33 A. 147 | R.I. | 1895
This is assumpsit upon two promissory notes made by the defendants, at Boston, in the State of Massachusetts, on the 9th day of April, 1889, and the 7th day of May, 1889, respectively, and payable to the order of the International Trust Company, at its place of business in said Boston, and by said International Trust Company endorsed and delivered to the plaintiff. The said International Trust Company is a Massachusetts corporation.
The writ, wherein John A. Cross, of Providence, was plaintiff, and Gideon P. Brown, of Boston, Edward Steese and Amasa Clarke, of Brookline, all in the State of Massachusetts, copartners under the firm name of Brown, Steese Clarke, were defendants, was sued out of the Court of Common Pleas, in the County of Providence, August 13, 1889, and was served by trustee process, on the same day, upon the Lippitt Woolen Company, the Riverside Oswego Mills and the Wanskuck Company, each being a corporation of this State, and was also further served, on August 15, 1889, by trustee process upon the assignees of said Riverside Oswego Mills, and by sending a copy of the writ by mail to the address of each of the said defendants. At the time of the commencement of said suit and of the insolvency proceedings hereinafter mentioned, the defendants, Brown, Steese Clarke, were creditors of said Lippitt Woolen Company, the Riverside Oswego Mills and the Wanskuck Company. The indebtedness of the Lippitt Woolen Company was on a contract for the sale of wool, made in Boston where the wool was delivered, and where the purchase price for the same was payable when it should become due. At the time of the alleged garnishment, however, said indebtedness had not become due and payable, and did not until September 12, 1889.
Subsequently to the service of said writ on the Riverside Oswego Mills, but on the same day, this corporation made a general assignment of all its property to Charles D. Owen, of Rhode Island, Chester A. Braman, of the city and State of New York, and James B. Case, of Webster, in the State of Massachusetts, in trust for the equal benefit of all its creditors *223 excepting its employees, the wages of whom, for labor performed within six months prior to said assignment, not exceeding however the sum of one hundred dollars to any one person, were preferred. January 7, 1890, the defendants appeared and pleaded the general issue, and on trial to a jury, on March 20, 1890, a verdict was rendered for the plaintiff for $41,534.27, which verdict this court, on a petition for a new trial subsequently filed, refused to disturb. Said Brown, Steese Clarke failed in the early part of August, 1889, and on the 12th of the same month two members of the firm applied by a voluntary petition to the Judge of the Court of insolvency, in and for the county of Norfolk, Massachusetts, setting forth their inability to pay all their debts, and their willingness to assign all their estate and effects for the benefit of their creditors, and praying that such proceedings might be had as were provided by the Public Statutes of Massachusetts, cap. 157, viz., the insolvency laws of that State.
Section 46 of such chapter provides as follows: "The assignment shall vest in the assignees all the property of the debtor, real and personal, which he could have lawfully sold, assigned, or conveyed, or which might have been taken on execution upon a judgment against him, at the time of the first publication of the notice of issuing the warrant in case of voluntary proceedings, and at the time of the first publication of notice of the filing of the petition in cases of involuntary proceedings, and shall be effectual, subject to the provisions of the following section, to dissolve any attachment on mesne process made not more than four months prior to the time of the first publication aforesaid. The assignment shall vest in the assignee all debts due to the debtor or any person for his use, and all liens and securities therefor, and all his rights of action for goods or estate, real or personal, and all his rights of redeeming such goods or estate."
The first publication of notice of the insolvency proceedings referred to was made on August 23, 1889, and on September 4, 1889, the assignment was made by the Judge of the Court *224 of Insolvency, under the provisions of said law. No assignment was made by the insolvents themselves.
The assignees of Brown, Steese Clarke, by virtue of the assignment to them, as aforesaid, and of the provisions of said insolvency laws of Massachusetts, duly purported to sell and assign the claims of said firm against the Lippitt Woolen Company and the Wanskuck Company to Theophilus King, a citizen and resident of Massachusetts, who, as shown by the duly authenticated record, as such purchaser, and under and by virtue of section 109 of said chapter 157 of the Massachusetts statutes, brought suit in his own name in that State against the Lippitt Woolen Company on its obligation under said contract, setting forth the fact of the sale and of the purchase by him, in the writ, and recovered judgment against the Lippitt Woolen Company, notwithstanding said company appeared and fully set out in said suit the garnishment proceedings in the case now before us.
Under and by virtue of chapter 433 of the Public Laws of Rhode Island, the said King was allowed to become a party to this action as adverse claimant, which he did, setting up the insolvency laws and proceedings thereunder in Massachusetts and the assignment to him thereunder, as aforesaid, and also setting up his judgment against the Lippitt Woolen Company. He also offered to show that this is not a suit brought in good faith by a citizen of Rhode Island for his own benefit, but that it is colorable only, and in the interest, for the benefit and in behalf of the International Trust Company, of Boston. Bullens Sawyer were also allowed to become a party to the suit as the claimant of all the property and estate of the defendants in the hands of the Riverside Oswego Mills, they claiming said property by virtue of an assignment to them from the assignees in insolvency in Massachusetts of said Brown, Steese Clarke.
