Stivers v. Steele

Opinion op the Court by Judge Willis — Reversing. Luther Stivers and Arthur Steele are adverse claimants to a fund of $456.29 derived from a crop of tobacco raised in 1924 bv W. H. Toohey. Toohey was a member of'the Burley Tobacco Growers’ Co-operative Association and had received some certificates for the tobacco he delivered to it. Stivers claims title to the fund by purchase of the certificates for full value, long before the lien of Steele was asserted. Steele rests his right to the fund upon an order of attachment served upon the Burley Tobacco Growers’ Co-operative Association and the Bank of Commerce for the purpose of subjecting the in.terest of Toohey in the fund to the payment of his undisputed debt. The case was referred to the master commissioner, who heard proof and reported in favor of the attachment lien of Steele. The report was confirmed and judgment rendered accordingly. Stivers and the Bank of Commerce have entered a motion for an appeal. The right of the attaching creditor depends upon whether Toohey had any interest in the property subject to the attachment. If the Burley Tobacco Growers’ Cooperative Association was indebted to Toohey at the time the attachment was served, Steele obtained a lien thereon. But an attaching creditor acquires no greater right than the attachment defendant had at the time of the service of the order. Poage Milling Co. v. Economy Fuel Co. (Ky.) 128 S. W. 311; Swigert v. Bank of Kentucky, 17 B. Mon. 290; Grooms v. National Bank, 218 Ky. 846, 292 S. W. 513; Kentucky Refining Co. v. Bank of Morilton (Ky.) 89 S. W. 492; Star Drilling Co. v. McLeod, 122 Ky. 564, 92 S. W. 558. Consequently, the solution of the problem presented by this record will be reached by ascertaining whether Toohey had parted with all right, title, and interest in the proceeds of the tobacco at the time the order of attachment was levied. The order of attachment was issued and served on September 13, 1927. The tobacco was grown in 1924. It was delivered to the association in three installments, one in December, 1924, and two in January, 1925, and certificates Nos. 80, 814, and 1447 were issued to William H. Toohey. *702 Tooliey assigned certificate No. 80 to the Bank of Commerce on February 14,1925. ' On January 31,1925, be assigned certificates Nos. 814 and 1447 to tbe Bank of Commerce. Some advancements were made to Toobey by tbe association, and tbe balance ultimately due on tbe three certificates was $456.29, which the association paid to tbe Bank of Commerce. Tbe assignments were valid, and in proper form directed tbe Burley Tobacco Growers’ Cooperative Association to pay all that was due or to become due thereon to tbe Bank of Commerce, and such payment would completely satisfy tbe obligations. It appears that tbe assignment of certificate No. 80 may have been originally a pledge to secure a debt of $100 due the Bank of Commerce. But on January 31, 1925, when tbe assignments were dated, the cashier of tbe bank gave bis personal check to Toohey for $460.50, which was tbe full amount due on tbe three certificates, and the bank’s debt was then paid. Tbe transfers were made to the Bank of Commerce, and on February 2,1925, Luther Stivers gave bis personal check to tbe cashier of the bank for tbe same amount thus reimbursing him in full for what he bad paid, and tbe Bank of Commerce delivered to Stivers tbe three certificates, but made no formal assignment of them. It was noted upon them, however, that they were tbe property of Stivers. The bank collected tbe proceeds of the three certificates standing in its name on tbe records of tbe association, and immediately paid it to Stivers. Tbe commissioner and circuit court were of tbe opinion that tbe bank bad no beneficial interest in the certificates after tbe payment of its debt and that it could not, therefore, transfer tbe certificates to Stivers. This reasoning overlooks tbe fact that Toobey bad been paid -in full and bad transferred tbe certificates to the bank, not as pledgee, but as purchaser, and bad no further interest in them or the proceeds derived from them. Tbe fact that tbe purchase may have been for tbe cashier of tbe bank or for Stivers was wholly immaterial, in thé absence of fraud or concealment to cheat or binder creditors. Tbe legal title of Toobey was transferred to tbe bank, and thereafter be bad no interest whatever in the certificates or their proceeds. Toobey could not have recovered tbe property from Stivers or tbe bank. Gonse■quently tbe creditor of Toobey, who stands, in no better position, could acquire no lien. Tbe subsequent --transfers become immaterial, since Toobey had-no further interest. Tbe assignment was clearly sufficient to author *703 ize the creditor to pay the money to the assignee as was done. Lexington Brew Co. v. Hamon, 155 Ky. 711, 160 S. W. 264; Kentucky Refining Co. v. Bank of Morilton (Ky.) 89 S. W. 492; Col. F. & T. Co. v. First National Bank, 116 Ky. 364, 76 S. W. 156; Poage Milling Co. v. Economy Fuel Co.. (Ky.) 128 S. W. 311; Beard v. Sharp (Ky.) 65 S. W. 810. It is apparent that Toohey had no interest in the property after he was paid and the assignments were made, and consequently the attaching creditor obtained no lien on the fund by his proceedings thereafter' instituted. In his original pleading Stivers made no claim to certificate No. 80, or its proceeds, thinking the entire fund in controversy arose from certificates Nos. 814 and 1447. The mistake was discovered during the taking of proof, and Stivers tendered an amended answer, setting up his claim to the proceeds of certificate No. 80, which the court refused permission to file. The facts proven make the error evident, and the amended answer should have been filed. In any event, Toohey had no. interest in any of the property after he had assigned the certificates, and consequently the attaching creditor acquired no interest therein. It is not necessary to determine the respective rights of the cashier of the bank, the Bank of Commerce, and Stivers. There is no controversy among them. It sufficiently appears that the' cashier of the bank was purchasing the certificates for Stivers, but took the assignments in the name of the bank. The title of Too-hey passed to the bank, although the consideration was paid by another. Stivers had a right to require formal assignment from the bank, but that was unnecessary, since the bank held the title it acquired by the assignment from Toohey for the benefit of Stivers, whose rights were recognized by it. Any defects in the title of Stivers could not avail Steele, inasmuch as the interest of Too-hey had been extinguished before the levy of the attachment. The motion for an appeal is sustained, and the judgment is reversed for proceedings consistent with this opinion.