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(230 P.) situs of the debt. Even though the garnishee | The facts in the Ming Case were: Ming, is in the jurisdiction, if the debt be not also a resident of Arizona, insured with the Nain our jurisdiction it cannot be legally ap- tional Fire Insurance Company, a Connectpropriated to the payment of plaintiff's judg. icut corporation, his property in Arizona. ment. The court must have jurisdiction of The policy of insurance was issued by the the debt garnished. The attitude of the company's agency in California, where it courts on the much-vexed question as to the bad qualified to solicit insurance. The proplocality of choses in action for purposes of erty having been destroyed by fire and the garnishment is well stated in Harvey v. insurance company failing to pay the inThompson, 128 Ga. 147, 57 S. E. 104, 119 surance, suit was brought by Ming in the Am. St. Rep. 373, 9 L. R. A. (N. S.) 765, as courts of Arizona. The insurance company follows:

answered that it had been sued in the Cali“The question as to where is the situs of fornia courts by Ming's creditors resident intangible property, such as choses in action, therein and garnished and had paid out for the purpose of attachment and garnishsaid insurance in satisfaction of judgments ment, is one that has been the subject of nu- obtained against it in California by such merous decisions. The conflict of opinion on creditors. Now, although the contract of inthe subject is distressing and hopeless. In

surance was made and payable in Arizona, some cases it is held that the situs, for the pur- where Ming, the creditor, resided, for the pose of garnishment proceedings, is the domicile of the principal defendant, in others that purposes of the garnishment proceedings the it is the domicile of the garnishee, and still situs of the debt was held to be in California others that it is the domicile of the debtor or where his creditors resided and where the wherever he may be found and sued. 20 Cyc. insurance company had general offices and 1036; Brown on Jurisdiction (2d Ed.) g 150." did business, although a resident of the state

of Connecticut. In the Ming Case neither The rule best adapted to the efficient em

the garnishee nor the garnishment creditors ployment of the writ of garnishment, for the were residents of Arizona.

In the present purpose it was evidently intended—to aid case both the judgment creditor and judgthe creditor in collecting his debt-is, we

ment debtor at the time of entry of judgthink, the one adopted by the federal Su- ment were residents of Arizona, and at the preme Court in Harris v. Balk, 198 U. s. time of garnishment both the judgment cred. 222, 25 S. Ct. 626, 49 L. Ed. 1023, 3 Ann.itor and the garnishee were either residents Cas. 1084, wherein it is stated:

or in the jurisdiction of the court. It was

held in the Ming Case that Ming could have “Attachment is the creature of the local law; sued the insurance company in California that is, unless there is a law of the state pro- even though it was a foreign corporation and viding for and permitting the attachment it he a nonresident, and acquired jurisdiction cannot be levied there. If there be a law of of the subject-matter by attachment or garthe state providing for the attachment of the debt, then if the garnishee be found in that nishment proceedings, since it was shown state, and process be personally served upon the insurance company had property and him therein, we think the court thereby ac- effects in the state of California. And for quires jurisdiction over him, and can garnish that reason his California creditors could the debt due from him to the debtor of the maintain the garnishment in California. plaintiff and condemn it, provided the garnishee So we think in this case defendant Harry could himself be sued by his creditor in that E. Weitzel, although his debt was for wages state.”

earned and payable in Mexico, could main

tain a suit in the courts of Arizona against When we were yet a territory, the prede- the Southern Pacific Company of Mexico, cessor of this court, in National Fire Insur-and, because of its being in Arizona and ance Co. v. Ming. 7 Ariz. 6. 60 P. 720, fol. having property and effects therein, could lowing, as it was bound to do, an earlier Su- secure personal service and a judgment in preme Court decision, said:

personam against it for the amount it owed “The situs of a debt for purposes of garnish

defendant. That being so, under the rule ment has, however, been a vexed question, and in the Ming Case, and the rule in the United has been variously answered. Some courts States Courts (Bingen beimer Mercantile Co. hold that the situs of a debt is at the residence v. Weber [N. D.) 191 N. W. 620, 27 A. L. R. of the creditor; others, that it is at the resi- 1392, and Annotation, page 1396 et seq.), Jose dence of the debtor; and still others, that it phine Weitzel was entitled to judgment, unis wherever it is payable. In the case of Rail- less the fact that such judgment when paid road Co. v. Sturm, 174 U. S. 710, 19 Sup. Ct. would not be an acquittance in the courts 797, 43 L. Ed. 1144, the Supreme Court has of Mexico would and should prevent it. settled the question for this court by deciding

