Henry v. Murphy & Co.

54 Ala. 246

• Court: Supreme Court of Alabama
• Decided: December 15, 1875
• Status: Published

Opinion

BRICKELL, C. J.

A garnishment is a legal proceeding, assimilated to an attachment, intended to reach debts, or other dioses in action, the property of a debtor, not capable of seizure by execution or attachment, or to compel the discovery of effects, capable of seizure, in-the possesion of a third person. Fraud not intervening, it-operates only on the legal rights of the defendant in attachment, or judgment — such rights as he could enforce by action at law in his own name. If it is a demand due or owing the defendant, which is sought to be subjected, it must be of a character on which he could maintain an action of debt, or of indebitatus assumpsit. — 1 Brick. Dig. 175, §§ 313-314. If. it is property -in the possession of the garnishee, which is sought to be subjected, it must be such as is subject to levy'and sale, under an execution. — lb. § 315.

Conforming to the current of American authorities, the decisions of this court have firmly established the doctrine, that if one person makes a promise to another for the benefit of a third, such third person may maintain an action upon the promise, though the consideration does not move from him.—Huckabee v. May, 14 Ala. 263 ; Mason v. Hall, 30 Ala. 599. It is generally true, that an entire stranger to the consideration, one who has taken no trouble or charge on himself, and has conferred no benefit upon the promissor, cannot maintain an action in his own name upon the promise. There is a want of privity between him and the promissor. But in the case suggested, the law, operating on the act of the parties, creates the duty, establishes the privity and implies the promise and obligation on which the action is founded.—Brewer v. Dyer, 7 Cush. 339 ; 2 Greenl. Ev. § 109. If he, for whose benefit the promise is made, elects not to accept it — if it is made to extinguish a debt, or a liability of the promissee, and the person to whom it is due prefers to retain such debt or liability and pursue his remedies theron, the promissee can maintain an action on the promise. The election of the person for whose benefit the promise is made, is exercised, when he resorts to and enforces his remedies against the promissee, with full knowledge of the promise.—Bohannan v. Pope, 42 Maine, 93; Brewer v. Dyer, supra, 2 Greenl. Ev. § 109; Metcalf on Contracts, 211.

It is certainly true that a creditor, by garnishment, can reach only debts or demands, recoverable by his debtor. He cannot convert the remedy into a means of enforcing any cause of action, vesting in him only, or any contract or promise on which the law authorizes him to maintain an action in his own name.—Thompson v. Wallace, 3 Ala. 132. The debt or demand recoverable by this process, must be due to the debtor, and one on which the debtor could maintain debt, or indebitatus assumpsit. In this case, however, the promise of the garnishees, if made as supposed in the pleadings, though originally capable of acceptance by thq garnishing creditor, and if accepted, of enforcement by an action in his own name, had not been accepted. The creditor, with full knowledge of the promise, pursued his legal remedies against Abrams the debtor, reduced his debt to judgment, and then resorted to the process of garnishment against the promissors as his debtors. Assuming the promise to have been made, and not void because of fraud, or a want of consideration, being a simple verbal contract, Abrams could have enforced its recovery by an action of indebiitatus assumpsit. This being true, the garnishing creditor could by garnishment subject it to the payment of his debt.

This brings us to the inquiry as to the validity of the promise. The sufficiency of the consideration, on which it is based, cannot be doubted. A consideration is sufficient' if it arises from any act of the plaintiff, from which the defendant, or a stranger, derives any benefit, however small, if such act is performed by the plaintiff, with the assent, express or implied, of the defendant; or by reason of any damage, or any suspension or forbearance of the plaintiff’s rights at law or in equity. In Hind v. Holdship, 2 Watts, 104, a promise by the defendant, made to a debtor, to pay particular debts owing by him, in consideration of his making an assignment for the benefit of his creditors, was held a valid promise, supported by a valuable consideration, entitling those for whose benefit the promise was made, to recover to the full extent of their debts, and not merely what they could have received if parties to the assignment. In Hatton v. Jordan, 29 Ala. 266, the plaintiff and defendant were sureties and endorsers for an insblvent debtor, who was about making an assignment for the benefit of creditors, and who refused tp make any assignment of which the plaintiff did not approve, and which did not' place him in the preferred class of creditors; in consideration that the plaintiff would consent to be postponed, and that the debtor would make an assignment preferring him, he promised to pay the plaintiff a specified sum. The assignment was made, and it was held, the promise was supported by a sufficient consideration, not violative 'of public policy, and not a fraud on other creditors. The court was referred to the authorities which have settled the principle, that when an insolvent, or embarrassed debtor, is entering into a composition with his creditors, any private agreement bettoeen such debtor and one of the creditors who professes to join in the general arrangement, that the former, or a third party for him, shall pay a further sum of money, or give a better or further security than such as is provided for other creditors, is void as a fraud on them. Admitting the principle, the court distinguished the case from cases falling within it. The distinguishing fact was, that the debtor was not a party to the agreement; no benefit accrued to him from it, and there was no dependency of the acts of the several creditors upon each other. The principle itself applies only as to creditors who are parties to the composition. The true ground on which it rests is that each creditor is induced into the composition on the supposition that all are to share and suffer in equal proportion — that there is to be an equality of loss and benefit. It has no application when each creditor acts for himself, and it may be in opposition to every other creditor.—Clarke v. White, 13 Peters, 200. In this case the creditor for whose benefit this promise was made, was not a party to the arrangement which is treated as a composition, never consented to take under it nor to discharge the debtor on its terms. He did not act in concert with those who were parties to it, nor influence their action either directly or indirectly. He preferred to, and did retain his debt as a demand against the debtor, with whom the garnishees were dealing. The authorities to which reference has been made would have supported an action by him against the promissoi, founded on the promise, if he had elected to pursue it. Not electing his remedy against the promissors, the debt remains a substituting demand against the promisees, not barred or discharged by the arrangement which was made.

