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fendanty in support of its motion to vacate and set aside the judg-
menty read the affidavit of the president and secretary of said de-
fendant The material part of the affidavit of the president is as
follows: '*That on the first day of December, A, D. 1890, H. J.
Benedict, Esq., assuming to act as the sheriff of said county of
Grant, in the state of South Dakota, . • • . did levy upon and take
into his custody, as said sheriff, under said writ, a large quan-
tity of lumber, lath, shingles, and other personal and real prop-
erty of and belonging to the said Charles Betcher Lumber Com-
pany, then and there being at and situate in Milbank, and also
Big Stone City (each and both of said places are in the said
county of Grant, and state of South Dakota), and whidi said per-
sonal and real property was then and there of great value, to wit,

of the value of sixteen thousand ($16,000) dollars The

said personal and real property of said Charles Betch^ Lumber
Company at said Big Stone City, in said county, was on said day •
of said levy in the charge of Albert Wihlborg, a hired employee
of said corporation; and the said personal and real property of said
Charles Betcher Lumber Company at said Milbank, the day of
said levy, was in charge of said A. J. Fairchild, Esq., an employee
of said corporation.'' The affidavit of the secretary is substanti-
ally the same. It will be noticed that the affidavits admit that the
defendant was engaged in the lumber business at Milbank and Big
Stone City; that the two persons named were in their employ, and,
inferentidly, had charge of defendant's business at the places
named. It will be further noticed that it is not in terms denied
that they were managing agents, but they were designated in the
affidavits as ''employees." It is nowhere stated in the affidavits
that the defendants had any other agents or persons in charge of
their business in this state. On the part of the plaintiff, a num-
ber of affidavits were read on the hearing, two being made by the
*^ two agents on whom the service of the summons and complaint
was made. The material part of the affidavit of A. J. Fairchild
is as follows: "A. J. Fairchild, being duly sworn, says that for the
past twenty-two months, and until the first day of December, 1890,
and on that date, he was the duly authorized, acting, and man-
aging agent, and the only agent, of Charles Betcher Lumber Com-
pany, the defendant in the above-entitied action, and also a foreign
corporation, whose main office and principal place of business is
in the city of Bed Wing, in the state of Minnesota, at the city of
iffilti^nV^ in the coimfy of Grant, and state of South Dakota; that

Digitized by


864 Foster v. Betchbb Lumbbb Ca [8. Dakota^

«8 fuch agent he had fall charge of the business of said coTparstiou
at said city of Milbank^ and was subject to no authority from any
other person or agent in said state of South Dakota; that he ac-
<?ounted to said corporation, and received all instructions from the
main office thereof, at said city of Red Wing, Minnesota; that he
<:onducted and managed the affairs and business of said corpora-
tion at said city of Milbank, and, in its behalf, he received and dis-
bursed all moneys, sold lumber and merchandise, paid freight,
made contracts and agreements with customers as to the terms of
payment of accounts, issued receipts for money for said corporation,
as agent thereof, employed all necessary temporary assistance for
said corporation, and transacted all of the business of said corpora-
tion at said city of Milbank/' The affidavit of Albert Wihlborg,
the agent at Big Stone City, was more full and specific as to the
nature of the agency, but we will insert only a few paragraphs
of the same: ^'Affiant further states, on oath, that at the instance,
and by and with the consent and instructions, of the said Charles
Beteher Lumber Company, he inserted in a certain newspaper,
the Western Wave, published at said city of Big Stone City, an
advertisement of the business of the said Charles Beteher Lumber
Company, including the name of affiant as agent thereof; ....
that afliant had full power and authority to hire laborers as he
deemed best from time to time, to make contracts with them for
the amount of ^'^ their hire, and to pay the same, and that affiant
had power and authority from the said Charles Beteher Lumber
Company to bring suits in the name of said Charles Beteher Lum-
ber Company whenever he deemed the same to be necessary for the
protection of the interests of said corporation, to engage attorneys
for the prosecution of said suits, and to settle and adjust the

claims upon which such suits were based; that affiant at

all times during his connection with the said Charles Beteher
Lumber Company, at the city of Big Stone City [has been] held
out to be, and has been, and has been authorized by the said
Charles Beteher Lumber Company to hold himself out to be, the
sole aj$ent of the said corporation at the city of Big Stone City,
for the general transaction of its business in all its details; that at
no time during affiant's connection with the said Charles Beteher
Lumber Company has any person or persons in the state of South
Dakota had or executed any authority or superintendency over
him in his connection with the business of said corporation at the
city of Big Stone City, and that he was, up to and including the
said first day of December, 1890, the sole agent of said corporation
at said Big Stone City^ as aforesaid, and not otherwise, that af-

