Hazard v. Agricultural Bank of Mississippi

11 Rob. 326

Opinion

Garland, J.

The plaintiff having obtained a judgment in the Circuit Court of'Adams county, Mississippi, against the Agricultural Bank, a corporation located in that county and State, for the sum of $7,778 23, with interest thereon at the rate of eight per cent per annum, from the 14th of December, 1842, and costs,, issued an execution thereon, which was returned “no property found”; whereupon he brought a copy of the record, and instituted a suit thereon in the Commercial Court, by attachment, making Samuel H. Lambdin a garnishee, to whom various interrogatories were propounded, for the purpose of ascertaining whether or not he was indebted to the defendants. The attachment was served on the 21st March, 1843, and the garnishee cited personally the same day.

On the 7th June, 1843, a judgment was rendered and signed by the judge of the Commercial Court, in which it is stated that, upon the production and filing of a duly certified copy of the record and proceedings in the Circuit Court of Adams county in the case mentioned, it was therefore ordered that the said judgment in favor of the plaintiff, against the defendants, be made executory in the State of Louisiana, for the sum therein mentioned, with interest and costs, and that any property of said defendants that can be found, be seized, and sold to satisfy the same. ■

In July, 1843, Lambdin appeared by counsel, and answered the interrogatories propounded to him. He says that he has no property belonging to the defendants in his possession, but that he and one William Bisland are indebted to said defendants, for which debt they, on the 13th of December, 1842, gave their note, in sólido, to the President, Directors and Company of the Agricultural Bank of Mississippi, for the sum of $42,425 87, payable twelve months after date, at the said bank, in Natchez; and that they also gave a bond at the same time, jointly and severally, promising to pay interest on the above-mentioned sum, at eight per cent per annum, from the date aforesaid. He further answered,.that the note and bond had been, on the 15th December, 1842, by an act of record in the office of the parish judge of the parish of Concordia, transferred to Brown, Brothers & Co.; but that he did not know of such transfer or assignment at the time of the service of the attachment in this case, nor for some time subsequently, when he was notified of it by Messrs. Tyler & Henderson, trustees, on the 5th April, 1843, as will more fully appear by a letter annexed to the answers, which letter bears date Sept. 4, 1843. With these answers Lamb-din files what his counsel calls a petition of intervention, in which he states the fact of being cited as garnishee, and his indebtedness as set forth in his answers; also the assignment of his note to Brown, Brothers & Co.; and he prays that they be cited, by their agent, Samuel Nicholson of New Orleans, to interplead and assert their rights, and if they fail to do so, after legal notice, that they be forever debarred from asserting any right or title to the note and bond described, and that he be preserved harmless from their neglect to appear and answer as required. Brown, Brothers & Co. were cited, and filed an exception to the jurisdiction of the court, averring that they could not be compelled to intervene in the action, nor could their rights be prejudiced by any judgment that could be rendered; but the court overruled their objections and compelled them to answer, although they are not residents of the State.

On the 29th January, 1844, on motion of the counsel of Lambdin, the garnishee, and contradictorily, as it is stated, with the counsel for the plaintiif, the court ordered that the judgment, given on the 7th June, 1843, making the judgment on which this suit is brought executory, be annulled, the same having been made through error; and it was also ordered, that counsel be appointed to represent the defendants, and that time be given them to correspond and answer. When this order was entered, the defendants were not represented, nor had Brown, Brothers & Co. answered to the merits. The counsel appointed by the court to represent the defendants, shortly after this, answered by a general denial; and, a short time after, the defendants appeared by counsel, and, without any exception to what had been previously ordered or decreed, alleged that the court had no jurisdiction, as no property of defendant’s had been attached. It is further denied that the plaintiff owned the notes originally sued on, and their production is required. A few days after this answer was filed, Brown, Brothers & Co. answered that defendants were largely indebted to them, and that the note of Lambdin and Bisland was delivered to secure them against loss on account of said debt, and for purposes more fully stated in an annexed act of subrogation from the bank to them, passed in the parish of Concordia, on the 15th December, 1842. To this answer the plaintiff replied, by denying that any assignment was made as alleged. He says the laws of the State in which the bank is situated, and by which it was incorporated, forbid any such transfer or assignment as is set up; that said transfer was made without authority from the board of directors, and that no notice was given of it to Lambdin previous to the attachment; that the bank was in insolvent circumstances, and that the alleged transfer was an improper attempt to give a preference to one creditor over another, and that Brown, Brothers & Co. have never accepted it.

At the trial, it was admitted that the Agricultural Bank was indebted to Brown, Brothers & Co. upwards of #446,000, with interest, and had received at Natchez a large amount in bills receivable and other assets, the nominal amount of which was much greater than the indebtedness, but that not enough had been collected to pay them, and that the bank was at the time owing them much more than the amount of Lambdin and Bis-land’s note; that the transfer of this note was subsequent to the transfer of the other bills receivable, and that no new consideration was given for it; that judgments to a large amount had been rendered against the bank in Mississippi, upon which executions were issued, and returned “ nulla bona”-, and that payments in specie were suspended in 1840, and never since resumed. It was further admitted, that the common law prevails in Mississippi, with statutory modifications; and it was agreed that the printed statutes of that State shall' be used in the inferior and Supreme Court.

