170 Mo. App. 108 | Mo. Ct. App. | 1913
(after stating the facts).— Appellant contends that there was such question raised by the reply of the plaintiff as could not be brought into and tried in a garnishment proceeding. It is true that garnishment proceedings in this State are purely and strictly legal proceedings, and it is not permissible to garnish a fund which is subject to indefinite contingencies, trust agreements and relations, or that has to be arrived at in an equitable proceeding to determine the amount that would be coming to the judgment debtor. Again, as a general proposition it may be said that the judgment creditor can have no greater rights against the garnishee than did the judgment debtor. This, however, is subject to the exception of fraud, and it has been so held in this State. [McDaniel v. Bryan, 123 Mo. App. 640, 643, 100 S. W. 1103; Holmes Organ Co. v. Pettitt, 34 Mo. App. 536, 539; Epstein v. Hammerslough Clothing Co., 67 Mo. App. 221; Gregg v. Bank, 80 Mo. 251; Eyerman v. Krieckhaus, 7 Mo. App. 455; Lee v. Tabor, 8 Mo. 322; Humphreys v. Milling Co., 98 Mo. 542, 10 S. W. 140; Holker v. Howendobler, 143 Mo. 80, 44 S. W. 794; Well & Wiggins Gro. Co. v. Clark’s Executrix, 79 Mo. App. 401; Hungerford v. Greengard, 95 Mo. App. 653, 69 S. W. 602; Donk Bros. Coal and Coke Co. v. Kinealy, 81 Mo. App. 646; Doggett v. Insurance Co., 19 Mo. 201; Dunlap v. Mitchell, 80 Mo. App. 393.] In McDaniel v. Bryan, supra, it is held that garnishment is the proper remedy where the debtor of a fraudulent grantee is summoned as garnishee to pay the debt of the fraudulent grantor. The law seems to be well settled in this State that a judgment creditor may pursue the funds in the hands of a third person who is a bailee or transferee or assignee to try the question of a fraudulent transfer in a garnishment proceeding; and all the cases we have examined arising in Missouri, ex
An examination of our statute (Sec. 2413, R. S. 1909) discloses that the field for garnishment is a wide one where a party has money or property in his hands belonging to a judgment debtor, or is the debtor of a judgment debtor. There is no question in the present case but that attachment would lie for the shares of stock in the Whitten-Chesley Mines Company had they been turned over to the wife (instead of the money derived from the sale of said stock) and had she placed them in the custody of the garnishee; nor is there any question but that a levy could have been made on the bank in this case had it been merely the custodian of some property which had been fraudulently turned over to the wife; and we can see no difference so far as this case is concerned between a debtor who makes a contract to pay certain money
Appellant contends that because it did not know of the fraudulent character of this money when its relation of debtor and creditor with Vera E. Whitten arose, it is not subject to garnishment. However, as stated in Freeman on Executions (2 Ed.), section 159, “It is not the taking of a fraudulent transfer, but the reception of property, which makes the garnishee answerable. Hence he may exonerate himself by showing that the property of which he received a fraudulent mortgage or bill of sale never came into his possession, or having come into his possession, was returned to the defendant before the garnishment was served, or being an animal, has died, and is therefore not subject to execution.”
A case closely in point is that of Kesler v. St. John, 22 Iowa, 565. Some corn was purchased of J,
In Waples on Attachment and Garnishment, at page 200, it is said: “A deposit to the credit of a second person to whom the bank acknowledges an indebtedness by a certificate may be subjected to a garnishment in the hands of the bank.” And in Drake on Attachment (7 Ed.), section 458: UA funda-, mental doctrine of garnishment is, that the plaintiff does not acquire any greater rights against the garnishee than the defendant himself possesses. When, therefore, the attachment plaintiff seeks to avail himself of the rights of the defendant against the,garnishee, his recourse against the latter is limited by the extent of the garnishee’s liability to the defendant. This principle is subject, however, to an exception, where the garnishee is in possession of effects of the defendant under a fraudulent transfer from the latter. There, though the defendant would have no claim against the garnishee, yet a creditor of the defendant can subject the effects in the garnishee’s hands to his attachment. ’ ’
Our conclusion is that appellant’s contention on this phase of the case is not well founded.
The second assignment of error that Vera E. Whitten should have been made a party under section 2439, E. S. 1909, is not well taken for the reason that that section contemplates bringing in' a new party where some act such as assignment or sale or change has taken place with reference to the ownership of the’ thing garnished subsequent to the time it was placed
Appellant complains of the action of the trial conrt in permitting the plaintiff to testify concerning certain declarations said to have been made by Yera E. Whitten at the taking of her deposition prior to the trial. This testimony was put in merely to trace the $1800 to the garnishee and to show the source from which it came. While the declarations may have been inadmissible, they were not of such a prejudicial character as to warrant a reversal of the judgment because of their admission. What they tended to prove was uncontroverted by the garnishee. -Indeed, the same facts were elicited by the garnishee from the declarant who was called as a witness by the garnishee.