Digitized by


If arch| 1894] Fomteb v. Bbtchbb Lumbbb Ca . 865

fianty BM sQch agent, reoeiyed from said corporation an annnal
salary.'' It was also shown that from August 8th to the seven*
teenth day of October, 1889, the said Fairchild had an advertise-
ment published in the Grant County Beview, a newspaper pub-
lished in said county, as follows: ^'Charles Betcher Lumber Co.,
A. J. Fairchild, Manager. , . • . Office and Yards, Third Ave.
and Second Street, Milbank, South Dakota." It was also shown
that from May, 1890, to January 15, 1891, the following advertise-
ment was placed in the Western Wave, a newspaper published in
said Grant county: ''Charles Betcher Lumber Company Al-
bert Wihlborg, Manager." It was also shown that said Wihlborg
had filed sevcaral mechanics' liens on behalf of said defendant,
and as the agent of said company, some of which he had settled
and released as such agent

^ While the term ''managing agent" has no strict legal defin-
ition, and it is not easy to formulate or lay down a general rule
that will govern all cases, yet we are of the opinion that the facta
in this case show that both Fairchild and Wihlborg were "man-
aging agents" within the meaning of the statute. The latest
and perhaps the most satisfactory definition of a managing agent
is that laid down by the court of appeals of New York in Tuch-
band v. Chicago etc. B. B. Co., 115 N. Y. 437. The court says:
^'2. Whether Oberg, within the meaning of the code supra, was the
'managing agent' The defendant, like other railroad corporar
tions, necessarily has not only directors, a treasurer, and secre-
tary, but other officers and agents. By these persons, or und^
their direction, by others, the business of the company is con-
ducted. From the very nature of a body corporate, service of
process cannot be personal, and at common law it was made by
serving it on a proper officer, so that it might come to the knowl-
edge of the company, and then further proceedings by distress:
1 Tidd's Practice, 121. Under the statute supra, the same object
was in view; and when the corporation has an office in this state
where a substantial portion of its business is transacted by a per-
son designated by itself as a 'general agent,' although followed by
words indicating some one department, it may safely be assumed
that the object of the statute will be accomplished. It, of oourse,
intends a managing agent in this state, and, where a corporation
created by the laws of any other state does business in this state, the
person who, as its agent, does that business should be considered
its managing agent, and more especially should that be so where
the foreign corporation has an office or place of business in this
state, and when that office is in charge of that person, and he there

AM. Br. Rsp., \QL, XLUL-CS

Digitized by VnOOQ IC

866 FosTBB V. Bbtghbb Lumbeb Ca [8. DakoU^

•cti for the corporatioxL He is there doing buflineBB forit, and so
Bumages its bufdness. Such person is, in every sense of the woid»

used in the statute^ a managing agent So far as the caae»