The various parties served with copies of the writ, for the purpose of attaching by trustee process the defendants' property in their hands, filed disclosures in said Court of Common Pleas, and in the Common Pleas Division of the Supreme Court which took cognizance of the case after the passage of *225 the Judiciary Act, which disclosures will hereinafter be considered; numerous interrogatories and cross-interrogatories were filed and answered in connection therewith; said claimants of the property attached were fully heard, and the case as a whole was tried at great length; and finally, after diligent consideration thereof by Rogers, J., presiding in said Division, a decision was rendered charging the said Lippitt Woolen Company as garnishee in the sum of $11,938.39, the same being the amount disclosed in its affidavit, together with interest thereon from September 12, 1889, and declining to charge the other garnishees. The case is now before us on two petitions for a new trial, one being filed by the plaintiff, and one by the said Lippitt Woolen Company, trustee, and Theophilus King, adverse claimant.
The plaintiff's petition is based upon certain alleged erroneous rulings of the court in regard to the admission and rejection of evidence; in the admission of supplemental affidavits or disclosures by the garnishees; in admitting said Theophilus King and Bullens Sawyer, respectively, as claimants of the property attached and as parties to the case upon their intervening petitions therein filed; in refusing to summon in the prior attaching creditors of the property in question; in declining to charge the assignees of the Riverside Oswego Mills as trustees; and in declining to charge the Wanskuck Company and the Riverside Oswego Mills as garnishees.
The numerous grounds of the petition of said Lippitt Woolen Company and of Theophilus King, adverse claimant, for a new trial, briefly stated, are that the Common Pleas Division erred in charging said Lippitt Woolen Company as trustee, and, even if chargeable at all, in charging it with interest on the amount disclosed; in its rulings as to the admission and rejection of evidence, and in its rulings and decisions as to the faith and credit to be given to the record and proceedings of the Massachusetts Court of Insolvency, and also of the Superior Court of that State. We will consider both of said petitions together.
The first question which logically presents itself in connection *226
with the petition for a new trial filed by said Lippitt Woolen Company and said claimant, is that of jurisdiction over the fund or property in question; for it is clear that jurisdiction over the principal defendants was obtained by their voluntary appearance in the case. The answer to this question depends upon the situs of the property sought to be attached. If it was in this State, as contended by the plaintiff, the court obtained jurisdiction; but if it was in Massachusetts, as contended by the Lippitt Woolen Company and the claimant, then the court did not obtain jurisdiction; for it is an elementary principle of law that jurisdiction, to be rightfully exercised, must be founded upon the presence of the person or thing in respect to which the jurisdiction is exerted within the territory. Plimpton v.Bigelow,
In order to make a valid seizure, then, by process of attachment, whether of tangible or intangible property or interest, the res must be within the territorial jurisdiction. That is, if the res consists of visible and tangible property, it must be found and seized within the State; and if it consists of a mere debt or chose in action, then its situs must be there.
Now, it is evident that a chose in action, being an intangible chattel, cannot, strictly speaking, have a physical location. Its locus or situs is, therefore, a legal fiction, and, being so, it may have different situs for different purposes, that is, a conventional situs. Thus, the situs thereof for the purposes of taxation is the domicile of the creditor or payee of the debt. For the purposes of administration, so far as the non-resident creditor is concerned, it is also at his domicile. But so far as the remedy of the creditors of the payee of the debt is concerned, the authorities are very uniformly to the effect that the situs of the debt is at the domicile of the debtor, and that wherever the creditor might maintain a suit to recover the debt, there it may be attached as his property, provided the laws of the forum authorize it; or, as said by Shiras, J., in Mason v. Beebee, 44 Fed. Rep. 556, "the situs of property for the purpose of jurisdiction is one thing, and its situs for the purposes of determining the *227 right of the parties thereto is another, and the two are not necessarily the same."
In a late case decided by the Supreme Court of Minnesota, this doctrine is thus concisely stated by Mitchell, J.: "While by a fiction of law a debt, like other personal property, is for most purposes, as, for example, transmission and succession, deemed attached to the person of the owner, so as to have itssitus at his domicile, yet this fiction always yields to the laws for attaching the property of non-residents, because such laws necessarily assume that the property has a situs distinct from the owner's domicile. For such purposes a debt has a situs
wherever a debtor or his property can be found. Wherever the creditor might maintain his suit to recover the debt, there it may be attached as his property provided, of course, the laws of the forum authorize it." Harvey v. Great Northern Ry. Co.,
Attachment laws, as said in Green v. Van Buskirk, 7 Wall. 139, "necessarily assume that property has a situs entirely distinct from the owner's domicile." The plaintiff occupies, as against the garnishee, the position of the defendant, with no more rights than the defendant had, and liable to be met by any defence which the garnishee might make against an action by the defendant. See also Strong v. Smith, 1 Met. 476; Campbell
v. Nesbitt,
If this be so, and we see no reason to doubt its correctness, — it follows that, as the defendants Brown, Steese Clarke could have maintained an action against the garnishees in this State for the recovery of the debts in question, then said debt was within this State and subject to attachment here. See alsoBragg v. Gaynor, 85 Wisc. 468; Wyeth Hardware Mfg. Co. v.Lang, 29 S.W. Rep. 1010; Berry v. Davis,
Nor is it material in a proceeding of this sort, where the creditor's remedies are concerned, that the debt is payable at the domicile of the payee, it being well settled that "where the garnishee is indebted it will not vary his liability that his contract with the defendant is to pay the money in another state or country than that in which the attachment is pending." Drake on Attachment, 6th ed. § 597, and cases cited.
