Emmons-Hawkins Hardware Co. v. Sizemore

• Decision Date: 30 October 1928
• Docket Number: (No. 6218)
• Court: West Virginia Supreme Court
• Parties: Emmons-Hawkins Hardware Company v. 0. K. Sizemore,Trading, etc.

106 W.Va. 259

Emmons-Hawkins Hardware Company

v.0. K. Sizemore,

Trading, etc.

(No. 6218)

Supreme Court of Appeals of West Virginia.

Submitted October 23, 1928.

Decided October 30, 1928.

1. Fraudulent Conveyances Garnishment Generally, Plain-

tiff Can Recover on Suggestion Only When Garnishee is Liable to Defendant; in Case of Fraudulent Conveyance of Defendant's Property, Garnishment is Proper Procedure Irrespective of Grantee's Liability to Defendant (Code, c. 141, § 10).

It is the general rule that a plaintiff can recover on a suggestion only when the garnishee is liable to the defendant. This rule, however, is subject to a well recognized exception. Where there has been a fraudulent conveyance of the defendant's property, garnishment is held to be a proper procedure irrespective of the grantee's liability to the defendant, (p. 260.)

2. Same Garnishment is Favored Remedy for Violations of

Bulk Sales Law; Buyer in Sale Violating Bulk Sales Law is Trustee for Seller's Creditors, and Such Liability is Enforceable by Garnishment, Though He Has Paid Price and Resold Stock; Buyer's Payment to Preferred Creditors of Seller of Price of Goods Sold in Violation of Bulk Sales Law Does Not Affect His Liability to Other Creditors (Code, c. 74, § 3a; c. 141, § 10).

Garnishment is uniformly favored in violations of the Bulk Sales Law. In such case the purchaser is treated as a trustee of the property for the seller's creditors, and his liability in that capacity may be enforced by garnishment, although he has paid the purchase price and resold the stock. His payment of the purchase price to preferred creditors of the seller does not affect his liability to the other creditors for their pro rata share of the value of the property. (p. 260.)

3. Fraudulent Conveyances Statute Making Buyer Person-

ally Liable After Disposing of Property Purchased in Violation of Btdk Sales Law is Not Exclusive of Remedy by Garnishment, But Gives Creditors Additional Remedy (Code, c. 74, § 3a; c. 141, § 10).

In imposing personal liability on the vendee in a conveyance fraudulent under the Bulk Sales Law, when he has dis. posed of the property, the statute has created an additional remedy for the creditors without abridging their right to proceed by garnishment. (p. 261.)

Error to Circuit Court, McDowell County.

Action by the Emmons-Hawkins Hardware Company against O. K. Sizemore. Plaintiff recovered judgment against defendant, and after execution thereon proceeded against the Superior-Pocahontas Coal Company, as garnishee, by suggestion. Judgment dismissing the suggestion, and plaintiff brings error.

Reversed and remanded.

F. C. Cook and Samuel A. Christie, for plaintiff in error.

Hatcher, Judge:

On July 30, 1924, 0. K. Sizemore sold to the SuperiorPocahontas Coal Company a stock of merchandise and fixtures for $3,420.18, which amount is agreed to have been the full value thereof. No attempt was made to comply with the requirements of the Bulk Sales Law. The coal company paid $3,417.90 of the purchase price to certain creditors of Sizemore and turned over to him the remainder of $2.28. Afterwards other creditors of Sizemore recovered joint judgments against him and the company in the aggregate amount of $1,736.48, which the company settled. The merchandise and fixtures so purchased have been disposed of. Sizemore owed the plaintiff $369.18 at the time of the sale which is unpaid. It recovered a separate judgment against him for that amount, had an execution issued thereon, and then proceeded against the coal company by suggestion, under section 10, Chapter 141, Code. In answer thereto the company denied being indebted to Sizemore in any amount. The lower court found that the coal company was not liable to the plaintiff, and dismissed the suggestion.

Garnishment is an ancillary statutory proceeding which has long been resorted to in aid of the collection of judgments. Its purpose is to divert to the judgment creditor a payment due the judgment debtor by a third person. Therefore it is generally held that the plaintiff can recover on a suggestion only when the garnishee is liable to the defendant. Shinn on Attachments and Garnishments, sec. 516 (a). This Court has subscribed to that doctrine. Swarm, Adm'r. v. Summers, 19 W. Va. 115. The rule is subject, however, to a well recognized exception. Where there has been a fraudulent conveyance of the defendant's property, garnishment is held to be a proper procedure, irrespective of the grantee's liability to the defendant. Shinn, supra, sec. 588; Drake on Attachments, (6th ed.), sec. 458; 2 Moore on Fraud. Conveyances, p. 743-5; 14 A. & E. Ency. 351; 27 C. J. 708, sec. 549. The courts find no logical distinction in the effect of actual fraud and statutory fraud and afford the same remedy in each case, unless an exclusive statutory remedy is provided. Rothchild Bros. v. Trewella, 36 Wash. 679, 683, 79 P. 480, 481; Hartwig v. Rushing, 93 Ore. 6, '21, 182 P. 177, 182. Garnishment is therefore uniformly favored in violations of the Bulk Sales Law. 12 R. C. L., p. 529, sec. 58; 27 C. J., p. 889, sec. 899; Supply Co. v. Smith, 182 Mo. 212, 226; J agues & Tinsley Co. v. Warehouse Co. (Ga.), 62 S. E. 82; Owasso C. & S. Co. v. Sweet (Tex.), 179 S. W. 257, L. E. A. 1916 B, 970, which has a...