Frazier v. Berg

Opinion by Me. Justice Schaffer, There is an important legal question to be passed upon in these appeals. We will first settle it and having done this will apply the principle announced to those facts of the controversy to which it is pertinent and then take up the other questions. The proceeding is an attachment execution. From the judgment entered both the plaintiffs and the garnishee appeal. The vital legal point at issue is this: Does an attachment execution bind all funds of the defendant coming into the hands of the garnishee up until the time of trial or does it grasp only those received up to the time when answers to interrogatories are filed or plea is entered? Most admirable and complete briefs discussing this question have been laid before us by the able advocates for each of the contending parties who argued the case at our bar, but we think it is not necessary to follow in this opinion the lines of research which they pursued or to discuss the many cases which they have skillfully digested and commented upon, because what we are now, to do is to lay down a rule gathered from all the cases which can be properly applied to the pending one, and which may serve as a guide in the future for attorneys and courts in cases of similar character. Authority can be found for the proposition that the only funds in the hands of a garnishee which are bound by an attachment execution served upon him, are those which were in his hands when he answered the interrogatories addressed to him or when he pleaded, nothing which he received after answers or plea (note 1); other rulings determine that everything in his possession up *324 to the time of trial is caught by the attachment (note 2); and others leave the question in doubt (note 3). The relevant statutes give at least some color to the conclusion that the legislative intent was that everything should be bound which comes to the garnishee up to the time of trial (note 4). *325 In our opinion, under modern conditions with the reasons for issues raised by pleas having largely ceased to exist, when the tendency in litigation, as in everything else, is in the direction of saving time and disposing of controversies in a single proceeding, if this can be accomplished and justice be done, the rule should prevail that such process binds all property belonging to the defendant or money due him, in the hands of a garnishee, which the latter receives up to the time of trial, and we so announce our ruling. Plaintiffs, therefore, were entitled to have included in their verdict all sums coming into the garnishee’s hands and owed by him to defendant up to the date of trial. The attachment was served on the garnishee January 2, 1929, and it filed answers to interrogatories on January 21, 1929. The court below ruled that the attachment bound nothing coming to the garnishee’s hand after the latter date and accordingly concluded that it did not bind a sum of $10,000 received from defendant July 12, 1929, and another sum of $7,500 likewise received July 11,1930, both before trial. We think this general ruling erroneous, although warrant may be found for it in some of the cases. We are not at this point deciding, however, whether these particular sums were attachable. As to the two amounts named, the one of $10,000 and the other of $7,500, the situation, generally speaking, as we understand its complications, is this: On July 30, *326 1928, the defendant, Berg, gave a note to the order of Publicker Realty & Holding Company, payable in four months, for $25,000, money due by him to it. The note was endorsed by Greenfield & Co. and by it discounted with the Metropolitan Trust Company. This note was not paid at maturity and Berg gave a series of renewal notes endorsed by the Publicker Realty & Holding Company and by Albert M. Greenfield & Co. One of the series was unpaid at the date of the levying of the attachment, and, at its maturity, the garnishee applied on account of it the $10,000 which it had received from the defendant. Of this series of notes, only the third was payable to Albert M. Greenfield & Co., but they were all discounted at the Metropolitan Trust Company and were given in renewal of the original obligation. On January 28, 1929, the garnishee took a note from the defendant for a new loan of $12,500, which is still unpaid. The payment of $7,500 heretofore referred to was intended to be applied on account of defendant’s indebtedness, but it has never been so applied and is now in the hands of the garnishee. The garnishee was not the holder of the $25,000 note. It was held by the Metropolitan Trust Company. The garnishee could be called upon only as an endorser to assume its payment, provided it