The contract relied on is not strictly a composition. It is a sale and transfer by the debtor of his property to a creditor, in consideration that the creditor will release him from liability, and will pay one-half of all his debts, but one, and pay that one in full. It was not an agreement between the debtor and all his creditors. The proposition to his creditors did not proceed Rom him, but from the garnishees, who proposed to become the alienees and transferrees of his property. He was not a party to it, nor to its acceptance by the creditors who did accept it. There was no agreement made or contemplated between the debtor and his creditors — the agreement made and contemplated was between him and the garnishees, and was a sale and transfer. The rule on which reliance is placed by the garnishees, is limited in its application to a composition or arrangement, made by a debtor with his creditors, and to secret agreements between him and one or more of such creditors, whereby a larger benefit is secured, or promised to such creditors, than is given to others.—2 Chit. on Con. 1050; 1 Story on Con. § 520. The agreement or promise now sought to be enforced, was a part of a contract of bargain and sale, by the debtor to one creditor, he not having entered into any composition or arrangement with his creditors, but whatever arrangement there was with them, being made by his vendee or transferree. The promise sought to be enforced, is not made by Mm, but to him. That promise does not secure to him any benefit, which could prejudice his creditors; nor does it deprive the creditors who entered into the arrangement of any benefit for which they contracted. It is nothing more, under the facts as disclosed in the record, than a promise by a vendor to pay a debt of the vendee, in part satisfaction of the price of the property sold. The creditor of the vendee not having acted on the promise and enforced it, the right of the vendee to its performance cannot be questioned. It cannot be said no damage resulted to the vendee from the non-performance of the promise, because the property sold was all applied to the payment of other debts, and was not equal in value to such debts. The benefit to accrue to him R'om the arrangement, that for which he contracted, and sustained the detriment of parting with the title and possession of his property, was in part the full payment of this debt, so that he would be discharged therefrom, and the creditor to whom he supposed himself under peculiar obligations, satisfied. If he had entered into a composition with his creditors, by which they agreed, to release him, on a partial payment, and one creditor holding negotiable paper, or having held it, and representing himself as still its holder, accepted the composition, having transferred, or subsequently transferring the paper, whereby the debtor was compelled subsequently to pay it in full, he could recover of the creditor to the full amount of such payment. It would be no answer for him that the debtor was under a legal and moral obligation to pay his debt' in full,' and that the subsequent payment was only a satisfaction of the obligation. Against the obligation, by his acceptance of the composition, he impliedly assumed to protect the debtor, and failing, he must answer for the loss sustained.—Howley v. Beverly, 6. Man. & Gran. 221, (41 Eng. Com. Law); Harlow v. Foster, 53 N. Y. (8 Sickels), 385. The promise here .was part of the consideration of the bargain and sale, and transfer of property, real and personal. No question of the adequacy of the consideration can arise. It was a matter of mere volition with the vendor to fix the price, and with the vendee to pay it or not. With this volition, in the absence of fraud, the law does, not interfere, leaving each to judge and determine for himself as to thexbenefit to be derived or the detriment sustained. We hold, if the garnishees promised the judgment debtor that they would pay the debt due the. plaintiffs in the garnishment, and this promise formed a part of the consideration on yyhich the debtor made the conveyance and transfer to the garnishees, the promise is valid and supported by a sufficient consideration. The plaintiffs not having elected by suit to enforce this promise, but electing to pursue the debtor on the original debt, the debtor could maintain indebitatus assumpsit for a breach of the promise. As he could maintain that remedy for a breach of the promise, the demand is of the nature and character which may be reached by garnishment.

