State Savings Bank v. Guaranty Abstract Co.

Gaynor, C. J. On the 21st day of March, 1912, the plaintiff herein, appellee, obtained judgment against the principal defendant, the Guaranty Abstract Company, of Missouri Valley, Iowa, for $2,768.88. On the 18th day of July, 1912, the appellant herein, W.. J. Burke, was garnished under execution issued upon said judgment, and on the 6th day of November, 1912, appeared and made answer in said garnishment proceeding. The defendant the Guaranty Abstract Company appeared by its president, and waived — 1379 — notice of garnishment proceedings on the principal defendant. On the 8th day of January, 1913, the plaintiff filed a pleading controverting the answers of the garnishee, claiming that said garnishee was indebted to the defendant the Guaranty Abstract Company in the sum of $500. Issue was joined upon this pleading between the plaintiff and the garnishee, W. J. Burke. No pleading was filed by,the Guaranty Abstract Company in this proceeding. Upon the issue joined, a trial was had to a jury, and a verdict and judgment rendered against the garnishee and in favor of the plaintiff, for the sum of $429.25. From this judgment, the garnishee, W. J. Burke, alone appeals. It appears that the notice of appeal to this court was served upon the attorneys for the plaintiff, and upon A. W. Blackburn, clerk of the district court. As to them, the service of notice was complete, but no notice of appeal was served upon the principal defendant, the Guaranty Abstract Company. The plaintiff filed a motion in this court to dismiss the appeal, on the following grounds: “The abstract herein shows that, on March 21, 1912, the plaintiff, State Savings Bank, appellee herein, obtained a judgment against the principal defendant, Guaranty Abstract Company, for the sum of $2,768.88, and that such judgment, or at least more than the amount claimed against the garnishee, herein, was due and unpaid at the time the notice of garnishment herein was served, and at the time of this trial. That the appellant herein has not perfected his appeal to this court in the manner required by law, for the reason that no notice of appeal was ever served upon the principal defendant, Guaranty Abstract Company, the only notice of appeal served herein being a notice directed to State Savings Bank, of Missotiri Valley, Iowa, and to A. W. Blackburn, clerk of said district court, and that no notice of appeal directed to the Guaranty Abstract Company was ever served or filed herein. That the only — 1380 — service of notice of appeal on file herein is the acceptance of service of said notice by J. S. Dewell, Ross McLaughlin, and S. H. Cochran, attorneys for plaintiff, and by A. W. Blackburn, clerk of said district court. That, as appears from the record herein, the Guaranty Abstract Company, the principal defendant, is directly interested in the event of this suit, for the reason this action in garnishment is based on the claim that the garnishee was indebted to the principal defendant, the Guaranty Abstract Company, and said claim having been established herein, and if judgment herein is paid, would, to that extent, inure to, the benefit of the principal defendant, and a reversal of this judgment would, therefore, be prejudicial to the interests of said Guaranty Abstract Company. In addition to the foregoing, it fully appears that the principal defendant, the Guaranty Abstract Company, is party to this present proceeding, said principal defendant having entered its appearance in this garnishment proceeding before judgment was rendered herein.” This motion involves a question of procedure. We hesitate to sustain a-motion of this kind, which has the effect of depriving the garnishee of a hearing upon the merits of his case; nor would, unless, by well-established principle and precedent, we are forced to do so. The motion goes to the right of this court to hear and determine the questions raised upon the appeal upon their merits. If the contention of the plaintiff is well-founded, we have no choice or discretion in the matter, but must refuse a hearing upon the merits. Section till of the Code of 1897 provides as follows: “A part of several co-parties may appeal; but in such case they must serve notice of the appeal upon those not joining therein, and file proof thereof with the clerk of the Supreme Court.” These questions meet us, therefore, at the threshold of — 1381 — this inquiry: (1) Was the defendant the Guaranty Abstract Company a co-party to this proceeding? (2) Would a reversal of this case be prejudicial to it? If both of these questions are answered affirmatively, this court is without jurisdiction, and therefore without right to.hear or determine the main question urged-by appellant. It is apparent that,, if it prejudicially affects the principal defendant, and it has no notice of this proceeding, this court has no right to make any pronouncement prejudicial- to its interests. Section 3947, Code Supplement, 1913, provides: “Judgment against the garnishee shall not be entered until the principal defendant shall have had ten days’ notice of the garnishment proceedings, to be served in the same manner as original notices.” It is apparent that, after such notice, the principal defendant