Tabour Realty Co. v. Nelson

'SMITH, J. Appeal from an order sustaining a demurrer to plaintiff’s complaint. The complaint alleges substantially the following facts: In April, 1916, the First National Bank of Aberdeen began an action to foreclose a mortgage given by one Cranmer and his wife, in'which action one Gannon was appointed receiver of the rentals of the mortgaged property pending suit. After foreclosure and deed.in January, 1918; the receiver-made final report disclosing net proceeds of such rentals in his hands to the amount of $1,608.98. .On- September- 4, 1918, the trial court entered an order approving and -allowing said report and directing the receiver to pay over said money to the Cranmers. [371] Thereafter, and on September 28, 1918, Suttle, the defendant in this action, commenced an action against the 'Cranmers. In that action Gannon was served as garnishee, and made return denying that he had in his possession money or property belonging to the Cranmers. Said return also set forth the receivership proceedings above referred to, stating that he had in his possession as such receiver $1,608.98; that an order had been entered by the court in the foreclosure action directing him to pay said money to the Cranmers; that prior thereto there had been exhibited to him a written assignment purporting to be executed by the Cranmers assigning the funds in his hands as receiver to the Tabour Realty Company, which assignment he ignored; that, at the time the order was entered directing the receiver to turn the funds over to the Cranmers, one Goodman, an attorney at law, acted for and represented the Cranmers, and was also attorney for the Tabour Realty Company, assisting in procuring said order of September 4, 1918, all of said parties having knowledge of said purported assignment of said funds to the Tabour Realty Company; that demand had been made for payment of said fund to the' Tabour Realty Company; that said receiver did not know- to whom said money belonged, whether to the Cranmers, to the Tabour Realty Company, or whether accountable as garnishee in the action by iSuttle against the Cranmers, and that he would pay the money as directed by the court. The complaint further alleges that about 'February 4, 1918, the Cranmers assigned in writing and conveyed to the Tabour Realty Company, plaintiff herein, the money thus in the hands of Gannon as receiver; that the Tabour Realty Company, in February, 19x8, presented said written assignment to said receiver, and demanded said money, which demand was, and at all times has been refused; that the defendants Suttle and Nelson at all times knew that said fund had been assigned to Tabour Realty Company as disclosed by the answer of Gannon in the garnishment proceeding; that in the action begun by Suttle on September 28, 1918, in which Gannon was served as garnishee, the summons and complaint, together with the garnishment summons, were served on the Cranmers in Minneapolis on November 18, 1918; thereafter on May L2, 1919, the Cranmers being in default-, the trial court entered judgment against them in favor of Suttle for [372] $1,394.16, arid further ordered and adjudged that the funds in the hands of Gannon as garnishee be applied in satisfaction of said judgment, that said Gannon deliver said fund to defendant Nelson, then clerk of said court, and that said clerk apply the same in satisfaction of a special execution on said judgment, which was done — 'Suttle receiving from the clerk the amount of his said judgment and costs, out of said moneys. In addition to findings of fact and conclusions of law upon which said judgment was entered, the trial court also made and entered the following finding of fact: “VI. The court further finds from the evidence that S. H. Cranmer and Tahour Realty Company are estopped from claiming any part of the funds in the hands of said garnishee defendant. Fred Gannon, for the reason that a fraud was perpetrated upon the court, in that the defendants claim to have assigned such fund to the Tabour Realty Company, and at the same time the defendant S. H.. Cranmer was representing the Tabour Realty Company as attorney, and that thereafter a judgment was entered in the above court in favor of S. H. Cranmer and Emma A. Cranmer with the knowledge and consent of the Tabour Realty Company; and that by reason thereof, both Emma A. Cranmer and S. H. Cranmer and Ta’bour Realty Company are estopped from having or claiming to have any right in and to the funds in the hands of said garnishee defendant Fred Gannon, and that, by virtue of the proceedings herein, the plaintiff J. H. Suttle is entitled to all of such proceeds.” 'Upon this finding of fact the trial court entered judgment decreeing' an estoppel against the Cranmers and the Tabour Realty Company from claiming any interest in the funds in the hands of Gannon, and further adjudged that, upon payment by Fred Gannon of said funds to the clerk of court, the said Gannon be relieved from all liability as garnishee and from all liability on account of funds remaining in his hands as receiver in the case of First National Bank against the Cranmers. Upon all the foregoing facts set forth in the complaint, respondent contends that the Tabour Realty Company, plaintiff in this action, cannot recover the funds in the hands of defendant Suttle, for that the foregoing finding of fact and .judgment constitute a binding estoppel against such claim. It is appellant’s contention that no. [373] such estoppel can exist for the reason that the Tabour Realty Company was never made a party defendant in said action or to said garnishment proceedings against Gannon. The Tabour Realty Company was not a party to the garnishment proceedings, nor was it a party to the action of Suttle against the Cranmers in which said finding of fact' and judgment of estoppel were entered, and is in no manner otherwise estopped or bound thereby. • No judgment or decree against any person is valid or binding unless founded upon and entered pursuant to due process of law. The demurrer in this case, so far as it was founded upon improper joinder of parties or causes of action, is disposed of by the decision of this court in Robinson v. Nelson et al., 183 N. W. 874, not yet [officially] reported. We are of the view that the complaint states a cause of action and that the trial court erred in sustaining the demurrer thereto. The order of the trial court is reversed.