People's Bank of Biloxi v. Smith Bros. & Co.

Whitfield, J., delivered the opinion of the court. It is true, as held in Porter & Macrae v. West, 64 Miss., 548, that the plaintiff in attachment has no right to suggest for the garnishee that a third party claims the fund in the hands of the garnishee, that suggestion being permitted to be made by the garnishee, to protect him against a possible double payment of the debt garnisheed. But the case holds nothing further than that, in order to make such third person a party litigant to the issue, as between the plaintiff and himself, the garnishee in such case not himself making any contest, but paying the money into court and being discharged, the garnishee must suggest that such third party has a claim. Section 2143, code of 1892. In order that the third party may thus become a party to the record, and ‘ ‘ contest with the plaintiff the right to the money, debt or property, ” it is a statutory condition precedent that he must ,be suggested by the garnishee as such claimant,' [759] and be made such party litigant as a result of such suggestion by the garnishee. West was an assignee in a general assignment for creditors, and voluntarily came in propounding a claim to the debts due the assignors by the garnishees, they (the garnishees) having admitted they owed the debts to the assignors, and not having suggested that any third party had any claim to them. That is the whole extent of that case. It is no authority for the proposition that a garnishee who has been summoned as such, and “ notified ” that the fund he holds is claimed by a third party, and who, instead of protecting himself under the statute by paying the money into court, and having the claimant summoned to “ contest with the plaintiff the right to the fund,” himself elects to litigate with the plaintiff the issue that ought to be litigated by the claimant, can object to the trial in this proceeding of the issue tendered by the traverse of his answer. Mrs. Bulandi did not contest this issue in the circuit court. The appellant voluntarily did it for her. That issue arose on the traverse of appellant’s garnishment answer, and was whether the money in bank deposited to the credit of Mrs. Bu-landi was, in fact, the money of the debtor in attachment, hex-husband, by reason of a fraudulent transfer of it to her by him. “This special statutory proceeding was borrowed from equity jurisprudence.” Kellogg v. Freeman, 50 Miss., 130. And we think it is settled by Dodds v. Gregory, 60 Miss., 549, and Gregory v. Dodds, 61 Miss., 351, that this inquiry can be made in this proceeding on the travex-se of the garnishee’s answer. The point made here that this is using garnishment process as a bill in equity to set aside a fraudulent transfer, must surely have been considered by the court in 61 Miss., 351. Besides, a careful examination of the authorities has satisfied us that, on principle and authority, the view announced is the sound one. Cases cited by learned counsel for appellant do not sustain this contention. Harris v. Phœnix Ins. Co., 35 Conn., 310, does not touch the question. In Toomer, etc., v. Randolph, 60 Ala., 356, it was held that, in that state in an action [760] at law — the mortgage there creating an estate in the land in the mortgagee — the rents collected by the mortgagee, who was in possession, were his (the mortgagee’s) property, and not the mortgagor’s, and of course not garnishable as the mortgagor’s. So, in Johnson v. Brant, 38 Kan., 759, the court states that the money paid into the bank on Johnson’s mortgage was never thereafter Clark’s money — the defendant. It had become Johnson’s money, he holding a mortgage on lands on which the money was realized, executed by Clark. This money Clark’s agent, Plaque, paid Johnson’s agent, the bank, on Clark’s admitted valid debt to Johnson. How could the bank be garnisheed as owing Clark, Johnson’s money collected on his mortgage? The distinction is plain. Kearney v. Nixon, 19 La. Ann., 16, was an effort, by various irrelevant interrogatories, to get out of the garnishee evidence, and then, on that evidence, to have property owned by the garnishee subjected to plaintiff’s demands. The property in that case was claimed by the garnishee as his own, not belonging to anybody else in any way, or claimed by anybody else. That is not this case. The bank here does not claim to be the owner of the money, the deposit, in any absolute sense, so as, for' example, that it does not owe Mrs. Bulandi the amount of the deposit. It claims, it is true, that the relation of debtor, on its part, exists to Mrs. Bulandi, in whose name the deposit was made. Not that it is not liable to Mrs. Bulandi, or the real owner of the deposit, in any event, as was the exact claim in the Kearney-Nixon case, but the very question at issue here is, to whom does the deposit, in fact, belong, Mr. or Mrs. Bulandi ? And that it was competent to investigate and settle that issue made by the traverse of the garnishment answer in this proceeding, is, we think, well settled. Dodds v. Gregory and Gregory v. Dodds, supra; Drake on Attach., secs. 458, 598; Waples on Attach., 213; Kesler v. St. John, 22 Iowa, 565; 8 Am. & Eng. Enc. L. (1st ed.), 1180; 41 Mich., 376; VanNess v. McLeod, 2 Idaho, 1149. The case of Doggett v. St. Louis, etc., 19 Mo., 203, cited by [761] appellant’s counsel, squarely supports our view, and correctly distinguishes Van Winkle v. McKee, 7 Mo., 435, the court saying: ‘ ‘ When a person is summoned as a debtor of the defendant, and in his answer states the fact of an assignment of the debt to a third person, if such assignment is fraudulent as to the plaintiff, who is an execution creditor, then the garnishee is, so far as that proceeding is concerned, the debtor of defendant, and not of his assignee, and may be required to pay.the money to satisfy the plaintiff’s judgment. There is no other inconvenience in proceeding to determine the question of the validity of the assignment in this case. That would arise in any case in which a garnishee admitted himself to have been the debtor of the defendant, and then stated that some third person claimed the debt as assignee. In all such cases the plaintiff has the right to have the fact tried, whether the garnishee is still the debtor of the defendant, so as to be liable to pay his judgment.” The case of Hutchins v. Howley, 9 Vt., 295, is plainly distinguishable on several grounds. The principle is, of course, limited by the consideration that the garnishee cannot be held for more than he had when served —for funds he had previously parted with — in this proceeding, as held in Feary v. Cummings, 41 Mich., 384. Ordinarily the plaintiff has no larger right against the garnishee than the debtor has; but in case of a fraudulent transfer by a debtor to a third party, the plaintiff may set it aside, though the debtor, in pari delicto, cannot. Drake on Attach., sec. 458; VanNess v. McLeod, 2 Idaho, 1150. Affirmed.