[4] It was stipulated by the parties that that the situs of a debt for purposes of attachment and garnishment, following the policy a lawyer of the bar of Mexico, presumably of the law which protects home creditors familiar with the laws and policy of his through administration proceedings, is at the country, a Mr. Ybarre, would testify that domicile of the debtor, or wherever the latter upon the facts of this case an Arizona judg. may be found and sued by the creditor." ment could not be pleaded in the Mexican

courts as a bar or defense to a suit for the ceedings, and that Nadel would be entitled
same debt in that country. As between the to sue the bank in Germany and recover, Lord
different states of the Union such a judg- Justice Williams Vaughan said:
ment would be a bar, since the federal Con-

"I do not think that ultimately it was disputstitution requires that each state give fulled that such a payment would be no answer to faith and credit to the judgments of the oth- the action. It appears to me to be clear that er states. Harris v. Balk, supra; Louisville a garnishee order is of the nature of an execu& N. R. Co. v. Deer, 200 U. S. 176, 26 S. Ct. tion, and is governed by the lex fori; and by 207, 50 L, Ed. 426; Baltimore & 0. R. Co. international law an execution which has been v. Hostetter, 240 U. S. 620, 36 S. Ct. 475, 60 carried into effect in a foreign country under L. Ed. 829. These cases definitely settle that foreign law, and has taken away part of a garnishment judgments in cases like this fall man's property, is not recognized as binding. within the protection of the full-faith and There can be no doubt that under the rules of

international law the Dresdner Bank could not credit clause of the federal Constitution, and

set up, in an action in Berlin, the execution that payment after judgment in one juris- levied in this country in respect to this debt. diction will be a bar against the collection of If we consider the converse case it is clear, to the debt in any other jurisdiction. Prior to my mind, that we should take that view of a these decisions of our highest court, however, similar transaction occurring abroad." parties have been made to pay the same debt twice, through no fault or negligence of their Lord Justice Stirling, commenting on the own, because the second jurisdiction invokedi same facts, used this language: refused to recognize jurisdiction, either over “Mr. Dicey, at page 318 of his treatise on the subject-matter or person, in the first the Conflict of Laws, points out the rule of law court. National Bank v. Furtick, 2 Marv. that debts or choses in action are generally to (Del.) 35, 42 A, 479, 44 L. R. A. 115, 69 Am. be looked upon as situate in the country where St. Rep. 99.

they are properly recoverable or can be enThe garnishee is in a sense a mere stake- forced. On the facts of this case, the debt of

the bank to Nadel would be properly recoverholder. From a monetary standpoint, it can make no difference to him whether he pays taken that the order of this court would not

able in Germany. That being so, it must be what he owes to his employee or to the cred-protect the bank from being called on to pay itor of such employee, but he is interested in the debt a second time. That is a good reason being protected against a double liability. why the order should not be made, for to make While it is probable the Mexican courts it would be inequitable and contrary to natural would take notice of a payment of the debt justice." in Arizona and refuse to compel a second payment, there is no international rule, or [5] The Court of Appeals accordingly held law, or treaty, so far as we know, requiring that the English creditors were not entitled that they give faith and credit to judgments to the garnishment, either on grounds of natof this country's courts. The only case we ural justice or legal right. It seems to us, have found like the one in the matter of di- since the services were all rendered in the verse nationality and residence is Martin v. Republic of Mexico for a corporation whose Nadel (Dresdner Bank, garnishee), 2 K. B. plant is entirely in that country, and since Div. (1906) 26. That was a case wherein the debt was made and payable therein, the his English creditors sought to subject a company ought not to be compelled to pay local bank credit of Nadel's, who was & cit- such debt to an Arizona creditor when it is izen and resident of Germany, to the pay- not only possible but probable it would have ment of their debts by garnishment proceed to pay it again. ings in the English courts. After stating The judgment is affirmed. the contention of the garnishee bank that the German laws would not recognize a payment MCALISTER, C. J., and LYMAN, J., con. made in England under garnishment pro- cur.

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(230 P.)

