Strause Bros. v. Aetna Fire Insurance , 126 N.C. 223 ( 1900 )

Aycock, Fleming Moore for plaintiff.

H. G. Connor Son, Burwell, Walker Cansler, and Jarvis (227) Blow for defendant. The defendant is a corporation chartered in Connecticut, and issued its policy of insurance to the plaintiffs, who are residents and citizens of this State, upon property located here. The property was partially destroyed by fire during the existence of the policy, and the amount of the loss has been adjusted, in the manner required by the policy. This action is brought to recover that sum. The only defense set up is that a creditor of the plaintiff in Pennsylvania has instituted an action against him in that State, and attached the liability of the defendant company to said plaintiff by reason of said loss, by garnisheeing the agent of the defendant in that State, which action was instituted before the beginning of this and is still pending in the courts of that State, wherefore the defendant asks that this action be stayed till the determination of that.

The courts of one State give full faith and credit to judgments rendered in another when jurisdiction has been obtained of the person or subject-matter, but when such is not the case, the judgment of the foreign State is treated as a nullity; so the sole question here is (228) whether the Pennsylvania court has acquired jurisdiction by such garnishment (for there was no personal service upon plaintiffs), since if it has not, then as the judgment, if it shall be rendered adversely to these plaintiffs, will be a nullity, a stay of proceedings in the courts here will be useless.

It is true that under the Pennsylvania statute the defendant, a Connecticut corporation, is required to appoint a resident agent in that State upon whom process can be served, and this is a condition which that State can exact of nonresident corporations, but that only renders the Connecticut corporation suable in Pennsylvania by giving personal service upon its agent. It does not carry the situs of the debt it owes to the plaintiffs to Pennsylvania and make the plaintiffs Strause suable in Pennsylvania because their debtor, the defendant company, can be sued there for their own indebtedness to a plaintiff. If suability of the defendant were the test, the plaintiffs could be sued in every State and in every foreign country where their debtor has an agency. Many courts deny that a creditor can be brought into court by attaching a debt due to him, and it is certainly not very logical that a debt should have asitus where the debtor resides, for the debt is property of the creditor, not of the debtor. Some courts, however, have gone that far, including the courts of this State, but none have gone so far as to hold that debts may be ambulatory, and well-nigh ubiquitous in this case, by having asitus wherever the debtor has an agent who can be served with process for its own indebtedness. An attachment could be levied in Pennsylvania only upon property of the defendant in such action, and these plaintiffs had no property in that State, and the debt due them (229) by the Connecticut corporation was not in the hands of such company's local agent in Pennsylvania.

To put it as strongly as possible, suppose the defendant was a natural person, a citizen and resident of Connecticut, and was temporarily in Philadelphia, so that he could be personally served with process for his own indebtedness to a plaintiff, would that make him liable to garnishment by any one holding a claim against those whom he owed? This question has often arisen and has uniformly been decided in the negative. Balk v.Harris, 124 N.C. 468, and numerous cases cited at pp. 469, 471. Even if the defendant company had become "domesticated," or had taken out incorporation in Pennsylvania, the Pennsylvania corporation would simply be an affiliated company, and would not swallow up or be substituted for the Connecticut corporation which owes these plaintiffs, and the situs of whose indebtedness as such would not be affected, however it might be as to their transactions and indebtedness arising in Pennsylvania.

The very point was decided in Bank v. Blaecker, 72 Minn. 383; 42 L.R.A., 283, where it is said: "The garnishee has filed the stipulation required by the statute, has established local agencies, and has been insuring property in this State. This did not, in our opinion, give the garnishee a domicile in this State for all purposes, or bring into this State the situs of debts which it owes elsewhere by reason of business transacted elsewhere. Neither the creditor nor the debtor resided in this State. None of the transactions out of which the indebtedness arose took place in this State, and the indebtedness was not payable in this State. Under these circumstances the debt has not a situs in this State.Remiers v. Manufacturing Co., 70 Fed., 573; Douglas v. Insurance Co., 70 N.Y. 209; Douglas v. Insurance Co., 20 L.R.A., 118; Renier (230) v. Hurlbut, 81 Wis. 24; R. R. v. Dooley, 78 Ala. 524; Wright v. R. R., 19 Neb. 175; Keating v. Am. Ref. Co.,32 Mo. App. 293."

The Supreme Court of Wisconsin, in Renier v. Hurlbut, cited above, says: "It is obvious that if the indebtedness of the Boston Company to Mrs. Renier had any situs outside of Wisconsin for the purposes of garnishment, it was at the home office of that company in Massachusetts; certainly not with the respective agents of that company wherever located in the several States." This same view is taken and strongly reinforced inBank v. Furtrick, 44 L.R.A., 115, decided by the Delaware Court of Appeals in 1897. In that case the Court says: "True, the garnishee is a corporation doing business in this State, but the debt due the defendant arose from its contract for insurance made through its agency in South Carolina with the defendant, a citizen of that State, and concerning property situated there, and was payable there, . . . and is not such a credit or property within this State as will confer jurisdiction. To take any other view would be to hold that it existed, had its situs, and was liable to attachment in every State in this Union where the defendant happened to have an officer upon whom process could be served as a condition precedent to its being permitted to do business in such State."

Upon the argument that because the defendant is suable in Pennsylvania by service upon its local agent, that, therefore, the plaintiff, as a creditor of the defendant, is suable also in that State, it may be said, following the Minnesota case above cited, that while Strause might have sued the Connecticut company in Pennsylvania by serving his summons upon its agent in Pennsylvania (by service upon the Insurance Commissioner in Minnesota, as required by its laws), this does not prove that the debt has a situs in Pennsylvania. Such action would be in personam and not in rem, and it would be immaterial where the situs of the debt would be. Besides the creditor may give the debt a (231)situs there, for it naturally follows his person, and he can take it anywhere, but a third person claiming to be a creditor of the creditor can not do this. He has no power to change the situs of the debt or give it a situs where it would otherwise be.

Statutes requiring domestication, or the appointment of a local agent by nonresident corporations, as prerequisites to doing business in a State, enable any plaintiff to get personal service upon such corporation in an action upon its liabilities to such plaintiff, but it does not remove the corporation's property to such State nor the situs of its debts, which have been created elsewhere, and it is only upon the latter ground that the indebtedness of the defendant, a Connecticut corporation, to the plaintiffs could be attached in Pennsylvania.

In Boyd v. Insurance Co., 111 N.C. 372, the point now presented was not discussed nor adjudicated, nor indeed does it appear that the insurance company, the garnishee, was not a Virginia company, which would have made the situs of the debt there and attachable. At any rate the validity of the attachment was not questioned. Chicago R. R. v. Sturm, 174 U.S. 710, also relied upon by defendant, does not apply, for it is not contended that the defendant here is a Pennsylvania corporation.

Affirmed.

Cited: Biggs v. Life Ass'n., 128 N.C. 7; Sexton v. Ins. Co., 132 N.C. 2;Goodwin v. Claytor, 137 N.C. 235; Williams v. Heptasophs, 172 N.C. 789,790.

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