Parol evidence of the promise does not offend the rule excluding parol cotemporaneous evidence, to contradict or vary the terms of a valid instrument. It is only evidence of an additional consideration than that expressed in the deed, and not inconsistent with it. It does not vary the nature or legal effect of the deed, neither enlarges or diminishes its operation, nor changes the relation of the parties to it. It is said by Stone, J., in McGehee v. Rump, 37 Ala. 656, “the decided weight of the modern authorities, as our after citations will show, is that the consideration clause in a deed is open to the influence of parol proof, except for two purposes; first, it is not permissible for a party to the deed to prove a different consideration, if such change vary the legal effect of the instrument; and second, the grantor in a deed, who acknowledges the receipt of payment of the consideration, will not be allowed, by disproving that fact, to establish a resulting trust in himself.”—Thomas v. Barker, 37 Ala. 392. In Hair v. Little, 28 Ala. 217, the deed purported to have been made on a valuable pecuniary consideration, in hand paid. A part only of the consideration was paid in money ; the balance was promised to be paid in discharge of debts due from the grantor. Parol evidence of the promise was decided to be admissible, as it did not vary the legal effect of the deed, and was not inconsistent with the consideration expressed, which was a valuable consideration.—Eckles & Brown v. Carter, 26 Ala. 563; Johnson v. Boyles, ib. 576. Parol evidence of the promise not varying or contradicting the deed was admissible.

A conveyance entered into to hinder, delay and defraud the creditors of the grantor, is valid and operative between the parties to it. The grantor is estopped from setting up his fraud to defeat or avoid the conveyance. The principle that a garnishing creditor can avail himself only of the legal rights of his debtor against the garnishee, and that his recovery is limited to the recourse of the debtor, is subject to an exception when the garnishee has possession of , the effects of the debtor under a fraudulent transfer. There, though the transfer is valid against the debtor and he cannot be heard to gainsay it, the creditor may in this proceeding, as well as in any other, assert its invalidity.—Richards v. Hazard, 1 Stew. & Port. 139; Hazard v. Franklin, 2 Ala. 347; Price v. Masterson, 35 Ala. 483; Hall v. Heydon, 41 Ala. 242; Drake on Attachment, § 458; Lamb v. Stone, 11 Pick. 527. The fraud of which a creditor may avail himself when assailing a transfer, or conveyance by his debtor, is not a constructive fraud on the debtor, which he could assert as equitable ground of relief against the transfer or conveyance. It is an actual fraud directed against purchasers or creditors denounced by the statutes. — R. C. §§ 1861, 1865, 1866. The conveyance or transfer may not be intended to defraud creditors — it may have been founded on a valuable consideration, yet, subject to trusts, or uses, a diversion from which, though not inconsistent with the terms of the deed, would be a fraud on the grantor, against which a court of equity would relieve. A court of law would not take cognisance of such a fraud. The only fraud in a deed of which a court of law takes cognizance, as between the parties to it, relates to its execution. —Swift v. Fitzhugh, 9 Port. 39 ; Morris v. Harvey, 4 Ala. 300; Thompson v. Drake, 32 Ala. 99. Then, the evidence would show the deed never had any binding force, because never assented to by the grantor. Of such a fraud, doubtless an attachment creditor could take advantage, and this would be an actual, as distinguished from a constructive fraud. Bht of constructive frauds, such as may arise from a breach of the promises of the grantee — the diversion of the conveyance from the uses intended, or a violation of confidence reposed, the creditor could not avail himself. If the conveyance was not intended to hinder, delay or defraud the creditors of the grantor — if it was made in good faith, on a valuable consideration, and is not offensive to either § 1861 or 1866 of the-Code, the attaching creditor' could not avoid it, because the grantee had induced the grantor into it by promises he did not keep, and did not intend to keep when he made them. If, then, the appellants, not proceeding against the appellees as the debtors of Abrams, because of the promise alleged to have been made him, to pay the debt due appellants, assail the transfer, and conveyance as fraudulent, they must rely on fraud on creditors, or an actual fraud on the grantor, as we have defined them.

We shall not extend this opinion by making an application of its principles to the various rulings of the circuit court. They were not consistent with the views we have expressed, and what we have already said will enable the court and parties in the further proceedings, to conform to these views. The cause appears to have been before this court at the January term, 18,78, but we have not been able to obtain the opinion then pronounced. Hence, we cannot say how far we may have departed from or conformed to it.

We have not been referred to, nor are we aware of any law, which authorized the circuit court to .ascertain the reasonable compensation of the attorneys of the garnishees, and direct its taxation as costs recoverable from the appel-' lants. At common law, no costs were due or recoverable either from the plaintiff or defendant. The statute with us prescribes the costs which may be taxed, and is the limit of their recovery. The garnishees being the successful party, were entitled to recover of the appellants the taxable costs of the suit, of which the attorney’s taxed fee, as prescribed by the statute, is a part. But they were without right to recover the compensation they may be bound to pay their attorneys.

The judgment must be reversed and the cause remanded.