Ward v. Kolman Manufacturing Company

148 S.E.2d 27 (1966)

267 N.C. 131

F. John WARD, Plaintiff, v. KOLMAN MANUFACTURING COMPANY, John L. Healy, C. A. Dubbe, Ed. F. Burg, Patrick J. Healy, F. N. Kolberg, Mrs. F. N. Kolberg, and Mrs. Blanche Zetterlund, Executrix, Defendants.

No. 532.

Supreme Court of North Carolina.

May 4, 1966.

*29 Poyner, Geraghty, Hartsfield & Townsend, by John Q. Beard, Raleigh, for plaintiff appellee.

Purrington, Joslin, Culbertson & Sedberry, by William Joslin, Raleigh, for defendant appellants.

HIGGINS, Justice.

Both the corporation and the individual defendants base their motions to dismiss upon these grounds: (1) The "property" the plaintiff attempts to attach is a note executed by an Illinois corporation (Athey) payable to and held by a South Dakota corporation (Kolman) under a contract made in South Dakota, to be performed there. (2) The note has been assigned to the individual defendants who also reside in South Dakota. (3) The situs of the note is not in North Carolina and the North Carolina court cannot acquire jurisdiction either of the note or of the defendants. The defendants' motions to dismiss do not challenge the court's findings of fact or its order on any ground except lack of jurisdiction. The court has undertaken to acquire jurisdiction of the indebtedness and deal with the defendants' interest in it. Since the defendants are non-residents and not personally served, in personam judgments cannot be rendered against them. The court must act upon their property rights but can do so only if the property is in the court's custody. Trinity Methodist Church v. Miller, 260 N.C. 331, 132 S.E.2d 688.

In their brief the defendants argue that the affidavit of the newspaper showing the publication of the notice, and the sheriff's endorsement and return showing the levy in the garnishment proceeding, were not timely filed as the law required. The record, however, shows the sheriff served the notice of the levy upon the garnishee (Athey) promptly and that the affidavit of the printer, though made late, nevertheless shows timely publication of the notice in the newspaper. After the court acquired control of the debt by the garnishment order, the objections are not sufficient to justify a motion to dismiss. Jenette v. Hovey & Co., 182 N.C. 30, 108 S.E. 301; Mills v. Hansel, 168 N.C. 651, 85 S.E. 17. The court has power, in its discretion, to allow amendments. Thrush v. Thrush, 245 N.C. 63, 94 S.E.2d 897.

The plaintiff filed his original complaint against the corporation alone. When it appeared there was, or might be an attempt to dissolve the corporation and require Athey, under the terms of the note to pay the amount due to the shareholders rather than to the corporation, the plaintiff amended his complaint, making the stockholders defendants. The condition of the record indicates that Athey owes the *30 note, either to the Kolman corporation or to its stockholders. The plaintiff seeks to have the interests of both before the court so that the garnishee may be ordered to pay to the plaintiff rather than to Kolman or its stockholders. This case is now in the pleading stage. When the facts are developed in the trial, one or both of the defendants may be found to have an interest in the debt of which the note is but evidence. Both the corporation and the individual stockholders signed the agreement to pay the plaintiff. Garnishment is a proper ancillary remedy by which to discover intangible property rights and subject them to attachment.

In order to subject a debt to garnishment and to give the court jurisdiction to act with respect thereto, "(T)hree things should occur: (a) The corporation who is the garnishee in this case must have such a residence and agency within the State as renders it amenable to the process of the court; (b) the principal defendant, who is the plaintiff's debtor, must himself have the right to sue the garnishee, his debtor, in this state, for the recovery of the debt; (c) it must appear that the situs of the debt is in this state." Goodwin v. Claytor, 137 N.C. 224, 49 S.E. 173, 67 L.R.A. 209.

The facts found by Judge Copeland, and which are not challenged, fully justify him in denying the motion to dismiss. According to the allegations of the complaint, the defendants owe the plaintiff. Athey, the garnishee, owes the defendants. The garnishee is located in Raleigh where the defendants could sue on the debt. All requirements discussed in Goodwin are present.

The defendants fail to make objection in the court below upon procedural grounds but relied exclusively upon the lack of jurisdiction. Since the enactment of G.S. § 1-134.1, challenge on other grounds would not waive the objection to jurisdiction. Finch v. Small Business Administration, 252 N.C. 50, 112 S.E.2d 737. Conceding, but not deciding, that the defendants may raise procedural objections for the first time in this Court, nevertheless we have examined the grounds argued in the brief. We do not discover in this voluminous record anything which would justify dismissing the action. The defendants will have time to answer.

Affirmed.

MOORE, J., not sitting.