Further objection is made that the court improperly excluded the testimony offered by the garnishee .showing the extent of its investigation after the notice was served upon it on June 15, 1910. Assuming, for the present, that the notice was sufficient, the garnishee was bound by every fact which an inquiry would have disclosed. [Eyerman v. Bank, 80 Mo. 408.] The question was fairly put in the instructions as to whether the transfer was fraudulent and whether the garnishee had reasonable notice of such purpose and intent and the finding of the jury is conclusive on the garnishee on this question. If A, while negotiating the purchase of a farm from B, is notified by C that he holds a mortgage on it and that B cannot sell the farm free and clear of incumbrance, although A then takes any number of affidavits and concludes in his own mind that C is mistaken as to his mortgage on this farm, this would not bar C from a recovery if the farm were in fact the one on which he held a mortgage, and to defeat C it would not be competent for A to show the extent of his inquiry; it would be sufficient for C to recover to show that he gave A the notice.
The instructions given by the court at the instance of the respondent to' which appellant saved exceptions we think properly declared the law. They merely told the jury that if they found that the money deposited in Vera E. Whitten’s name with the garnishee was in fact the money of the judgment debtor, and that notice of this fact was given to the garnishee, and notice of the purpose for which it was placed in her name was conveyed to the garnishee, and that said money was in the. hands-of the garnishee on the date of the service of the writ of garnishment and at the time of receiving said notice, they should find for the plaintiff. These instructions are in harmony with the views herein expressed.
Instruction “A” asked by the appellant and refused by the court was properly refused for the reason that it required that the garnishee be released unless it knew the fraudulent character of the money at the time it was deposited.
Complaint is also made that the trial court erred in striking out of the garnishee’s answer the allega
The affidavits of the Whittens had no place in the case as it was not a question of the quantum of diligence required of the garnishee after it received the notice; if it did'get notice, and the money belonged to the judgment debtor, it was bound.
We do not think the contention made by the garnishee that the notice was insufficient is well taken because the notice specifically calls the attention of the garnishee to a fund placed on deposit, either in the name of Vera E. Whitten or Mrs. E. Gr. Whitten, and that it was placed in the custody of the garnishee as an attempt to conceal the same and to prevent garnishment, and the notice sets out the source of the wife’s possession of this money, and states that it was placed with the garnishee to defraud the creditors of E. G-. Whitten. This is certainly such notice as would put an ordinarily prudent man on inquiry and is sufficient notice to bind a garnishee; and it seems that it did have the proper effect in this case because the record shows that acting on this notice the garnishee took some affidavits to ascertain the true status.
The motion to make Vera E. Whitten a party to this suit is as follows (formal parts omitted) :
“Comes now the garnishee in this cause and says that the denial of the plaintiff to its interrogatories herein and its reply to the same, set out and show that the legal title to the deposit in controversy, which is alleged by the plaintiff to be fraudulently made was in the name of Vera E. Whitten, and that said Vera*129 E. Whitten claims said deposit and that the same has been paid to her by said garnishee, and that the right of said garnishee to pay said property to her cannot be litigated and determined in this cause, so as to bind her and all other parties at interest therein until the said Vera E. Whitten is made a party hereto and that no valid judgment can be rendered against said garnishee until the said Vera E. Whitten, • the adverse claimant thereto, is made a party to this proceeding by proper order of this court; and that for the reasons aforesaid, the said Vera E. Whitten is a necessary and indispensable party to this cause for the complete and final determination of the same.
“Wherefore, the garnishee moves the court to make an order upon the said Vera E. Whitten to intervene and appear in said cause at the designated time and place and set out and declare her right and interest in the deposit with said garnishee, in order that the issues in this cause may be fully and finally determined.” (Marked: “Filed, June 20, 1912.”)
As hereinbefore stated, garnishment is a purely statutory proceeding, unknown to the comipon law (Norman v. Pennsylvania Fire Ins. Co., 237 Mo. 576, 141 S. W. 618), and we must look to the statute to determine all rights, duties and obligations of the parties affected, as well as the procedure.
The issues in garnishment proceedings are made up by the denial of the answer of the garnishee and the reply thereto. The denial should state the grounds on which a recovery is claimed, and the reply to the denial makes the issue. [Holker v. Hennessey, 141 Mo. 527, 42 S. W. 1090.]
The question in this case, under the pleadings, was, Did the garnishee have any fund in its hands which was the property of the judgment debtor, the husband?
