Masury v. Lowther

• Citation: 299 Mich. 516,300 N.W. 866
• Decision Date: 02 December 1941
• Docket Number: Motion No. 55.
• Court: Michigan Supreme Court
• Parties: JOHN W. MASURY & SON v. LOWTHER (COOK PAINT & VARNISH CO., Garnishee).

299 Mich. 516

300 N.W. 866

JOHN W. MASURY & SON

v.LOWTHER (COOK PAINT & VARNISH CO., Garnishee).

Motion No. 55.

Supreme Court of Michigan.

Dec. 2, 1941.

Garnishment proceeding by John W. Masury & Son against Russell A. Lowther and the Cook Paint & Varnish Company, garnishee defendant. From an order denying the garnishee defendant's motion to set aside default and default judgment, the garnishee defendant appeals.

Order reversed, and the default and default judgment set aside.

Appeal from Circuit Court, Wayne County; DeWitt H. Merriam, judge.

Argued before the Entire Bench.

Leo W. Kuhn, of Detroit, for garnishee defendant-appellant.

Maurice Schwartz, of Detroit, for plaintiff-appellee.

STARR, Justice.

Garnishee defendant appeals from order entered in the circuit court for Wayne county April 21, 1941, denying its motion to set aside default and default judgment.

Plaintiff is a New York corporation. Garnishee defendant is a Delaware corporation having a factory in Kansas City, Missouri, and branch factory and retail store in Detroit. Defendant Lowther was employed by garnishee defendant as ‘outside salesman’ in connection with its retail store in Detroit.

On January 22, 1938, plaintiff obtained judgment for $1,710 and costs against defendant Lowther. On May 16, 1940, plaintiff caused writ of garnishment to be issued against the garnishee defendant, requiring it to appear June 7, 1940, and make disclosure in writing as to its liability as garnishee of its employee, defendant Lowther. On May 29, 1940, such writ of garnishment was served on Lowther (principal defendant) as agent of garnishee defendant, a foreign corporation. Defendant did not deliver such garnishment writ to his employer, the garnishee defendant, nor inform it of service of the writ.

Affidavit of the default of garnishee defendant in failing to make disclosure and also affidavit of regularity of the proceedings, both signed and sworn to by plaintiff's attorney of record, were filed June 14, 1940. Default judgment was entered against garnishee defendant August 6, 1940, for $1,952, which sum included the amount of the original judgment against the principal defendant, together with interest. 3 Comp.Laws 1929, § 14902 (Stat.Ann. § 27.1900). The record indicates the garnishee defendant had no knowledge of such default judgment until more than four months after the same was entered. From affidavit of counsel it appears that when the writ of garnishment was served May 29, 1940, garnishee defendant owed its employee, the principal defendant, only $87.50. Execution was issued on such judgment, and on February 27, 1941, the sheriff endeavored to levy such execution at garnishee defendant's retail store in Detroit.

On March 3, 1941, garnishee defendant filed motion to set aside its default and the default judgment against it, for the reason that ‘no service of process was ever had on the said garnishee defendant nor was its appearance entered.’ Such motion was based, in part, upon the following affidavit of its employee, defendant Lowther: ‘Russell A. Lowther, being first duly sworn, deposes and says that he is the principal defendant in the above captioned cause; that he was on May 29, 1940, and now is employed as an outside salesman by Cook Paint and Varnish Company, the above named garnishee defendant; that on May 29, 1940, he was not in charge of the office of the garnishee defendant, as set forth in the sheriff's return to the writ of garnishment, but that he just happened to be in the store at the time; that the said sheriff did not ask who was in charge but simply asked to see this deponent; that the writ of garnishment was then served upon this deponent, who was alone in a small office and who did not turn it over to the garnishee defendant or to any of its officers or agent, nor did he bring it to their knowledge; that as a result thereof, the garnishee defendant, having no knowledge of the service, failed to make a return to the writ of garnishment as to their indebtedness to this deponent.’

Such motion to set aside default and default judgment was denied April 21, 1941; no opinion was filed; and defendant appeals.

Section 14094, 3 Comp.Laws 1929 (Stat.Ann. § 27.761), provides, in part: ‘In all cases where suit is brought against a foreign corporation, process may be served upon any officer or agent of such corporation within this state, and any person representing such corporation in any capacity, shall be deemed an agent within the meaning of this section.’