The debt of the garnishee to the defendants in the case at bar, although payable in Massachusetts, was yet a debt everywhere, in whatever country it or its property might be found; and hence a suit for the recovery thereof, as we have already said, could have been prosecuted in the courts of this State. See Sturtevant v. Robinson, 18 Pick. 175; Nichols v.Hooper,
The counsel for the said garnishee and claimant, while they have not furnished us with much judicial authority to the contrary of the foregoing doctrine, have presented a very elaborate and learned argument in support of their contention that said debt or pecuniary obligation could not be made the subject of a proceeding quasi in rem in this State, (a) because it had no situs at the domicile of the debtor, and was not property here over which the legislature and courts of this State had dominion and control; and (b) because if it *229 had been property here the court could not have discharged the debt as against the non-resident owners not personally subject to the control and jurisdiction of the court, without impairing the obligation of contract.
In support of their contention that the situs of the debt was not here but was at the domicile of the payees thereof, counsel have cited and elaborated numerous cases on taxation, both in the state and federal courts, which hold with great unanimity that, for the purposes of taxation, personal property of the kind in question follows the person and has its situs at his domicile, and that only the tangible property of a non-resident is subject to the taxing power of a State. And they earnestly argue that these cases are directly in point and decisive of the question at issue, the sovereign power of a State being best illustrated and most accurately defined by cases on taxation.
It is undoubtedly true that the jurisdiction of the State for purposes of taxation cannot be held to extend to the property which a non-resident has in a debt which he holds against a resident. For, as said by Judge Cooley in his valuable work on taxation, "the state has no jurisdiction to assess a tax as a personal charge against non-residents; neither can the personalty of a non-resident be taxed unless it has an actual situs within the state, so as to be under the protection of its laws. The mere right of a foreign creditor to receive from his debtor within the state the payment of his demand cannot be subjected to taxation within the state. It is a right that is personal to the creditor where he resides, and the residence or place of business of his debtor is immaterial. The power of taxation, however vast in its character, and searching in its extent, is necessarily limited to subjects within the jurisdiction of the state. These subjects are persons, property and business. Whatever form taxation may assume, whether as duties, imposts, excises or licenses, it must relate to one of these subjects. It is not possible to conceive of any other, though as applied to them the taxation may be exercised in a great variety of ways. . . . . . . The creditor cannot be taxed, because he is not within the jurisdiction, *230 and the debts cannot be taxed in the debtors' hands, through any fiction of law which is to treat them as being, for thispurpose, the property of the debtors. They are not property of the debtors in any sense; they are the obligations of the debtors, and only possess value in the hands of the creditors." Cooley on Taxation, 2d ed. 21-22.
But, conceding that the State has no power to tax a merechose in action belonging to a non-resident, does it therefore follow that it cannot authorize an attachment thereof by process of garnishment? Or, in other words, may not the debt, which is an intangible thing, have a situs at the domicile of the creditor for the purpose of taxation, and also at the domicile of the debtor for the purpose of attachment? We see no reason why it may not; and the authorities above cited, together with many others which might be added, fully support the view that it may. Moreover, for us to hold that a debt due to a non-resident is not attachable by trustee process here would be both to render our statutes relating to foreign attachment largely null and void, and also to overrule the settled practice of the court from time immemorial. Indeed, until a comparatively recent date, an action could not be commenced by garnishment, unless the defendant was out of the State. Cottle v. American Screw Co.,
But the counsel for said trustees and said claimant further urge, in support of their contention that said statute is unconstitutional, that the statute of the State, being without force in any other State, cannot discharge a debt held by a citizen of another State. And in this connection they have referred us to numerous cases bearing upon the question of the effect of discharge in insolvency under State insolvency laws.
The general doctrine for which counsel contend is this: That the insolvency laws of one State have no effect against the citizens of another State holding claims that follow the person of a creditor, no matter where the debt was contracted, or where it was made payable, unless they place themselves under the jurisdiction of the law by voluntarily becoming parties to the insolvency proceedings. *231
That the statute laws of a State can have no extra-territorial operation or force is everywhere admitted; for it goes without saying that, each State being an independent sovereignty subject only to the limitations of the Constitution of the United States, no State can legislate with regard to the rights of citizens of another State, except and in so far as such citizens or their property are found within the territorial limits of the State where the law is passed. See Gilman v.Lockwood, 4 Wall. 409; Denny v. Bennett,
We fail to see the pertinency of this doctrine, however, to the case before us; for here, as we have already seen, the debt sought to be affected is within the jurisdiction of this court. The res is here, and this is a proceeding quasi in rem to reach and appropriate that res to the payment of the judgment debt of the defendants. In a word, it is compelling the payment of the defendants' debt out of their property found in this State.
As to the second point made by the counsel for said trustees and the adverse claimant, viz., that if the debt was property here the court could not discharge it, as against the non-resident owners thereof not personally subject to the jurisdiction of the court, without impairing the obligation of contract.
