Frank Nichols, Ltd. v. Mossman

35 Haw. 772

• Court: Hawaii Supreme Court
• Decided: January 2, 1941
• Docket: No. 2446.
• Status: Published

Opinion

OPINION OP THE COURT BY

KEMP, J.

Frank Nicliols, Limited, in an action in assumpsit in the district court of Honolulu against Isabelle Mossman, named E. J. Botts, Esq., as garnishee. The garnishee filed a disclosure. No defense to plaintiff’s suit was interposed by the defendant. Judgment was accordingly entered against her and the garnishee was ordered to pay to the plaintiff the amount of the judgment.

The defendant and the garnishee jointly appealed to the circuit court of the first circuit. Upon the trial in that court, jury waived, the defendant’s liability to the plaintiff as alleged was admitted, the garnishee order being the only matter contested. At the hearing in the circuit court the garnishee filed an amplified disclosure as of the date of service on him. The disclosure was not controverted and was the only evidence produced having a bearing on the question of the liability of the garnishee. The disclosure established that when the garnishee was served with process he had in his possession an instrument which the court and counsel are pleased to term a draft, of which the following is a copy:

“NO PROTEST NO. 1533

Circuit Court Case #15354 Honolulu, T. H.

San Francisco, Calif. March 16th, 1938. PAY TO THE

ORDER OF - - - LIBBY MOSSMAN and E. J. BOTTS, her Attorney - - #3699.07 - - THIRTY SIX HUNDRED NINETY NINE AND 07/100 - - Dollars.

Agency HONOLULU, T. H. Policy No. AL 182121

In full settlement of all claims for injury to person and damage to property & judgment & interest now existing or hereafter arising as a result of an accident oceuring on or about FEBRUARY 7TH, 1937, at NUUANU AVENUE & PAUAHI ST., HONOLULU, T. H., it being understood that the above amount is the sole consideration of this release and payee (s) by the acceptance and endorsement hereof forever release(s) and discharge(s) B. A. SHERMAN from all further claims or payments because of said accident.

TO SAINT PAUL-MERCURY INDEMNITY COMPANY OF SAINT PAUL PACIFIC COAST DEPARTMENT 60 SANSOME STREET SAN FRANCISCO, CAL.

FRED L. WALDRON, LTD.

(SGD) J. L. GRIMSHAW

Manager, Insurance Department.”

We deduce from the terms of the instrument and the facts set forth in the disclosure of the garnishee that the defendant, Mossman, was plaintiff in an action for damages against B. A. Sherman, who held a policy issued by the indemnity company; that Fred L. Waldron, Ltd., was the local agent of the indemnity company and in its behalf negotiated a settlement of said damage suit with the plaintiff and her attorney, the garnishee herein, and that the instrument in question was executed and delivered to the garnishee by said local agent of the indemnity company in settlement of said damage suit. Said disclosure further established that the garnishee, as the attorney for the plaintiff in the damage suit, was, by agreement with his client, entitled to one-half of the amount recovered and that the instrument had not, at the time of service on the garnishee, been presented to the indemnity company for payment but that the same would be presented by him in due course, which implies that all tilings necessary to presentment for payment had been done, including acceptance and endorsement as required by the terms thereof.

The court gave judgment for plaintiff as prayed and ordered the garnishee to withhold and pay to plaintiff out of any moneys paid to him by reason of the honoring of said draft sufficient to satisfy the judgment, provided there be sufficient funds remaining after satisfying said garnishee’s prior attorney’s lien, etc. The reasons for the garnishee order given by the circuit judge are set forth in his decision as follows: “Upon reading and filing the return of E. J. Botts, Garnishee above named, the Court is of the opinion that the draft in the hands of said Garnishee was and is subject to garnishment by Plaintiff either upon the theory that same was goods and effects of the Defendant in the hands of said Garnishee or upon the theory that same represented an indebtedness of said Garnishee to said Defendant payable in the future or to-wit, upon the cashing of said draft.”

