Cross v. Hillsboro National Bank

Grace, J. Appeal from an order of the county court of Cass county setting aside a satisfaction of, and opening and vacating, a judgment entered against the garnishee. The plaintiff brought an action against the defendant to recover for certain indebtedness. The defendant made no appearance' in the action, and judgment was entered against him by default. ' In- the course of the proceedings a garnishee summons was issued — 265 — and served upon the garnishee on the 24th day of February, 1915. The garnishee took no further steps in the matter until the 2d day of March, 1915, when he wrote a letter to L. N. Miller, attorney for the-plaintiff, wherein he called attention to the fact that Justin E. Safford and his attorneys, Marx & Conger, did not seem to know the amount or nature of the claim of Cross against Safford in which garnishment summons was served on the garnishee. The garnishee asked Miller to write Marx & Conger, giving to Miller the exact postoffice address of Marx & Conger in Tacoma, Washington. The plaintiff’s attorney, Miller, replied to the letter from the garnishee, stating that he had taken the matter up with Mr. Safford’s lawyers. He further stated that the garnishee had money in its possession and under its control belonging to the defendant Safford, and that he would take it for granted that the garnishee intended to admit liability to the defendant prior to the ten days allowed for answer, and prepared and inclosed with his letter an original and copy of a garnishment affidavit admitting liability, which he stated that the garnishee might use if it should see-fit. He further stated that it was not the desire of the plaintiff to entangle the garnishee in a lawsuit, and the garnishee’s affidavit, admitting liability, would relieve it from any further proceedings and leave the matter entirely between the plaintiff and defendant. The garnishee then signed the affidavit, admitting liability, and in a letter dated March 8, 1915, to plaintiff’s attorney, Miller, inclosed therewith the affidavit, admitting liability from the garnishee to the defendant. Prior to the time of the mailing and delivery to plaintiff’s attorney of the affidavit, admitting liability, the garnishee had received notice of the claim of Marx & Conger, of which claim the letter, exhibit D, signed by both Safford and Marx & Conger, is the basis, and constitutes the agreement with reference to the claim of ownership of Marx & Conger of the moneys then in the hands of the garnishee. On the 16th day of March, 1915, an oral conversation over the long-distance telephone occurred between Arnegard, the cashier of the HillsboroNational Bank, the garnishee, and the attorney for the plaintiff, which, according to Arnegard’s affidavit, was substantially as follows: That the affiant Arnegard on the 16th day of March, 1915, had personal knowledge of an indebtedness, and the claim of ownership of Marx & Conger of the money in controversy. That Arnegard had personal knowl — 266 — edge that Arthur P. Marx, an attorney at law who claimed to represent the rightful owner of the money covered by said garnishment proceeding, was then in Fargo, North Dakota, and had seen and talked with Mr. Miller, the attorney for the plaintiff, and that it was represented to the affiant by Attorney Miller and said Marx that they would probably reach an amicable adjustment as to the money in controversy. That Miller and Marx called up the affiant over the same telephone, both being present when the talk was had, directing him to send the money to the First National Bank of Fargo, North Dakota, and was told by both Miller and Marx that they were representing the two claimants to the money held by the garnishee; and, further, that the affiant believed that the information given by either or both would be reliable and proper for him to follow. On the 27th day of March, 1915, Attorney Miller called the affiant ■over the telephone, stating that he had obtained judgment against the ■defendant and garnishee in said action, and requested the affiant to immediately telephone the First National Bank of Fargo, who had come into possession of the money in controversy following the conversation of March 16th, when the demand certificate for $1,277.05 was sent to the First National Bank of Fargo. The affiant Arnegard, knowing that said Marx and plaintiff’s attorney had been trying to reach an amicable adjustment, and that, if they had not been able to do so, the ownership of the money controlled by the garnishee would be decided by the judgment of the court in which the action was pending, and relying upon the representations made by plaintiff’s attorney, and believing that the matter had been settled in a legal manner, telephoned the First National Bank of Fargo, as requested by plaintiff’s attorney, and insti’ucted the bank to pay the judgment of the coixnty court obtained by the plaintiff against the garnishee, which was done, and the plaintiff’s attorney filed a satisfaction of such judgment in such court. The main question presented in this appeal is, Did the court abuse its discretion in setting aside the judgment against the garnishee and in permitting it to make a further disclosure ? It must be conceded that the trial court has a wide discretion in such matters, and, unless there is plain abuse of the exercise of such discretion, the order of the trial court in such matters should be sustained. The