The position thus taken, as we understand it, amounts to this, viz., that our statute which provides that "Any trustee, after final judgment or decree against the defendant, may satisfy such judgment or decree, or any part thereof, to the amount of the estate attached in his hands, before any suit shall be brought against him therefor; and such payment shall avail for his discharge, as against both plaintiff and defendant, for the amount thereof," is unconstitutional in so far as it affects debts due to non-residents, in that it deprives the owners of their property in the debt without due process of law.
But what is due process of law except the observance of those general rules established in our system of jurisprudence for the security of private rights; i.e., a trial or proceeding *232
in which the rights of the parties, after notice and opportunity to be heard shall have been duly given, shall be decided by a tribunal appointed by law and governed by the rules of law previously established? Kilbourn v. Thompson,
A valid attachment by trustee process creates a lien upon the debt in the hands of the trustee in favor of the attaching creditor. Blake v. Williams, 6 Pick. 286, 303. See alsoEddy v. O'Hara,
But how does our statute above quoted, relating to the discharge of the debt due from the garnishee to the principal defendant, impair the obligation of contract? And, in this connection, it may be useful to inquire what the contract in question was. It was this: The principal defendants sold and delivered wool in Boston to the Lippitt Woolen Company, the payment thereof to be made in Boston. Before the time for payment had arrived, the plaintiff attached the debt by trustee process, and is seeking to compel payment thereof to him as a creditor of the principal defendants, instead of making such payment to them. That is, he is seeking in effect by operation of law totransfer the indebtedness of the trustees, from the principal defendants, to him. Now suppose that to be done, as it practically is when the trustee proceedings are regular, and a judgment is obtained against the trustee for the amount of the debt in his hands. Is it not perfectly obvious that a satisfaction of that judgment ipso facto discharges the obligation of the trustee, who is the debtor, to the principal defendants? The judgment, if binding on the trustee, is also binding on the principal defendants and all parties in privity with either. And the satisfaction of the judgment against the trustee is an extinguishment of his debt to his principal creditor, and has precisely the same effect as if it were paid to the creditor directly. As stated in 2 Wade on Attachment, § 503, "The question to be determined is whether the debt has been satisfied, and the extent of such satisfaction, and it matters not by whom it has been paid, nor to whom paid, provided it be to one who is entitled to receive it from the one who pays. Hence, where one of several joint debtors in the garnishment proceeding has paid the debt for which the judgment was obtained, it will be for the benefit of his co-debtors, each of whom may rely on it as a defence to a subsequent action by the original creditor."
Said statute, then, in so far as it provides that the trustee, after final judgment against the defendant, may satisfy the same, and that the payment thereof shall discharge him from his debt to the principal defendant, is simply declarative of the legal status of the parties to the contract out of which *234 the original indebtedness arose, after such change of title to it has been affected by the process of garnishment. And it bears no analogy to the provision for the discharge of a debtor under State insolvency laws as affecting non-resident creditors. In other words, it is not the statute which discharges the debt due from the trustee to the principal defendants at all; but it is the payment of the debt to the attaching plaintiff, in satisfaction of his judgment against the principal defendants.This is what works a discharge of the debt. See McConnell on Trustee Process, §§ 295-297, 483, and cases cited. And if it be an impairment of the obligation of contract in this case to compel the debtor to pay the debt in question to the attaching plaintiff, instead of to the principal defendants to whom the contract made it payable, and upon such payment to be discharged from its obligation to the said defendants as to the amount so paid, then we do not see why all foreign attachment laws, whereby a debtor is compelled to pay a debt due to a non-resident creditor to the attaching plaintiff in a proceeding of this sort, are not unconstitutional and void.
In the leading case of Embree v. Hanna, 5 Johns. 101, Chief Justice Kent said: "Nothing can be more clearly just, than that a person who has been compelled by a competent jurisdiction to pay a debt once, should not be compelled to pay it over again. It has accordingly been a settled and acknowledged principle in the English courts that where a debt has been recovered of the debtor, under this process of foreign attachment, in any English colony or in these United States, the recovery is a protection in England to the garnishee against the original creditor, and he may plead it in bar. . . . . . . If, then, the defendant would have been protected under the recovery had by virtue of the attachment, and could have pleaded such recovery in bar, the same principle will support a plea in abatement of an attachment pending and commenced prior to the present suit. The attachment of the debt in the hands of the defendant fixed it there in favor of the attaching creditors; the defendant could not afterwards lawfully pay it over to the plaintiff. The attaching *235
creditors acquired a lien upon the debt binding upon the defendant, and which the courts of all other governments, if they recognize such proceedings at all, cannot fail to regard." See also Jarvis v. Mitchell,
But the counsel for said Lippitt Woolen Company further contend that, even if the legislature of this State might, for the purpose of attachment, change the ordinary situs and establish a local situs at the domicile of the debtors, within the State, for a debt due to a non-resident who is not subject to its jurisdiction or control, the attachment laws of the State have nowhere declared, or attempted to establish, any such localsitus or to change the ordinary situs of such debts, nor do they purport to authorize an attachment of property which a non-resident has in a debt which he holds against a resident.