The only questions presented on this appeal which require consideration are: (1) Did the court acquire jurisdiction over the garnishee defendant, a foreign corporation, where the writ of garnishment was served on the principal defendant, an employee and agent of the garnishee defendant, who did not deliver the writ to his employer nor inform it of such service; and (2) was the motion to set aside the default judgment timely made?

This precise question as to the validity of service of garnishee summons upon the principal defendant in his capacity as agent of the garnishee defendant, a foreign corporation, has never, so far as we can ascertain, been before this court. However, the rule properly applicable to such situation was enunciated in the case of Atwood v. Sault Ste. Marie Light, Heat & Power Co., 148 Mich. 224, 111 N.W. 747,118 Am.St.Rep. 576. In that case one Goltra was secretary and assistant treasurer of defendant company. He held an alleged claim against defendant arising out of a contract for personal services. He assigned such claim to plaintiff Atwood, who began suit, and service was made on Goltra as an officer of defendant. No appearance being filed, default judgment was entered. On appeal defendant contended that ‘service was invalid, for the reason that, the claim sued upon being one assigned by John N. Goltra, service upon him was unauthorized.’ In reversing the judgment Mr. Justice Montgomery said, pages 225, 226 of 148 Mich., page 747 of 111 N.W.,118 Am.St.Rep. 576:

‘John N. Goltra was an officer of the company upon whom service could be made under the statute. But it is established by authority-if authority for a rule so manifestly just were needed-that even though a person is within the terms of a statute, if his relation to the plaintiff or the claim in suit is such as to make it to his interest to suppress the fact of service, such service is unauthorized. Buck v. Ashuelot Manufacturing Co., 4 Allen, Mass. 357; St. Louis, etc., Coal [& Mining] Co. v. Edwards, 103 Ill. 472. * * *

‘It follows that Goltra had an interest in the claim in suit adverse to the defendant, and that service upon him was unauthorized. See White House [Mountain Gold] Mining Co. v. Powell, 30 Colo. 397, 70 P. 679.’

See, also, North British & Mercantile Insurance Company v. Storms, 6 Tex.Civ.App. 659, 24 S.W. 1122; Walsh v. Commercial Vehicle Motors Co., 20 Ohio N.P., N.S., 159; Tortat v. Hardin Min. & Mfg. Co., C.C., 111 F. 426;Consolidated Iron & Steel Co. v. Maumee Iron & Steel Co., 8 Cir., 284 F. 550, 551;George v. American Ginning Co., 46 S.C. 1, 24 S.E. 41, 32 L.R.A. 764, 57 Am.St.Rep. 671.

The question under consideration was directly passed upon in Personal Loan & Savings Bank v. Schuett (Appeal by Advance Cleaners & Dyers, Inc.), 299 Ill.App. 421, 20 N.E.2d 329. In that case plaintiff obtained judgment against defendant Eleanor Schuett, an employee and agent of Advance Cleaners & Dyers, Inc. Garnishment summons against Advance Cleaners & Dyers, Inc., as garnishee, was served on defendant Schuett, as its agent. Defendant Schuett did not deliver the garnishment summons to her employer nor inform it of the service thereof. As a result the garnishee failed to appear or answer on the return day and default judgment was entered against it. The garnishee first learned of such default judgment more than four months after the same was entered. Garnishee's petition to vacate such judgment being denied, an appeal was taken. In reversing the judgment the court said, pages 425, 428 of 299 Ill.App.,page 331 of 20 N.E.2d:

‘The service of process on the garnishee corporation upon its agent Mrs. Schuett [defendant] was in compliance with the letter of the statute authorizing such service (chap. 110, § 141 [§ 17] Ill.Rev.Stats. 1937 [Jones Ill.Stats.Ann. 104.017]), but in violation of the spirit of same. * * *

‘Service of process against a corporation on an officer or agent whose relation to the claim in suit is such as to make it to his or her interest to suppress the fact of service is unauthorized, though the person served is within the terms of the statute authorizing the service. People [ex rel. Lafferty] v. Feicke, 252 Ill. 414, 96 N.E. 1052;Atwood v. Sault Ste. Marie Light, Heat & Power Co., 148 Mich. 224, 111 N.W. 747,118 Am.St.Rep. 576. * * *

‘It would be unconscionable to permit the judgment against the garnishee to stand, compelling it to pay the debt of another without first having been allowed its day in court.’

See, also, Upton Manuf'g Co. v. Stewart Bros., 61 Iowa 209, 16 N.W. 84.

‘Service of process on an agent, otherwise competent, whose relations to plaintiff or to the claim are such as to make it to his...