8. Mines and minerals m 103Corporations UNITED STATES SMELTING, REFINING treated as separate and distinct in absence

& MINING EXPLORATION CO. et al. V. of common stock holders or directors. WALLAPAI MINING & DEVELOPMENT Corporations having separate charters and Co. (No. 2154.)

no common stockholders or directors must be

treated as separate and distinct, though one or (Supreme Court of Arizona. Dec. 10, 1924.) more were holding companies and another a

subsidiary, organized to operate mines taken I. Corporations Emw432(5)-Burden of proving over by former under contract, în absence of

agency of party contracting on party alleging averment of facts showing that separate corfact.

porate existence is mere sham, used to conceal Where written agreement, declared on as truth, or that organization and control are such breached, contained no words indicating that that one is but instrumentality or adjunct of one, with whom it purported to be made, was

another. acting for another, it was incumbent on plain-9. Appeal and error ww1003—Jury's verdict on tiff to establish allegation that he was agent

nonconflicting evidence not binding on Suduly authorized to act for defendant corpora

preme Court. tions.

Where evidence in all material ways points 2. Corporations Ons 397 — Agency, in execu same direction, and question is not its truth or tion of contract, for corporation not then in weight, but its effect, jury's verdict is not bind. being, impossible.

ing on Supreme Court. One cannot act for corporation, not then in 10. Evidence Om597--Jury cannot conjecture being, in executing contract; agent without and assume necessary controlling facts not principal being impossible.

in evidence.

Jury, in arriving at verdict, have no legal 3. Corporations @ww 406 (4)—That party mak. right, in absence of evidence, to conjecture and ing contract was general or field manager of

assume necessary and controlling facts. corporation held not to show his agenoy therefor.

Appeal from Superior Court, Mohave Coun. That party executing contract was general ty; E. Elmo Bollinger, Judge. or field manager of corporation at time and long afterward held not to show that he was its

Action by the Wallapai Mining & Develop duly authorized agent in execution thereof. ment Company against the United States 4. Corporations Cw432(6)-Letter heads held Smelting, Refining & Mining Exploration not competent evidence of agency.

Company and another. Judgment for plainLetters written by party to contract, bear- tiff, and defendants appeal. Reversed and reing letter heads of corporations, of which he manded, with direction to dismiss complaint. was employee, are not competent evidence of Carl G. Krook, of Kingman, and' Alfred his agency therefor in executing contract. Sutro, of San Francisco, Cal., for appellants. 5. Principal and agent Eww22(2), 122(1) - Pierce and R. L. Alderman, both of Los

O. W. Herndon, of Kingman, and Frank Agent's declarations not evidence of fact or extent of agency.

Angeles, Cal., for appellee. Declarations of alleged agent are not evidence of fact nor extent of agency, but, at ROSS, J. The Wallapai Mining & Developbest, are mere hearsay, not admissible against ment Company, as plaintiff, recovered judgprincipal, whether oral or written, until agency ment against the defendants United States is proved by other evidence.

Smelting, Refining & Mining Exploration 6. Mines and minerals eww 105(2)-Officer con- Company and the United States Smelting, Re

tracting personally held not shown to be fining & Mining Company, corporations, for agent.

the sum of $20,000, and the latter appeal. That consulting engineer and general man

We will designate the Wallapai Company ager of company, which took over and operated as plaintiff and the two defendants as defendmines under contract, declared on as breached, ants, or as the Exploration Company and the was also official of defendant corporations, one Mining Company. of which was not organized until after contract

Briefly, plaintiff states its cause of action was made by him, held not evidence that it was defendants' joint contract, or that he or com

as follows: That on December 14, 1909, it pany operating mines was defendants' agent in

was the owner of mining claims known as 80 doing.

the Tennessee group of mines, situate in Mo

have county, Ariz.; that on that date it 7. Principal and agent em 19, 119(1), 147(2)-granted to A. P. Anderson the sole and ex

One dealing with agent must ascertain fact clusive right and option to purchase at any of agency and nature and extent of authority; time within ten years, upon the terms therein one claiming agency must prove it. To bind principal, one dealing with agent, the personal property, consisting of buildings,

stated, said group of mines, together with all whether general or special, must ascertain, not only fact of agency, but nature and extent of machinery, and improvements; that said Anauthority, and, if either is controverted, bur- derson (who was also made a party defendden is on him to establish it.