It is true that we have no statute which, in express terms, authorizes an attachment against a non-resident. But we think there can be no question that our attachment laws are broad enough to include attachments of this sort. Section 14, cap. 32, of the Judiciary Act, provides that "An original writ commanding the attachment of the real or personal estate of the defendant, including his personal estate in the hands or possession of anyperson, copartnership or corporation, as the trustee of thedefendant, and his stock or shares in any banking association or other incorporated company, may be issued from the Common Pleas Division of the Supreme Court or any District Court, whenever the plaintiff in the action to be commenced by such writ, his agent or attorney, shall make affidavit," c. Section 20, cap. 33, provides for the manner of service of the writ, including the service upon a non-resident defendant, and § 2 of cap. 19 of said act provides for the continuance of a case commenced by foreign attachment where the defendant is a non-resident and fails to answer within the regular time limited therefor. With these provisions in view, taken in connection with the settled and heretofore unquestioned practice of the court thereunder, it is hardly necessary to argue in favor of the authority to attach a debt due to a non-resident.
Another question, and one of vital importance, is raised *236 by the counsel for said Lippitt Woolen Company and for the claimant, King, viz., as to the effect of the said insolvency proceedings in Massachusetts. It is strongly urged that the rulings of the Common Pleas Division fixing August 23, 1889, the date of the first publication of notice in said proceedings, as the date decisive of the question of the effect on the debt in question of the Massachusetts assignment, are erroneous. The contention is that by filing the voluntary petition, hereinbefore referred to on August 12th, (one day before the issuing of the writ in this action,) the defendants submitted themselves and their property to the jurisdiction of the court of insolvency at that time.
The first inquiry which logically arises regarding this branch of the case is, did this court or the Massachusetts court first obtain jurisdiction of the debt in question. For it is undoubtedly the law that whichever first obtained general jurisdiction will hold the same to the exclusion of the other. Under the Massachusetts statute, hereinbefore quoted, the insolvency proceedings date from the first publication of notice. The notice in the proceedings instituted by the defendants was first published on August 13, 1889. But ten days prior to that time, viz., August 13, 1889, the said debt had been attached here and our court had thereby obtained jurisdiction over it.
But the counsel still further urge that, even conceding that the date of the assignment itself, which was September 4, 1889, is the date which is to be decisive on the question of jurisdiction, still the Massachusetts court first obtained it because, in so far as said debt was property, it was property exclusively within the dominion and jurisdiction of the legislature and courts of Massachusetts. As we have already decided that this position is not tenable, we need not consider it further. But, independent of the fact that the attachment preceded the first publication of notice and also the making of the assignment, even though the insolvency proceedings as finally consummated shall be held by relation to have taken effect as of the 12th day of August, 1889, the day on which said petition was filed, still we do not think *237
that said proceedings can be held so to affect the debt in question as to take away the jurisdiction of this court; and, primarily, for the reason that said assignment was not the personal act of Brown, Steese Clarke. In other words, notwithstanding the fact that the said insolvency proceedings were set in motion by a part of the debtors, viz., Steese and Clarke, or even by all of them, yet said proceedings are to be regarded as involuntary, the test being whether the insolvency system provides for compulsory proof of the debts under penalty of losing them by the discharge of the debtors from all liability therefor. And this the Massachusetts statutes clearly require. Admitting that the general rule is that a transfer of personal property by the owner thereof is governed by the law of the domicile of the owner, and also that this rule applies to voluntary assignments for the benefit of creditors, and that the title of the assignee thereunder, if valid by the law of the domicile, will prevail against the lien of an attachment made in another State subsequent to such assignment in favor of a creditor there, upon a debt belonging to the assignor and embraced in the assignment, (Noble v. Smith,
Insolvency proceedings similar to these in the case at bar *238
have repeatedly and almost uniformly been held not to affect an attachment made subsequent thereto in another State. SeeGoodsell v. Benson,
The counsel for said Lippitt Woolen Company and the adverse claimant further contend that said debt was not attachable because, by the terms of the contract out of which it arose, it was not due and payable at the date of such attachment, and that, as the principal defendants had no present right of action in Rhode Island against their debtors, the trustees, to hold that a garnishment can be maintained would be to place the plaintiffs in a better position than the principal defendants occupied. It is doubtless true, as a general rule, that the plaintiff in trustee process is not to be placed in a better position than the principal defendants with regard to the debt in question.Waldron v. Wilcox,
Another point upon which counsel for the adverse claimant King rely is that the Common Pleas Division erred in ruling out the evidence offered by him for the purpose of showing that this is not a suit brought in good faith by a citizen of Rhode Island for his own benefit, but that it is colorable only and in fact in the interest of the International Trust Company of Boston. To this it may be replied, first, that it is wholly immaterial whether the plaintiff was in fact the owner of the notes upon which the suit was based or simply had them in his hands for collection. For, being negotiable promissory notes payable to said International Trust Company, and by it endorsed and delivered to the plaintiff, he unquestionably had the right to sue thereon. Bank of America v. Senior,
The last ground upon which said Lippitt Woolen Company and the claimant King ask for a new trial is that the Common Pleas Division wrongfully charged said Lippitt Woolen Company, as garnishee, with interest on the amount of its indebtedness to the principal defendants. The argument in support of this contention is, in substance, that the Lippitt Woolen Company had no specific moneys in its hands belonging to the principal defendants, either in trust or on special deposit or otherwise; but that it was simply indebted to them for the wool it had purchased; that any money with which it might satisfy said indebtedness was its own money, and if it is chargeable with interest it is simply because it has detained the debt since it became due and payable. The facts relating to this branch of the case, as shown by the sworn answers of said Lippitt Woolen Company, are that it has never made any special deposit of the amount disclosed in its original affidavit, as due from it to the principal defendants; that it has never set apart said sum; that it is impossible to state how its use of the money due from it, as aforesaid, has been changed in consequence of the service of the plaintiff's writ upon it; that it has used all its money as it has seen fit, from time to time, without distinction, and that at the time of the service of the writ in this case its moneys were in various banks and in the hands of various individuals, and has fluctuated in amount from time to time since then according to the necessities of its business.
