUCK LINES, a corporation, Defendant and Relator.

Page 437

62 Wn.2d 437

383 P.2d 512

Richard E. JOHANSON, Plaintiff and Respondent, v. UNITED TRUCK LINES, a corporation, Defendant and Relator.

No. 36491.

Supreme Court of Washington, Department 1.

June 27, 1963.

Hughes & Jeffers, Wenatchee, for appellant.

Whitmore, Graham & Whitmore, Wenatchee, for respondent.

HILL, Judge.

This is a review by certiorari ¹ of an order of the trial court denying relator's petition to vacate an order of default entered November 15, 1961, and default judgment entered December 5, 1961. The order, insofar as it relates to the default judgment, reads as follows:

'IT IS THEREFORE ORDERED That, conditioned upon defendants' acceptance of the following terms, the Judgment heretofore entered on the 5th day of December, 1961, be vacated and set aside, the terms being that the issue remaining be limited to the question of damages; that said issue be submitted to the Court sitting without a jury; and if said terms be not accepted by the defendant, the Petition to Set Aside and Vacate Judgment shall be denied.'

The defendant not accepting the conditions in the order, the petition to vacate the default judgment is denied.

Plaintiff, Richard E. Johanson, commenced this action in Chelan County for personal injuries sustained by reason of the alleged negligence of the defendant, United Truck Lines. The home office of the defendant is in Spokane, but the summons and complaint were served on Don Trotter, dock foreman at the defendant's East Wenatchee freight terminal. This was on October 17, 1961; and no appearance having been made by defendant by November 15, 1961, the plaintiff moved for, and secured, an order of default. December 5, 1961, the trial court, after hearing testimony, entered a judgment for $21,384.73 and costs. The plaintiff's attorneys then wrote a letter to the defendant, addressed to its Spokane office, asking payment of the judgment; and the defendant, claiming that this letter (received December 7, 1961) was the first notice it had of the pendency of the action, petitioned (January 3, 1962) for an order vacating the order of default and the judgment.

The defendant relied in the trial court (and is relying here) on subsections 3 and 7 of RCW 4.72.010. ²

In attacking the validity of the service, under subsection 3, the defendant admits that the summons and complaint were served on Trotter; but contends that this was not service on the corporation because he was not the 'managing agent' or 'office assistant * * * or the managing agent' within the meaning of our statute relative to service on corporations (RCW 4.28.080(9)) ³ and relies on Osborne & Co. v. Columbia County Farmers' Alliance Corp. (1894), 9 Wash. 666, 38 P. 160, ⁴ to support that contention.

The evidence established that the manager of the defendant's East Wenatchee terminal was out of town on business at the time of the service on Trotter, and that the latter was in charge during his absence. Of the twelve to fifteen employees at the branch terminal, Trotter had authority to hire and fire nine of them. There was also evidence that both before and after the service in question, he had been served with legal process directed to the defendant, including garnishment process; and it had not, theretofore or thereafter, denied his authority to accept such process.

The trial court made an excellent analysis of the evidence and the applicable case law on this phase of the case; and its conclusion--that under a statute such as ours the general rule is that the managing agent of a corporation upon whom process could be served is one who 'must have some substantial part in the management of its affairs generally or in a particular district or locality'--is abundantly supported by the authorities set out in a 1960 A.L.R. annotation on 'Who is 'managing agent' of domestic corporation within statute providing for service of summons or process thereon.' See 71 A.L.R.2d 178 et seq.

The trial court further found that:

'* * * Trotter had been served with legal processes both before and after the service herein question, including garnishee process as against the defendant corporation, and that the corporation had accepted such service of process and had reason to know that sheriffs or other legal process servers would continue to serve process on Don Trotter.'

The Wisconsin Supreme Court has held that such circumstances can be considered in determining whether a particular individual is a managing agent upon whom service of process can be made. Neitzke v. Kraft-Phenix Dairies, Inc. (1934), 214 Wis. 441, 253 N.W. 579.

We agree with the trial court's holding that Trotter was a managing agent of the defendant at the time and place of the service of the summons in this case.