appellant contends that the garnishee, at the time of the disclosure having had knowledge — 267 — of the claim of Marx & Conger to such money, and thereafter having made his disclosure admitting liability, and judgment having been ■entered against it, and such judgment paid and satisfied from the money which the garnishee disclosed, by the affidavit, it owed Safford, the defendant in the case, the garnishee cannot now be afforded any relief. However, we must not lose sight of the fact that the garnishee in this case had no direct interest in the matter except to pay the money to some person entitled to receive the same. To the garnishee it made no difference who received the money. No benefit of any ldnd or character accrued to the garnishee. It merely had a duty under the law to make a proper disclosure of the amount of property or money it had in its possession owing Safford. It must also be conceded that the garnishee has acted in the highest of good faith; and it also appears that it relies largely upon the advice or statements of Miller, the attorney for the plaintiff, and also upon the statements of Miller and Marx made during the long-distance telephone conversation which the garnishee had with each of them. The garnishee knew that Miller was an attorney, and also that Marx was an attorney, and each had knowledge of the right and proper thing to do in such cases. The garnishee, in view of all the correspondence and conversations had, and under all the circumstances, was justified in believing that Miller and Marx were adjusting the matter amicably; and if they did not do so, they would arrange the matter in some way so that when the garnishee paid the money over to whomsoever it did pay it, it would not have any more trouble in regard thereto, and no further liability. If, therefore, the garnishee, through a misapprehension of the real state of facts by reason of the letter written to it by Miller at the time Miller sent it, the affidavit of disclosure for admission of liability, and by reason of the conversation with Miller and Marx over the telephone, and all the other circumstances of the ■case, in good faith made an improper disclosure, and the money was paid to the wrong party when it should have been held to abide the final result of all the claims to such money, surely such a case is one in which the court would be justified in using its discretion and exercising its inherent power to set aside and vacate the judgment against the garnishee, and permit an amended disclosure. If the garnishee believed at the time it made such disclosure and paid such money — 268 — over, that it was doing the right, proper, and legal act, and yet it should subsequently appear that it was mistaken, and it had at all times, acted in good faith, and in this case the good faith of the garnishee must be conceded, there could be no more proper case for the exercise of the discretion of the court. First State Bank v. Krenelka, 23 N. D. 568, 137 N. W. 824 (Meyer, garnishee). It was held in the case of Racine-Sattley Mfg. Co. v. Pavlicek, 21 N. D. 222, 130 N. W. 228, that the ruling of the trial court on a motion to vacate a default judgment will not be reversed except in cases of manifest abuse of the wide judicial discretion vested in the trial court. The test of the court’s discretion in such matters is that the exercise of the court’s discretion, on an application to vacate a judgment, should tend in a reasonable degree to bring about a trial on the merits. Such is the expression in the syllabus of such case. We believe this is a sound rule. The only thing desired in the case at bar is a disclosure upon the merits. That is, the garnishee should be allowed to show and disclose its liability to Safford, and then it is for the court to say which of the several claimants to such money is entitled to receive the same. Acme Harvester Co. v. Magill, 15 N. D. 116, 106 N. W. 563, recognizes the inherent power of the court to set aside a satisfaction of a judgment entered through mistake of- facts. The principle laid down in such case is applicable to the case at bar, even though the circumstances and facts of the cases are different. The court has the inherent power to-set aside a satisfaction of a judgment entered through mistake of fact, or for any other reason that appeals to the sound discretion of the court, when the granting of the order vacating the judgment would tend to do justice between all the parties, and to have the matters involved disposed of entirely upon their merits. As before stated, the garnishee in this case had no interest except to pay the money to the party entitled to receive the same. It is evident that it would not have paid the money where it did, if it had not actually and in good faith, believed the party entitled to receive it who did receive it. If it was mistaken in this, it was the duty of all the parties, the claimants of the fund and the attorneys connected with the case, to act in the utmost good faith with the garnishee, so that it would become involved in no-difficulty, as the garnishee claimed none of the money itself, and claimed no offsets against the money, and had but one desire, that being to pay — 269 — the money to the party entitled to receive the same. We think the ■court below gave the matter a thorough consideration, and acted wisely and clearly within its sound discretion. The order of the court is therefore in all things affirmed, with costs.