Watkins v. Field, 6 Ark. 391 (1846)

Jan. 1846 · Arkansas Supreme Court

6 Ark. 391

Watkins vs. Field.

W a judgment creditor of J, garnisheed F as debtor to J: F answered that, after the ser. ■vice of the writ, he had paid ipore than he owed J, on a judgment which had been recovered against him as the security of J, previous to the issuance of the writ, and that J was insolvent — held that the answer did not entitle him to a discharge at law.

•That the service of the writ was a transfer, by operation of law, of the amount due by the garnishee to the original defendant to the judgment creditor for the satisfac. tion of his judgment, and the right of the creditor to a satisfaction of his judgment out of the debt thus transferred could not be defeated by a subsequent payment of the garnishee, whether made voluntarily or by legal coercion.

Writ of error to the circuit court of Pulaski county.

This was a proceeding by garnishment, determined in the circuit court of Pulaski county at the April term, 1845, before English, special judge.

In April, 1843, Watkins sued out a writ of garnishment against Field, reciting that he had obtained judgment against Johnson in the Pulaski circuit court on the 12th March, 1841, for $970 debt, $19 72 damages and for costs, which judgment remained unsatisfied : that he had reason to believe that Field had in his hands goods, &c., and was indebted to Johnson. At the return term of the writ, to allegations and interrogations filed by Watkins, Field answered that on the 10th of May, 1839, Johnson sold him sixty shares of stock in the Real Estate Bank, and covenanted to transfer the same free of incumbrance, as soon as the forms of transfer should be settled by the central board of said Bank, and he should be required by Field. Upon this being done, Field was to pay Johnson $900 in Arkansas bank paper, though the agreement upon its face was for dollars. The covenant of the agreement was made part of the answer. That • after the said Board had settled the forms of transfer, he required Johnson, in the fall of 1839, or winter of 1840, to make the transfer according to the agreement; that Johnson refused to do so, but made him an informal transfer of fifty shares, at fifteen dollars premium per share in Arkansas money, and that he paid him $100 or $150 towards the shares so transferred. .

That in 1841, a judgment was obtained against him, Field, as the security of Johnson in said court, in favor of E. D. for $1,000 which remained in full force and unsatisfied; and an other judgment was obtained against him in the same court as the security of Johnson in December, 1842, in favor of the Real Estate Bank for $2,370, which also remained unsatisfied. That his co-securities and Johnson were insolvent, and he would have the judgments to pay. Upon this answer, the court rendered j udgment against Field for $750 and costs, in favor of Watkins.

'Field brought the case to this eourt, by writ of error, and the court decided that he could not set up, in a court of law, his liability upon the judgments as Johnson’s security, in bar of the garnishment for the sum he was indebted to Johnson, but reversed the judgment because Field had not been allowed his just credits. See 5 Ark. R. 672.

The cause was remanded, and at the April term, 1845, Field, by the permission of the court, amended his answer, by stating that since the service of the garnishment upon him he had paid on the judgment obtained against him by the Real Estate Bank as the security of Johnson, the sum of $750, and therefore claimed not -to be indebted to Johnson, and asked to be discharged. The court •thereupon gave judgment that he be discharged: and Watkins brought error.

Watkins & Cubran, for the plaintiff.

This cause was before this court at July term, 1844, and is reported in 5 Ark. R. 672. Upon the return of the cause to the court below, the garnishee put in an amended answer, alleging payments to Johnson after the service of the writ of garnishment, and we are at liberty to infer that they were made since the putting in of the first answer, although this perhaps would not vary the question.

'According to our statute and the decisions of this court, the service of the writ of garnishment stopped the indebtedness of Field to Johnson as it then existed and transferred it as an assignment by operation of law to the judgment creditor. Desha vs. Baker et ah 3 Ark. R. 520.

The former decision of this cause it seems to us settles the case now. No new question is presented. The claim of garnishee vs-Johnson could not be ofisetted in this proceeding at law. See also-Gray et al. vs. Badgett, 5 Ark. R. 16.

This court clearly intimated that if the garnishee could discharge himself, he could only do so in equity where the rights of Johnson and all the parties could be settled. The law could not tolerate in Field to set up disputed matters between Johnson and himself in a proceeding to which, according to the statute, no means was provided for making Johnson a party. This may be an extreme case- and one of hardship to the garnishee: but to change the rule in this case would be to change it in all others. It would open the door to fraud and collusion between the judgment debtor and the garnishee, and defeat the beneficial purposes of the statute.

Hempstead & Johnson, contra.

