Diamond Rubber Co. v. Fourth National Bank

ANDERSON, J. The Southern Supply Company was garnished, and admitted an indebtedness for the purchase money of a certain automobile from the defendant Cannon, and suggested that said fund was claimed by the appellee, the Fourth National Bank. The fund, and not the automobile, was involved in the controversy, and the issue to be tried, under section 4329 of the Code of 1907, was, not who was entitled to the machine, but who was entitled to the fund? While the statute requires no particular form or nicety of pleading, yet section 4329 requires the claimant to propound his claim in writing and make oath thereto, upon which the plaintiff must take issue. The claim should be to the fund or thing set up in the answer of the garnishee, and not to something not involved; and as the answer set up an indebtedness,, the claim should have been to the fund, and not to it or an automobile. The trial court erred in sustaining the sufficiency of the claim propounded by the claimant. If it claimed the debt, it should have so stated; and it made no difference whether it owned the automobile, or not as the right to same was not involved, except as an incident to the ownership of the fund. If at the time the claim was propounded the bank claimed the automobile, this would be a disaffirmance of the sale of same by Cannon, and it would have no right to the proceeds of the sale. On the other hand, if it claimed the proceeds, it could only do so upon the theory of a ratification of the sale, which it could doubtless do by making an election; but it could not repudiate the sale by claiming the machine, and at the same time and in the same claim also claim the proceeds of the sale. The election should be specified and certain, and not in the alternative, and the claim propounded was inconsistent. [424] Assuming that the claimant will amend his claim, upon the next trial, so as to conform to the statute, we will discuss the legal question involved. The Southern Supply Company does not claim to he a bona fide or innocent purchaser, and is a mere stakeholder; the controversy being between rival claimants to the debt owing from it to Cannon. The Fourth National Bank claims as a lienor or mortgagee, or as a conditional vendee of the automobile, and that it had the right as such to ratify the sale and elect to look to the proceeds of said sale rather than go upon the property, and this it would doubtless have the right to do, by making the proper election, and which could be done by propounding a proper claim to the fund. The Diamond Rubber Company claims the fund as a creditor without notice of the bank’s claim or title because the instruments under which it, the said bank, claims were not recorded. As to whether or not the bank is a mortgagee or conditional vendee, under the instruments introduced in evidence, involves a question of some difficulty, but which is not necessary to-decide, as we think its claim superior to that of the-rubber company, whether it is a mortgagee or conditional vendee. If a conditional vendee, the failure to record under section 3394 of the Code of 1907 was not available to the plaintiff, as said section is intended to protect only mortgagees, purchasers for a valuable consideration, and judgment creditors without notice. The rubber company had notice of the claimant’s claim before the rendition of its judgment and before the issuance of its: garnishment. The notice was given to West, who was the agent of the supply company, and which said company was the agent of the plaintiff; and West was acting-for and in behalf of the plaintiff in endeavoring to collect its claim when he received the notice of the bank’s [425] claim, and notice to him was therefore, notice to the plaintiff. If, on the other hand, the bank held as a mortgagee, the failure to record the mortgage, as required by section 3386 of the Code of 1907, would operate only in favor of creditors and purchasers without notice; that is, purchasers from the mortgagor subsequent to the execution of the mortgage, or creditors who became such after the execution of said mortgage. This statute was intended to protect creditors who deal with the mortgagor upon the strength of his ownership of the property, and who did not know of an existing unrecorded mortgage on same, and does not apply to creditors existing when the mortgage was made. This court, as far back as the case of Carew v. Lee, 30 Ala. 577, held that creditors and purchasers stand upon the same footing, and that the statute there considered meant subsequent and not existing creditors, and this case was followed in the cases of Durden v. McWilliams, 31 Ala. 206, and Mathis v. Thurman, 143, 560, 39 South. 360. It is true, those cases dealt with the statute of frauds against loans; but by analogy the word “creditor” as there used and construed would apply to creditors and purchasers as used in section 3386, as the purpose of said section is to protect those dealing with a mortgagor who did not know of an existing mortgage. The burden was on the plaintiff to bring itself within the protection of the statute by showing that the debt was contracted after the mortgage was made.—Mathis v. Thurman, supra. The mortgage was made on June 1st, and the plaintiff sued on an account due June 1st, and there is nothing to indicate that the debt was contracted subsequent to the date of the claimant’s mortgage. The case of Butler v. Savannah Co., 122 Ala. 326, 25 South. 241, is unlike the present case. There the defendant sold the guano as the sales agent of [426] the claimant, the original vendor. The bank here was not the defendant’s vendor. It merely paid for him the purchase price to the vendor, and undertook to secure the payment of same by the instruments introduced in evidence, and the defendant Cannon was more than a mere sales agent. He was the conditional owner or morgagor of the property. Nor can we say that the error of the court in not sustaining the objections to claimant’s claim was error without injury, upon the theory that the evidence shows that the claimant has a superior claim to the fund. In the first place, the claim should have been propounded to the fund in order to present an issue, under the statute, and which the claimant did not do, as it claimed the fund or the automobile, one or the other, and the said auto was not directly involved. Moreover, the only theory upon which the claimant would he entitled to the fund would he by a ratification of the sale by an election to accept the proceeds, and the only election attempted was the propounding of the claim, and which was not unequivocal and unconditional, when it claimed the automobile also in the alternative. For the errors above mentioned, the judgment of the city court is reversed, and the cause is remanded. Reversed and remanded. Simpson, Mayfield, and Somerville, JJ., concur.