
    T. F. Duhigg, Appellee, v. Waterloo Gasoline Engine Company et al., Appellants.
    1 PROCESS: Service in Actions Growing out of Agency. An action may not be said to “grow out of” or "be connected with” an office or agency because of the fact that, after the purchase of the article directly from the maker, the agent (1) sold repairs to the purchaser and (2) attempted to remedy defects in the article. (Section 3532, Code, 1897.)
    2 PROCESS: Dealer (?) or Agént (?) One who, under a contract for the exclusive sale of an article in a given territory, makes C. O. D. purchases of the manufacturer, and sells at his own price, with a claim to a portion of the difference between the retail and wholesale price, in case his exclusive right is violated, and who attends to the manual delivery and replacement of defective parts furnished by the manufacturer under his warranty against defective material or workmanship, is a “dealer," and not an “agent," in the sense that service may be made on him in an action against the manufacturer growing out of a purchase from the latter. (Section 3532, Code, 1897.)
    3-PROCESS: Agency and Action Arising out of. Evidence reviewed, and held insufficient to show that one on whom service was made was other than a “dealer,” and that, if agency be conceded, nevertheless the action did not “grow out of” nor was it “connected with” such agency.
    
      Appeal from Polk District Court. — Thomas, J. Guti-irie, Judge.
    
      July 17, 1920.
    Motion to set aside services of original notice and judgment was overruled. The defendants appeal.
    
    Reversed.
    
      Charles F. Maxwell and Myron H. Cohen, for appellants.
    
      Mulvaney & Mulvaney, for appellee.
   Ladd, J.

I. About March 6, 1918, plaintiff, in liis petition, claimed to have purchased of defendants a “Waterloo Boy Tractor” for $1,150; that he had paid out for freight, additional parts, and labor to put the ma- .... chine m condition, amounts aggregating & t> $79.56; that the tractor was represented to plow from 8 to 10 acres a da.y, but was. unable and unfit to do so; that the seller was unable to put it in condition, and that, instead, plaintiff was able to plow only about 100 acres during the plowing season; that, if it had plowed as represented, he would have plowed 22 acres additional, and intended so to do and to put the land in corn; but, owing to the condition of said tractor during the last four days used, though operated by. experts, it was unable to plow more than 6 acres; whereupon, plaintiff tendered the return of the machine, and prayed that'the contract of purchase be rescinded, and that he be reimbursed for the amounts paid out., as stated, and for $1,500 as damages. Original notices were served on the alleged agents of defendants, in accordance with the requirements of Section 3532 of the Code. On January 4, 1919,' the court found defendants to be in default, and. on May-2d following, adjudged each defendant to be in default,- and, on May 7th of the same year, entered judgment for damages in the sum of $1,800, and declared the contract rescinded. Each defendant filed a motion, June 26, 1919, asking that the original notice be set aside and the judgment vacated, on the grounds that such service did not give the court jurisdiction to enter default or judgment, for that G-. MeClelland, the alleged agent of the Waterloo Gasoline Engine Company, Avas not, at the time, and never had been, an officer, agent, representative, or employee of the Waterloo Gasoline Engine Company, and that C. S. Denny, on Avhom the notice to the John Deere PIoav' Company Avas served, AAras not then, and never had been, a.n officer, agent., representative, or employee of the said John Deere PIoav Company. The sole inquiry is whether the court acquired jurisdiction of the. defendant companies by the service of the original notice on these persons. Section 3532 of the Code provides:

. “When a corporation, company, or individual, lias, for the transaction of any business, an office or .agency in any county other than that in Avhicli the principal resides, service may be had on any agent or clerk employed in such office or agency, in all actions. groAviug out of or connected' with the business of that office or agency.”

•. It appears, that the plaintiff, on March 6, 1918, signed an order as purchaser from the Waterloo Gasoline Engine ■Company of .one Model N tractor, at $1/150. This Avas endorsed by “F. M-. Culbertson, salesman,” and a check draAvn by plaintiff for $100, payable, to the company, Aims mailed Avith the order. The tractor was shipped to plaintiff from the company’s factory at Waterloo, and the bill of lading, accompanied Aidtli a sight draft for the balance of the purchase .price, sent to the People’s Savings Bank of Des Moines, and there paid by the purchaser, avIio, obtaining the tractor, took it to his farm. TJp to this time, McClelland had nothing AArhatever to- do AAdth the sale, delivery, or payment of the machine, and these did. not groAV out. of, nor AArere they connected Avitli, the business he Avas conducting at Polk City. McClelland complained that, as all. of Polk County north of Des Moines had been set apart as .territory in Avhicli he had the exclusive sale of. tractors of the company, plaintiff should have purchased of him; but there is no pretense that the deal greAV out of, or. aauis in any manner connected Avith; McClelland’s place of business at Polk City. This conclusion, is not. obviated by the circumstance that McClelland sold plaintiff parts to be used on the tractor, or that he attempted to remedy matters with the tractor. None of plaintiff’s ciaim grew out of McClelland’s efforts, and there was no evidence that any orders for parts were made on the company through McClelland. Even though the company maintained an office or agency at Polk City then, this action neither grew out of nor was connected with the business of such office or agency, and for this reason the service of the original notice on McClelland ivas not good. See Barnabee v. Holmes, 115 Iowa 581; State Ins. Co. v. Granger, 62 Iowa 272; Winney v. Sandwich Mfg. Co., 86 Iowa 608.