■ The process of garnishment is in the nature of an equitable pro*-ceeding, and the garnishee may set up any thing which would be available in chancery. In Massachusetts, in this kind of proceeding, there called “trustee process,” it has been held that liability before the service of the writ and payment by reason thereof after-wards by the garnishee, will entitle him to a discharge. Boston Type Foundry vs. Mortimer, 7 Pick. 166. Ripley vs. Severance, 6 Pick. 474. The same doctrine has been held in South Carolina,, undfer a statute similar to our own. In both States it has been held that if the garnishee is endorser for theoriginal defendant on anote- or bill of exchange before service of the writ,- he has a right to re--tain the moneys of such defendant in his hands as indemnity until relieved from liability in respect to such note or bill; undthis principle is conformable with justice and right.

Field alleges in his answer that he became the security of Johnson, who is now utterly insolvent, that the co-securities of Field are also insolvent, that judgment was obtained against Field as such security, and that he was compelled to pay $750 on the judgment. The payment of the sum was introduced into the answer by amendment, which was allowed without objection, so that it was in fact paid before answer, on a liability which accrued previous to the issuance and service of the writ, and comes within the principle decided in the above case in-7 Pick. 166.

Watkins & Cumian, in reply.

The plaintiff in error cites the court to the case- of the legal representatives of Thomas, deceased, vs. Hopper, 5 Ala. R. new series, p. 443, to show that a summons of garnishment is not in the nature of an equitable proceeding, but is a legal remedy and to be so treated. The court, when this cause was before it at a former term, decided the legal question as to- the liability of the garnishee,that it was fixed by the service of the writ of garnishment, and the court say that his remedy, if any, is in chancery. When the court made that decision it was fully aware from the answer of Field that, at the time the writ was served, he was the security of John-son to a large amount, and that Johnson was insolvent. The fact, as disclosed by his amended answer, that since the service of the writ, he has paid a portion of those security debts, cannot change the nature of this proceeding.

The plaintiff in error submits that the case of The Bank vs. Levy, 1 McMullards S. C. R. 431, does not sustain the decision of the court below i-n this case. In that case Judge Gantt, p. 436, rests-his decision upon the ground that Levy, the garnishee of the Messrs. Josephs of New York as banker, bill-broker, factor or agent, had a lien upon the securities in his hands and a right to retain them-for the general balance of his account against the Messrs. Josephs. Earle Judge, p. 439, in addition to the lien of a factor or broker held, p, 441, that a letter from the Josephs to the garnishee which-was prior to the attachment, constituted a valid transfer or assignment of the assets claimed,' and that as garnishee Levy had a right to claim and hold under that against the attachment.

' By reference to Aiken’s Digest it will be perceived that our law of garnishment (see Rev. Stat.) is' substantially if not literally the same as that of Alabama.

Oldham J.,'

delivered the opinion of the court/

The questions presented by the record have, as we conceive, been settled by the previous adjudications of this court, When this case was previously in this court, it was held that “ the defendant hád no right to set-off his demands against Johnston in this form of action.” Field vs. Watkins, 5 Ark. R. 672.

Nor does the fact of the payment of seven hundred and fifty dollars by the defendant upon one.of the judgments rendered against him as Johnston’s security, exonerate him. In Desha vs. Baker, 3 Ark. R. 509, it was held that “if the requisites of the statute are complied with the attachment of a debt in the hands of á garnishee would fix it there m the hands of the attaching creditor-, and the debtor could not afterwards pay it over except in conformity to the judgment of the court. The attaching creditor would, in such case, acquire a lien upon the debt binding upon all the parties interested, and which the Courts would not only recognize, but the garnishee would be protected pro tanto under a recovery had in virtue of the attachment, and could plead such recovery in bar of any future action.” The principle is jjhe same whether the attachment is sued out at the instance of an attaching or judgment creditor; if any difference exists; it i's in favor of the latter, because his demand against the original debtor has been settled and determined by the judgment of a competent tribunal.-

-At the time of suing out the writ of garnishment;- Field had no demand against Johnston, which would serve a's the fótmdation of an action, or which he could set off in any action Brought by the latter against him, but the demand depended upon the contingency of the non-payment of the judgments by Johnston and .the payment by himself. The service of the writ was a transfer by oper-" .ation of law of the amount due by the- garnishee to the original defendant, to the-judgment creditor for the-satisfaction of his judgment,-and the right of the creditor to a satisfaction of his judgment out of the debt thus transferred Cannot be-defeated by a subsequent payment of the garnishee, whether made1 voluntarily or by legal coercion. Had Johnston held Fields’s note for the. amount of Wat-kin’s judgment, and transferred it before the payment of the seven* hundred and fifty dollars, could Field set off that payment in an action brought against' him by the endorsee ? Most certainly not.The two cases are analogous, the transfer in the one case, being; effected by the act of the party, and in the other by operation of law. In the present proceeding at least we do not conceive tha-tl any difference in principle exists between the two cases.- The judg--mentmust be reversed and the cause remanded.-