Meier v. Hess

Bean, J. (after stating the facts as above). — The question here presented is as to the priority of right between the assignee of a chose in action, and an attaching creditor whose garnishment is served before notice to the debtor of the assignment. Under our statute its solution depends upon whether a failure to notify the debtor will invalidate the assignment of a chose in action, as against a subsequent bona Jide purchaser from the assignor who first gave notice to the debtor of his purchase. By section 150, Hill’s Code, an attaching creditor is placed in exactly the same position, with reference to his rights in the property attached, as a bona Jide purchaser in good faith and for value: Rhodes v. McGarry, 19 Or. 222 (23 Pac. Rep. 971). Without this statute, which seems peculiar to our legislation, there can be no doubt that an assignment will take precedence over a subsequent attachment, for it is valid as between the parties, and the general rule is that the garnishment or attachment “operates only on the legal rights of the defendant in the attachment or judgment — -such rights as the debtor could, by action at law, enforce in his own name. The plaintiff acquires no greater rights against the garnishee than the defendant himself possesses, except when the garnishee is in possession of property of the defendant under a fraudulent transfer from him. Nor does garnishment have any retroactive effect, so as to affect prior transactions between the garnishee and the defendant. Only, therefore, such demands can be subjected to garnishment as the defendant in his own name would have a right to recover in an action at law”: Lord, J., in O. R. & N. Co. v. Gates, 10 Or. 514; Baker v. Eglin, 11 Or. 334 (8 Pac. Rep. 208); Phipps v. Rieley, 15 Or. 497 (16 Pac. Rep. 185); Case v. Noyes, 16 Or. 329 (19 Pac. Rep. 104); Rhodes v. McGarry, 19 Or. 222 (23 Pac. Rep. 971); Riddle v. Miller, 19 Or. 468 (23 Pac. Rep. 807). 602 But our statute undertakes to, and does, put the attaching creditor, not only on the footing of his debtor, but on that of a bona fide purchaser for value, which, in many instances, may place him in a better position as to the property attached than his debtor. We are, therefore, confronted with the question as to whether, between successive purchasers of a chose in action, their rights will depend upon the priority of the assignment, or of notice to the debtor. In England the rule undoubtedly is that the question which of successive assignees of the same obligation should be preferred, depends, not on the'date of the respective transfers, but upon the time when they were communicated to the obligor: Dearle v. Hall, 3 Russ. 1; Loveridge v. Cooper, 3 Russ. 30; Pomeroy, Eq. Jur. § 695 and notes. And this rule has been adopted by the courts of many of the states in this country: Spain v. Hamilton, 1 Wall. 624; Campbell v. Day, 16 Vt. 558; Vanbuskirk v. Hartford, Ins. Co. 14 Conn. 141 (36 Am. Dec. 473); Hobson v. Stevenson, 1 Tenn. Ch. 203; Coldfelter v, Cox, 1 Sneed, 330 (60 Am. Dec. 157); Murdock v. Finney, 21 Mo. 139. It is explained by the courts adopting it as but an application to the case of an assignment of a chose in action, of the principle which renders void, as to bona fide purchasers, sales and transfers of chattels, unless accompanied by a delivery and continuous change of possession. It is said that the act of giving the debtor notice is, m a certain degree, taking possession of the fund, and is going as far toward an actual change of possession as is possible, and if this notice is omitted, the assignee is guilty of the same degree and species of neglect, and must suffer the same consequences, as one who leaves a chattel, purchased by him, in the possession of his vendor. In jurisdictions where the rule prevails that the sale of personal property capable of immediate delivery to the purchaser, is fraudulent and void as to subsequent bona fide purchasers, unless accompanied by immediate delivery, and followed by an actual change of possession, the reasoning 603 of the authorities cited seem unanswerable, and to rest upon a solid foundation of argument. But where, as in this state, the sale of chattels, unaccompanied by a change of possession, creates only a presumption of fraud as against a bona fide purchaser, which may be rebutted by showing that the sale was made in good faith, for a sufficient consideration, 'and without intent to defraud (Hill's Code, § 776, Subd. 40; Marks v. Miller, 21 Or. 317; S. C. 28 Pac. Rep. 14; 14 L. R. A. 190), the foundation for the rule fails, and no sufficient' reason can be perceived why a plaintiff should obtain any other or better rights, by the attachment of a chose in action which had previously been assigned, but of which the debtor had no notice, than he would obtain by the attachment of a chattel which had been sold, but still remained in the possession of his debtor. It seems to us that, under the rule prevailing in this state, an assignment of a chose in action, made in good faith, for a sufficient consideration, and without intent to defraud creditors, or subsequent purchasers, is complete upon the mutual assent of the assignor and assignee, and does not gain an additional validity, as against third persons, by notice to the debtor ; and, as between successive bona fide assignees of a chose in action from the same person, the one prior in point of time will be protected, though he has given no notice to either the subsequent assignee or the debtor. Notice is indeed needful in order to charge the debtor with the duty of payment to the assignee, so that if, without notice, he pay the debt to the assignor, or to a subsequent assignee, or on a garnishee process, he will be discharged from the debt. This seems to us to be the better doctrine, as supported by the general course of decisions in this country: 2 White & Tudor, Lead. Cas. 1666; Thayer v. Daniels, 113 Mass. 129; Fairbanks v. Sargeant, 104 N. Y. 108 (58 Am. Rep. 490; 9 N. E. Rep. 870); Muir v. Schenck, 3 Hill, 228 (38 Am. Dec. 633); Beckwith v. Union Bank, 9 N. Y. 211; Bholen v. Cleveland, 5 Mason, 174; Dix v. Cobb, 4 Mass. 507; Wood 604 v. Partridge, 11 Mass. 488. We are of the opinion, therefore, that the assignment of the debt against Meier & Frank to defendant Sophia Schwab, gave her a prior right to the fund, although the debtor did not receive notice of the assignment until after the attachment, and the decree must be reversed.