The plaintiff gave in evidence a duly certified copy of the record, judgment and execution in his favor, rendered in Mississippi, the answers of Lambdin to the interrogatories, and the notice of Tyler and Henderson, trustees, to him of the assignment of his and Bisland’s notealso the first transfer of bills receivable and assets from the bank to Brown, Brothers & Co., passed before the parish judge of Concordia, in August, 1842. In behalf of Brown, Brothers & Co., the act passed on the loth December, 1842, assigning and pledging to them the note of Lambdin and Bisland, as additional security for the debt owing to said assignees, was given in evidence. The court below, after a full statement of the facts, and consideration of them and other topics, concluded that there was “ no other way to get rid of this entangled business except on the technical rule, that the plaintiff has a recognition of his judgment and an order for its execution, and his application for these is an abandonment of his attachment, and this order has not been properly annulled.” For this reason principally, and incidentally because the note was transferred before it became due, and because there is nothing to impeach the validity of the assignment, such being valid in Mississippi, where it will not be interfered with in favor of non-resident creditors; and further, because the statute which prohibits the transfer by banks of their rights and credits, was made in favor of debtors, and the only relief they have is to plead the same in abatement when sued by a transferree, the court gave a judgment of nonsuit against the plaintiff, saying that, if the statute forbidding assignments is of any avail, it avails against the attempt of the plaintiff to acquire a right to the debt owing by Lambdin, by citing him a garnishee. From this judgment the plaintiff has appealed.

The judge of the inferior court complains very much of the management of this cause, and the confusion produced by it; but it appears to have been plain enough until he allowed the application of Lambdin to cite in Brown, Brothers & Co., and persisted in keeping them in court, in spite of their exception to his “ Briarean jurisdiction,” as he calls it. There were before the court a plaintiff, with a demand liquidated by a judgment not open for investigation; a corporation located in another State, as defendants; and a garnishee making no objection to being drawn into the cause, and answering under oath that he was a large debtor of the defendants, but stating, by way of precaution, that he had, since he was cited as garnishee, been notified of an assignment of the note he owed, of which he had no previous knowledge.

As between the plaintiff and defendants, the demand of the former, is sufficiently established by the record.and judgment of the Circuit Court of Adams county. It is conclusive between the parties, both being before the court, and a verdict and judgment having been given upon the issues made. The defendants have no right to go behind that judgment, and again put the plaintiff upon proof of his demand. The garnishee admits that he gave his note to the defendants, for a much larger sum than the plaintiff claims, and interposes no obstacle to a judgment, if it be so rendered as to protect him, in the payment of it, from future liability. Lambdin acted correctly, in' stating in his answer the notification to him of the transfer of the note to Brown, Brothers & Co., and in requesting that they should be notified of the proceedings against him. He would be liable to pay a second time, if any injury should result from his withholding the information; but the court below was wrong in compelling Brown, Brothers & Co. to assert their claim to the note of Lambdin and Bis] and in a manner they did not wish, and before a tribunal not of their selection. They had notice that a legal proceeding was pending which might seriously affect their rights and interests. If they choose to stand by, and not assert their claims, they do so at their peril; and it is not the duty of the court to force them to the assertion of them. The law authorises persons whose interests may be affected by a suit pending between other parties, to intervene in such suit, and join one of the parties, or oppose both'; but it does not compel them to do it. Code of Practice, arts. 389, 390, and amendments thereto. They have a right to institute their separate suit against either, or both of the parties litigant (Ibid, art. 391); and if any of their rights have been lost or impaired, by their neglect, after notice of the proceedings likely to affect them, the loss is the result of their own misconduct or inattention. We are, therefore, of opinion that the court erred, in overruling the exception of Brown, Brothers & Co. Whenever they think proper to pursue Lambdin on the note alleged to have been assigned by the defendants, he may oppose to them, not only the statute of the State of Mississippi declaring it illegal for any bank to assign its assets, and abate their suit; but he can also set up his notice to them of the proceedings in this case, and their refusal or neglect to take care of their rights when they were in danger. This court has more than once decided, that a garnishee is but a stakeholder between other parties. He can do nothing more than take care of himself, and not become liable for more than he really owes, or is bound for. He cannot interfere between the plaintiff and defendant, or others setting up claims to what he has in his hands, but must pay to whomsoever the court may order him. 4 Robinson, 517. 14 La. 511. 19 La. 405. It is also well settled by numerous decisions of this court, that so long as no notice is given of the assignment of the debtor’s claims against a third person, such claims are liable to be attached. In this case, it is not pretended that any notice of the assignment of Lambdin and Bis-land’s note was given, until after the formqr was cited as a garnishee. The notice is dated subsequently to the attachment, and in it Tyler and Henderson state that they are informed that an attachment had been levied, and, therefore, they give the notice. This is clearly insufficient.

