Murphy v. Bjelik

169 P. 520, 87 Or. 329, 1917 Ore. LEXIS 192

• Court: Oregon Supreme Court
• Decided: December 27, 1917
• Status: Published

Opinions

Mr. Justice Harris

delivered the opinion of the court.

The main question for decision, and the one to which counsel have given most of their attention, is whether the sale of Tracts A and B by the sheriff was void. But there is a preliminary question which must be disposed of first; and it is because of this preliminary question that an extended statement of the material facts and of the pleadings has been made. Recurring to the answers filed by Bjelik, Bray ton & Lawbaugh, Ltd., and Patton, it will be observed that these defendants in effect allege that the Assets Realization Company became the real owner by reason of the deeds executed by the Monarch Lumber Company of Oregon, the Monarch Lumber Company of Maine, and Ira M. Cobe; that the Assets Realization Company was the real owner of the certificate of sale purchased from Spencer for the reason that the company furnished the money and Getz and Murphy acted as its agents; and that therefore the transfer of the Spencer certificate of sale and the delivery of a sheriff’s deed to Murphy operated as a redemption by the real owner, the Assets Realization Company, from the lien of the Spencer judgment and left the subsequent judgments, held by Bjelik, Bray ton & Lawbaugh, Ltd., and Patton, standing as subsisting liens. During the trial the plaintiff formally stated to the court that he did not claim title through his deed from Ira M. Cobe. None of the parties contended, at the trial in the Circuit Court, that the judgment against the Monarch Lumber Company of Oregon was a nullity; nor did any of the litigants plead, or argue or even suggest that the sale of Tracts A and B by the sheriff to Spencer was void. The trial court, however, found as a conclusion of law that the judgment against the Monarch Lumber Company of Oregon as garnishee was void and that the levy upon and the sale of its lands were nullities because made without first demanding payment of the debt by the Monarch Lumber Company of Oregon. The plaintiff expressly disclaimed acquirement of title through the deed from Cobe; and, hence, the only claim of ownership made by him is rested upon the Spencer judgment and the sheriff’s sale. Although he does not plead all the details the plaintiff does aver in his complaint and in his several replies that Spencer obtained a judgment against the Monarch Lumber Company of Oregon. The three defendants, Bjelik, Brayton & Lawbaugh, Ltd., and Patton, also affirmatively plead that Spencer obtained a judgment against the Monarch Lumber Company of Oregon. The plaintiff relies upon the Spencer judgment to create and sustain his title and to extinguish the liens of the judgments held by the defendants, while the defendants who pleaded the Spencer judgment did so for the purpose of continuing and preserving the liens of their judgments.