II. But tlm Waterloo Gasoline Engine Company did not maintain such an office or agency in the territory which included plaintiff’s farm. McClelland had his place of business at Polk City, where he handled carriages, automobiles, tractors, and engines since January 15, 1917, and during 1918. He handled the tractors of the Waterloo Gasoline Engine Company at that place. When he sold one of these tractors, he made out an order therefor, and mailed it, with his check for $100, payable to the company, and the tractor was shipped to him, with sight draft for balance attached to bill of lading, and he paid this, on delivery. He had in his possession none of the company’s property. The company warranted all parts of the machine as to material and workmanship during the first year, and forwarded new parts upon the return of those Avhich Avere defective, and McClelland attended* to replacing these. The parts AArere shipped invoiced to him, for which he remitted in time to obtain a discount. He purchased at the company’s prices, and sold at those of his OAvn choosing. There was .no agreement betAveen them under Avhich he was to receive salary or commission, or other compensation. Under oral agreement with the company’s agent, he Avas to have the exclusive sale of tractors Avithin Polk County north of the city of Des Moines, the agent saying that, if someone else should sell in such territory, he was to receive a part of the difference between the wholesale and the retail price of the tractor sold; and, as the sale of the tractor was in his territory, he had claimed what had been promised, denominating it a commission. He explained that he had handled goods in no other manner, and thought himself a dealer, and not an agent. J. E. Johnson, in charge of the company’s business at Waterloo, testified that McClelland, as dealer, looks after a tractor which is claimed after sale to be defective, and that parts to replace those found to be defective are shipped to him, without awaiting the return of the defective parts, and that it was his duty to look after the tractors in his territory during the year. But the. only testimony as to warranty was that there was a “warranty as to parts as against defective material and workmanship for within one year from the sale of the tractor. If a part breaks because of defective material or workmanship, we furnish a, new part, on board cars at factory, free, without charge, to replace the old part, on condition that the old part is returned to the factory and found to be defective.” The company performed its obligation, in furnishing the parts, and what else he did was as dealer. Both McClelland and Johnson deny that McClelland ivas employed in any manner by the company, and this was not denied. Some evidence that McClelland had declared himself an agent of the company was adduced; but nothing is better settled than that agency may not be proven against another than the declarant by the declarations of an alleged agent. The agent upon whom service may be made must be the agent in fact, having, representation' and derivative authority. Wold v. Colt Co., 102 Minn. 386 (114 N. W. 243). To constitute one person the agent of another, the former must have been authorized by the latter to act in some respect for him; and, as McClelland ivas not so authorized, he was not agent of the Waterloo Gasoline Engine Company, and service of the original notice on him as agent of said company gave the court no jurisdiction over it.

III. Default was entered against the John Deere. Plow Company on service of the original notice on it through its alleged agent, C. S. Denny. Our inquiry is limited to the issues (1) whether Denny was such agent, and, if so, (2) whether the transaction grew out 01‘ was connected with such agency. It appears .that the John Deere Plow Company occupied a four-story ■ building at Southwest Ninth and, Tuttle Streets in Des Moines. . Thereon were .the signs of. that company, and-stored therein were its implements. These were in the care of one Johnson, who received the company’s manufactured products, and shipped the same out as ordered. Such occupancy has continued several years. During this time, W. S. Denny Company, composed of Denny and his wife, has had an office in the building, and has been selling at retail the company’s products within the city of Des Moines.. On March 15, 1918, nine days after .the order Ava.s given by plaintiff, Deere & Company became owner of all the capital stock of the Waterloo Gasoline Engine Company. Deere & Company appears to be the holding company of the capital stock of the defendant, Avhich is a sales organization, and also of -the stock of another corporation of the same name, engaged in manufacturing the products defendant puts on the market, . At and prior to the deal Avith plaintiff, a portion of the Avarehouse Avas set apart to and occupied by the Waterloo Gasoline Engine Company .Avith implements manufactured by it. After the transfer of its.stock, its products Avere put on the market through the John Deere PIoav Company, defendant herein. Denny testified that he was not -agent, and acted in no manner for the .John Deere PIoav Company; that he paid no rent for the premises occupied by him; that the firm of W- S. Denny Company bought -and paid for all goods sold by it; that Culbertson Avas. trailing agent, for the Waterloo Gasoline Engine Company} and that, as he had. to-go aAvay, he telephoned the Avitness to get a contract from his house for plaintiff to sign, and also to have him sign a check for $100, payable to the company, AAdiich- -he did,. and forwarded said 'contract to Culbertson; that plaintiff • had submitted to him a list of horse-drawn and of tractor-drawn implements, for prices on each, and inquired concerning tractors, and asked to meet Culbertson, to whom the witness' introduced him; that he did not handle the goods of the Waterloo Gasoline Engine Company until the fall of 1918,' and was not aivare that- that company iras referring to him as agent of the John Deere Plow Company; that lie did not sell or assist in selling the tractor to the plaintiff. The witness thus explains the method of doing business:

