Nachtegall v. Reilley

Brooke, J. (after stating the facts). The question to be determined seems to be whether or not the fund in the hands of the garnishee defendant (in which he claims no beneficial interest) is in fact the property of the principal defendant, and therefore lihble to garnishment. There is here no dispute between the plaintiff and the [351] garnishee defendant; it is admitted that he holds the fund under the contract as stated in his disclosure. It is claimed by the plaintiff that an examination of the contract will demonstrate that as to this $1,000 the principal defendant, James E. Reilley, is the sole owner thereof, and that upon the refusal of P.erkins to pay the same over to him he could maintain an action of debt or indebitatus assumpsit against Perkins for its recovery; while defendant claims that it is obvious that the fund belongs to James E. Reilley and E. H. Reilley jointly, and that E. R. Preston may also have an interest therein. The contract first sets out that: “ J. E. Reilley and E. H. Reilley agree to accept $2,500 in full settlement of their claims against the Naohtegall Manufacturing Company for salary, expenses, etc.” It then, among other things, provides for the deposit of this amount in two sums in different depositories, but both payable, upon the happening of certain contingencies, to the same person, E. R. Preston. The contract further provides that: "The payment of said sum of $2,500 shall be in full settlement of all claims, demands of every sort and kind whatsoever, of said J. E. Reilley and E. H. Reilley against the Nachtegall Manufacturing Company.” When the contract provides for the payment of the $1,500 to E. R. Preston, he is described as attorney for J. E. Reilley and E. H. Reilley. When it provides for the payment of the $1,000 to Preston, he is described as attorney for J. E. Reilley. The last clause of the contract, however, is, in part, as follows: “ It is understood and agreed that the said Gaius W. Perkins shall have the right, and it shall be his duty to pay over to said E. R. Preston, attorney, said sum of $1,000.” Here Preston is not described as attorney for the Reilleys, or for either of them. We are unable to say from an examination of the con [352] tract that James E. Reilley is the sole owner of the $1,000, but it is equally plain that the contract does not show affirmatively that either E. H. Reilley or E. R. Preston own the fund. Both claim to own it, and they have been interpleaded in order that their rights to the fund, if they have any, may be determined. 3 Comp. Laws, § 10637, provides that: “When the answer of the garnishee shall declare that any other person than the defendant claims the indebtedness. or property in his hands, or any part thereof, * * * the court may, on motion, order that such claimant be interpleaded as a defendant to the garnishee action, and * * * the court may order an issue to be formed, and may proceed to try the same or direct the trial thereof by a jury as in other cases, etc.” In Muncey v. Sun Insurance Office, 109 Mich. 542 (67 N. W. 562), where this section was under consideration, it was said: “Upon such disclosure the garnishee has no further interest in the proceedings, except to have the right as between such claimant and the principal defendant determined. And where the statement in the disclosure is accepted as true, except as such statement relates to the claim set up by said third party, there is no necessity or propriety in demanding as against the garnishee a trial of this question. The claimant must be brought in for that purpose.” If, at the time of the service of the writ of garnishment upon Perkins, this fund was in fact the sole property of James E. Reilley, it was clearly subject to the process. If, upon the other hand, either E. H. Reilley or E. R. Preston was the owner thereof, or of a joint interest therein, at that time, the garnishment proceedings must fail. Markham v. Gehan, 42 Mich. 74 (3 N. W. 262); Kennedy v. McLellan, 76 Mich. 598 (43 N. W. 641); Stone v. Dowling, 119 Mich. 476 (78 N. W. 549); 20 Cyc. p. 1030; Rood on Garnishment, §§ 156-161. The fact that Perkins was to pay the money to Preston as attorney, instead of to the Reilleys, presents no diffi [353] culty. The instrument plainly indicates that it was made between the Nachtegall Manufacturing Company upon one side, and the Reilleys upon the other, and that Preston was merely an agent appointed to receive the money. The right of the principals to sue upon the contract is, we think, clear. Mechem on Agency, § 757, and cases there cited; Garton v. Union City Nat. Bank, 34 Mich. 279; Michigan State Bank v. Trowbridge, 92 Mich. 217 (52 N. W. 632); First Nat. Bank of Hancock v. Johnson, 133 Mich. 700 (95 N. W. 975, 103 Am. St. Rep. 468). That service of process upon the principal defendant was made outside the State affords no ground for the quashing of the garnishment proceedings. In Serviss v. Washtenaw Circuit Judge, 116 Mich. 101 (74 N. W. 310, 73 Am. St. Rep. 507), it is said: “ The validity of this substituted form of service upon the principal defendant does not depend upon the disclosure of the garnishee defendant, or upon the denial of an indebtedness which he may make when interrogated thereon. No judgment could be had against the principal defendant, it is true, unless some credits were found in the hands of the garnishee; but whether such credits are in his hands is the subject of inquiry which may be had upon the statutory issue.” We are of opinion that, upon the interpleading of the other claimants to the fund, the court should have ordered ail issue to be formed and proceeded to the trial thereof, as provided by 3 Comp. Laws, § 10637. The judgment is reversed, and a new trial ordered. Ostrander, C. J., andMcALVAY, Blair, and Stone, JJ., concurred.