1-3. The plaintiff argues that Bjelik, Brayton & Lawbaugh, Ltd., and Patton, are concluded by their answers and that therefore it must be assumed that Spencer secured a valid judgment against the Monarch Lumber Company of Oregon and that the levy and sale were valid. If there were no parties to this suit except the plaintiff and these three judgment creditors and if there were no pleadings except those filed by the plaintiff and these three defendants and if the record contained no evidence concerning the Spencer judgment, then the plaintiff could successfully argue that these three defendants had admitted that Spencer obtained a valid judgment against the Monarch Lumber Company of Oregon and that Tracts A and B had been legally sold to Spencer. But the plaintiff did not content himself by relying upon the pleadings. He offered the entire record showing every step taken from the commencement of the action by Spencer to the execution and delivery of the sheriff’s deed, and it now affirmatively appears from the evidence offered by plaintiff himself that in the action prosecuted by Spencer the Monarch Lumber Company of Oregon was not a party defendant but was only a garnishee and as such admitted that it owed the Monarch Transportation Company, one of the defendants, the sum of $7,250; and it also appears that the order awarding a judgment to Spencer included a judgment against the garnishee for $7,250; and it is this judgment which the plaintiff and the three defendants in the instant suit refer to in the pleadings as the judgment against the Monarch Lumber Company of Oregon. It further appears from the evidence offered by the plaintiff that the sheriff sold Tracts A and B without first making a demand upon the garnishee to pay the debt which it had admitted was due the Monarch Transportation Company. Furthermore, these three defendants deny that Murphy is the owner or in possession of the premises. And while the pleadings speak of a judgment against the Monarch Lumber Company of Oregon and a levy and sale of the property, neither the plaintiff nor any of the defendants in terms allege that such judgment or levy or sale was valid. Moreover, the answer filed by Springer puts in issue the very facts which the plaintiff contends the other answering defendants have admitted. The admission in the answer of one defendant is not conclusive upon the other defendants : 31 Cyc. 91,139. On his own theory, Murphy does not own Tracts A and B at all unless he acquired title through the sheriff’s deed and if he did so acquire title lie is the absolute owner of the premises, subject only to the trust deed held by Crawford; but if the sheriff’s deed is void then it necessarily follows that plaintiff has no title at all. Murphy must prove ownership before he can succeed against Springer; but if in his attempt to prove ownership he shows by his own evidence that the deed upon which he relies is void, he has shown that he has no title at all. It would be a legal impossibility for Murphy to be the absolute owner of the premises and at the same time be utterly without ownership: See Murray v. Murphy, 39 Miss. 214, and 31 Cyc. 337; People v. Oakland Water Front Co., 118 Cal, 234 (50 Pac. 305); Prichard v. Board of Commrs. of Morganton, 126 N. C. 908 (36 S. E. 353, 78 Am. St. Rep. 679); Southern Pac. R. Co. v. Groeck, 68 Fed. 609; Southern Ry. Co. v. Covenia, 100 Ga. 46 (29 S. E. 219, 62 Am. St. Rep. 312, 40 L. R. A. 253); Louisville etc. Ry. Co. v. Palmes, 109 U. S. 244 (27 L. Ed. 922, 3 Sup. Ct. Rep. 193); Griffin v. Augusta & Knoxville R. Co., 72 Ga. 423; McLane v. Paschal, 8 Tex. Civ. App. 398 (28 S. W. 711). All the defendants are similarly situated and if Murphy has no title whatever against one defendant he has none as against the others. The plaintiff claims to own and each of the defendants claims to have a lien upon the premises and each party has the burden of proving his or its claim: Durkin v. Ward, 66 Or. 335, 338 (133 Pac. 345). The plaintiff chose to offer evidence of his alleged title. He must rely upon the strength of his own title. If he himself shows that he has no title he cannot ask a court of equity to decree that to be true which his own evidence shows not to be true, even though the answers admit it to be true. If the sale by the sheriff was void then the plaintiff is not entitled to a decree saying that he does have title.

The present theory of the defendants is: (1) That the judgment against the Monarch Lumber Company of Oregon in the aetion prosecuted by Spencer was void for want of jurisdiction; and (2) that the levy and sale were void whether made under an execution on a judgment against the principal defendants or on a judgment against the garnishee, because (a) the judgment did not include an order for the sale of the attached debt, and (b) no demand was made upon the garnishee for the payment of the debt before the levy and sale. The defendants rest their contention upon the language of certain statutes regulating attachment proceedings and for that reason it is necessary to direct attention to such sections of the Code as are applicable here.

The plaintiff “may have the property of the defendant attached, as security for the satisfaction of any judgment that may be recovered * * ”: Section 295, L. O. L. After prescribing the method to be pursued when attaching real property or personal property capable of manual delivery and not in the possession of a third person, Section 300, subdivision 3, L. O. L., provides that “other personal property shall be attached by leaving a certified copy of the writ, and a notice specifying the property attached, with the person having the possession of the same, or if it be a debt then with the debtor * * . ” From the time that a copy of the writ and notice are served any person mentioned in Section 300, subdivision 3, L. O. L., is, unless he pays the debt to the sheriff,” liable to the plaintiff for the amount thereof until the attachment be discharged or any judgment recovered by him be satisfied”: Section 301, L. O. L. "Whenever the sheriff applies to any person mentioned in Section 300, subdivision 3, such person is required to furnish him with a certificate designating the property in his possession belonging to the defendant or the amount of any debt owing to the defendant; and if such person refuses to give a certificate, or if the certificate given is “unsatisfactory to the plaintiff, he may be required by the court, or judge thereof, where the action is pending, to appear before him and be examined on oath concerning the same * * ”: Section 303, L. O. L. If the plaintiff fails to recover a judgment the attachment is discharged: Section 309, L. O. L.; but,

“if judgment is recovered by the plaintiff, and it shall appear that property has been attached in the action * * the court shall order and adjudge the property to be sold to satisfy the plaintiff’s demands, and if execution issue thereon, the sheriff shall apply the property attached by him or the proceeds thereof, upon the execution * * Section 308, L. O. L.