ant but dismissed, not having been served For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

with process) was in the making of the con-, ploration Company, were introduced, not that tract "acting for and on behalf of the said their contents had any bearing upon the isdefendants,

and the said defend- sue of agency, but upon the theory that the ants then and there pursuant to the terms of letter beads themselves were evidence of An

said agreement entered into possession of derson's agency. There were also two let· said premises and control of the aforesaid ters on the letter beads of the Mining Comproperties, and worked and developed the pany introduced, but they were written subsame and extracted and shipped ores there- sequent to December 14, 1917, the date the from"; that one of the covenants of the Tennessee group of mines were surrendered agreement was that Anderson, or his assigns, to the plaintiff. or the parties for whom he was acting, if [5] These letter beads were not competent property was surrendered, would leave in evidence of such agency and the court erred good repair and working order, reasonable in admitting them for that purpose. The rule wear and tear thereof excepted, all tools, is well established, not only in this state but machinery, buildings, appliances, and person- elsewhere, that the declarations of an alleged al property situate thereon belonging to agent are not evidence of the fact of agency, plaintiff ; that on December 14, 1917, said nor the extent thereof. mines and premises were surrendered to

“The agency must be proved by other eviplaintiff by defendants, but that defendants dence before his (the agent's) acts and statefailed to keep said covenant and did not leave ments can be shown against the principal. At the tools, machinery, buildings, appliances, best such declarations are mere hearsay. The and personal property, but on the contrary rule applies equally to oral statements of the destroyed, removed, and converted such prop- agent and the written statements, contained in erty (enumerating it), to plaintiff's damage letters, Jetter heads, receipts, or other docuin the sum of $22,665.

ments implying, admitting, or claiming authorThe defendants filed separate identical an- third person.” 31 Cyc. 1652.

ity to act as agent in the negotiations with the swers denying the allegations of the complaint. The case was tried before a jury, See, also, Navajo-Apache Bank & Trust Co. whose verdict was in favor of plaintiff. v. Willis, 21 Ariz. 610, 193 P. 297; Franklin

There are a number of assignments, but as v. Havalena Mining Co., 18 Ariz. 201, 157 we view the case it will not be necessary to 986; Petterson v Stockton, etc., R. Co., 134 consider them all. It is contended by the de-Cal. 244, 66 P. 304; Smith v. Liverpool, etc., fendants that the verdict and judgment are Co., 107 Cal. 432, 40 P. 540; Blanke Tea & not supported by the evidence, and that the Coffee Co. v. Rees Printing Co., 70 Neb. 510, court erred in the admission, over their ob- 97 N. W 627; Klumpp et al. v. American jection, of certain evidence. Our attention Hardware Mfg. Co., 50 Misc. Rep. 662, 99 N. will be confined to these two assignments. Y. S. 326; Heimerdinger v Lehigh Val. R.

[1-4] The written agreement, declared on Co., 26 Misc. Rep. 374, 56 N. Y. S. 188. as breached, on its face is between plaintiff [6] The allegation of the complaint that as party of the first part and Anderson as the defendants, Exploration Company and party of the second part, and contains no Mining Company, “then and there pursuant words indicating or suggesting that the lat- | to the terms of said agreement entered into ter was acting for any one except himself. It possession of said premises and control of the was therefore incumbent upon plaintiff to es- | aforesaid properties, and worked and developtablish by competent evidence its allegationed the same and extracted and shipped ores that Anderson in entering into said contract | therefrom," has no support in the evidence. was the agent of the defendant companies, As we have stated, the Esploration Company duly authorized to act for them. This the was not organized until more than two years plaintiff did not do. At the time of the mak- after the making of said contract. It was ing of the contract the Exp ration Company not an entity and could not, by agent or othwas not in esse. It was not organized until erwise, take possession of the Tennessee February 24, 1912, over two years after date group of mines, work and operate the same. of contract. So far as this defendant is con- It is undisputed that six days before Andercerned, it was impossible for Anderson to son entered into contract with plaintiff there have acted for it in the execution of contract. was organized a corporation known as the It is inconceivable that there should be an Needles Mining & Smelting Company, of agent without a principal. The evidence which Anderson was the consulting engineer, upon this point, as it affects the Mining and that it was this company that “then and Company, is that Anderson was its general there” took possession of the Tennessee group manager or Pacific Coast manager at the time of mines, worked and developed them, ex. of entering into contract, and for a long time tracted and shipped ores therefrom; that Anthereafter. But this of itself proves noth- derson and wife on September 11, 1910, asing. Over objection, many letters written by signed his contract to the said the Needles Anderson and other employees of the Ex- Company; that thereafter, on August 26, ploration Company and the Mining Company, 1910, Anderson and wife quitclaimed the Tenbearing the letter heads of defendant Ex- nessee group of mines to said company; that