The defendant insists that such a holding is contrary to the Osborne case, supra, which does squarely hold that service on a branch manager of a domestic corporation is ineffectual and that a 'managing agent * * * was one who managed the affairs of the corporation, and not some particular part or branch thereof only.'

This seems, however, to be an unrealistic holding in today's world of decentralization in business, banking, and industry. In the intervening years since 1894, this court has never voiced its approval of that holding; and it has been disapproved in other jurisdictions. In Roehl v. Texas Co. (1930), 107 Cal.App. 691, 291 P. 255, the court said:

'* * * Especially does appellant ask us to consider Osborne & Co. v. Columbia C. F. A. Corp., 9 Wash. 666, 38 P. 160 , where, under a statute authorizing service of summons on a domestic corporation 'by delivering a copy to the president or other head of the company or corporation, secretary, cashier, or managing agent thereof,' an attempt to serve an agent in charge of a branch store belonging to a corporation having a manager exercising general control of its business, including that transacted by the agent, was held ineffectual, the court saying: 'The term 'managing agent' would seem to carry the idea that such an agent was one who managed the affairs of the corporation, and not some particular part or branch thereof only,' and that it would not include one 'who was only in charge of a single branch of the business of the corporation, among those upon whom service could be made.' There was, however, other language in the context from which the court concluded that, 'when the legislature intended to provide for service upon others than those having general and uniform relations to all of the business of the company, they made special provision therefor, from which it will follow that, as to corporations as to which no such special provision was made, the general language used was intended to exclude therefrom all other classes of officers and agents.' (p. 701, 38 P. p. 259)

* * *

* * *

'* * * Whatever may be the situation under the Washington statute, we are not inclined to hold that, to be a 'managing agent' within the meaning of our statute, such agent must manage the affairs of the corporation as a whole, nor that the term necessarily excludes one in charge of a single department of the corporation's business, nor that it necessarily excludes one in charge of all of its business at a place other than that where its principal office is, nor even that it necessarily excludes every agent whose discretion is in any degree, controlled by a superior. None of these tests are conclusive. * * *' (9 Wash. p. 704, 38 P. p. 260) We, too, decline to follow it; and to the extent that it is inconsistent with the general rule to which we have made reference, it is overruled. ⁵

As we agree with the trial court that there was adequate service on the defendant corporation, we must consider the defendant's further claim: That the order of default and the default judgment should be vacated because of 'unavoidable casualty or misfortune' preventing the defendant from answering and defending (RCW 4.72.010(7)).

One link in the chain of proof to establish the 'unavoidable casualty or misfortune' is completely lacking. Trotter testified that he placed the summons and complaint on the desk of Henry Ahnemiller, the manager of the defendant's East Wenatchee branch terminal. Donald E. Agostino, the corporation's administrative manager, stated in an affidavit that the summons and complaint were never received in the home office at Spokane. In the same affidavit he states that after the home office had received notice of the judgment, Ahnemiller told him that he (Ahnemiller) had 'about the 16th day of October, 1961' mailed the summons and complaint to the Spokane office; and he concludes the affidavit with this statement:

'* * * that affiant believes and states that if said transmittals were made by the said Ahnemiller as above stated, the same must have been lost in the United States mails; that affiant believes and states that United Truck Lines, Inc. has a meritorious defense to the within action.'

This leaves the mailing of the summons and complaint to the Spokane office resting on a hearsay affidavit (Agostino's statement that Ahnemiller told him they had been mailed). Plaintiff's counsel in oral argument stated that Ahnemiller was present at the hearing on whether the order of default and judgment should be vacated, but did not testify.

The trial court did not discuss the issue of 'unavoidable casualty or misfortune,' but devoted its attention solely to the sufficiency of service. However, it could not have found that 'unavoidable casualty or misfortune' had been established and, at the same review, refuse to set aside the order of default and give the defendant an opportunity to plead and defend on the issues of liability and damage. We, therefore, proceed on the theory that the court found adversely to the defendant on the issue of 'unavoidable casualty or misfortune' and sustain it in that position because the defendant clearly did not sustain its burden of proof.

Having determined that...