Smith v. Heidecker

Eagg, Judge, delivered the opinion of the court. The following statement will be necessary to an understanding of the points presented by the record for the consideration of the court. The respondent Smith, as trustee for various parties, had obtained a judgment in the St. Louis Circuit Court against the Missouri Spinning Company for a large amount; and [162] the execution baying been returned nulla bona, an attachment issued against the rights and credits of the company. (See R. C. 1855, p. 377.) The appellant Heidecker was summoned as garnishee, and in his answer to the interrogatories filed admits that he subscribed four shares of stock in said company, each to be of the nominal value of fifty dollars.” That afterwards he paid nothing; but further says that he “ does not laiow whether he was legally bound, or is so now, to pay any part or the whole of said subscription, — and believes not, from what he is informed, for the reasons that said company never was legally organized; that the charter of said company has not the legal effect of making the stockholders liable; that the subscription of stock by the garnishee does, according to its terms, not create any liability on his part; that said subscription was obtained by fraud and false representations; and that said defendant was a fraudulent institution, and the subscriptions to its stock without consideration and void.” The plaintiff having denied the answer, and the reply thereto having been made by the garnishee, there was a trial upon the issues so made, which resulted in a verdict and judgment for the plaintiff; from which an appeal is taken to this court. . The errors principally complained of are the giving and refusing instructions, and the exclusion of testimony offered by the garnishee. The latter will be first disposed of. Upon the trial, the appellant offered to prove that the charter of the company had been obtained by fraud, and the testimony was excluded by the court. This proceeding is said tó be, “in effect, a suit by the defendant in the plaintiff’s name against the garnishee” (Drake Attach. § 452, 3d ed.); and hence the rights and liabilities of the parties are not affected by the fact that the action is in the name of the plaintiff instead of the defendant. “ It cannot be shown in defence to the suit of a corporation that the plaintiff’s charter was obtained by fraud; nor especially by a subscriber who accepted the Charter and as [163] sisted in putting it into operation” — Ang. & Ames on Corp., § 636, 8th ed., and the authorities there cited. There was abundant testimony at the trial to show that the garnishee participated in the business of the company; that he voted to accept an amendment to the charter; and that eight or nine months after it had organized and was doing business in its corporate name, he was chosen a director, and accepted the position. The gaimishee was, therefore, most clearly estopped from denying the legal existence of the corporation, and the testimony was properly rejected. It is urged by appellant’s counsel that the first instruction given for the plaintiff, to the effect that the declarations of Bosse and Blattau, the parties who are charged with kprocuring the subscriptions of stock by false and fraudulent representations, unless made to the garnishee, could not affect him, was erroneous. There is no pretence, except in his answer, that his subscription was procured by any such means, or that he had knowledge of such representations made to other parties at any time before the commencement of this proceeding against him. His conduct and connections with the company, and without any repudiation of its acts or authority, is sufficient, we think, to estop him not only from showing that the charter was fraudulently obtained, but to exclude any idea of fraud in procuring his subscription of stock, Indeed every question of fraud on the part of this company, or those connected with it, from its inception down to the period of its dissolution, may be dismissed with the general remark, that the garnishee was too prominently connected with the coi’po-ration to derive any advantage therefrom. But the record shows that in the declarations' of law given at the instance of the plaintiff, the whole case, so far as it was affected by any consideration of fraud, w,as fairly presented to the jury, and in a light most favorable to the garnishee. The remaining question is as to the legal effect of the garnishee’s answer, and the ruling of the Circuit Court in reference thereto. [164] The proceeding by garnishment is somewhat summary in its character, and seeks to reach effects in the hands of a third person, and subject them to the payment of the defendant’s debt. The garnishee is required to purge his conscience by an answer made under oath, both as to the question of his indebtedness to the defendant, and as to the possession or control of any property belonging to him. The appellant asked the court to instruct the jury, that “under the pleadings in this case the burden of proof is upon the plaintiff; and before the jury can find for the plaintiff, it is incumbent upon him to disprove by satisfactory evidence the facts stated in the answer of the garnishee, and, unless he has done so, the jury will find accordingly.” The theory of this instruction is, that the answer of the garnishee goes to the jury as evidence in the cause, and is to be taken as true until the contrary has been made to appear by affirmative proof on the part of the plaintiff. The law permits the judgment creditor, or party suing by attachment, and who avails himself of this proceeding, to occupy the same position that the defendant does as it respects his right of recovery against the garnishee. It has been said that the latter is not to be placed in a worse position than he would have been at the suit of the defendant ; and with equal justice and propriety it might be said that he ought not to be permitted to occupy one more favorable. Some of the earlier decisions of this court have been referred to, viz.: Davis v. Knapp et al., 8 Mo. 657, and McEvoy v. Lane et al., 9 Mo. 48. In both of these cases the court held substantially that the answer of the garnishee must go the jury as evidence, and is to be taken as true until the contrary is shown by the plaintiff. It should be observed that both of these decisions were made upon the law as it stood in the Revised Code of 1885. The issue between the plaintiff and garnishee, under that act, was made upon a denial simply of the answer, the latter being the only pleadings, so to speak, in the case. By the Code of 1855 the denial of the answer is required to state “specifically the grounds upon which a recovery is sought against [165] the garnishee; and the garnishee shall be entitled to a reply ; and the issue or issues made up on the denial and reply shall be the sole issue or issues tried ; and the issue or issues shall be tried as ordinary issues between plaintiff and defendant” — R. C. 1855, p. 258, § 69. Previous to the change in our system of practice, the answer of the garnishee being the only pleading in the cause that was required to be sworn to, it was placed upon somewhat the same footing that an answer to a bill in equity occupied. In some of the States the garnishee is still regarded in the light of a trustee, and the pleadings in such cases are made to conform to that general idea; but such is clearly not the case in this State. It is true that it devolves upon the plaintiff to show affirmatively why the garnishee should be charged ; but the answer cuts no greater figure in the trial than his answer to a petition would in a suit by the defendanj^seeking the same sort of recovery against him.. There was no error in refusing the instruction. The other judges concurring, the judgment of the court below will be affirmed.