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(230 P) it was against this company the property was , Mining Co., 18 Ariz. 201, 157 Pac. 986, quotassessed by the county and state taxing au-ing from Browning v. Hinkle, 48 Minn. 544, thorities and that it paid the taxes on said 51 N. W. 605, 31 Am. St. Rep. 691: property from 1909 to 1917; that it employed

"The mere fact that one is a director, presiand paid the miners who worked in mine; dent, secretary or other officer of a corporathat it was sued, according to the court rec- tion does not make all his acts or declarations, ords of Mohave county, for personal injuries even though relating to the affairs of the corby employees injured while working in poration, binding upon the latter. Such permines; that it rendered (as the agreement sons are mere agents, and their declarations are with Anderson required) regular statements binding upon the corporation only when made to the plaintiff of the ore produced; that it in the course of the performance of their aupaid plaintiff, in conformity with the terms tions constitute a part of their conduct as

thorized duties as agents, so that the declaraof contract, on the 14th day of December of agents—a part of the res gesta.” 'each year, for eight years, the sum of $10,000 fixed royalties; and that it was the en

[7] It appears that during all this time tity that was openly and unquestionably op | Anderson was an officer in three or four otherating the Tennessee group of mines the eight er companies, all of which, as their names years they were operated under the Ander- would indicate, were engaged in mining. son contract.

They were: Gold Road Mines Company, The plaintiff in its brief admits that the Mammoth Copper Mining Company, and operations at the mines were carried on by Rainbow Mining Company. If Anderson in the Needles Company, but claims such com

some of his letters had used the letter heads pany was acting as the agent of the defend- of one of these companies, the claim might ants. Its position is stated in these words:

just as reasonably have been set up that it "We do not claim that the Tennessee busi

was a party to the contract and to the alleged was not conducted in the name of the conversion, as to claim the defendants were Needles Mining & Smelting mpany, but we

parties. In Brutinel v. Nygren, 17 Ariz. 491, do assert that that company was not the real 154 P. 1042, L. R. A. 1915F, 713, the question party in interest; that it was a subsidiary was not whether Dunn was the agent of the and agent of the defendants; that it was di- defendant, but the extent of the agency. In rected and controlled in the operation of the discussing that question the important rule, Tennessee mine by these defendant companies, which we understand to be the general one, and that it had no independent will of its own, and that the wrongs committed during the op

was thus stated: eration of the Tennessee property were under "The mere fact that one is dealing with an the direction of defendants, the 'parent organi- agent, whether the agency be general or special, zations.''

should be a danger signal, and, like a railroad

crossing, suggests the duty to 'stop, look and The evidence to support the assertion that listen,' and if he would bind the principal is the Needles Company operated the mines as bound to ascertain, not only the fact of agency, a subsidiary and agent of defendants, that but the nature and extent of the authority, and it was directed and controlled by defendants, in case either is controverted the burden of that it had no independent will of its own, proof is upon him to establish it." and that it was not the real party in interest, [8] The defendants and the Needles Comis more attenuated, if possible, than that of pany were distinct entities. Each had its fered in support of plaintiff's contention that own charter. There is no showing whatever Anderson in executing optional contract was that their stockholders were the same either acting as the agent of defendants. The only in whole or in part, or that they had a compossible clue in the evidence to such a con mon directorate, or that any director of one clusion is that Anderson, who was the con was also a director of the other. There is sulting engineer of the Needles Company the bare statement by a witness for plainfrom its organization until 1914 and there- tifl that the defendant companies were the after its general manager, was also Pacific parent companies, or that one of them was Coast manager of the Exploration Company, such, and the Needles Company a subsidiary. or, as one witness (the plaintiff's president) | Whether it was meant by this that the Exexpressed it, the field manager of defendants ploration Company, or the Mining Company, in charge of their principal business. The or both of them, were the holding companies, fact that Anderson was an official of the and the Needles Company was organized to Needles Company and also of both the defend- operate the Tennessee Group, we have no ants would not of itself be any evidence what way of knowing. But, if that be the meanever that the contract entered into by himing, still they would be separate and distinct personally with plaintiff was the joint con- corporations, to be treated as such “unless," tract of the defendants, or that he was act- as is said in Martin v. Development Co. of ing as the agent of defendants in securing America, 240 F. 42, 45, 153 C. C. A. 78, 81, contract, or that he or the Needles Company facts are averred which show that such sepwas their agent or agents in operating the arate corporate existence is a mere sham, or mines or in paying the royalties. As was has been used as an instrument for conceal. said by this court in Franklin v. Havalena ing the truth, or where the organization and

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