Case ID: nc_218/html/0533-01.html
Source: Caselaw Access Project
Author: {"author": "BaeNHill, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

McDONALD SERVICE COMPANY v. PEOPLE’S NATIONAL BANK OF ROCK HILL, SOUTH CAROLINA.
    (Filed 27 November, 1940.)
    1. Process § 6d—
    A “local” agent of a foreign corporation for tbe purpose of service of summons under C. S., 483, is an agent residing in tbis State permanently or temporarily for tbe purpose of tbe agency.
    2. Same—
    An “agent” of a foreign corporation for tbe purpose of service of summons under C. S.', 483, is a person or corporation given power to act in a representative capacity with some discretionary supervision and control over tbe principal’s business committed to bis care, and one wbo may be reasonably expected to notify bis principal that process bad been served on him.
    3. Same—
    In tbe absence of any express authority, tbe question of whether a person or corporation in this State is tbe local agent of a foreign corporation for the purpose of service of summons under C. S., 483, depends upon the surrounding facts and the inferences which tbe Court may properly draw from them.
    •4. Same — Depository bank held not local agent of foreign bank for the purpose of service of process under C. S., 483.
    Tbe facts found by tbe court below upon tbe uncontroverted evidence appearing by affidavit and by stipulation of tbe parties, were to tbe effect that tbe bank, chartered by this State, upon which process was served, acted as a depository for tbe nonresident defendant bank, received money of tbe defendant for deposit, honored checks of tbe defendant drawn on it, charged currency to defendant as and when requested, and discounted notes of defendant’s customers for defendant. Selcl: Tbe depository bank was engaged in the discharge of the very functions for which it was organized, and it was conducting its own business and not that of tbe defendant, and tbe relation existing between tbe banks was that of creditor and debtor and not that of principal and agent, and therefore tbe depository bank was not tbe local agent of tbe nonresident bank for tbe purpose of service of summons under O. S., 483. Further, it would seem that the nonresident bank was not doing business in North Carolina, since the business transacted here was tbe business of tbe depository bank.
    
      Appeal by plaintiff from Johnston, Special Judge, at October Special Term, 1940, of MeciclbNbueg.
    Affirmed.
    Motion, made on special appearance, to vacate purported service of process and to dismiss the action.
    Tbe facts found by the court below upon uneontroverted evidence appearing by affidavit and by stipulation of the parties may be summarized as follows :
    The defendant, People’s National Bank of Rock Hill, South Carolina, is a nonresident corporation with its domicile and place of business in the city of Rock Hill, South Carolina, and the American Trust Company of Charlotte is a banking institution organized under the laws of North Carolina, with its principal place of business in the city of Charlotte, North Carolina. For a period of twenty years the American Trust Company has performed the following services for the defendant: (a) acted as depository; (b) received money of-the defendant for deposit; (e) received checks, drafts and acceptances for collection and deposit; (d) honored checks of the defendant drawn on it; (e) charged currency to defendant as and when requested; (f) discounted notes of defendant’s customers for defendant.
    When items for collection and credit were received, those drawn on other banks within Charlotte were collected through-the Charlotte clearing house and those drawn on out-of-town banks were credited and collected either through the Federal Reserve System or through some other bank.
    On 1 October, 1940, the date of service of summons, the American Trust Company received from the defendant three cash letters with a number of checks, accompanied by deposit tickets. The amount of these checks was placed to defendant’s credit and collected in the usual course. On the same day it received a letter with collection items which were to be collected by the American Trust Company and placed to defendant’s credit and which were collected and so credited 2 October. Likewise, on 1 October, it paid a check of defendant in the amount of $90,000 and charged back to defendant two items which had been previously credited to its account. On that date it had on deposit to the credit of defendant an amount in excess of $500,000.00.
    One of the cash or collection letters received by the American Trust Company from the People’s National Bank on 1 October, 1940 — which was typical of others- — was in the form as follows: (From) People’s National Bank, Rock Hill, S. C., September 30, 1940, (To) American Trust Company, Charlotte, North Carolina. “We enclose for collection and (credit to our account) items as follows (here were listed 228 items for collection aggregating the sum of $10,976.71), John G-. Barron, Cashier.”
    
      Service was bad in tbis action on 1 October, 1940, by delivering a copy •of tbe summons and verified complaint to C. B. Campbell, wbo is secretary-treasurer of tbe American Trust Company, upon tbe theory that tbe said bank is a local agent of tbe defendant witbin tbe meaning of C. S., 483.
    When tbe cause came on to be beard by tbe court below, upon tbe facts found, tbe court concluded that tbe American Trust Company is not a local agent of tbe defendant witbin tbe meaning of C. S., 483, and thereupon entered judgment sustaining tbe motion of tbe defendant and invalidating tbe service of process. Plaintiff excepted and appealed.
    