was not met at maturity and the holder demanded that it be paid by the endorser. Just exactly what the relation of Albert M. Greenfield & Co. was to this obligation is not entirely clear. It is set up that the debt represented by it is actually due to Greenfield & Co., but the evidence does not fully establish this. It is argued by plaintiffs that the garnishee had no interest in the $10,000 until the maturity of the renewal note, on which it was an endorser, and had the defendant called upon the garnishee to return the money before that date, it would have been obliged to do' so, citing First National Bank of Scranton v. Higbee & Co., 109 Pa. 130, and other cases, and that, until there was an actual appropriation of the money to the purpose in *327 tended, which could not and did not take place until some two weeks later, the fund became subject to the attachment. We are not now determining that this would be true in all cases so far as an endorser is concerned. This can be resolved when the facts are fully developed on another trial. As to the $7,500 item, although it came into the garnishee’s hands over two weeks before the then outstanding renewal note was due, it not only was not used to reduce the amount of the defendant’s indebtedness as evidenced by that note, since another renewal note was taken for the same amount, but it has never been appropriated for any purpose, being merely held by the garnishee, perhaps it may be concluded for the defendant’s account. The garnishee having failed to appropriate it to the payment of the note until the attachment was served, the attaching creditor may have acquired a lien on these funds: Schift' v. Schindler, 98 Pa. Superior Ct. 207. This also can be determined when all the facts are before the court. The garnishee thus lays out its case so far as the two payments of $10,000 and $7,500 are concerned. It agrees that Berg was indebted to the Publicker Realty & Holding Company at the time he gave to it the original $25,000 note. It is said that on August 12, 1928, Berg gave Greenfield & Co. a check for $10,000 and on the next day Greenfield & Co. loaned Berg $34,473.34 by giving the Publicker Company a check for $34,473.34, representing the proceeds of the $25,000 note and the $10,000 check. The details of this transaction are not clear to us from the record. It is asserted that, on January 28, 1929, Greenfield & Co. loaned Berg a further sum of $12,500. The terms of this loan do not appear-in the testimony and no information is given about it. It is alleged that the $10,000 paid by Berg to Greenfield & Co. was paid under an agreement that the money could be applied on either the $25,000 nóte or the debt of $12,500, and that it was applied on the former. It *328 is admitted that Greenfield & Co. have not yet determined on which debt to credit the $7,500 payment, but it is set up that, however it shall be applied, Berg still owes Greenfield & Co. approximately $23,000. This figure is somewhat difficult to verify from the record because of a lack of full explanation. In view of the court’s instruction that the attachment did not bind the funds coming into the hands of the garnishee down to the time of trial, and the lack of full explanation as to the indebtedness of defendant to the garnishee and as to the two payments of $10,000 and $7,500, we conclude that a new trial must be granted on plaintiffs’ appeal, and we might well close the opinion at this point. Inasmuch, however, as the objections raised by the garnishee will probably arise on the next trial, as they did on the one now under review, it would seem wise to indicate our conclusions touching them. They relate to three sums in the garnishee’s hands, claimed by plaintiffs to be owing to Berg and liable to the attachment. These sums appear in what are known as the Franklin Building account amounting to $2,-727.70, 7th and Chestnut Streets account to January 2, 1929, $795.52, and receipts from 7th and Chestnut Streets from January 2, 1929, to January 21, 1929, $1,-135, making a total of $4,658.22. For these items the trial judge gave binding instructions in plaintiffs’ favor. The garnishee contends judgment should have been entered for it non obstante veredicto. We are requested to determine as a matter of law that plaintiffs are not entitled to take with their attachment the three sums which the court below thought them unquestionably entitled to. The argument of the garnishee is based upon the proposition that the defendant, Berg, could not have recovered these sums from it and hence the attaching creditor cannot. We accept the argument that an attaching creditor’s rights cannot rise higher than those which the defendant named in the process had against