The counsel for the defendants contends that an attachment cannot lie against a foreign corporation. We do not think there is any weight in the objection. Our reports contain numerous cases of the kind; and our jurisprudence on that point is too well settled to require further argument. He further says that the suit cannot be maintained, because nothing is attached; that the bank disclaims any right to the note, and has put it beyond its control; and that the plaintiff cannot reach it, as he cannot have any greater rights than the bank has. If this doctrine were admissible, it would be very easy for every debtor to defeat the claim of his creditor, by making a fraudulent assignment. But the counsel does not seem to recollect that the assignment made by the bank was not valid and complete against third persons, until notice had been given to the debtor. The note was not beyond the control of the bank in fact, because it has never gone out of the possession of Tyler, who was the president of the institution.

The judge below held that, as he had made the judgment rendered in Mississippi executory in this State, it dissolved the attachment, said order not having been legally annulled, wherefore he nonsuited the plaintiff. In this, we think, the court erred. In the first place, we think that said order could be, and was, properly annulled. If it were any thing at all, it was a judgment in favor of the plaintiff, never executed. It was his property, and he could consent to its being annulled if he thought proper. We suppose that the court below thought there were grounds for annulling it, when the order was made; and no one has ever complained of it, until the judge made it the means of escaping from the position in which he was placed. The defendants appeared by counsel long after the two orders were made, and pleaded to the merits, taking no exception to any previous proceeding in the case. This, we think, is a waiver of any previous irregularities in the case. As to the validity of the assignment, we do not consider it necessary to decide further than we have already.

It is, therefore, ordered and decreed, that the judgment of the Commercial Court be annulled and reversed, and that the plaintiff, Rowland G. Hazard, do recover of the Agricultural Bank of Mississippi the sum of seven thousand seven hundred and ninety-one dollars and twenty-three cents, with interest at the rate of eight per centum per annum on the sum of seven thousand seven hundred and seventy-eight dollars and twenty-three cents, part thereof, from the 14th day of December, in the year 1842, with costs in both courts; and it is further ordered and decreed, that the garnishee, Samuel H. Lambdin, do pay to the plaintiff, out of the funds in his hands owing to the defendants, the aforesaid sum of seven thousand seven hundred and ninety-one dollars and twenty-three cents, with interest as above stated, and costs; and that an execution issue, as on an ordinary judgment, against said Lambdin, in case he does not pay said sum, with interest and costs; so much of the costs of this appeal as relates to Brown, Brothers & Co., to be paid by the appellant.

*

L. Pierce, for a re-hearing. An attachment will not lie against a foreign corporation. McQueen v. Middleton Insurance Co., 11 Johns, pp. 6, 7. The articles of the Code of Practice show that such a writ will lie only against natural persons. Great reliance has been placed on the act of the legislature of Mississippi forbidding the transfer of notes by the bank; but this objection comes with bad grace from a plaintiff who endeavors, by pleading a local statute, made to prevent one creditor from obtaining an advantage over the others, to obtain the assistance of our laws in securing such an advantage for himself. Admitting that, since the decisions in that State, the law itself must he regarded as consti. tutional in Mississippi, are the courts of Louisiana bound to carry it into effect ? Are we to maintain all the prohibitory laws of Mississippi, and to treat as a nullity an act of pledge executed here, because forbidden there ? The Browns are not prohibited from obtaining security in Louisiana for a just debt, because forbidden by Mississippi to do so within her limits.

But the contract between the bank and Brown, Brothers & Co., was not a violation of the laws of Mississippi. It was not such a transfer as is forbidden by the law of that State, but simply a pledge. Hazard should have brought a direct action against Brown, Brothers & Co. to annul the pledge as illegal. Where title in third persons is sought to be divested, recourse must be liad to a direct action of revocation. 17 La. 659. 1 Rob. 437. Holmes v. Remsen, 20 Johns. 229.

The court have decided that Brown, Brothers & Co. could not be compelled to engage in this controversy; yet it has ordered Lambdin to pay to the plaintiff, to the prejudice of their rights. If Brown, Brothers & Co. were not compelled by law to appear and defend themselves, the whole proceedings in this attachment were, as to them, res inter alios, and they cannot be concluded thereby. The record shows that Lambdin and Bisland’s note was an ordinary negotiable note, not yet due when “ assigned, transferred, pledged and delivered” by the bank to Brown, Brothers & Co. If this act was an absolute transfer, the note, being within the custom of merchants, was transferrable without delivery or notice. But it was really and plainly a pledge ; and by article 3128 of the Civil Code, notice was unnecessary. The pledge has been declared void on the assumption that the note never passed out of the hands of the president of the Agricultural Bank. The record shows that the contrary was the fact. By the act itself the note is expressly stated to have been transferred and delivered. The fact that Tyler appears to have been subsequently, with one Henderson, the agent of Brown, Brothers & Co., and that the note was then in their possession, is not inconsistent with the declarations of the notarial act as to the delivery of the note-The fact that Tyler had heen, at a former period, president of the bank, did not incapacitate him from becoming the agent of Brown, Brothers & Co.

Re-hearing refused.