The case is here on the defendant’s and the garnishee’s joint bill of exceptions perpetuating their exceptions to the garnishee order and that part of the decision authorizing it. The sole question presented for our determination is, do the facts disclosed by the garnishee justify the order? Garnishment being a creature of statute, the determination of this question depends upon a proper application of our statute to the facts before us. Decisions from jurisdictions with different statutory provisions are of little value. Our statute (R. L. H. 1935, § 4270), in defining Avhat may be attached by garnishee process and how such attachment is accomplished, provides in substance that when any “goods or effects” of a debtor are concealed in the hands of the garnishee so that they cannot be found to be attached or levied upon, or when any “debt is due” from the garnishee to the debtor, the creditor may bring bis action against the debtor and cause the summons to be served upon the garnishee. That done, (a) all “goods and effects” of the defendant then in the hands of the garnishee, (b) every “debt then owing” by the garnishee to the defendant, and (c) a stated percentage of all wages then or thereafter to become owing from the garnishee to the defendant, shall be secured in the hands of the garnishee to pay such judgment as the plaintiff shall recover in the action, such property or choses described under (a), (b) and (c) being included under the term “garnishee fund.” The trial court in applying the foregoing statute held that the instrument above set out, subject to the garnishee’s prior lien, was, by service on the garnishee, secured in the hands of the garnishee to pay the judgment entered against the defendant either because it was “goods and effects” of the defendant in the hands of the garnishee or because it represented an “indebtedness of said Garnishee” to the defendant, payable in the future, upon the cashing of the draft.

“Statutes authorizing garnishment are remedial, in that they pertain to and affect a remedy as distinguished from a right.” 28 C. J., tit. Garnishment § 4, p. 19. In construing such a statute “The primary consideration is of course to arrive at the intention of the legislature, even to the extent of favoring the spirit of the statute rather than its literal wording, and the court will incline to that construction which will be conducive to the ends of justice.” Id. §( 18, p. 25. No citation of authority is needed to establish that the garnishable character of the goods or effects or debts involved in any garnishment proceeding are, under our statute, with certain exceptions not here material, determined as of the time of the service on the garnishee. We are of the opinion that the instrument which the garnishee had in hand when served was not “goods” belonging to defendant nor did the facts disclosed show that the garnishee was then indebted to the defendant. If, therefore, the garnishee order is to be upheld, it must be because the instrument which the garnishee held when served was “effects” of the defendant in his hands and therefore subject to garnishment under the terms of the statute. The word “effects” denotes property-in a more extensive sense than “goods.” It embraces things in action as well as tangible personal property. (Bouvier’s Law Dictionary.) The instrument in question came into being as a substitute for defendant’s cause of action against Sherman, the policy holder, and became a thing or chose in action against the indemnity company in place of defendant’s action against Sherman. It was in the hands of the garnishee, as attorney for the defendant, for the purpose of being converted into money. Hence, as a chose in action readily convertible into money, it unquestionably falls within the term “effects” of the defendant within the meaning of the statute. The order complained of requires the garnishee to pay the judgment only in the event that proceeds from said instrument have come into his hands and then only after satisfaction of his attorney’s lien. This, we think, is within the spirit of the statute and will be conducive to the ends of justice. In Cooley v. Janes, 71 Kan. 297, 80 Pac. 596, the garnishee at the time of service held certain corporate stock of $5000 par value which the defendant had pledged to him as security. Before the trial the corporation sold all of its assets and distributed the proceeds of the sale, amounting to 80% of its capital stock, pro rata, to its stockholders. The garnishee, as pledgee of said stock, received $4000. The order was that Cooley, the garnishee, account for the stock in his hands at the time of service and also the remainder of the $4000 so received after satisfying his own debt. The garnishee appealed and the principal con tention was that inasmuch as under the statute a garnishee is liable only for property or money in his hands belonging to the defendant or for debts owing to him at the time of service of the garnishee summons, no part of the $4000 paid to the garnishee after he was summoned can be applied to the payment of the judgment. In answer to this contention the court said: “If he can hold the so-called dividend for that amount exempt from liability to the garnishing creditor the latter will get nothing on his debt, although at the time he garnished there was stock of ample value in the hands of Cooley to pay his claim. The garnishee must account for the actual value of the stock in the corporation at the time the garnishment summons was served on him.”

E. J. Botts in person as garnishee and attorney for defendant. W. R. Ouderkirk for plaintiff.

If we are correct in our statement of the facts disclosed by the garnishee, including deductions from stated facts, the instrument in question constituted “effects” of the defendant in the hands of the garnishee, in that it was a chose in action binding upon the indemnity company to pay to the parties therein named the sum of money therein written, in full settlement of the suit referred to in the instrument. No injustice to anyone will result from the order complained of. As to one-half of the value of the instrument, the garnishee is protected by the terms of the order, and as to the other half he is a mere stakeholder. The defendant admitted her liability to plaintiff in the suit. The judgment entered is not contested and should be paid. Technicalities should not be permitted to assist the defendant in avoiding payment.

The exceptions are overruled.

T. E. M. Osorio and Cass & Silver for the motion. T. M. Waddoups and Smith, Wild, Beebe & Cades contra.