is in court for all purposes connected with the garnishment proceedings, and is bound to take notice of all further actions of the court touching the subject matter of the garnishment. Section 3951 of the Code provides: “The judgment in the garnishment action, condemning the property or debt in the hands of the garnishee to the satisfaction of the plaintiff’s demands, is conclusive between the garnishee and defendant.” In Smith v. Dickson, 58 Iowa 444, it was held, in substance, that the court might proceed against the garnishee who had been served properly with notice of garnishment, without having jurisdiction of such debtor, and it was said he was not a necessary party; but this was before the statute was enacted requiring notice to the defendant of the garnishment proceedings, and the decision is based upon the stated fact that there was no provision of the statute then requiring the. notice on the principal defendant. — 1382 — Section 3948 of the Code provides that the defendant in the main action may, by proper pleading filed in the garnishment proceedings, interpose certain claims or defenses against the plaintiff. Section 3953 of the Code provides: “An appeal lies in all garnishment cases at the instance of the plaintiff, the defendant, the garnishee, or an intervener claiming the money or property.” In Sinard v. Gleason, 19 Iowa 165, this court said: “As to the right of the principal debtor to appeal from the judgment against the garnishee, we have but little doubt, the latter being a part and auxiliary to the main action.” The statute at the time the above case was decided was the same as it is now. See Eevision of 1860, Section 3214. Section 3952 of the Code provides that, when a judgment is rendered against the garnishee, the same shall distinctly refer to the original judgment. Thus it is apparent that the principal defendant is bound by the judgment against the garnishee, condemning its property in the hands of the garnishee to the payment of its debt. This judgment is conclusive on it, unless it appeals. It is also conclusive on the garnishee, unless the garnishee appeals. Each has a right to appeal from the judgment, if adverse to his interests. Before judgment could be entered' against the garnishee, notice must be served on the garnishee, as provided in Section 3935 of the Code. This notice forbids him to pay any debt owing the defendant, due or to become due, and requires him to retain possession of all the property of the defendant in his hands or under his control, to the end that the same may be dealt with according to law. Notice must be served upon the principal defendant of this fact of garnishment, and that its property is so held. The judgment entered in that proceeding, condemning the prop — 1383 — erty of the principal defendant in the hands of the garnishee, is conclusive between the garnishee and the defendant, and either party feeling himself aggrieved by such judgment may appeal. If judgment is entered against the garnishee, the effect of the judgment is to condemn the property of the defendant in the hands of the garnishee, to the payment of the judgment held by the plaintiff against the defendant. The judgment rendered against the garnishee, when collected, discharges the debt from the defendant to the plaintiff pro tanto. To the extent of the judgment when satisfied, defendant is relieved of his obligation to the plaintiff. A reversal of- the judgment, or a finding that the garnishee, as claimed in this case, was not indebted to the defendant, is to leave the defendant still charged with the full amount of the judgment against it. A reversal, therefore, would be prejudicial to its interests. We must answer both questions in the affirmative. Defendant was a party to this garnishment proceeding, in that it was bound by the judgment against the garnishee equally with the garnishee, and had a right to appeal if it felt itself aggrieved; and there is apparently nothing left for us to do but to sustain the motion and dismiss this appeal. As supporting this contention, see Hunt v. Hawley, 70 Iowa 183; Goodwin v. Hilliard, 76 Iowa 555; Day v. Hawkeye Ins. Co., 77 Iowa 343; Tukey v. Foster, 158 Iowa 311; Dillavou v. Dillavou, 130 Iowa 405; Smith Lbr. Co. v. Scott County Garbage Co., 149 Iowa 272; Schaller & Son v. Marker, 136 Iowa 575. The appellant relied upon the case of Payne v. Raubinek, 82 Iowa 587. That case does nothing more than hold that, in case of co-parties, no. notice is necessary where the defenses are distinct and separate, and a judgment against one does not affect in. any way the interests of the other. In that case, it is said that the judgment as to appellant can be modified, affirmed, or reversed; without injuriously — 1384 — affecting the interest of the. other co-party. It was held that the party who did not appeal, and on whom notice was not served, had no concern with the questions presented. A determination either way on the issues between the plaintiff and defendant cannot affect the liability of the co-party on whom no notice of the appeal was served. This is not the fact in the case at bar, and the Payne case is not controlling. Motion to dismiss appeal sustained. Deemer, Labb, and Salinger, JJ., concur. Supplemental Opinion.