Ryan v. Kimberly

Mr. Justice Smith delivered the opinion of the court. There is no question of fact in this case. The record presents a question of law only, which must be determined by the construction of the contract set out in the answer of Kimberly, garnishee. If the contract was an executed contract of sale at the time of the service of the garnishment writ, and the shares of stock mentioned in the contract were then the property of Kimberly, and the latter absolutely owed a certain and specific amount of money for them to Ryan and Oonley, the defendants in the attachment, as contended by appellants, it was a debt subject to garnishment by the creditors of Ryan and Conley. If, on the other hand, it was a cash sale, then no debt was created, and the garnishment must fail. It is contended by appellants that if it had been expressly provided in the contract, or if the contract be held to mean that the money should be paid to McCormick & Co., bankers, in Salt Lake City, Utab, that would not affect the right of appellant to garnish the debt due from appellee Kimberly in this State. This proposition is admitted by appellees as the law. It is undoubtedly well established in this State that a debt, payable outside of this state, is subject to garnishment here. H. & St. F. R. R. Co. v. Crane, 102 Ill. 249; Pomeroy v. Rand, McNally & Co., 157 Ill. 176; Lancashire Ins. Co. v. Corbetts, 165 Ill. 592; Wabash R. B. Co. v. Dougan, 142 Ill. 248. The situs of the debt therefore has nothing to do with the solution of the question presented, although it is apparently raised in the answer of appellees. Appellants’ second contention is that the contract was an executed contract of sale, and that the money in the hands of appellee Kimberly, to be paid on the contract at the time of the service of the garnishment writ, was absolutely owing to the defendants in attachment and was subject to garnishment by their creditors. Appellees, on the other hand, claim that it was a cash sale, and that in contemplation of law the sellers let go of the property with one hand as they received the price for it with the other; and “ there being no appreciable space of time between delivery and payment, the relation of debtor and creditor cannot be said to exist.” Upon an examination of the contract we find that aside from the incidental and subsidiary provisions therein contained and guarantees as to its title to mines, etc., the substance of the agreement was that Conley and Bvan sold to Kimberly the stock which was to be deposited with McCormick & Co., upon payments to be made by Kimberly to McCormick & Co., as therein provided, and the stock to remain in the hands of McCormick & Co., until the last payment therefor was made, when the stock was to be delivered to Kimberly. The payments for the stock to McCormick & Co., bankers, were to be for the use and benefit of Ryan and Conley, “ and the holders and owners of said stock certificates respectively, and such payments and the receipt of McCormick & Co. to said second party shall be full payments to said first parties and the holders of such stock certificates respectively,” etc.; “ and that in case of a failure on the part of said second party to make said payments, or either of them, and the continuance of such default for fifteen (15) days, in either case, then, in that case, said McCormick & Co. will deliver all of said stock certificates to said parties of the first part, or to either of them, upon their joint order.” The intention of the parties, as expressed in the contract and gathered from the whole subject-matter of the contract, and the time and manner of the transfer of the stock, is" clear. The title to the stock was not to vest in the purchaser until the stock had been fully paid for. The certificates of stock were not to be delivered until the last installment of the purchase price had been paid in- cash. Mo element of credit can be discovered in any of the provisions of the contract. It clearly appears, on the othér hand, that until the stock was fully paid for in cash, it was not to be delivered, and if the stock was not fully paid for in cash according to the provisions of the contract, it was to be returned by the bankers to the vendors and that all interests of Kimberly therein should cease and be determined. These provisions are inconsistent with the vesting of the title in Kimberly before the stock was fully paid for. These provisions are likewise inconsistent with an executed contract, at any period of time prior to the full payment in cash, and the delivery of the stock upon such full payment. To determine whether or not the title to property has passed from the vendor to the purchaser under the provisions of contracts somewhat similar to the contract in question, is frequently difficult. In United States v. Woodruff, 22 Wall. 180, the rule is laid down which is to be applied in determining this question. Mr. Justice Strong there says: ‘‘There are, however, certain rules for the construction of such contracts which are well settled in England, and, we think, also in this country. Mr. Justice Blackburn in his work on sales (pp. 151-2,) states two of them, and Mr. Benjamin in his treaties (2d Ed. p. 236,) adds a third. They are as follows: * * - Third: Where a buyer is by a contract bound to do anything as a consideration either precedent or concurrent, on which the passing of the property depends, the property will not pass until the condition is fulfilled, even though the goods may have been actually delivered into the possession of the buyer.” Tested, by this rule no title passed to the stock in question by this contract until payment in full in cash, as provided by the contract, had been made by Kimberly. On the part of both parties to the contract many things had to be done before title to the stock passed. Titles to properties claimed to be owned by the G-old Star Mining & Milling Co. had to be shown and examined by the purchaser. It is evident from the provisions of the contract that Ryan and Conley did not own all of the shares of stock covered by the contract, and ratifications of the sale from the otherownershadtobe procured and deposited with McCormick & Co., together with the certificates of shares of such owners. An exhibit must be made by the vendors of the records of the corporation, also of its books of account, its charter, its stock certificate book and all books relating to or showing the organization of the corporation and its assets'and liabilities; abstracts of title to all its properties were to be brought down to date, and examined by the vendee and passed upon by Chicago attorneys named in the contract, and if defects, either in the title of the corporation • or in its organization, were found, they were to be cured if possible by January 28, 1903; and if in the opinion of the attorneys named such defects could not be cured, the money paid was to be refunded and the contract to become void, at the option of Kimberly, unless he should elect to waive such defects, except the stock, and pay for the same in full upon delivery. These and other provisions of the contract exclude the idea of an executed contract of sale, and negative any intention of the parties to pass the title to the stock at the time the contract was signed by the parties, and establish the relation of debtor and creditor between the parties. In the case of National Revere Bank v. Bay State Shoe-Fastening Co., 40 Atl. Rep. 255, the Supreme Court of Hew Hampshire clearly defined the relations of the parties in a sale much simpler as to its facts but involving the same legal principles. In that case Bichardson the trustee (guarnishee) bid off certain property at an auction sale for $'600, of which sum he was required to pay $100 at the time of the sale, as a guaranty of the bid, and the balance was to be paid at the time of the delivery of the property; and the defendant had thirty days in which to make the transfer and delivery. Bichardson paid the defendant $100 immediately after the bidding. While he was endorsing a check for that purpose he was served with the writ. Subsequently and within the time specified he paid the balance, in accordance with the terms of the sale. The court say : “ The contract of'sale was for cash on delivery of the property. The title to the property could not vest in the buyer until the sale was consummated by payment and delivery. * * * When he had paid he owed nothing. Before the title vested in him, he owed nothing for which the defendant could have enforced payment without tendering the goods. The plaintiff, therefore, was not wronged by the payment.” Paul v. Reed, 52 N. H. 136; Furness v. Smith, 30 Pa. St. 520, hold the same doctrine. The statute authorizing the proceeding by garnishment only authorizes the creditor to recover such indebtedness as can be recovered by an action of debt, or vndebitatus assumjysit, in the name of the attachment or judgment debtor against the garnishee. Webster et al. v. Steele et al., 75 Ill. 544; Goodman v. Boyd, 44 Ill. App. 250. And in Richardson et al. v. Lester et al., 83 Ill. 55, it is held that in proceedings by garnishment, the garnishing creditor will have no greater rights to recover of the party garnished than the execution debtor, in whose name the suit is brought. It is in point then to inquire what rights Eyan and Conley would have had against Kimberly, if he had made default in the terms of his contract and had not paid the last installment due on April 28. In that event McCormick & Co. would have returned the stock, according to the terms of the contract. Conley and Eyan could not then have sued, treating the contract as still in force and the title as vested, for the certain and liquidated amount of $91,000, without tendering the stock. But Fox, the garnishing creditor, never had control of the stock, and could not tender it under any circumstances. How, then, can he maintain this proceeding where he has no greater right than Eyan and Conley, in whose name he sues, would have had, in the event supposed ? If in the event supposed Eyan and Conley had sued Kimberly, without tendering the stock, for general damages under the contract, it is clear they could not have recovered anything more than such damages as they could have shown themselves to have sustained by reason of Kimberly’s breach of the contract. Without going into the true measure of such damages, it is certain that the amount would be involved in great uncertainty, and would have to be determined by a jury or the court. In other words, the damages would be unliquidated, and beyond question would not be the subject of garnishment. Capes v. Burgess, 135 Ill. 61. So that in either case, and upon the theory of the contract contended for by appellants there can be no recovery in this proceeding. Upon the theory that the contract was not an executory contract, and that the title to the stock had not passed when the writ was served, this proceeding cannot be sustained; for, as we have seen, garnishment will not lie to stop payment of money on a cash sale. Another ground for discharging the garnishee is urged by appellee. It appears from the contract that the so-called debt sought to be reached by these proceedings was due, not to Eyan and Conley alone, but to them and a number of other persons, owners of portions of the stock sold. Eyan and Conley did not undertake to sell all the stock themselves. Their contract covered all the stock which they owned and all the stock owned by others, subject to the ratification of such other owners. The contract provides that the payments to be made by Kimberly “ shall be made by him to said McCormick & Co., for the use and benefit of said first parties and the holders and owners of said stock certificates respectively.” The contract further provides that the payments should constitute a release of Kimberly from liability not only to Eyan and Conley, but to the other holders or owners of the stock certificates. It nowhere appears what amount was due to Eyan and Conley or what amount was due to the other owners of the stock. Garnishment proceedings cannot be maintained against one indebted to the principal defendants, .with others not defendants to the action. Ripley v. Peoples’ Savings Bank, 119 Ill. 341, affirming same cause in 18 Ill. App. 430. The judgment of the Superior Court must be affirmed. Affirmed.