The order provided for in Section 303, shall require the person to appear before the court or judge at a specified time and place, and “in the proceedings thereafter upon such order, such person * * shall be known as the garnishee”: Section 314, L. O. L. After the allowance of the order requiring the garnishee to appear and be examined on oath the plaintiff must serve upon the garnishee written allegations and interrogatories “touching any of the property liable to attachment as the property of the defendant”: Section 315, L. O. L.; the garnishee must return the allegations and interrogatories to the court or judge with his written answer: Section 316, L. O. L.; the plaintiff may reply to the answer, “and the issues arising thereon shall be tried as ordinary issues of fact between plaintiff and defendant”: Section 319, L. O. L. If, however, the garnishee fails to answer, the court or judge may compel him to do so “or the plaintiff may, at any time after the entry of judgment ag’ainst the defendant in the action, have judgment against the garnishee for want of such answer * * ”: Section 317, L. O. L. But if the garnishee answers and it appears from the answer or is found upon trial that the garnishee at the time of the service of a copy of the writ and the notice, .

“had any property of the defendant’s liable to attachment as provided in subdivision 3 of section 300, and as to which such garnishee # * is required to give a certificate, * * beyond the amount admitted in the certificate, or in any amount if the certificate was refused, judgment may be given against such garnishee for the value thereof in money. The garnishee may at any time before judgment discharge himself by delivering, paying or transferring the property to the sheriff”: Section 320, L. O. L.

It is then provided in Section 321, L. O. L., that:

“Executions may issue upon judgments against a garnishee as upon ordinary judgments between plaintiff and defendant, and costs and disbursements shall be allowed and recovered in like manner * * .”

The Code provides for the issuance of an execution and prescribes the mode to be followed by the sheriff when executing the writ. Section 233, L. O. L., contains six subdivisions which point out the course to be followed when property has been attached as well as when property has not been attached. If the property attached is a debt due the defendant and the amount of the debt has been paid to the sheriff the latter indorses the amount on the execution and pays it to the clerk; if the attached property is in his custody he sells it; if no property has been attached the execution itself is authority for the sheriff to levy on the property of the judgment debtor and the sheriff makes the levy “in like manner and with like effect as similar property is attached, as provided in Sections 300, 301 and 303,” bnt “until a levy, property shall not be affected by the execution.” So far as it is material here Section 234, L. O. L., reads thus:

“In case of property in the possession of or owing from any garnishee mentioned in section 303, the sheriff shall proceed as follows: 1. If it appear from the certificate of the garnishee that he is owing a debt to the judgment debtor, which is then due, if such debt is not paid by such garnishee to the sheriff on demand, he shall levy on the property of the garnishee for the amount thereof, in all respects as if the execution was against the property of the garnishee; but if such debt be not then due, the sheriff shall sell the same according to the certificate, as other property.”

It thus appears that provision has been made for the attachment of personal property, whether it be in the possession of the defendant or in the possession of a third person; and, so too, provision has been made for the attachment of debts due or yet to become due the defendant. The framers of the Code appreciated the fact that the third person might deny that he was indebted to the defendant and consequently provision was made for ascertaining the fact ‘ ‘ upon trial. ’ ’ One of three .situations may follow the notice of garnishment to a third person who is indebted to the defendant: (1) The answer may disclose a debt from the third person to the defendant and that debt may (a) be due, or (b) yet to become due; (2) the answer may be unsatisfactory to the plaintiff; or (3) the third person may refuse to answer. The instant suit presents a situation where the third person, the Monarch Lumber Company of Oregon, answered a notice of garnishment by saying that it was indebted to one of the defendants, the Monarch Transportation Company, in the sum of $7,250 and that the amount was then due, and such answer was satisfactory to the plaintiff, E. W. Spencer. The first question for decision is whether the Code requires or even permits such a judgment as was rendered against the Monarch-Lumber Company of Oregon.

4. Nowhere does the Code speak of a judgment against a third person who has been garnished, except when the third person (a) refuses to answer; or (b) his answer is unsatisfactory to the plaintiff. There is no statute authorizing the court to enter a judgment against a third person if he has answered a notice of garnishment by admitting an indebtedness then due the defendant, and if the plaintiff is satisfied with such answer. In De Witt v. Kelly, 18 Or. 557, 559 (23 Pac. 666), this court said that:

‘ ‘ The statute does not permit a plaintiff in an attachment suit to take judgment against a garnishee on account of a debt owing by the garnishee to the defendant in the suit, except where the latter refuses to furnish to the sheriff a certificate of the indebtedness, or when the certificate given is unsatisfactory”: See, also, Adamson v. Frazier, 40 Or. 273, 277, 278 (66 Pac. 810, 67 Pac. 300).

