Greenwich Insurance v. Columbia Mfg. Co. ex rel. Citizens' National Bank

Mr. Presiding Justice Harker delivered the OPINION OF THE COURT. This is an action in assumpsit brought on the twenty-first day of May, 1896, in the Circuit Court of Macon County, by the Columbia Manufacturing Company, of Decatur, Illinois, for the use of the Citizens’ national Bank, against the Greenwich Insurance Company of Hew York, upon a policy of insurance for the recovery of damages occasioned by fire to property located at Decatur, and covered by the policy. A special plea was filed, setting up that on the second of December, 1895, a suit in attachment was commenced by James M. Morrison against the Columbia Manufacturing Company in the Superior Court of Suffolk County, Massachusetts, in which' the defendant Insurance Company was summoned as garnishee to answer whether it was indebted to the Columbia Manufacturing Company, that it answered on the sixth of January, 1896, that the Columbia Manufacturing Company had made a claim upon it, which claim had not been adjusted; that afterward, on the fifteenth of July, 1896, it further answered that the claim had been adjusted at $1,500 and had not been paid; that on the twenty-sixth of December, 1896, service by publication having been had upon the Columbia Manufacturing Company, judgment was rendered against it for $3,013.26 in favor of Morrison, and execution ordered against the defendant Insurance Company for the amount due from it to the Mann-factoring Company; that on the twelfth of February, 1897, the entire $1,500 was paid on execution issued against it as garnishee and that thereby the obligation and liability on the policy of insurance had been discharged. The plaintiff by way of replication alleged that on the twenty-third day of November, 1895, the plaintiff assigned its claim against the defendant Insurance Company to the Citizens’ National Bank of Decatur, Illinois, to secure a large indebtedness then due and owing from the said plaintiff herein to the said bank; and that on the fifth day of December, 1895, prior to the making of the answer of the Greenwich Insurance Company to the interrogatories filed in the attachment proceedings in the Superior Court of Massachusetts, the defendant insurance company received written notice that the said claim had been assigned as aforesaid, and was thereby warned to pay said moneys to no other person than the said bank; and that at the time of making the answers as aforesaid, the defendant insurance company well knew that the moneys arising under said policy were due and owing to the Citizens’ National Bank, whereupon it became and was the duty of the defendant insurance company to interpose in said proceedings as a defense thereto the said assignment, which the defendant failed to do. To this replication defendant demurred generally, which demurrer was overruled, and the defendant was permitted to rejoin double. In the first-rejoinder the defendant alleged that on the twenty-third day of November, 1895, when the said assignment was alleged to have been made, the amount of the indebtedness of the defendant insurance company to the Columbia Manufacturing Company had not been ascertained and was unknown, and the liability of this defendant was contingent upon the performance of the conditions of the policy, and there was therefore no assignment. In its second rejoinder defendant alleged that the claim of the Columbia Manufacturing Company against the defendant had not been assigned by the manufacturing company. The court sustained a demurrer to the first rejoinder. Upon the second, issue was joined and a trial had by the court without a jury. The evidence showed the execution of the policy of insurance for $1,500, the destruction of the property by fire on the fourth of November, 1895, the execution of a written instrument of assignment of all moneys due and owing under the policy as security for an indebtedness due the bank on the twenty-third of November, that there was an indebtedness at the time exceeding the amount of the policy, that proofs of loss were not furnished the insurance company until after that date, that the insurance company was served with garnishee summons in the attachment suit as "stated in the special plea and judgment rendered against it and paid as alleged, that on the fifth of December, 1895, I. F. Mills, representing the Citizens’ National Bank of Decatur, called upon the president of the defendant insurance company and demanded payment of the amount of the policy, which payment was refused because of the garnishee proceedings pending, and that thereupon a written notice of the assignment from the Manufacturing Company to the bank was served upon the president of the insurance company by Mills in which the insurance company, was warned not to pay the insurance money0 due on the policy to any other person than the bank. The Circuit Court rendered a judgment against the insurance company for $1,593.75 and costs. It is contended by appellant that the payment of the garnishee judgment rendered against it in the Superior Court of Suffolk County, Massachusetts, under compulsion of execution is a performance of its obligation to the Columbia Manufacturing Company and a discharge of its liabilities under the policy. Appellant would have been in better position to urge that contention had it stood by its demurrer to appellee’s replication. Instead, however, it obtained leave to rejoin double and under that leave filed two rejoinders. To the rejoinder that when the assignment of the claim under the policy was made to the Citizens’ National Bank, the amount of the loss had not been ascertained, the court sustained a demurrer. To the rejoinder that the claim had not been assigned to the bank, a similiter was filed. Only two issues, therefore, were presented by the pleadings; one of law, as to whether the first rejoinder was a sufficient answer to the replication; the other of fact as to whether the replication was true. It was not necessary to the validity of the assignment that proof of loss had before then been made and the rights of the policy holder determined by adjustment. The loss by fire fixed the liability. The assignment was an equitable assignment of the manufacturing company’s claim, and by it the assignee took such rights as entitled it to protection both in law and equity. The rights of an equitable assignee are superior to those of a subsequent attaching creditor. Hodson v. McConnel, 12 Ill. 170; Carr v. Waugh, 28 Ill. 418; Morris v. Cheney, 51 Ill. 451; Dressor v. McCord, 96 Ill. 389. The demurrer to the first rejoinder was properly sustained. Under the issue raised by the second rejoinder to the replication, no other finding could have been made than that the assignment was made in manner as alleged. Complaint is made of the ruling of the court in refusing to hold as the law two propositions tendered: First, that it was the duty of the Citizens’ National Bank, on receiving notice of the attachment proceedings in Massachusetts against the insurance company, to set up its claim in the court there; second, that the judgment rendered against the insurance company as garnishee in the payment of it was a full and complete bar to this suit. Looking solely to the issues raised by the pleadings, we must say that those propositions were properly refused for the reason that they were not applicable, and we could very well dismiss that contem tion without further comment. But as counsel for appellant have filed an elaborate argument in support of the contention that it was the. duty of the bank to interplead in the Massachusetts court, and having failed to do so, the payment of the garnishee’s judgment by the insurance company was a complete satisfaction and discharge of all liability under the policy, we are ready to express our views upon the law of the proposition. If a garnishee, with notice of an assignment to a third party of the debt garnisheed, fails to bring it to the attention of the court, the judgment rendered against him will be no bar to a suit by such third person. Drake on Attachments, Secs. 607, 608; 8 Am. and Eng. Ency. of Law, 1183, and cases therein cited. The authorities are abundant in support of that holding. Nor will the mere fact that the assignee knew of the pendency of the garnishee proceedings and might have intervened to assert his right, relieve the garnishee of the duty to set up in his answer the fact of his having received information of the assignment. Lancanshire Ins. Co. v. Corbetts, 165 Ill. 592, is not an authority against that view. In that case our Supreme Court holds that where a debtor is garnisheed for the same debt by different parties in courts of concurrent jurisdiction in different States, the recovery and payment of judgment in one State will bar a recovery against him in the other State, if he has acted without collusion, fraud or negligence. In other words, it declined to adopt a “construction of the law which will impose a double liability upon a garnishee, who, without collusion, fraud or negligence, has undertaken to fully discharge its duties under apparently conflicting laws of different jurisdictions.” But in the case at bar there was negligence on the part of the insurance company; that of failing to set up in its answer that it had received information of the assignment of the debt and that demand had already been made for payment by the assignee. If it is required by this suit to pay the liability a second time, that hardship results from its own neglect of duty. Judgment affirmed.