The question as to whether the garnishee shall be required to pay interest on its debt due to the principal defendant during the time he is restrained by the attachment from paying the debt, is one which has been much discussed and upon which the decided cases are not in accord. One line of authorities holds that where the garnishee is indebted to the principal defendant upon a demand where interest would be recoverable by the principal defendant only as damages for breach of contract, interest will not be deemed to accrue during the pendency of the trustee process. The reason ordinarily given in support of this view is that the garnishee, having been restrained by the garnishment from paying his *241
debt, is in no fault for not paying, and hence there is no wrongful detention and consequently no liability for damages. SeePrescott v. Parker,
Another line of authorities holds that, as interest is the mere incident to the debt arising from the defendant's use of the money, the attaching plaintiff is as much entitled to recover the one as the other. In other words, that he is entitled to claim and recover all that the principal defendant could claim and recover from his debtor, the garnishee. Woodruff v. Bacon,
We are inclined to adopt the latter view of the garnishee's liability, rather than the former. We can see no sufficient reason for holding that a garnishee, who continues to hold and use the money in his hands after it is due and payable, should not be chargeable with interest thereon, notwithstanding he is prevented by the attachment from paying it over to the principal defendant. If he wishes to avoid his liability to pay interest, he can set the fund apart or so deposit it that it will draw interest, or being a mere stakeholder, he can pay it into the registry of the court, where interest will accrue for the benefit of the party or parties finally held to be entitled thereto. Indeed, one of presumptions upon which the first class of decisions above referred to seems to rest is, that the garnishee keeps the money by him set apart for the payment of the claim of the attaching creditor. Moreover, the injustice which would result in the present case, both to the principal defendants and also to the attaching plaintiff, by exonerating the garnishee from the payment of interest, is a strong argument in favor of the position we have taken. The situation is this: The plaintiff has recovered a final judgment against the principal defendant in the sum of $41,534.27. The disclosure of said trustee shows that the sum of $11,938.39, belonging to the principal defendant is in *242 its hands. Now suppose it to be charged with only this latter amount as garnishee. The result is that upon payment of said sum its entire indebtedness to the principal defendants is discharged, notwithstanding the fact that it has had the use and benefit of said large sum in its business for upwards of five years. The principal defendants get no benefit from the use of said money by their debtor, the garnishee, by way of a reduction of their indebtedness to the plaintiff, on the one hand, and the plaintiff gets no benefit of said use by way of the satisfaction of his judgment against the principal defendants, on the other. In short, the result would be that the garnishee will have had the use and benefit of said large sum of money for the length of time aforesaid, without being liable to anybody therefor. If it be argued that the said Lippitt Woolen Company has been necessarily subjected to trouble and expense, as it apparently has, in the employment of counsel properly to protect its rights in the premises, and in answering the numerous interrogatories propounded in behalf of the plaintiff, and that for this reason it ought not to be compelled to pay for the use of the money in its hands, it is sufficient to reply that it is within the power of the court to allow it such costs and charges as are reasonable in the case, under the provision of the Judiciary Act, cap. 34, § 29.
We will now consider the grounds upon which the plaintiff asks for a new trial. And first with regard to the refusal of the court to charge the Riverside Oswego Mills and the Wanskuck Company as garnishees. The facts upon which the Common Pleas Division refused to charge these garnishees are as follows:
1. — The disclosure of the Riverside Oswego Mills shows a very complicated state of affairs existing between it and the principal defendants, so that the balance due from it to them is very difficult, if not, indeed, impossible to determine in a proceeding of this sort. It also shows that, at the time of the service of the plaintiff's writ upon it, all of the property of said principal defendants in its hands and possession had already been attached in suits brought against *243 said principal defendants by the Industrial Trust Company and the Hollis Dressed Meat and Wool Company, the aggregate amounts claimed in which suits exceeded the amount of the defendants' property in the hands and possession of said Riverside Oswego Mills.
2. — The Wanskuck Company's disclosure shows that it had in its hands and possession at the time of the service of the plaintiff's writ upon it, $28,823.80 due to the principal defendants; that a part thereof, viz., $6,808.23, was the price of eighty-two bags of wool bought by it of said principal defendants July 26, 1889, under the supposition that said bags of wool were the property of said principal defendants; but that, after the purchase of said wool, the Massachusetts Loan Trust Company, of Boston, notified it that said wool was its property and not the property of said defendants, and that said defendants had no right or authority to sell the same, and that said Massachusetts Loan Trust Company would look to said Wanskuck Company for the purchase price thereof. It also appears that said Massachusetts Loan Trust Company now has a suit in trover, pending in said Common Pleas Division, against said Wanskuck Company for the value of said eighty-two bags of wool.