the garnishee (Austin-Nichols Co. v. Union *329 Trust Co., 289 Pa. 341), but our difficulty is in determining that the rights of the garnishee to retain the funds are so clear that they can be fixed as a matter of law. Our study of the record leads us to the conclusion that the garnishee’s rights are not so clear. Greenfield & Go. managed the Franklin building for Berg, collected the rents and made the necessary disbursements. At the time the attachment was served there was to the credit of Berg in this account $2,727.70. It is claimed that, because, in addition to managing this property, Greenfield & Go. was managing another property for Berg at 7th and Chestnut Streets, and was under a moral obligation to safeguard two building association mortgages which it had been instrumental in placing on this property, and had obtained an oral agreement from Berg by which the income from that property was appropriated exclusively to the payment of its operating expenses and carrying charges, which the income had not met, and because Berg had authorized Greenfield & Co. to use balances in the Franklin Building account to make up the deficit on the 7th and Chestnut Streets property, in pursuance of which over $22,000 had been transferred on its books from the Franklin Building account to that of the 7th and Chestnut Streets property, that although the sum of $2,727.70 in the Franklin Building account had not been so transferred, it is to be treated under the authority from Berg as though it had been, as there still existed unpaid taxes on the 7th and Chestnut Streets property amounting to more than the balance shown in the other account. It is not at all certain that had Berg demanded this money which stood to his credit, he could not have recovered it, particularly when the situation between him and Greenfield & Co. with regard to the 7th and Chestnut Streets property about to be referred to is taken into account. Certainly it could not be said as a matter of law that he could not recover it because of the unpaid taxes on the other property. As we under *330 stand the record and the state of the accounts as to both properties, the garnishee on the date of the attachment had been fully repaid for all the actual advances it had made for defendant and there were credit balances of the sums named in each account. We now come to the 7th and Chestnut Streets account, which in its argument the garnishee divides into two periods, the first up to January 2, 1929, the date of the service of the attachment, and the second between that date and January 21, 1929, when it filed answers to interrogatories. As before stated, this account exhibited the transactions growing out of the garnishee’s management of that property. On January 2, 1929, it showed a credit balance in Berg’s favor of $795.52, which the court instructed the jury plaintiffs were entitled to under their attachment. The garnishee’s position as to this is, that it was the conveyancer for two building associations, and from them, acting in Berg’s behalf, it secured two second mortgages on the property aggregating $120,000, that it was under the moral obligation heretofore mentioned to protect the associations, and accordingly it asked, and Berg assented, that the rents of the property should be applied by Greenfield & Co. to the payment of the carrying charges of the property, and it is claimed that the $795.52 net balance as shown in the account as of January 2d is the property of the building associations, (in the language of the garnishee’s brief) “in view of the fact that taxes for 1927 and 1928, amounting to approximately $10,000, which were a lien against the mortgaged premises ahead of the building associations’ mortgages had not been paid.” It should be noted that not the building associations (which have not intervened) make this claim, but the garnishee. This position is, to say the least, a somewhat novel one, and if tenable, would be disturbed by the fact that in the leases for the property which the garnishee made, and which Berg countersigned, it was expressly stipulated that he could cancel the authority to the garnishee to collect the *331 rents at any time by paying its commissions. We think it cannot be successfully argued under the state of facts above outlined that the garnishee held this money in trust for the building associations (which they do not come forward and assert) and hence such cases as Willis v. Curtze, 203 Pa. 111; Austin-Nichols Co. v. Union Trust Co., 289 Pa. 341, and Wyoming Construction Co. v. Franklin Trust Co., 298 Pa. 582, relied upon by the garnishee, do not apply. This brings us to the last matter for consideration, the receipts from the 7th and Chestnut Streets property