      Jno. H. Small, Jr., for plaintiff, appellant.
    
    
      Whitlock, Dockery & Shaw and Lenoir G. Wright for defendant, ap-pellee.
    
   BaeNHill, J.

Tbe only question presented on tbis appeal is tbis: Ls tbe American Trust Company, on tbe uneontroverted facts found by tbe court, a local agent of tbe defendant, a foreign corporation, upon whom valid service of summons may be bad under tbe provisions of C. S., 483? Tbe court below answered tbis question in tbe negative. In tbis conclusion we concur.

Tbe exact provisions of C. S., 483, as they relate to tbe service of process upon a foreign corporation, have heretofore been outlined and discussed by tbis Court in a number of cases. Cunningham v. Express Co., 67 N. C., 425; Higgs v. Sperry, 139 N. C., 299; Tinker v. Rice Motors, Inc., 198 N. C., 73, 150 S. E., 701; Steele v. Telegraph Co., 206 N. C., 220, 173 S. E., 583; Mauney v. Luzier’s, Inc., 212 N. C., 634, 194 S. E., 323. Further repetition would serve no good purpose.

Tbe term local, as used in tbe statute, pertains to place and a local agent to receive and collect money ex vi termini means an agent residing either permanently or temporarily witbin tbe State for tbe purpose of bis agency. Moore v. Bank, 92 N. C., 592; Tinker v. Rice Motors, Inc., supra. Tbe term as used in C. S., 483, contemplates Some control over and discretionary power in respect to tbe corporate functions of tbe ■defendant. A local agent is one wbo stands in tbe shoes of tbe corporation in relation to tbe particular matters committed to bis care. He must be one wbo derives authority from bis principal to act in a representative capacity. Watson v. Plow Co., 193 Pac., 222 (Wash.), and "who may be properly termed a representative of tbe foreign corporation. St. Glair v. Cox, 106 U. S., 350, 27 L. Ed., 222. Anno. 113 A. L. R., 41. He must have tbe power to represent tbe foreign corporation in tbe transaction of some part of tbe business contemplated by its charter, Booz v. Texas & P. R. Co., 250 Ill., 376, 95 N. E., 460; and be must represent tbe corporation in its business in either a general or limited capacity. Peterson v. Chicago R. I. & P. R. Co., 205 U. S., 364, 51 L. Ed., 841. Thus tbe question is to be determined from tbe nature of tbe business and tbe extent of tbe authority given and exercised. Lumber Co. v. Finance Co., 204 N. C., 285, 168 S. E., 219. It is merely a question whether tbe. power to receive service of process can reasonably and fairly be implied from tbe character of tbe agency in question. Conn. Mutual Life Ins. Co. v. Spratley, 172 U. S., 602, 43 L. Ed., 569; Board of Trade v. Hammond Elevator Co., 198 U. S., 424, 49 L. Ed., 1111.

In tbe absence of any express authority tbe question depends upon a review of tbe surrounding facts and upon tbe inference which tbe court might properly draw from them. If it appear that there is a law of tbe State in respect to tbe service of process on foreign corporations, and that tbe character of tbe agency is such as to render it fair, reasonable and just to imply an authority on tbe part of tbe agent to receive service tbe law will and ought to draw such an inference and to imply such authority, and service under such circumstances and upon an agent of that character will be sufficient. Conn. Mutual Life Ins. Co. v. Spratley, supra; St. Clair v. Cox, supra.

Furthermore, tbe provisions for tbe service of summons upon agents of nonresident corporations must not encroach upon tbe principles of natural justice which require notice of a suit to a party before be can be bound by it. They must be reasonable and tbe service provided for should be only upon such agents as may be properly deemed representatives of tbe foreign corporation. St., Clair v. Cox, supra; Whitehurst v. Kerr, 153 N. C., 76, 68 S. E., 913; Higgs v. Sperry, supra; Steele v. Telegraph Co., supra.