cited by the appellant hold a contrary doctrine, they cannot be-
approved. To limit service by requiring the person served, in
^^ case of an action against a railroad corporation, to be one who-
controls ^the general and practical operations and business of
running the road/ would so restrict the meaning of the statute-
a» to render it useless. Such an agent would naturally find his-
occupation and engagement in the state where the road was domi-
ciled or operated; and if his incidental presence in this state-
subjected him to process, as representing Ihe corporation, it can-
not to be supposed that the l^islature intended to confine the
remedy to him alone." The case of American Express Co. t.
Johnson, 17 Ohio Si 641, is directly in point, and the law ia so
clearly stated that we quote the decision in full: '^y the court
The plaintiff, who was defendant in the original action, is a for-
eign corporation, and the principal ground of error relied on ]»
the alleged insufficiency of the service of the original summons.
At the time of service, the company had a general 'superintend-
ent' for the state, residing at Cleveland, and two or more ^ocal
agents' in the county of Madison, one of whom resided in London,,
in said county, and kept an office there, where he received and f <»'-
warded packages for tiie company, and did all the business of the-
company usually transacted in such receiving and forwarding of-
fices. Service was made upon the said agent at London alone;
and the question is, whether he was the 'managing agent* of the-
company, within the meaning of the sixty-eighth section of the
code. We think he was such managing agent, and that the ser-
vice was sufficient*' Tn McAllister v. Pennsylvania Ins. Co., 28^
Mo. 214, the court says: 'It would seem to be a reasonable inter-
pretation of the language of the twenty-sixfh section of the attach-
ment law that an agent of a foreign insurance company located
here, and doing business under this law of 1855, should be deemed
a 'managing officer* of such corporation for all the purposes of an
attachment or garnishment Such agents do in fact represent
the corporation here, although in the foreign coimtry where the
corporation has been chartered and its chief place of business is,
there is another chief officer of such corporation. We are not
aware of any principle ^^ of public policy which could induce the
legislature designedly to discriminate between domestic insurance
companies and these agencies of foreign insurance companies
which they have allowed to transact business here with all the

Digitized by


March, 1894«] Foster v. Betcheb Lumber Ca 867

privileges of domestic corporations^ so as to exempt the latter from
liability to a process to which the former is undoubtedly liable^:
White Lake Lumber Co. y. Stone, 19 Neb. 402. The case oC
Tuchband v. Chicago etc. R. R. Co. 115 N. Y. 437, shows that the
principles laid down in some of the earlier cases in New York,
cited by appellant's counsel, are in elTect overruled. As showing
what agents are not regarded as managing agents, we quote briefly
from Reddington v. Mariposa etc. Min. Co., 19 Hun, 405: '^ence
arises the material question upon this appeal, viz., whether Bruma-
gim can be regarded a Managing agent' of the corporation, within
the meaning of said statute, so as to authorize the service upon
him of a summons^ in order to commence an action in this state.
The duties which were assigned to Brumagim by the company
were restricted in regard to their nature and extent, and the per-
formance of such duties was subject to the direction and control
of the company. We do not percdve that any exercise of inde-
pendent judgment was confided to him, and he seems to have acted

entirely in a subordinate capacity It is quite clear that the

legislature attached importance to the term 'managing agent,'
and employed it to distinguish a person who should be invested
with general power, involving the exercise of judgment and dis-
cretion, from an ordinary agent or employee who acted in an in-
ferior capacity, and under the direction and control of superior
authority, both in regard to the extent of the work and the manner
of executing the same. The distinction thus attempted to be
drawn we deem reasonable, and in harmony with the obvious pur-
pose of the statute in regard to the service of process upon a for-*
eign corporation. It would, indeed, be a great hardship to allow
actions to be commenced against foreign corporations by the ser-
vice of a summons upon an inferior agent or servant, who, by rea-
son of ignorance or ^^ heedlessness, would be quite likely not to
apprehend the purpose of such service, and therefore neglect the
same.'' In the latter case, Brumagim was simply employed in the
city of New York as transfer agent of the defendant's stock, and
was authorized to collect assessments, and remit them to the com-
pany. In the former case, decided by the court of appeals some
ten years later, Oberg, the agent, was described in the company's
time table as "General Agent, Passenger Department, 261 Broad-
way, N. Y." He had nothing to do with the freight department,
but he occupied an office over which was the sign, ''Chicago ft
Alton R R.," etc., which, as the court says, indicated that the
office was a general office, for the transaction of railroad business
connected with the defendant's line in that city. It seems to us