“If I want a wagon, I give an order to' the Deere Com-' pany to' deliver to John Jones a wagon, and sign my name' to it. ' The order first goes to that office, and the workman delivers the wagon to Jones, and reports the Order to the' factory, and the factory bills it to me, and I pay for it. The order I give is an order for a wagon, or whatever I may not have in my stock. The order directs the Deere Company to ship to John Jones, and, when the company ships to John Jones, it charges that wagon to my account, and the Deere Company then bill me in the regular way, and I pay for it. I collect for the Avagon sold to John Jones. I put my money in'the bank to the account of W. S. Denny Company. Q.' Does any money for any goods you sell go to the account of the John Deere Company? A. No, sir, absolutely not.”

Hammer, cashier of the John Deere PIoav Company, testified that he paid the help of said company, and that Denny ivas not on its payroll, and that he had not been one of its employees, but that he had nothing to do Aidth the adjustments of agents’ commissions; that Denny AAras a retailer; and that neither he nor W. S. Denny Company sells or has sold' implements othemvise than as dealers. The order signed by plaintiff as ’ purchaser and Culbertson as salesman ivas addressed to the Waterloo Gasoline Engine Company, and directed that company to ship from Waterloo to Des Moines at once, sight draft for $1,050 attached to bill of lading, one Model N tractor complete. It ivas so shipped, and, upon payment of sight draft .for the balance of the purchase price, delivered to plaintiff. The latter testified that, in a conversation in February of 1918, Denny informed 'him that he was agent of the John Deere Plow Company; that Denny, when the order was signed, recommended the tractor as the best in the world, and that he was handling it; that, upon the arrival of the tractor, Culbertson and Denny set it up, and drove it to his farm; that Denny told him he was agent of both defendants (though Denny denied having so stated), and that they were really one organization; that witness went to the warehouse to buy, and had never before heard of the Waterloo Gasoline Engine Company; that Denny introduced Culbertson as an expert, to explain certain features of the tractor with Avhich he was not familiar; that he bought the tractor of Denny, who, as he supposed, was agent of the John Deere Plow Company; and that, though the order was on the other company, and the price paid to it, he supposed that the other company was consolidated with said company.

As pointed out, the declarations of Denny, even if made, are not sufficient to establish agency of himself or of W. S. Denny Company; nor was the letter of the Waterloo Gasoline Engine Company to plaintiff, designating him “the agent for John Deere Plow Company goods.” The evidence other than the written contract between Denny and the John Deere Plow Company does not warrant the inference that the former was other than a dealer in the implements sold by the former within the city of Des Moines, or that their relations were not those of seller and purchaser. Though Denny, by himself or through W. S. Denny Company,, handled the company’s implements, there is no room to say that he did so as agent in any respect. Occupancy of its property cannot be ascribed otherwise than to convenience, and the relation of agency is not to be inferred therefrom.

IV. But the relations of Denny to the John Deei’e Plow Company were covered by a contract, entered into each year, including 1918. This contract was much like that considered in Pugh v. Bothne Co., 178 Iowa 601. The court there ruled that, even though the defendant therein was a dealer and an automobile company seller, this did not preelude tlie conclusion that the former was agent of the latter, and that the matter in controversy grew out of such agency. Conceding, for the purposes of the case, that it is ruled by the above decision, we do not find that the sale, of the tractor grew out of or was-.in any manner connected with such agency. In so far as appears from the record, the Deere Company had no interest in the Engine Company, prior to acquiring all its capital stock, March 15, 1918, and defendant John Deere Plow Company, which was a sales organization, is not shown to have undertaken the handling of the Engine Company’s products, prior to August 1st following. Though the secretary of the Engine Company swore that Denny was a dealer in its products at the time of the sale to plaintiff, — and the trial court might have so found, though Denny denied it, — still there was no evidence that the defendant John Deere Plow Company was concerned in the handling or sale of the tractor or other products of the Engine Company prior to August 1, 1918, or that anything Denny may have done in connection with the tractor was as agent or dealer for the John Deere Plow Company. There is no pretense that Culbertson was acting for the latter. The order, together with plaintiff’s check, was forwarded directly to the Engine Company, and, if Denny negotiated the sale or assisted therein, it ivas not as representative of the John Deere Plow Company, and the tractor did not pass through its warehouse. There is no room to say, then, that the controversy grew out of or was connected with such agency, if any, as that company maintained in the city of Des Moines. Our conclusion is that the motion to set aside the service of the original notice and vacate the judgment should have been sustained. — Reversed.

Weaver, C. J., Gaynor and- Stevens, JJ., concur.  