Farmers National Bank of Webster City v. Manke

CARTER, Justice. Farmers National Bank of Webster City (the bank), the plaintiff in an action on a promissory note, appeals from a pretrial order discharging an attachment of the business real estate of the debtor, defendant, Robert Manke d/b/a Country Garden Store (Manke). The bank had sought and obtained an attachment, as an auxiliary remedy, on Manke’s business real estate based on the allegation that he was about to sell his property and place it beyond the reach of his creditors. Manke filed a motion to discharge the attachment, supported by affidavit, and the bank filed counteraffidavits. Subsequently, an evidentiary hearing was held before the district court. Manke testified that he did propose to sell his business real estate and that he intended to use the proceeds to pay real estate taxes on his house and to reduce his home mortgage. The district court, after finding that the intended disposition of the proceeds of the pending sale was as Manke had testified, concluded that no legal basis existed for continuing the attachment. Consequently, it entered an order discharging the attachment. The bank has appealed. In seeking reversal of the district court’s order, the bank urges three grounds: (1) that a motion to discharge an attachment under section 639.63 (1991) may only be used to test the legal sufficiency of the stated grounds and not to traverse the factual basis for those grounds, (2) that such motions should only be heard on affi [20] davits, and (3) that such motion should be considered as in the case of motions for summary judgment and overruled if the facts are in any manner in dispute. The debtor argues that the bank waived these contentions by not asserting them at the hearing on the motion to discharge the attachment. We agree that the bank did not object to the debtor presenting oral testimony in support of the motion for discharge. Consequently, it may not assert that circumstance as a basis for reversal. We believe the record is clear, however, that the bank did assert that the factual basis for its alleged grounds for attachment could not be tried out on a motion filed under section 639.13. It also asserted that the court should consider the record as if the matter were a motion for summary judgment. Consequently, we conclude that the first and third grounds argued by the bank on appeal have been preserved for our review. We conclude that both of these grounds provide a basis for reversal. Although our decision in Rockport Co. v. Wedgewood, Inc., 447 N.W.2d 126 (Iowa 1989), established a basis for the legal claim that Manke is advancing, i.e., that a debtor is free to use his property to prefer a particular creditor, it does not validate the procedure by which that proposition is now being asserted. In considering this proposition, the point of beginning is the opinion of this court in Sturman v. Stone, 31 Iowa 115 (1871). In considering a motion for discharge of an attachment under Iowa Code section 3239 (Rev.1860), a statutory predecessor to section 639.63, this court stated: The defendant also grounded his motion to dissolve the attachment on certain affidavits filed by him, showing that the cause for attachment, as stated by the plaintiff in his petition, was not true— that it had no existence in fact. Id. at 118. The court in Sturman relied on its earlier decision in Sackett, Belcher & Co. v. Partridge & Cook, 4 Iowa 416 (1857), in holding that “the general and better opinion now is that such issues can be made only in an action on the attachment bond.” Id. The Sturman case was followed in Peters v. Snavely-Ashton, 157 Iowa 270, 134 N.W. 592 (1912). In considering the scope of the matters to be considered on a motion to discharge an attachment, the court stated: The alleged grounds of an attachment cannot be controverted by evidence for the purpose of quashing the writ. They can be traversed in the main action only by a counterclaim on the bond. If an excessive levy be made or if exempt property be attached, the defendant may move for a discharge of the attachment as to such property. If the property of a third party be wrongfully attached, such party may also appear and move for a discharge or release. It is only in some such sense that the defendant can move to dissolve or discharge an attachment. A writ of attachment is not like a writ of temporary injunction, subject to dissolution pending the action upon mere preliminary investigation of the facts. Id. at 270, 134 N.W. at 593 (emphasis added) (decided under Iowa Code § 3929 (1897)). The provisions of section 639.63 are substantially similar to the provisions of the statutes in effect at the time of the Peters and Sturman decisions. We conclude that no different result is warranted under the present statute. The language of the current section 639.15 appears to perpetuate the principles on which Peters and Stur-man were decided. The proper method for Manke to have traversed the factual allegations in support of the attachment was by an action on the bond under section 639.14. That was the procedure that was successfully employed by the debtor in the Rock-port Co. decision. Although it is not necessary to our decision, we also agree with the bank’s contention that, whatever issues may be considered in a motion for discharge under section 639.63, the scope of the summary consideration provided by that statute is the same as in ruling on a motion for summary judgment. This proposition was [21] recognized in Frudden Lumber Co. v. Clifton, 183 N.W.2d 201 (Iowa 1971). In that case, the court stated: In Bell v. Courteen Seed Co., 197 Iowa 120, 124, 196 N.W. 1006[, 1008 (1924) ], this court held a proceeding for discharge of an attachment is summary in nature. Earlier we took the position of a court, in such matters, may justifiably consider all papers properly on file.... ... The situation thus presented is analogous to that regarding summary judgment proceedings under Iowa R.Civ.P. 237, as amended. In such matters the court must examine all pleadings, depositions, answers to interrogatories and affidavits on file, if any, in order to determine the matter. See Iowa R.Civ.P. 237(c).... Id. at 203-04. Under a summary judgment standard, the record in the present case concerning the debtor’s motives in selling the property reveals a genuine issue of material fact. Based on our holding that the factual basis of the grounds alleged in support of an attachment may not be traversed on a motion to discharge attachment under section 639.63, the judgment of the district court must be reversed. It is so ordered. REVERSED. All Justices concur except SNELL, J., and McGIVERIN, C.J., and HARRIS and NEUMAN, JJ., who dissent.