Bank of Centerville v. Gelhaus

Decision Date21 May 1932
Docket NumberNo. 7140.,7140.
Citation60 S.D. 31,242 N.W. 642
PartiesBANK OF CENTERVILLE v. GELHAUS (FIRST NAT. BANK OF CENTERVILLE, Garnishee).
CourtSouth Dakota Supreme Court

OPINION TEXT STARTS HERE

Appeal from Circuit Court, Turner County; L. L. Fleeger, Judge.

Action by the Bank of Centerville, a corporation, against E. G. Gelhaus, wherein the First National Bank of Centerville, a corporation, was made garnishee. From a judgment for plaintiff and an order denying a new trial, the garnishee appeals.

Affirmed.Boyce, Warren & Fairbank, of Sioux Falls, for appellant.

Alan Bogue, of Parker, for respondent.

POLLEY, J.

At the time of the service of the summons and complaint on the defendant in this action, a garnishee summons was served on the garnishee. At the time of the service of the garnishee summons, the garnishee had in its possession a promissory note for $2,260, executed by one Jensen and wife, and a real estate mortgage securing the payment of the said note, payable to defendant. This note and mortgage had been regularly assigned by the defendant to the garnishee as collateral security for the payment of $500 which the defendant then owed to the garnishee. Shortly after the service of the garnishee summons, the garnishee defendant sold and assigned the said note and mortgage for its full face value. From the proceeds of said sale, the garnishee satisfied its claim against the defendant, and the remainder, amounting to something like $1,800, it still has in its possession.

The defendant defaulted, and judgment was entered against him for an amount greatly in excess of the said balance in the hands of the garnishee, which said judgment is still unpaid; and judgment was entered against the garnishee for the portion of the proceeds of the Jensen note and mortgage still in its possession. From this judgment and an order denying a new trial the garnishee appeals.

[1][2] At the time of the service of the garnishee summons, the appellant had a right to the possession of the Jensen note and mortgage, but it had no other right thereto than as security for the payment of its $500 claim against the defendant, and the enforcement of the collection thereof, so that, when this claim was satisfied, it had no further right to, or interest in, the said note and mortgage, but appellant contends that, because it had the right of possession of the note and mortgage at the time of the service of the garnishee summons, the garnishee proceedings were ineffectual for any purpose; in other words, it is the contention of appellant that the interest of the defendant in the Jensen note, while it was held as security by the garnishee, was not garnishable. In support of this contention, appellant cites Borgen v. Auguski, 51 S. D. 65, 212 N. W. 47;Bowman v. Larsen, 53 S. D. 246, 220 N. W. 489; and Brocket Mercantile Co. v. Lemke, 39 N. D. 37, 166 N. W. 800. But these cases do not support appellant's position. They merely hold that: “As against the garnishee, a garnishing general creditor has no greater right than the principal debtor had at the time the garnishee summons was served.”

This, of course, is the law. At the time of the service of the garnishee summons, the defendant was the owner of the note and mortgage in question, subject only to the right of the garnishee. The equity in the note above the amount of the garnishee's claim against the defendant belonged to the defendant. Section 2453, Rev. Code 1919. reads as follows: “Any creditor shall be entitled to proceed by garnishment in any court having jurisdiction of the subject of the action, against any person, including a public corporation, who shall be indebted to or have any property whatever, real or personal, in his possession or under his control, belonging to such creditor's debtor, in the cases, upon the conditions and in the manner prescribed in this chapter. The term plaintiff is used in this chapter to embrace every judgment creditor, and the term defendant a judgment debtor.”

Section 2470, Rev. Code 1919, reads as follows: “From the time of the service of the summons upon the garnishee he shall stand liable to the plaintiff to the amount of the property, money, credits and effects in his possession or under his control belonging to the defendant, or in which he...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT