Fisher v. Norman Apartments, Inc.

• Decision Date: 21 June 1937
• Docket Number: 13963.
• Citation: Fisher v. Norman Apartments, Inc., 101 Colo. 173, 72 P.2d 1092 (Colo. 1937)
• Parties: FISHER v. NORMAN APARTMENTS, Inc. COLORADO NAT. BANK OF DENVER et al., Garnishees (HOLMAN et al., Interveners).
• Court: Colorado Supreme Court

72 P.2d 1092

101 Colo. 173

FISHER v. NORMAN APARTMENTS, Inc. COLORADO NAT. BANK OF DENVER et al., Garnishees (HOLMAN et al., Interveners).

No. 13963.

Supreme Court of Colorado, En Banc.

June 21, 1937

Rehearing Denied Oct. 18, 1937.

Error to District Court, City and County of Denver; James C Starkweather, Judge.

Action by B. B. Fisher, assignee of the George Tritch Hardware Company, against Norman Apartments, Incorporated, in which the Colorado National Bank of Denver, Colo., and another were summoned as garnishees and in which C. L. Holman and others intervened. From a judgment in favor of the garnishees and interveners, plaintiff brings error.

Reversed and remanded.

BOUCK J., dissenting.

A Irving Sobol and A. R. Morrison, both of Denver, for plaintiffs in error.

Bartels, Blood & Bancroft, of Denver, for defendants in error except Norman Apartments, Inc.

YOUNG, Justice.

The plaintiff in error, herein referred to as Fisher, or the judgment creditor, is the assignee of a judgment rendered in favor of the Tritch Hardware Company against Norman Apartments, Inc. Fisher procured execution to be issued on the judgment and caused garnishee summons to be served on one B. F. Englander and the Colorado National Bank as garnishees. All of the interrogatories propounded in the summons were answered by the garnishees in the negative. Fisher traversed the answers. The International Trust Company filed a petition in intervention claiming the 'credits, issues, debts choses in action and other personal property' with which the Colorado National Bank of Denver and B. F. Englander as garnishees are sought by the plaintiff herein to be charged.

From a judgment on the traverse in favor of the garnishees and on the petition in intervention in favor of the trust company, Fisher prosecutes this writ of error.

A chronology of the transactions preceding and subsequent to the garnishment is necessary to an understanding of the issues involved and to a determination of the applicable legal principles.

(1) August 15, 1923, William N. Bowman and Alice M. Bowman executed a deed of trust to the International Trust Company covering certain property on which the Norman Apartments now are located securing a bond issue of $350,000.

(2) October 12, 1923, the Bowmans by warranty deed, recorded November 12, 1923, conveyed the property covered by the deed of trust to the Norman Apartments, Inc., which assumed and agreed to pay the encumbrance.

(3) September 4, 1931, the Tritch Hardware Company secured the judgment against the Norman Apartments, Inc., on which the summons in garnishment issued.

(4) October 12, 1932, an agreement, hereinafter set out at length, was entered into between the Bowmans, the Norman Apartments, Inc., and certain persons constituting a 'bondholders' protective committee,' which is herein referred to as the bondholders' committee.

(5) November 1, 1932, the trust company on the request of the bondholders' committee--holders of more than one-third of all the bonds then outstanding--declared all of the unpaid bonds secured by said deed of trust to be due and payable immediately.

(6) November 28, 1932, a foreclosure suit was instituted by the trust company, against the Bowmans, the Norman Apartments, Inc., the members of the bondholders' committee, and unknown persons consisting of the unknown holders of outstanding bonds.

(7) November 28, 1932, notice of lis pendens was filed in the office of the county clerk and recorder.

(8) July 15, 1935, the bondholders' committee filed its answer setting up that the committee had been in possession of the Norman Apartments under and by virtue of the contract of October 12, 1932, and offering to account for all moneys unexpended deposited from October 12, 1932, in the Colorado National Bank subject to being paid out as provided in said contract.

(9) July 15, 1935, the court entered a decree of foreclosure.

(10) July 31, 1935, the judgment of the Tritch Hardware Company was assigned to Fisher.

(11) September 17, 1935, execution issued on that judgment.

(12) September 18, 1935, the garnishee summons above mentioned were served.

(13) November 26, 1935, the order confirming the sale was entered.

