CHAPTER CC. PROCEEDINGS AGAINST FOREIGN CORPORATIONS BY GARNISH SECTION MENT. SECTION 8069. Garnishment of funds held by foreign corporations for oth ers. 8070. Circumstances under which for- 8073. Situs of a debt due by a foreign 8074. Injunctions restraining domestic citizens from proceeding in a foreign State to subject exempt wages due from for- 8075. Garnishment of the wages due 8078. Duty of the garnishee to notify 8079. Necessary that the garnishee § 8069. Garnishment of Funds Held by Foreign Corporations for Others. A proceeding by garnishment is dual in its nature. In so far as it is a proceeding against the principal debtor, it is a proceeding in rem; because it results in attaching money or property belonging to him which is held by another for him. But in so far as it is a proceeding against the custodian of his money or property, that is to say, against the garnishee, it is a proceeding in personam; because, like an ordinary action commenced by summons, it proceeds upon notice, upon an answer and a hearing, and results, if successful, in a personal judgment against the garnishee.' When the 1 That this is the proper conception of the nature of the proceeding, see Tunstall v. Worthington, Hempst. (U. S.) 662; Mahany v. Kephart &c. R. Co., 15 W. Va. 609, 625. nature of the proceeding is thus understood, it would seem to follow, on principle, and as a general rule, that where a foreign corporation is established in the domestic State in such a manner that it is liable to be there sued in an ordinary action in personam, it is there liable to garnishment, provided it have in its custody money or property belonging to another, appropriate to be reached by that proceeding, under principles hereafter stated.' The general rule, subject to exceptions, is believed to be that a foreign corporation may be summoned and charged as garnishee (or, in Massachusetts and Maine, as a trustee) in respect of any debt owing to the principal debtor in the attachment suit, or to the judgment debtor where the plaintiff's demand has ripened into a judgment, where three circumstances concur: 1. Where the attachment or judgment debtor could maintain an action at law against the corporation to recover the debt which is attached in its hands. 2. Where the situs of the debt is in the domestic State, so that the debt is subject to condemnation there, under its laws relating to attachments and executions. 3. Where the corporation has such a residence or agency within the domestic State as renders it amenable to the judicial process of such State. The fact that 1 In conformity with this principle, it has been held that a foreign railway corporation which has accepted, in Pennsylvania, the privilege of extending its road through that State upon the condition of keeping at least one manager or officer resident therein, on whom process in actions may be served, may be made garnishee in an "attachment execution" in respect of a debt owing by it to a non-resident. Fithian v. New York &c. R. Co., 31 Pa. St. 114. * It will appear, from examination of the decisions, that in many States a foreign corporation transacting business in the domestic State may be summoned as garnishee for a debt it may owe anywhere in the State where suit for such debt could be brought. Selma &c. R. Co. v. Tyson, 48 Ga. 351; Bank of United States v. Merchants' Bank, 1 Rob. (Va.) 573 (proceeding in equity in the nature of garnishment); Hannibal &c. R. Co. v. Crane, 102 Ill. 249; 8. c. 40 Am. Rep. 581; Rainey v. Maas, 51 Fed. Rep. 580; Brauser v. New England Fire Ins. Co., 21 Wis. 506; Knox v. Protection Ins. Co., 9 Conn. 430; 8. c. 25 Am. Dec. 33; Libbey v. Hodgdon, 9 N. H. 394. It has been held in New Hampshire that foreign corporations doing business within the domestic State, under the operation of statutes which make them amenable to the jurisdiction of its courts, may be served with process of garnishment and made liable as garnishees in respect of funds or property in their custody belong a foreign corporation is exempt from process of garnishment under the laws of its home State will not exempt it from such process when doing business within another State, where the laws of the latter State provide for such process; since when it enters the other State to do business, it does it upon the condition of compliance with its laws.1 § 8070. Circumstances under Which Foreign Corporations not Subject to Garnishment.-This question is very much the same as the question under what circumstances a foreign. corporation is liable to an ordinary action in personam in the domestic State. In so far as the proceeding by garnishment is a proceeding for the attachment of a debt, considered as property, due by the garnishee to the principal debtor, it is a proceeding in rem; and unless the levying officer recites in his return that he has attached the goods and chattels, rights and credits of the debtor in the hands of the garnishee, the court ing to third persons. Libbey v. Hodgdon, 9 N. H. 394; McAllister . Pennsylvania Ins. Co., 28 Mo. 214. 1 First Nat. Bank v. Burch, 80 Mich. 242; s. c. 45 N. W. Rep. 93. This case holds that under Pub. Acts Mich. 1889, No. 266, providing that any corporation, foreign or domestic, other than municipal, may be garnished, a foreign mutual benefit corporation,owing moneys on a certificate of membership issued to a resident of Michigan for the benefit of persons dependent on him for support, may be garnished in that State by a creditor of the holder of such certificate, though, by the law of the State in which the corporation is organized, such moneys are exempt. Ibid. That foreign corporations were not subject to trustee process (garnishment) in Massachusetts and Maine until recent statutes, see Danforth v. Penny, 3 Met. (Mass.) 564; Gold v. Housatonic R. Co., 1 Gray (Mass.), 424; Larkin v. Wilson, 106 Mass. 120; Ting --- ley v. Bateman, 10 Mass. 343; Ray v. Underwood, 3 Pick. (Mass.) 302; Hart v. Anthony, 15 Pick. (Mass.) 445; Nye v. Liscombe, 21 Pick. (Mass.) 263; Lovejoy v. Albee, 33 Me. 414; 8. c. 54 Am. Dec. 630; Columbus Insurance Co. v. Eaton, 35 Me. 391; Smith v. Eaton, 36 Me. 298; s. c. 58 Am. Dec. 746. This rule was changed in Massachusetts, by Mass. Laws 1870, ch. 194, and in Maine by Pub. Laws Me. 1877, ch. 153 (Rev. Stat. Me. 1883, ch. 86, 8). Under this last statute it has been held that in cases where the agent of the foreign corporation doing business within the State has property within his hands belonging to a non-resident defendant,such property may be attached, and the foreign corporation held as trustee, though the principal defendant has not been previously served with notice. Cousens v. Lovejoy, 81 Me. 467; s. c. 17 Atl. Rep. 495. See also Gould v. Bangor &c. R. Co., 82 Me. 122; s. c. 19 Atl. Rep. 84. acquires no jurisdiction to proceed to the condemnation of such goods and chattels, rights and credits. But in so far as the proceeding involves a summons to the garnishee, requiring him to appear and answer, and provides for further proceedings against him upon his answer, or in default of his answer, which may result in a judgment against him, it is a proceeding in personam. Now, in so far as it is a proceeding in personam against the foreign corporation, no jurisdiction can be acquired unless the situation of the foreign corporation within the domestic State is such that an ordinary action in personam could be prosecuted against it in the domestic tribunal. It follows from these considerations that a foreign corporation which is entirely non-resident, is not subject to garnishment, and cannot be made so, for the States have no power to extend their judicial process into other States; but if it is resident in the domestic State in such a sense as makes it amenable to the ordinary judicial process of such State, then it is amenable to process of garnishment, unless the statute governing the question is so framed as to exclude such a conclusion. There is certainly no principle of public policy or justice upon which an intention can be imputed to the legis lature to distinguish between actions brought directly against foreign corporations for the recovery of a debt, and those in which they are indirectly brought before the court for the purpose of satisfying the demand of some third person. In both cases, it has been said, the inconvenience is the very same, and it is no more in the case of a foreign than of a domestic corporation. The conclusion is that, unless the plain language of the statute otherwise imports, foreign corporations are subject to the process of garnishment on the same condi 'Keane v. Bartholow, 4 Mo. App. 507; Epstein v. Salorgne, 6 Mo. App. 352, 354; Brecht v. Corby, 7 Mo. App. 300; Norvell บ. Porter, 62 Mo. 310; Connor v. Pope, 18 Mo. App. 86; Swallow v. Duncan, 18 Mo. App. 622. See Pennsylvania R. Co. v. Peo ples, 31 Ohio St. 537, and Rainey .. Maas, 51 Fed. Rep. 580,-where these ideas are brought out with sufficient clearness. And compare Squair v. Shea, 26 Ohio St. 645, where the same principle was applied in the case of the garnishment of a non-resident person. tions as domestic corporations, or natural persons, in all cases where direct actions may be prosecuted against them to recover the debt on account of which they are garnished.' § 8071. Garnishment of the Funds of Foreign Corporations in the Hands of Resident Custodians. — Garnishment, or "trustee process," as it is called in Massachusetts, is the usual mode of levying an attachment upon property or money which is held in custody for the principal debtor by his creditor. It being established that the property of a foreign corporation, situated within the domestic jurisdiction, is subject to attachment, it follows that such an attachment may be levied by garnishment or by trustee process, directed against an inhabitant of the domestic State who owes a debt to the foreign corporation, and that a judgment against such inhabitant, in the proceeding by garnishment, will protect him against a subsequent action brought against him by the corporation to recover the debt.2 § 8072. Attachment of a Debt Due from a Citizen of Another State to a Foreign Corporation of a Third State. - A citizen of Rhode Island attached in Connecticut a debt due from a citizen of Connecticut to a corporation of Pennsylvania. That corporation had become insolvent, and, under the laws of Pennsylvania, had made an assignment for the benefit of creditors, of which the Connecticut debtor had notice. It 1 Brauser v. New England Fire Ins. Co., 21 Wis. 506, opinion by Dixon, C. J. When, therefore, a foreign corporation had extended the exercise of its prerogative franchises into the domestic State, presumably with the consent of the legislature of such State, as by assuming to operate a railroad there, it was held that it was subject to garnishment in like manner as a domestic corporation. Pennsylvania R. Co. v. Peoples, 31 Ohio St. 537. So, where a manufacturing company, organized under the laws of another State, had its principal office and place of business, and place of corporate meetings, and place of deposit of its books and records, in the State of Ohio, it was held that it was subject to garnishment in a court of the United States sitting in that State, in like manner as a domestic corporation of Ohio. Rainey v. Maas, 51 Fed. Rep. 580. 2 Ocean Ins. Co. v. Portsmouth &c. R. Co., 3 Met. (Mass.) 420; Hazard v. Agricultural Bank, 11 Rob. (La.) 326. |