The money judgment awarded to Spencer against, the Monarch Lumber Company of Oregon was a nullity; and, hence, by such judgment Spencer did not gain any right which he would not have had without such judgment: Missouri Pac. Ry. Co. v. Reid, 34 Kan. 410 (8 Pac. 846); Conover v. Conover, 17 N. J. Law, 187; Secor v. Witter, 39 Ohio St. 218, 231; Carmer v. Evers, 80 N. C. 55.

5. The defendants contend that the sheriff’s sale was void because the judgment, did not include an order adjudging the attached property, the debt, to be sold to satisfy the plaintiff’s demands as required by Section 308, L. O. L. If the court had made an order directing the sheriff to sell the debt due from the Monarch Lumber Company of Oregon to the Monarch Transportation Company the order would have been a nullity. The statute neither requires nor permits the sale of a debt which a garnished third person admits he then owes to a defendant. If the debt is not yet due it is ordered sold so that the plaintiff can collect on his judgment without delay; but if the debt has matured and is due from a third person who satisfactorily answers the notice of garnishment then the plaintiff collects on his judgment against the defendant by causing an execution to issue to the sheriff who levies on the property of the third person if the debt is not paid to the sheriff on demand: Batchellor v. Richardson, 17 Or. 334, 343, 344 (21 Pac. 392). Construing Sections 233, 234, and 308, L. O. L., together it is plain that Section 308 does not contemplate an order directing the sale of a debt which has matured and is due; but it is collected for the plaintiff by the sheriff in the manner pointed out by Section 234: Whitney v. Day, 86 Or. 268 (168 Pac. 295).

We now come to the crucial question involved in the appeal. The sheriff did not demand payment of the debt due from the Monarch Lumber Company of Oregon before levying upon its property. The plaintiff takes the position that the statute is merely directory and that the failure to make a demand was only an irregularity which no one except the Monarch Lumber Company of Oregon could at any time have objected to, and that even the company could not now complain of the failure of the sheriff to demand payment of the debt and thus defeat the sheriff’s deed: 17 Cyc. 1114. The defendants contend that the statute is mandatory and that a demand is jurisdictional; that a levy without a prior demand of payment is void; and that therefore the defendants can question the sheriff’s deed and defeat it by showing a void levy, since the validity of the deed depends upon the validity of the levy: 17 Cyc. 1201; 10 R. C. L. 1334, 1335; McRae v. Daviner, 8 Or. 63. If the failure to make demand was only an irregularity of which no person could at any time complain except the Monarch Lumber Company of Oregon, then as against these defendants the sheriff’s deed passed a fee-simple title to Murphy and extinguished the liens of the subsequent judgments; but if, upon the other hand, the failure to demand payment rendered the levy void then the sheriff’s deed did not pass any title to Murphy and the judgments owned by the defendants are subsisting liens upon Tracts A and B.

6-9. Attachment proceedings are statutory. It is generally stated that these statutes must be strictly followed: Schneider v. Sears, 13 Or. 69, 74 (8 Pac. 841); Batchellor v. Richardson, 17 Or. 334, 346 (21 Pac. 392); Spores v. Maude, 81 Or. 11, 15 (158 Pac. 169); California Trojan Powder Co. v. Wadhams & Co., 85 Or. 307 (166 Pac. 759); and the substantial requirements of the statute must be complied with: Case v. Noyes, 16 Or. 329, 333 (19 Pac. 104). In Batchellor v. Richardson, 17 Or. 334, 341 (21 Pac. 392), this court said:

“It is an inflexible rule of law that title to property cannot be divested out of one person, and invested in another, by proceedings in invitum, unless such proceedings are strictly complied with.”

The property of the Monarch Lumber Company of Oregon was taken to pay the debt of its creditor. The Monarch Lumber Company of Oregon was not a party to the action prosecuted by Spencer. The notice of garnishment only operated to place the corporation in the position of a stakeholder with a contingent per-