A definition of local agent, as used in tbe statute under consideration, which has been followed and approved by tbe courts of this and other states, is given by Hoke, J., in Whitehurst v. Kerr, supra, as follows: “While there is some apparent conflict of decision in construing these statutes providing for service of process on corporations arising chiefly from tbe difference in tbe terms used in tbe various statutes on tbe subject, tbe cases will be found in general agreement on tbe position that in defining tbe term agent it is not tbe descriptive name employed, but tbe nature of tbe business and tbe extent of tbe authority given and exercised which is determinative, and tbe word does not properly extend to a subordinate employee without discretion, but must be one regularly employed, having some charge or measure of control over tbe business entrusted to him, or of some feature of it, and of sufficient character and rank as to afford reasonable assurance that be will communicate to bis company tbe fact tbat process bas been served upon bim. 19 Enc. Pl. & Pr., 665, 676, 677; Simmons v. Box Co., 148 N. C., 344; Jones v. Ins. Co., 88 N. C., 499; Angerhoefer, Jr., v. Bradstreet Co., 22 Fed., 305; Hill v. St. Louis Ore & Steel Co., 90 Mo., 103.” See also Furniture Co. v. Bussell, 171 N. C., 474, 88 S. E., 484; Furniture Co. v. Furniture Co., 180 N. C., 531, 105 S. E., 176; Tinker v. Rice Motors, Inc., supra; Mauney v. Luziers, Inc., supra.

Applying tbis definition of local agent, although it appeared tbat tbe relationship, in some aspects, was tbat of principal and agent, it bas been held tbat a caretaker serving without compensation and who bas sold and received pay for one or two articles and applied tbe proceeds in payment of the corporate watchman, Kelly v. Lefaiver & Co., 144 N. C., 4; a foreman of tbe corporation who acts under orders of a superintendent who is present at tbe time, Simmons v. Box Co., supra; an attorney for a foreign corporation who bas claims to collect in tbis State, Moore v. Bank, supra; a bookkeeper of a nonresident defendant who is not clothed with authority generally to make collection who is in tbis State for tbe purpose of collecting a particular account, Tinker v. Bice Motors, Inc., supra; a representative of a foreign corporation who solicits orders to be filled by tbe shipment of goods from tbe home office, Mauney v. Luzier’s, Inc., supra; and a broker or commission merchant who maintains a local office at bis own expense and solicits orders for tbe sale of goods within tbe State by a foreign corporation, such orders being subject to approval by tbe corporation at its office in another State and tbe goods sold being shipped from tbe other State directly to tbe purchasers and tbe corporation makes all collections through its home office, Anno. 60 A. L. R., 1038, are not local agents upon whom service of process may be bad.

And, dealing with a situation similar to but somewhat stronger than tbe one here presented, it was held in Bank of America v. Whitney Central National Bank, 171 U. S., 173, 67 L. Ed., 594, tbat a bank located in one State does not do business in another merely because it bas a correspondent in such other State with which it keeps an active account, and which transacts for it tbe business usually transacted by a correspondent bank. There Mr. Justice Brandéis said: “Tbe Whitney Central bad what would popularly be called a large New York business. Tbe transactions were varied, important, and extensive. But it bad no place of business in New York. None of its officers or employees was resident there. Nor was tbis New York business attended to by any one of its officers or employees resident elsewhere. Its regular New York business was transacted for it by its correspondents — the six independent New York banks. They, not tbe Whitney Central, were doing its business in New York. In this respect their relationship is comparable to that of a factor acting for an absent principal. The jurisdiction taken of foreign corporations in the absence of statutory requirement or express consent, does not rest upon a fiction of constructive presence, like qui facit per alium facit per se. It flows from the fact that the corporation itself does business in the State or district in such a manner and to such an extent that its actual presence there is established. That the defendant was not in New York, and, hence, was not found within the district, is clear.” Certainly, if the correspondent bank, on the facts stated, is conducting its own business and not the business of its customer, in so doing it is not the agent of such customer.

While this Court has held that in certain respects in connection with transactions between one who delivers to a bank negotiable paper for collection and the bank, the relationship is that of principal and agent, this principle is applied purely for the purpose of determining the relative rights and liabilities of the parties in connection with the transaction. Under the facts found by the court the relationship between the American Trust Company and the defendant was that of depository bank and customer — creditor and debtor — and not that of principal and agent. The services rendered by the American Trust Company to the defendant were those of a depository bank. In the various transactions outlined, the American Trust Company was engaged in the discharge of the very functions for which it was organized. It was conducting its business and not the business of the defendant. In no sense can it be said that it was the local agent of the defendant within the meaning of C. S., 483. To so hold would make every bank a local agent for many, if not all, of its corporate depositors, upon which service of process could be had. This would extend the meaning and purpose of the statute far beyond that contemplated by the Legislature.

The correlated question — is the defendant doing business in North Carolina — is presented in the briefs. This question we need not discuss. It is sufficient to say that if the American Trust Company was not the agent of the defendant in respect to the transactions outlined, then it follows as. a matter of course that the defendant is not doing business in North Carolina.

The judgment below is

Affirmed.