3. — Said Wanskuck Company's disclosure also shows that, at the time of the service of the plaintiff's writ upon it, all the property of said principal defendant in the hands and possession of said Wanskuck Company had already been attached, in suits brought against said principal defendants by the Hollis Dressed Meat and Wool Co., the Industrial Trust Company, and the Massachusetts Loan Trust Company, which suits are still pending, the aggregate amounts claimed in the same exceeding the amount of the defendants' property in said Wanskuck Company's hands and possession.
In view of these disclosures, the Common Pleas Division held that it could not enter a charging order against the Riverside Oswego Mills and the Wanskuck Company, for the reason that, until it shall be ascertained by the disposition of the pending suits wherein said garnishees have been previously served with trustee process, it is impossible to *244 determine whether either of said garnishees are chargeable, and if chargeable, to what extent.
We think this ruling was correct. For, while the statute clearly recognizes the possibility and the right of successive attachments of the same property, (Judiciary Act, cap. 33, § 32, and cap. 34, § 1,) and the right of the plaintiff to share therein after judgment, in the order of his attachment, as contended by plaintiff's counsel, yet we do not see how the court could enter a charging order in this case until the disposition of said prior suits, for the reason that the whole fund in the hands of said garnishees may be absorbed in the payment of the judgments which may be obtained in the prior actions. And when the question as to whether a garnishee should be charged is involved in litigation in this manner, with the result necessarily problematical and in doubt, the court will not enter a charging order. Moreover, said statute (Judiciary Act, cap. 34, § 18) provides that the court, in charging a garnishee, must determine the extent to which he is chargeable, and also that the execution which issues upon the judgment shall have the amount, for which he is charged, inserted therein. Judiciary Act, cap. 36, § 20. And until the amount due upon said prior attachment shall have been determined, it is impossible to say whether any amount will remain to be applied under this attachment. The proper course for the plaintiff to have taken, in these circumstances, was to ask for a continuance of the case until said prior suits were disposed of. Cutter v. Perkins,
The next question in point of importance, which is raised by the plaintiff's petition for a new trial, is whether the assignees *245
of the Riverside Oswego Mills are chargeable as garnishees. We are clearly of the opinion that they are not; and that the Common Pleas Division was right in discharging them. In order to charge a garnishee, it is necessary (1) that he shall have personal property in his possession, belonging to the defendant, capable of being seized and sold on execution, or (2) that he be liableex contractu to the defendant, whereby the latter has at the time of the garnishment a legal cause of action, present or future, against him. In other words, in order to a recovery against a garnishee, it must be shown affirmatively, either by his answer or by evidence aliunde, that he has property of the defendant in his possession of a description which will authorize his being charged, or that he is indebted to the defendant. Drake on Attachment, 6th ed. § 461; Smith v. Millett,
In support of its contention that said assignees were properly chargeable as garnishees, counsel for the plaintiff commends to our attention the case of Irwin v. McKechnie,
But it is urged that the word "trustee" in our statute, relating to persons who may be garnished is broad enough to include one holding property in trust for the benefit of another, and particularly for the reason that the statute in which the phrase "the attorney, agent, factor, trustee or debtor," appears was in force as early as 1774, when and for a long time afterwards our courts had no chancery jurisdiction over private voluntary trusts, and the creditor had no other means of reaching his debtor's property held under it than by this process. It is true that the word "trustee," taken by itself, is broad enough to include, and does include, and assignee; for an assignee is the trustee both for the creditors of the assignor and also for the assignor himself. Said word must not be taken out of its setting, however, and simply its abstract or technical meaning determined, but it must be considered in its collocation and also with reference to the process of garnishment provided for by our statutes relating to that subject. And, (1) it may be observed that the proceeding itself is denominated "trustee process" in the statutes. This is the term generally employed in the New England States to designate the proceeding. See Judiciary Act, cap. 34, § 24. In some States it is called "factorizing." In the one case the party in possession is called the "trustee," in the other the "factor;" but, after all, it is but another mode of effecting the same general purpose. (2..) The form of writ prescribed by our statute commands the attachment of the personal estate of the defendant in the hands or possession of some person as "trustee" of the defendant. It is the "trustee" who is to make the disclosure provided for (Judiciary Act, cap. 34, § 10); and it is the "trustee" who is authorized to satisfy the judgment against the defendant in all cases. Judiciary Act, cap. 34, § 15. It is the "trustee" who, in case the property in his hands does not consist of money but of specific articles, is authorized, after judgment *249
against the principal defendant, to surrender such articles to the officer charged with the service of the execution. Judiciary Act, cap. 34, § 16. In short, the word "trustee," as used in the various provisions of the statutes relating to trustee process, manifestly denotes the debtor or agent of the principal defendant, i.e. the person against whom an action excontractu at law only might be maintained in favor of the principal defendant, and is not used in its technical sense. (3) It was evidently never intended that the trustee process provided for in our statutes should be an equitable proceeding, but strictly a proceeding at law. See Raymond v. NarragansettTinware Co.,
