Central Nat. Bank v. Latham & Co.

• Decision Date: 14 November 1929
• Docket Number: (No. 845.)
• Citation: 22 S.W.2d 765
• Parties: CENTRAL NAT. BANK et al. v. LATHAM & CO.
• Court: Texas Court of Appeals

22 S.W.2d 765

CENTRAL NAT. BANK et al. v. LATHAM & CO.

(No. 845.)

Court of Civil Appeals of Texas. Waco.

November 14, 1929.

Rehearing Denied December 12, 1929.

Appeal from District Court, McLennan County; Giles P. Lester, Judge.

Garnishment proceeding by Latham & Co. against the Gulf, Harrisburg & San Antonio Railway Company and others. From the judgment rendered, the Central National Bank and J. M. Smith separately appeal. Reversed and rendered in part, and in part affirmed.

Renfro, Ledbetter & McCombs, of Dallas, and Spell, Naman & Penland, of Waco, for appellants.

Tirey & Tirey and Bryan & Maxwell, all of Waco, for appellee.

GALLAGHER, C. J.

This appeal is prosecuted by Central National Bank, represented and acting herein by its liquidating committee, but hereinafter called bank, and J. M. Smith, hereinafter called by name, from a judgment awarding the sum of $1,588.35 in the hands of the Gulf, Harrisburg & San Antonio Railway Company, garnishee herein, to Latham & Co., garnishing creditors of Early-Foster Company, judgment debtor. Said Latham & Co. will be hereinafter called appellees.

The record is complicated. No purpose could be served by reciting the same in detail. Judge Sam. R. Scott and W. M. Foster also were parties to this suit, and each claimed the fund in controversy in separate right. They were each denied any recovery by the trial court, and neither of them has appealed. The bank and Smith each claimed in separate right, and each is prosecuting a separate appeal.

Appellant Smith claims $1,507.15 of the fund in controversy as assignee of Early-Foster Company. Said corporation, on and before October 6, 1921, had pending before the Interstate Commerce Commission certain claims against various railroads for overcharges on freight shipped by and to it over their respective lines. One of such claims was against the garnishee, Gulf, Harrisburg & San Antonio Railway Company for a large sum of money. On said last-named date, Early-Foster Company, acting by its president, W. M. Foster, employed Smith to prosecute said claim before said Commission. The original contract was verbal, but was confirmed by an exchange of letters made the same day. The letter of Early-Foster Company to Smith stated, in substance, that it turned over to him said claim "on a basis of thirty per cent. of the amount you collect; the claim to be payable to us and we to pay you out of what we receive." The letter of Smith to Early-Foster Company acknowledged a preceding verbal agreement on the same day to assist in recovering on such claim, and state, "In consideration of which, you agreed to pay us thirty per cent. of the amount recovered from the railroads on these shipments." (Italics ours.) The sum of $5,023.83 was recovered on said claim. All of such recovery, except said sum of $1,588.35 remaining in the hands of the garnishee, had been appropriated to satisfy a prior garnishment. Smith had never been paid anything for his services. The garnishee admitted that it was indebted to Early-Foster Company in said sum, and offered to pay the same as directed by the court. It made Smith and said bank parties to said proceeding on the ground that they were each setting up some claim to the fund in its hands.

The bank claims the fund in controversy under a written assignment executed and delivered to it by Early-Foster Company on December 4, 1922. Said assignment recited that it was made as collateral security for all sums then or thereafter owed the bank by the assignor. Thereafter, on April 25, 1923, Early-Foster Company became indebted to the bank in the sum of $2,000, evidenced by its promissory note bearing said date and due on demand. Said note had never been paid. The bank answered in this proceeding and sought recovery of the fund in controversy as such assignee for the purpose of applying the same to the satisfaction of its indebtedness evidenced by said note. No suit was instituted on said note within four years after its date, but the bank answered and asserted its claim to said fund within said period of time.

Appellees Latham & Co., as judgment creditors of Early-Foster Company, claim under garnishment proceedings instituted by them, with due service of writ therein.

A trial to the court resulted in judgment that both Smith and the bank take nothing by their respective suits, and that appellees recover of the garnishee the entire fund in its hands.

Opinion.

Appellant Smith presents as ground for reversal a single proposition, in which he contends, in substance, that, under his contract with Early-Foster Company, he became the equitable owner of 30 per cent. of the recovery against the garnishee in the proceedings before the Interstate Commerce Commission. The letters exchanged between Smith and the Early-Foster Company have been set out, in substance, above. It appears therefrom that it was agreed that Early-Foster Company was to collect the entire award, if any, made in its favor against said railway company by the Interstate Commerce Commission, and that said Early-Foster Company agreed and promised to pay to said Smith 30 per cent. of the amount so received as compensation for his services. The trial court found that, in making the contract evidenced by said letters, it was not intended or contemplated by the parties thereto that Early-Foster Company should release control of such funds or that Smith should have any lien or claim against the same, but that it was intended and contemplated that said company should collect such funds, and that he should look to it for payment of his stipulated fee as the same were collected by it. To constitute an equitable assignment, there must be an appropriation of the fund pro tanto, either by an order on such specific fund, or by such a transfer thereof that the holder of the fund is authorized to pay the amount directly to the creditor without the further intervention of the debtor. To state the proposition more succinctly, an equitable assignment can be effected only by surrender of control over the funds or property assigned. Conversely, a mere agreement, whether by parol or in writing, to pay a debt out of a designated fund, is not of itself sufficient; there is lacking the specific appropriation of the fund pro tanto and surrender of control thereof. Davis & Goggin v. State National Bank (Tex. Civ. App.) 156 S. W. 321, 327, par. 1 (writ refused); Patterson v. Citizens' National Bank (Tex. Civ. App.) 236 S. W. 130, 131; Southern Surety Co. v. Bering Mfg. Co. (Tex. Civ. App.) 295 S. W. 337, 340, 341, par. 3; American Cotton Co. v. Simmons, 39 Tex. Civ. App. 189, 87 S. W. 842, 843 (writ refused); 6 C. J. p. 742, § 317. Appellant Smith's contention is overruled, and the judgment of the trial court denying him a recovery herein will be affirmed.

Appellant bank also presents as ground for reversal a single proposition. It contends therein, in substance, that, inasmuch as it held an assignment of the fund in controversy as collateral security for its debt, it was entitled to...