CAROLINA PAPER COMPANY, INC. v. Bouchelle

203 S.E.2d 1 (1974)

285 N.C. 56

CAROLINA PAPER COMPANY, INC., Plaintiff, v. Everett B. BOUCHELLE, t/a Bouchelle Enterprises, Defendant, and W. P. Cherry & Son, Inc., Garnishee.

No. 27.

Supreme Court of North Carolina.

March 13, 1974.

*3 Ruff, Bond, Cobb, Wade & McNair by Thomas C. Ruff, and John E. McDonald, Jr., Charlotte, for movant-garnishee, W. P. Cherry & Son, Inc., appellant.

Harkey, Faggart, Coira & Fletcher by Harry E. Faggart, Jr., Francis M. Fletcher, Jr., and Philip D. Lambeth, Charlotte, for plaintiff-appellee.

MOORE, Justice.

G.S. § 1-440.21 states that "garnishment is not an independent action but is a proceeding ancillary to attachment and is the remedy for discovering and subjecting to attachment . . . Any indebtedness to the defendant and any other intangible personal property belonging to him. . . . " This same section states that "a garnishee is a person, firm, association, or corporation to which such a summons as specified by § 1-440.23 is issued."

After defining garnishment, our statutes set forth the procedures to be followed in garnishment proceedings. G.S. § 1-440.22 provides that "a summons to garnishee may be issued (1) At the time of the issuance of the original order of attachment, by the court making such order, or (2) At any time thereafter prior to judgment in the principal action, by the court in which the action is pending."

*4 G.S. § 1-440.25 in pertinent part provides that "the levy in all cases of garnishment shall be made by delivering to the garnishee, or . . . some representative of a corporate garnishee designated by § 1-440.26, a copy of each of the following: (1) The order of attachment, (2) The summons to garnishee, and (3) The notice of levy."

G.S. § 1-440.26 pertains to the service of garnishment papers when the garnishee is a domestic corporation. It provides that in such cases "the copies of the process listed in § 1-440.25 may be delivered to the president or other head, secretary, cashier, treasurer, director, managing agent or local agent of the corporation."

G.S. § 1-440.27 provides that "when a garnishee, after being duly summoned, fails to file a verified answer as required, the clerk of the court shall enter a conditional judgment for the plaintiff against the garnishee for the full amount for which the plaintiff shall have prayed judgment against the defendant, together with such amount as in the opinion of the clerk will be sufficient to cover the plaintiff's costs.. . . The clerk shall thereupon issue a notice to the garnishee requiring him to appear not later than ten days after the date of service of the notice, and show cause why the conditional judgment shall not be made final. If, after service of such notice, the garnishee fails to appear within the time named and file a verified answer to the summons to the garnishee, or if such notice cannot be served upon the garnishee because he cannot be found within the county where the original summons to such garnishee was served, then in either such event, the clerk shall make the conditional judgment final."

Assuming proper service was had on Cherry, plaintiff followed the statutory procedures set out above. Therefore, the sole question presented by this appeal is whether W. F. Lyon, an employee of the garnishee Cherry, was a proper person for delivery of process in this proceeding under the terms of G.S. § 1-440.26(a).

Initially it should be noted that former G.S. § 1-97, concerning service of process generally provided for the delivery of summons in an action against a corporation "to the president or other head of the corporation, secretary, cashier, treasurer, director, managing or local agent thereof." G.S. § 1-97(1). This is substantially the same language now contained in G.S. § 1-440.26(a) as to service on a corporate garnishee. When the North Carolina Rules of Civil Procedure were enacted in 1967, G.S. § 1-97 was repealed and replaced by G.S. § 1A-1, Rule 4(j)(6)(a). However, G.S. § 1-440.26(a) has not been changed and continues to govern service of process in garnishment proceedings. Hence, Rule 4(j)(6)(a) has no application to this case. Nevertheless, we do note that service in this case on Lyon would have been valid under Rule 4(j)(6)(a), since under that rule service may be had on a corporation by leaving a copy of the summons and complaint in the office of the president of the corporation with the person "who is apparently in charge of the office." The testimony shows that Lyon was not only apparently in charge but that he was actually in charge of the office when process was served upon him.

Because the language used in former G. S. § 1-97(1) was the same as now appears in G.S. § 1-440.26(a), cases decided under former G.S. § 1-97(1) are still pertinent. In defining the term "agent" as used in the statute, Justice Hoke in Whitehurst v. Kerr, 153 N.C. 76, 68 S.E. 913 (1910), stated:

". . . [T]he cases will be found in general agreement on the position that in defining the term `agent' it is not the descriptive name employed, but the nature of the business and the extent of the authority given and exercised which is determinative, and the word does not properly extend to a subordinate employe without discretion, but must be one regularly employed having some charge or measure of control over the business intrusted to him or of some features of it, *5 and of sufficient character and rank as to afford reasonable assurance that he will communicate to his company the fact that process has been served upon him. [Citations omitted.]"

See also Heath v. Manufacturing Co., 242 N.C. 215, 87 S.E.2d 300 (1955); Mauney v. Luzier's, Inc., 212 N.C. 634, 194 S.E. 323 (1937); Blades Lumber Co. v. Finance Co., 204 N.C. 285, 168 S.E. 219 (1933).

The definition given in Whitehurst v. Kerr, supra, was approved in McDonald Service Co. v. Bank, 218 N.C. 533, 11 S.E.2d 556 (1940), where Justice Barnhill (later Chief Justice) also stated:

". . . A local agent is one who stands in the shoes of the corporation in relation to the particular matters committed to his care. He must be one who derives authority from his principal to act in a representative capacity . . . and he must represent the corporation in its business in either a general or limited capacity. . . . Thus the question is to be determined from the nature of the business and the extent of the authority given and exercised. J. B. Blades Lumber Co. v. Finance Co., 204 N.C. 285, 168 S.E. 219. It is merely a question whether the power to receive service of process can reasonably and fairly be implied from the character of the agency in question. [Citations omitted.] "In the absence of any express authority the question depends upon a review of the surrounding facts and upon the inference which the court might properly draw from them."

The record in this case shows service on Lyon; however, if such service was insufficient because not authorized by G.S. § 1440.26(a), the court never acquired jurisdiction over Cherry and the conditional and final judgments against it, though apparently regular, would be void, and a motion in the cause to correct the record is the appropriate action. See G.S. § 1A-1, Rule 60(b). Such void judgment is "without life or force, and the court will quash it on motion, or ex mero motu." Carter v. Rountree, 109 N.C. 29, 13 S.E. 716 (1891). See Mills v. Richardson, 240 N.C. 187, 81 S.E.2d 409 (1954).

Lyon was not the president or the head of Cherry, nor was he secretary, cashier, treasurer, or director. The question then becomes: Was he such an agent, "regularly employed having some charge or measure of control over the business intrusted to him or of some features of it, and of sufficient character and rank as to afford reasonable assurance that he will communicate to his company the fact that process has been served upon him"? Whitehurst v. Kerr, supra.

Mr. Cherry testified that when the process was served on William F. Lyon on 16 October 1970, he was informed that a garnishee paper of some sort from plaintiff had been received in the company's office; that he had Mr. Bruce Boney of Lawyers Title Company contacted and that "he assumed that he had cleared up the paper"; that he personally received the papers marked "conditional judgment" in April 1972 but did not turn them over to an attorney at that time because he "did not realize that [he] was supposed to do anything" about it; that he did not look for the summons and notice when he got the conditional judgment; and that he did not know that final judgment had been taken until execution was served on him in December 1972. Mr. Cherry further testified that after the execution was served, he looked and found in his office copies of the summons and notice of levy that had been served on Lyon on 16 October 1970, and that he now knows he should have turned these papers over to his attorney but he did not do so because he thought the matter was between plaintiff and defendant Bouchelle.

Thus, Cherry, through its president and owner, had notice that garnishment papers had been served on Lyon, that a conditional judgment had been rendered against *6 Cherry for $10,404.87 plus interest and costs, and that this judgment would become final unless Cherry answered within ten days and showed that it was not indebted to Bouchelle. Despite this notice Cherry's president and owner did nothing when originally informed of the garnishment proceeding except contact Mr. Boney of Lawyers Title Company, who in turn apparently did nothing with respect to plaintiff's proceeding. When notice of the conditional judgment was served on him, again Mr. Cherry ignored the notice and did nothing. It is difficult to understand how an experienced businessman could be so lax in the conduct of his company's affairs.

The garnishment papers were served on Lyon. He was the son-in-law of W. P. Cherry, Jr., the president and owner of the garnishee; he was 38 years of age with 15 years' business experience, during which time he served as manager of a department store where he had had experience with garnishment proceedings. Mr. Cherry had recently persuaded Lyon to accept a position with his company, and shortly after beginning his employment with Cherry, Lyon was made president of Edgewood Components, a subsidiary of Cherry. On 16 October 1970, the date of the service of the garnishment papers, Lyon had been an employee with Cherry for two months. According to the testimony of both Lyon and the company's bookkeeper, Mr. Ambrose, when Mr. Cherry and Mr. Ambrose were out of the office, Lyon was in charge of the company's office where some 17 other employees worked. When process was served in this case, neither Mr. Cherry nor Mr. Ambrose was in the office. Lyon acknowledged receipt of the process and signed as "purchasing agent" since he had done some purchasing, although usually under the direction of Mr. Cherry. The deputy sheriff who served the papers in question had served other papers on the garnishee over the years by leaving them with the person in charge of the office since Mr. Cherry was rarely in. The company had been sued many times and no question had ever been raised about the process being left with the person in charge.

Lyon testified that he thought he gave the papers to Mr. Cherry or to Mr. Ambrose, but he was not sure. Usually when he received papers for Cherry he would place them on Mr. Cherry's desk since he worked closely with him. Mr. Cherry had never told him that he should not receive suit papers.

Under the circumstances in this case it can reasonably and fairly be implied that Lyon was an agent of Cherry of sufficient character and rank as to afford reasonable assurance that he wouldas he in fact did communicate to his company that process had been served upon him. We hold, therefore, that Lyon was an agent authorized to receive process and that service upon him was valid under G.S. § 1-440.-26(a).

The decision of the Court of Appeals affirming the order of Judge Abernathy denying Cherry's motion to strike the final judgment against it is affirmed.

Affirmed.

LAKE, J., dissents.