Digitized by


868 FosTiB V. Bbtchbb Lxjmbbb Ca [8. Dakota,

ihat tliie facb of the case at bar clearly bring the agents within tho
principle of the case of Tuchband y. Chicago etc. B. B. Co., 116
N. Y. 487. Fairchild had charge of the entire business of the
defendant at Milbank^ paid freights, made contracts, hired and dis-
charged men, and held himself out to the public and advertised
himself as manager. He exercised, in all the business of the
defendant at that point, discretionary powers and independent
judgment. He was subject only to the control of the company,
with which he corresponded directly. The defendant had an of-
fice and lumber yard entirely under the control of Fairchild, sub-
ject, of course, as all managing agents, to the control of the cor-
poration. The same may be said of Wihlborg at Big Stone City.
He occupied a place of business, where the lumber of the defend-
ant was sold and dealt in, under his sole charge; and he lield
himself out and advertised himself, under instructions of tbe
defendant, as manager. He, too, exercised discretion and an
independent Judgment in the management of the business^ and
received, as sudi manager, an annual salary. Neither of these
agents occupied the position of ''inferior agents'' or ''servants,"
in the ordinary sense in which those terms are used, or were used
by the court in the cases quoted from: Heddington v. Mariposa
etc. Min. Co., 19 Hun, 405. We have examined all the authori-
•ties cited by ^ counsel for the appellant to which we have access,
but they were, in nearly all cases, decided under provisions of stat-
utes so dissimilar to our own, or the agenfs powers were so limited,
as to afford us but little aid in deciding the question before us.
Our conclusions are that the learned drcoit court was dearly
right in denying the appellant's motion to set aside and vacate
the Judgment rendered in this case, and that the order appealed
from should be affirmed.
The order of the circuit court is therefore affirmed.

00BP0BATI0N8— FOREIGN— PBOOERS.— Process against a ooiw
poration must be served upon its principal officer within the Jurisdiction
of the sovereignty by whose law it exists, and authority for serving it
in any other manner must be conferred by statute: Aldiioh ▼• Anchor
Coal etc. Co., 24 Or. 82; 41 Am. St. Rep. 881, and note.

When a corporation, organised and doing business under the law of one
state, contracts a aebt through its authorised agent in another state,
he is BO far its managing agent there that service of summons upon him
for the debt while he is temporarily within the state will bind the cor-
poration s Elopp V. Creston City etc. Water Works Co., 84 Neb. 808;
83 Am. St, Rep. 068. For a fnll discussion of this sabjeett see the note
to Blanc v. Paymaster Min. Co., 29 Am. St. Rep. 157, and the sKtended
Bote to Hampson v. Weare, 60 Am. Dec 121.

Digitized by


Aprils 1894.] Kiuuel v. Diguok»

[6 Boun Dakota, 22L]


In a iMink to be paid to a certain person upon the happening of a cer*
lain event, the depositor taking a receipt reciting the purpose for
which the money is deposited, after which snch money la mingled
with the other deposits in the bank without the depositor's knowledge
or consent, and, before the event happens or the money is paid over,
the bank fails and goes into the hands of a receiver, the money so
deposited la a trust fnnd, and not assets of the bank, and the depositor
has a right to follow and recover it in the hands of the receivei;

B. Dollard, for the appellant

O. P. Harlen, for the respondent

'^ EELLAM, J. In this case the facts are ample and imdi»>
puted. On and prior to the ninth day of June, 1893^ the Douglas
County Bank was a banking corporation under the laws of this
etate^ doing business at Armour, in said Douglas county. On thai
day respondent Eimmd left with such bank $265, to> be paid t6
£. C. Ward on presentation by him of a warranty deed conveying
to Eimmel certain described land> with an abstract showing good
title in the grantor. The bank gave Eimmel a receipt therefor,
reciting that it was so received for such purpose. On the seven-
teenth day of June following, and before the deed was presented
and the money paid over, the bank failed, and respondent, Didc-
son, was appointed its receiver, and as such received and took poa-
session of all the assets and property found in the possession
of the bank, of which $259.71 was cash. Subsequently both
Eimmel and Ward demanded their money of the receiver, and this
action does not involve any controversy between Eimmel and
Ward, but simply whether the receiver of the bank should be re-
quired to pay over the amount, or so much thereof as the money
on hand will pay; or whether the cash so found on hand at the
time of the failure of the bank is assets in his hands, to be dis-
tributed with and as the other assets of the bank. The court below
ordered the receiver to pay over to respondent the said $259.71
80 found in the bank at the time of its failure and taken possesdon
of by him, and this appeal is from such order. In the affidavit
of Humbert, secretary of said bank, it is stated that when this
money was so left with ^^ the bank it ^Vas treated the same as
any other deposits of said bank, and mixed with the other money
therein.'' It is not intimated Uiat this was done with the knowl-
edge of Eommel, or that he in any manner consented to it Upon
these facts it would appear that the money was left with the bank