Again. The plaintiff asks for a new trial because the Common Pleas Division overruled his motion to reopen the case and summon in the prior attaching creditors as parties thereto. The object of this motion, as stated therein, was "that they (said prior attaching creditors) and each of them may show to this court, and that the court may examine and determine the validity and amount of such their respective alleged prior attachments and pledge, the said plaintiff denying that said parties or either of them now have any valid claim upon or to either said attached fund or any property or any part thereof." This was clearly an attempt to force the prior attaching plaintiffs to try their cases in the bowels of the one now before us. We do not think this can be done. The prior attaching creditors are already in court, in the cases before referred to, and clearly have the right as suitors to try their own cases in their own way. If they should be summoned into this case, there would then be two suits pending to determine the validity of each of their claims against the defendants, and endless confusion and difficulty would arise in finally settling the relative rights of the parties in interest, if, indeed, it were possible to settle said rights in this way. In short, to have granted the plaintiff's motion would have been in effect to allow him to intervene in said prior suits, which this court has already decided cannot be done. See Cross,Petitioner,
Still another ground upon which the plaintiff asks for a new trial is the admission of certain supplemental affidavits or disclosures by the garnishees. We think it was clearly within the discretion of the court to allow such supplemental affidavits to be filed. Winsted Bank v. Adams,
With regard to the point taken by the plaintiff's counsel that the overruling by the Common Pleas Division of his motion to strike out certain portions of the affidavits of the garnishees was error, we have to say that we do not think it should be sustained. It was a motion which addressed itself to the sound discretion of the court, and hence, unless it is shown that the overruling thereof was clearly an abuse of such discretion, it is not a proper subject of review. An examination of the affidavits in question does not satisfy us that said ruling was improper. For, while some of the matter objected to is manifestly irrelevant and impertinent, and, as remarked by Rogers, J., in his opinion, "as such when offered by the claimants as mere testimony was not admitted, but when presented and sworn to by the garnishees in their affidavits was allowed to be filed, such permission was granted because in the opinion of the court the rights and liabilities of garnishees and claimants are very different. A garnishee is involuntarily summoned in. If he fails to answer fully, he does so at the peril of being obliged to pay twice. If he *253 makes a false answer or affidavit, he is liable to an action for damages which may result to the plaintiff from such answer or affidavit. The sworn answer of the garnishee shall be considered true in deciding how far said garnishee is liable, though either party to the suit, or any claimant of the estate so attached, may allege and prove any facts not stated or denied by said garnishee or trustee that may be material in so deciding. While, in the case of an ordinary witness, testimony deemed by the court to be irrelevant will not be admitted to take up the time of the court, yet in the case of garnishees' affidavits, as the matter disclosed is deemed by the garnishee necessary for his protection, it would seem to be the better course to let them stand, and upon consideration of the case to reject irrelevant parts, than to suppress and strike out such parts as in the former case the Appellate Division, if the case should be taken up to it, would have the full and undisturbed garnishee's disclosures before it and could also reject what it deemed irrelevant."
As to the contention of the plaintiff that he should have been permitted to offer evidence in support of his allegations filed February 27, 1894, we are of the opinion that it cannot be sustained. Said allegations, or rather allegations and interrogatories combined, for such they in fact are, related, (1) to the acts of the prior attaching plaintiffs in proving the debts on which said prior actions were based, in the insolvency proceedings in Massachusetts, and also in receiving dividends thereon; (2) to the discharge of said defendants in said insolvency proceedings; (3) to the fact that the Riverside Oswego Mills, or any of its directors or officers, never made and filed in the City Clerk's office of the City of Providence any return, under the statute in such case provided, to exempt its stockholders and directors from personal liability for its debts; (4) to the question as to how said Trust Company originally came to the possession of the notes, drafts and obligations of the defendants, referred to in the affidavit of the Wanskuck Company, and for and to whom the same and their proceeds were originally discounted and paid, and what *254 if any collaterals were held by said Trust Company for the same, and the disposition thereof, and what payments said Trust Company has received upon the said notes and obligations, either from such collateral or otherwise, and what disposition it has made of the said notes, drafts and obligations, and which of the same it now holds, and what is the present condition of and who now holds or is really entitled to the same; (5) to the question as to what and for what was the indebtedness of the defendants to said Trust Company, sought to be enforced in said attachment suit against the defendants, referred to in the affidavits of said Wanskuck Company, and what collaterals were held by said Trust Company for the same, and as to what disposition has been made of said collaterals, and what payments said Trust Company has received upon said indebtedness, either from such collaterals or otherwise, and what disposition of said indebtedness or the evidences thereof has been made by said Trust Company, and what or which of the same it now holds, and what is the present condition of and who now holds or is really entitled to the same; and (6) as to what was the indebtedness of said defendants to said Hollis Dressed Meat and Wool Co., sought to be enforced in its attachment suit aforesaid, and what if any collaterals were held by said Hollis Dressed Meat and Wool Co., for the same, and the disposition which has been made of said collaterals, and the payments which have been received upon said indebtedness, either from such collaterals or otherwise, and what disposition of said indebtedness or the evidences thereof has been made by said Hollis Co., and what or which of the same it now holds, and what is the present condition of and who now holds or is really entitled to the same. It will thus be seen at a glance that to have allowed the evidence offered would have been in effect to try the cases of the said prior attaching creditors in the bowels of the one now before us, besides converting the whole proceeding into a bill in equity, neither of which, as we have already seen, can be done.
Finally. We are therefore of the opinion that neither the plaintiff's petition for a new trial nor that of said Lippitt *255 Woolen Company and Theophilus King, adverse claimant, should be granted. Said petitions are therefore denied and dismissed and the case remitted to the Common Pleas Division for further proceedings.