Plummer v. School District Number 1

118 S.W. 1011, 90 Ark. 236, 1909 Ark. LEXIS 446

• Court: Supreme Court of Arkansas
• Decided: April 26, 1909
• Status: Published

Opinion

Wood, J.,

(after stating the facts.) In Boone County v. Keck, 31 Ark. 387, this court held that public municipal corporations are not subject to the process of garnishment. The court said: “Public policy, indeed public necessity, requires that the means of public corporations, which are created for public purposes with powers to be exercised for the public good, which can contract alone for the public, and whose only means of payment of the debts contracted is drawn from the corporators by a special levy for that purpose, should not be diverted from the purposes for which it was collected, to satisfy the demands of others than the parties contracted, with.” This was said in a case where the interests of a county were involved. But the rule and the reason for it are the same in the- case of a school district. So that the appellants were remediless at law to have the funds in the hands of the directors applied to the payment of their debts against the contractors. . They would be likewise without any remedy in equity, and for the same reason, if the question were one of diverting the public funds from the channel to which they have been turned by public authority. But, as the school building has been completed and the purpose consumated for which the fund was raised, the public interest can not be injuriously affected by further withholding the fund from distribution to those who are justly entitled to it. No reason is assigned here on behalf of the school district why the creditors of the contractors should not come into equity to have the funds in the hands of the district subjected to the payment of their debt. But for the public policy which forbids liens to be declared on public buildings, all those who had claims for labor done, materials furnished, etc., on the school building could have their liens declared on same and be on an “equal footing” under section 4979, Kirby’s Digest. But this doctrine of public policy forbids such procedure. Then how are they to reach the fund which the district owes the contractor and which the contractor owes them? In the absence of a statute giving them a lien upon the fund superior to that of the contractor, and making them to share pro rata in its distribution when impounded, their relation to the contractor is simply that of creditors, and they can only resort to the remedies common to creditors for the collection of their debts. Riggin v. Hillard, 56 Ark. 476. In the absence of legislation or contract affecting the status of the parties otherwise, their relation is simply this, the school district owes the contractors a certain amount which it has in its possession, and the contractors owe the various claimants who brought these suits the respective amounts that the court found due them. Says Judge Cockrill in the above case of Riggin v. Hilliard: “Every equitable proceeding wherein a remedy is devised to apply the debt of a third person to the extinguishment of the plaintiff’s demand against his debtor is an equitable, garnishment.” The complaints in this case, as in that, alleged insolvency of the contractors, and that no relief could be had at law, and other facts, which laid the proper foundation for a creditor’s suit to subject the funds in the hands of the directors. There'fore, as the plaintiffs in these various suits are nothing more nor less than simple contract creditors, the law governing the question of the priority of their respective claims is well established. “The lien obtained on the equitable assets of a debtor by a creditor’s suit attaches thereto from the time of the service of process, or, as stated in some of the cases, on the filing of the bill suing out of-process.” 12 Cyc. 64 F. note. The plaintiffs in these several suits had no lien before the commencement of their respective suits, either in law or equity, which they could enforce. But the commencement of their suits to subject the fund in controversy created the lien by equitable garnishment of the assets in the hands of the directors, and these garnishments are subject to priorities. Watkins v. Field, 6 Ark. 391; Martin v. Foreman, 18 Ark. 249; Adams v. Penzel Gro. Co., 40 Ark. 531. See Jones, McDowell & Co. v. Ark. Mech. & Agl. Co., 38 Ark. 17; Little Rock T. & E. Co. v. Wilson, 66 Ark. 585; Green v. Robertson, 80 Ark. 1.

Equity follows the law as to priority in garnishment proceedings. It follows that appellants Plummer & Davis, O. C. Sutton, M. Lesser, Twen-Cen Granite Company and Hays & Sturdivant, who filed their suits .on the same day and obtained service at the same time, for aught that appears to the- contrary, are entitled to preference in the satisfaction of their claims, and that Paslay & Johnson and Brewer, who made their complaint a general creditor’s bill, and the subsequent claimants are entitled to share in the residue pro rata.

The decree is therefore reversed, and the cause remanded with directions to enter a decree in accordance with the opinion.