We see then that under our statutes relating to garnishment Vera E. Whitten could not under the facts of this case interplead of her own motion or be required to intervene on motion of the garnishee. There is no statute in this State in garnishment proceedings which permits a third party occupying the position of Yera E. Whitten to be made a party by the court.
If it was necessary, as contended by appellant, that she be made a party and be bound by the judgment rendered in this case, the appellant had a simple course open by which it could have bound her, and that was by offering her the right to come in and in its name and stead defend the fund, she being the interested party therein, according to appellant’s theory. Had it served á notice on her of the pendency of this suit, coupled with an invitation to her to come in and defend in its name and in its stead, then whether or not she came in and defended the result of the judgment rendered would have been as binding on her
The reason for the right of intervention, under both statutes or in any case if it is permitted at all, is. two-fold; first, it gives the party who claims the property an opportunity to protect himself and not merely rely upon the custodian of the property to protect his interests, and second, it gives protection to the garnishee to avoid a double liability in cases governed by those two sections of the statutes. In this particular case there is no need for such a statute for either of the purposes named because the wife has already received the money and there is no fund for which she desires to litigate; the garnishee has al-' ready paid the money to her and it therefore could not get the protection afforded by those statutes, to-wit, of not being required to pay the debt to her provided the court ordered it to pay the money to the plaintiff.
As stated, the main question and the only issue to be determined is, “Did the money which the garnishee had belong-to the judgment defendant?” The fact that the garnishee alleged that it belonged to the wife was merely a denial that it owed the money to the husband, the judgment defendant, and was a matter of proof, which, if it had been substantiated at the trial and its allegation and proof thereof found to be’ true by the jury would of course have defeated the liability to the judgment defendant. The issue was not whether the fund belonged to the wife of the judgment defendant, but whether or not it belonged to the judgment defendant, and the proof that it belonged to
Besides, the bank after the service of the writ of garnishment and the notice upon it undertook to settle for itself the question as to whom this money belonged; it preferred to take the affidavits of the judgment defendant find his wife rather than disclose all the facts to the court and await the verdict of the jury. Having taken the decision of that question upon itself and paid the money to the wife after service of the writ of garnishment and notice, it cannot then ask that she be made a party to protect it from paying the debt again to her should this garnishment proceeding go against it; and the only purpose of having her intervene at that time would be to fix up a lawsuit for the garnishee to bring against her in the future for a recovery of this money paid out on its own initiative, "relying upon the affidavits of the judgment defendant and the wife. As was said in a case somewhat similar to this, so far as the action with reference to the payment is concerned by the assignee (Potter v. Stevens, 40 Mo. 591, 597): “The defendant Stevens assumes in his answer to settle the question of his liability to pay these notes after the service of the garnishment upon him. A prudent man under such circumstances, instead of deciding which of the parties claiming the benefit of these notes were really entitled to it, would have asked the protection of the law. Having elected to pay them to George McDowell, he
Courts of law as well as courts of equity should, in determining the rights to property, protect all parties interested therein as far as they can consistently do so, but it is not for the courts to pick up some one who is not authorized by statute to be made a party and make him a party to a suit for the purpose of fixing some future liability which may or may not accrue; and this is especially true where the garnishee could have as effectually bound the claimant by giving the proper notice and offering the claimant the laboring oar. As before stated, the only purpose of making the wife a party to this suit under the facts of the case — the money having been paid to her by the garnishee — was to fasten upon her an adjudication of this question so that in the future the bank could bring an action against her for a return of the money which was paid by it to her after the writ of garnishment was served and the notice given.
The motion asking that the wife be required to intervene was properly stricken out for two reasons, first, because there is no section of thé statutes permitting the intervention, and second, because there was no right to have it ordered under the facts of this case either at law or in equity. The motion itself is suicidal, asking, as it does, that she be required to do something that the motion shows would be .for a useless purpose in this case.
Attention has been called to the instruction approved in the case of Gregg v. Bank, 80 Mo. 251, 255. However, the question on which that case was decided has no bearing on the present case, and while the approved instruction stated that Walker could at the instance of the garnishee be brought in to show cause why the money should not be paid over to the plaintiff, there was no dispute as to whose money it was, and the garnishee very properly held the money and
It is the duty of a garnishee to stand neutral in the litigation over the fund in his hands, to disclose all the information it has concerning the fund to the court, and to hold the fund in readiness to abide by the decision of the court. "When he follows this course he is entitled to the fullest protection; hut when the garnishee, as in this case, abandons his position as stakeholder and takes up the role of a litigant to such an extent that he pays out the fund to one of the parties and takes in place of the fund the chance of defeating the plaintiff, he must be content to accept the outcome of the battle fought out on the field he has chosen.
For the reasons herein appearing, we think the judgment should be affirmed, and it is so ordered.