by the garnishee between January 2,1929, when the attachment was served, and January 21, 1929, the date of the filing of the answers to the interrogatories. These amounted to $1,135. The court directed the jury to find in plaintiffs’ favor for this sum. During this period after the service of the attachment there was paid out of the account by the garnishee the sum of $926.50, made up of payroll of employees of the building, telephone service, repairs, electric lamps, building association dues and agent’s commissions. The same general argument is made in the garnishee’s behalf as to the balance of $1,135 as is made with reference to the balance to January 2, 1929, and, for the reasons stated as to that item, it cannot prevail as to this. Expenditures made by a garnishee after the service of an attachment cannot be set off: Pennell v. Grubb, 13 Pa. 552; Roig v. Tim, 103 Pa. 115; Schiff v. Schindler, 98 Pa. Superior Ct. 207. We think, however, that the garnishee should not be held liable to plaintiffs for the commissions due to it on the rents which it had collected during this period. We have also reached the conclusion that plaintiffs’ contention that they are entitled to interest on the sums in the garnishee’s hands should not be sustained. The garnishee’s rights to the moneys in its hands were sufficiently in doubt to warrant it in assuming the position which it did and in filing a plea of nulla bona. *332 On the plaintiffs’ appeal the judgment of the court below is reversed and a venire facias de novo is awarded. The garnishee’s appeal is dismissed. Footnotes [1] Franklin Fire Ins. Co. v. West, 8 W. & S. 350; Silverwood v. Bellas, 8 Watts 420 (overruled on other grounds, Kennedy v. Sehleindl, 290 Pa. 38); Raiguel & Co. v. McConnell, 25 Pa. 362; Bizot v. Audenried, 14 Pa. D. & C. 287; German Savings & Deposit Bank v. Braddock Union Planing Mill Co., 19 Pa. C. C. 18. [2] Mahon v. Kunkle, 50 Pa. 216; Somerset Coal Co. v. Diamond State Steel Co., 224 Pa. 217; Mechanics’s Nat. Bank v. Buckman, 56 Pa. Superior Ct. 285; Sweeting v. Wanamaker, 4 Pa. Dist. 245; McClure’s Est., 26 Pa. Dist. 892; Littletown Savings Inst. v. Corwell, 20 Pa. C. C. 145; Mullen v. Maguire, 1 W. N. C. 577; Andress v. Lewis, 17 W. N. C. 270; Excelsior Brick Co. v. Gibson, 21 W. N. C. 32. [3] Sheetz v. Hobensack, 20 Pa. 412; Hays v. Lycoming Fire Ins. Co., 99 Pa. 621; Humphrey v. O’Donnell, 165 Pa. 411; Bremer’s Sons v. Mohn, 169 Pa. 91; Glazier v. Jacobs, 250 Pa. 357; Butler Co. Nat. Bank v. MacMullen, 292 Pa. 556; Rankin v. Culver, 303 Pa. 401; Frank v. Kurtz, 4 Pa. Superior Ct. 233; Shipman v. Seiwell, 101 Pa. Superior Ct. 95; Importers, etc., Bank v. Lyons, 8 Pa. Dist. 675; Benners v. Buckingham, 5 Phila. 68; Griffith v. Gillardon, 1 Chester Co. 194. [4] Act of 1705, 1 Smith’s Laws 45, 46: “And if an attachment [foreign] shall be made for goods or effects, and the garnishee plead he had no goods or effects in his hands at the time of the attachment, or at any time after, and the plaintiff prove the contrary, the jury......shall......say what goods or effects they find in the garnishee’s hands.” Act of September 28,- 1789, 2 Smith’s Laws 502, 503, provides that in foreign attachment the garnishee shall answer “touching the goods......effects and credits......in his......possession ......or from him......due and owing, at the time of the service of such writ or writs of attachment, or at any other time.” The Eoreign Attachment Act of June 13, 1836, P. L. 568, section 55, provides that the garnishee shall answer “touching the estate and effects of the defendant in his possession......at the time of the service of such writ, or at any other time......” Also (section 50): “The goods and effects of the defendant in the attachment, in the hands of the garnishee, shall, after such service, be bound by such writ......” If the proceeding is by scire facias, now obsolete (section 58), “the jury shall find what goods or effects, if any, were in the hands of the garnishes at the time the attach *325 ment was executed as aforesaid or, afterwards, and also the value thereof.” The Attachment Execution Act of June 16, 1836, P. L. 755, section 35, provides: “In the case of a debt due to the defendant, or of a deposit of money made by him, or of goods or chattels pawned, pledged or demised, as aforesaid, the same may be attached and levied in satisfaction of the judgment, in the manner allowed in the case of a foreign attachment......” It also provides (section 37) : “From and after the service of such writ.....all debts..... due to defendant......shall remain attached in the hands of such corporation or person, in the manner heretofore practiced and allowed in the case of foreign attachment.”