sonal liability to tbe plaintiff which only ripened when a judgment was obtained against the defendants in the action: Altona v. Dabney, 37 Or. 334, 336 (62 Pac. 521); Barr v. Warner, 38 Or. 109, 112 (62 Pac. 899); Fraley v. Hoban, 69 Or. 180, 186 (133 Pac. 1190, 137 Pac. 751); Price v. The Boot Shop, 75 Or. 343, 347 (146 Pac. 1088). The garnishment did not create a lien in favor of Spencer upon any money in the hands of the Monarch Lumber Company of Oregon, nor upon any property owned by it, but it gave rise to a contingent personal liability to respond to any judgment that might afterward be recovered by Spencer against his debtor and the Monarch Lumber Company’s creditor: Barr v. Warner, 38 Or. 109, 112 (62 Pac. 899); Montana Nat. Bank v. Merchants’ Nat. Bank, 19 Mont. 586 (49 Pac. 149, 61 Am. St. Rep. 532). When Spencer finally secured a judgment even it did not create a lien upon any property owned by the Monarch Lumber Company because the only judgment that he was entitled to was a judgment against the makers of the note. If the instant case presented a situation where the property of a judgment debtor had been levied upon and sold without first demanding payment as directed by some statute, there would be substantial grounds upon which to base a conclusion that the statute was merely directory and that a failure to observe it was only an irregularity of which the defendants could not complain: Dow v. Smith, 6 Vt. 519; Collins v. Perkins, 31 Vt. 624; Solomon v. Peters, 37 Ga. 251 (92 Am. Dec. 69); Rock v. Haas, 110 Ill. 528; Odle v. Frost, 59 Tex. 684; Hobein v. Murphy, 20 Mo. 447 (64 Am. Dec. 194); Luther v. Clay, 100 Ga. 236 (28 S. E. 46, 39 L. R. A. 96). But see: Dutton v. Tracy, 4 Conn. 365. When a person is a party to an action and becomes a judgment debtor the law assumes that he knows of the judgment and of what follows: Ayres v. Campbell, 9 Iowa, 213 (74 Am. Dec. 346). But the Monarch Lumber Company was not a party to the action nor was it a judgment debtor. At no time before the issuance of the execution did Spencer acquire a lien upon any property owned by the Monarch Lumber Company' of Oregon. At the most Spencer only acquired the right to compel the Monarch Lumber Company of Oregon to pay to him the debt which the lumber company owed to the Monarch Transportation Company and when the statute gave the right it also prescribed the mode for the exercise of the right. A levy upon and sale of property owned by a person in the situation of the Monarch Lumber Company of Oregon is a pure proceeding in invitum and the requirements of the statute ought to be strictly followed. The authority of the sheriff is not brought into existence until he first demands payment of the debt. When the Code of Civil Procedure was framed and adopted in 1862 the legislature recognized the difference between the situation occupied by a judgment debtor and that occupied by a third person who owes a matured debt, by permitting a levy upon the property of the former without first demanding payment and by requiring a demand upon the latter before levying upon his property. The answer of a third person who admits a matured indebtedness to the defendant, by analogy, takes the place of an answer by a defendant who admits an indebtedness to the plaintiff, but with this difference: In the latter case the answer authorizes a judgment against the person answering, while in the former instance it does not warrant a judgment. When property of a judgment debtor is levied upon on the faith of an execution the writ and the levy are supported by a judgment, but when property of a third person is levied upon the levy is not supported by a judgment against that third person. In other words, the demand prescribed by Section 234, L. O. L., performs the duty of a judgment and therefore as against the third person the demand should be held to be just as essential as a judgment is as against the defendant. On the one hand an execution and levy, without a judgment, would be void; and upon the other hand an execution and a levy without a demand are likewise void. The right of levy flows from the statute and the right cannot be said to exist unless the statute which makes it possible to exist has first been complied with. In brief, the demand is jurisdictional; it is mandatory and not merely directory. The sheriff’s deed did not pass title to Murphy. While it would have been proper to have made entries in the journal giving an account of the manner in which the sheriff executed the writ of attachment, reciting the answer of the Monarch Lumber Company of Oregon, and, when judgment was rendered against the defendants, directing the sheriff to proceed in accordance with Section 234, L. 0. L., nevertheless it was not proper to enter a money judgment against the Monarch Lumber Company of Oregon; nor would it have' been proper to have ordered a sale of the attached debt. The decree of the trial court is affirmed. Affirmed. Rehearing Denied.

Mr. Chief Justice McBride, Mr. Justice Benson and Mr. Justice Burnett concur. (170 Pac. 723.) Messrs. Teal, Minor £ Winfree and Messrs. Wilson, Neal £ Rossman, for the petition. Mr. Hugh Montgomery, Messrs. Platt £ Platt, Mr. J. W. Kaste and Mr. Maurice W. Beits, contra.