Following the order of sale of July 15, the Norman Apartments, Inc., filed a petition in bankruptcy. The bankruptcy court temporarily enjoined further proceedings, but afterwards dissolved the restraining order and permitted the sale. On petition of the International Trust Company and the bondholders' committee, the bankruptcy court, on January 23, 1936, authorized the bondholders' committee to pay to the International Trust Company as trustee under the deed of trust the moneys on deposit in the Colorado National Bank sought to be reached by Fisher by garnishment.

The trust deed executed by the Bowmans after describing the real estate contained the following: 'Together with any and all buildings, improvements and appurtenances now and at any time hereafter constructed or placed upon said land or any part thereof, * * * together with all the rents, uses and privileges thereof, which are hereby assigned, * * * and together with all and singular the personal property of every kind and nature whatsoever contained or hereafter contained in said building or buildings, and used or to be used in connection with the carrying on of an hotel business in said building or buildings.'

The contract of October 12, 1932, was in words as follows:

'This agreement made and entered into this 12th day of October, A. D. 1932, by and between the Norman Apartments, Inc., a Colorado Corporation, and William N. Bowman, parties of the first part, and C. L. Holman, Lynton T. Block, Warren Browne, A. D. Plamondon and James R. D. Stevenson, constituting the Bondholders' Protective Committee, parties of the second part; Witnesseth:

'Whereas, the Norman Apartments, Inc., is the owner of the property known as 'The Norman Apartments,' in Denver, Colorado, subject to an encumbrance represented by first mortgage bonds in the principal sum of approximately two hundred and forty-four thousand dollars ($244,000), and also subject to a second encumbrance securing the payment of another bonded indebtedness, and William N. Bowman is the president and a stockholder and a representative of other stockholders of the said Norman Apartments, Inc., and

'Whereas, said Norman Apartments, Inc., have defaulted in the payment of interest on said first mortgage bonds, a certain amount of matured principal, and in the payment of taxes on said property, and

'Whereas, a Protective Committee consisting of C. L. Holman (Chairman), Lynton T. Block, Warren Browne, A. D. Plamondon and James R. D. Stevenson, has been formed for the holders of the first mortgage bonds of the Norman Apartments, Inc., and the committee has requested the holders of said bonds to deposit the same with said committee for the protection of said bondholders and for the purpose of either refinancing the bonded indebtedness on said property pursuant to a plan to be submitted to the bondholders when a sufficient number of said bonds shall have been deposited with said committee, or for the purpose of foreclosing, and

'Whereas, the Bondholders' Committee and the Norman Apartments, Inc., and William N. Bowman believe it to be to the best interests of all parties interested that the income and rents from said property be transferred to a depository satisfactory to all parties herein, and to be paid out only upon the joint signature of a resident manager of said apartments and of a representative for said Bondholders' Committee for the purposes hereinafter set forth.

'Now, Therefore, in consideration of the premises and in further consideration of the execution of this instrument by all of the said parties and of their promises herein contained, running from one to the other or others of them, they do hereby promise and agree, as follows, towit:

'That during the time this agreement shall be in force and effect, B. F. Englander, if the said Norman Apartments, Inc., so desires, may be continued in the employ of said company as the resident manager of said apartments and to perform the usual and customary duties of a resident manager of an apartment building, except as herein states, * * * That as such resident manager he shall act as agent for the Norman Apartments, Inc., and shall be one of the signers of all

checks drawn on the funds deposited with said depository hereinabove referred to.

'That W. D. Morrison shall act as the agent or representative of said Bondholders' Committee so long as he shall be satisfactory to it, and in the event that he may fail or refuse to act or prove to be unsatisfactory, the said committee, may, from time to time, appoint some other person desirable to it as its agent or representative, at the agreed salary of $75.00 per month to be paid out of the annual income from said property, which said salary shall also be payment for services performed as auditor for Norman Apartments, Inc.,

'All rentals and income, including all cash now on hand, from said Norman Apartments, Inc., and said garage connected therewith, of any kind or nature, whether past due or current, as the same are collected shall be deposited with the Colorado National Bank of Denver, Colorado, as such depository. * * *

'That all checks drawn on said moneys deposited with said depository shall be checked out and disbursed only upon checks signed by B. F. Englander, as a representative of the Norman Apartments, or his successor, and countersigned by said W. D. Morrison, or his successor, provided, however, that the said funds shall be checked out, used and disbursed for the following purposes, and none other, in the following order of

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