Digitized by


870 KiMMEL V. DicKBOV. [8. Dakotttp

in trust for a particiilar purpose. The bank could not afl erw a nlg»
without the acquiescence of Eimmel^ change its relation to him
from that of a bailee or trustee to that of a general debtor. We
apprehend that no different principle is involved because one of
the parties happens to be a bank. Suppose^ under the same cir-
cumstances, Kimmel had left the money with Humbert personally,
and he had failed and made an assignment, would this money, so
found in his possession, pass to his assignee as his property? If
so, when and how did it become so? That he, or the bank in this
case, had, without the consent of Bammel, diverted the money
and used it for some other purpose, ought not to affect Kinunel's
rights. Abuse of a trust can confer no rights on the party abusing
it, or on those claiming in privity with him. It is not claimed
that the $259 found in the bank's vault when it failed is the very
money, or a part of it, deposited by Eimmel, and it is not neceseary
that it should be so. If the money delivered to the bank had been
used by it in its business, it had presumably either paid its debts
pro tanto or increased its assets; and the general creditors of the
bank would be in the same condition if the money found in its
possession were paid over in execution of the trust as though the
money deposited had been kept separate, and the identical money
received had been so paid over. Peak v. Ellicott, 30 Kan. 156, 46
Am. Sep. 90, was a case entirely analogous to this. Peak had
left with the bank of which Ellicott, upon its failure, became as-
signee, money to pay a note, which the bank was to send for. As
in this case, he took a receipt showing the purpose for which the
money was left. The bank passed the amount to the credit of
Peak. After the failure of the bank, it not having paid the note.
Peak brought action against the assignee, asking the ■■" same
relief as is asked in this case, to wit, that the assignee be required
to pay over the amount in full as a trust fund. The supreme
court reversed the trial court, holding that the transaction con-
stituted a trust; that the relation created was not that of a debtor
and creditor, but rather that of principal and agent, or bailor and
bailee; and that the subject of such trust did not pass to the
assignee as assets of the bank. It was held further that the man-
ner in which the bank had treated the fund by crediting it to Peak
and mixing it with its own money did not affect his right to claim
the amount from the funds on hand. Ellicott v. Barnes, 31 Kan,
170, was a similar case and the same rule controlled. McLeod v,
Evans, 66 Wis. 401, 57 Am. Rep. 287, applies the same principle
with the same result, where a draft had been left for collection
with a banker who afterwards, and before the depositor had ra-

Digitized by


April, 1894] KiMMSL V. Dicksoh. 871

ceiyed its proceeds^ saspeiided, and assigned. The court held thai
the proceeda of the draft constitated a trust fund which did not
pass to the assignee, and, there not being sufficient cash in the
hands of the assignee to pay the amount, that the same should be
« lien upon the assigned estate. The same principle, though to
somewhat different facts, was applied in People v. City Bank, 96
N. Y. 32, and again in People y. Bank of Dansyille, 39 Hun, 187.

The suggestions of appellant, that this money is imperativelj
needed to meet immediate expenses in administering the bank's
•estate, can have little weight when the money itself is no part
of the estate, but belongs to another. There would be no justice
in requiring Eimmel to furnish means to assist in settling the
affairs of the bank. On behalf of appellant, it is further urged
that the answer shows that at the time of its failure the bank
held a large amount of other special deposits of the same character
as this $265; and it is insisted that by the order appealed from
Kimmel is given a priority to which he is not entitied oyer other
equally meritorious claimants. It is ^^ doubtful if the proceed-
ings convey the meaning which counsel thus draws from them.
The answer of the receiver is evidentiy framed upon the theory
that, notwithstanding the circumstances of this deposit^ it was a
general deposit, and concludes with admitting the indebtednees
of the bank on account of it After stating how and for what
purpose it was made, it proceeds: ''And it is alleged that said
$265 was deposited on account of the plaintiff as herein stated^
and not otherwise, and was carried to the credit of the plaintiff by
the defendant corporation the same as any other deposits of said
bank, and the money constituting said sum of $265 was mixed
with other money deposits of said bank, and its identity destroyed.
.... And that, after the deposit of said $265, and previous to

Online LibraryAbraham Clark FreemanThe American state reports: containing the cases of general value and ... → online text (page 99 of 121)