Fulton Bag & Cotton Mills v. Valley Products Corp.

• Decision Date: 11 March 1955
• Docket Number: No. 14909,14909
• Citation: 277 S.W.2d 241
• Parties: FULTON BAG & COTTON MILLS, Appellant, v. VALLEY PRODUCTS CORP. et al., Appellees.
• Court: Texas Court of Appeals

Page 241

277 S.W.2d 241

FULTON BAG & COTTON MILLS, Appellant, v. VALLEY PRODUCTS CORP. et al., Appellees.

No. 14909.

Court of Civil Appeals of Texas, Dallas.

March 11, 1955.

Rehearing Denied April 15, 1955.

Lane, Savage & Counts, Dallas, for appellant.

Hutcheson, Taliaferro & Hutcheson, Houston, Sharpe, Cunningham & Garza, Brownsville, Touchstone, Watson & Watson and Golden, Croley, Howell, Johnson & Mizell, Dallas, and Richard M. Keiser, Harlingen, for appellees.

DIXON, Chief Justice.

This appeal involves (1) a garnishment proceeding after judgment filed in a District Court of Dallas County; (2) a suit for debt and an ancillary garnishment proceeding, both thereafter filed in the District Court of Willacy County; and (3) an answer and a suit by way of interpleader filed in the District Court of Dallas County by the one garnishee named in both of the two garnishment proceedings above mentioned.

On September 2, 1953 appellant Fulton Bag & Cotton Mills filed its application in the 134th District Court, Dallas County, Texas, for a writ of garnishment based on a judgment for $6,125.25 rendered January 25, 1951 in favor of garnishor against E. Cannon, also known as E. E. Cannon. The writ of garnishment was served on Globe & Rutgers Fire Ins. Co., garnishee, on September 3, 1953, requiring garnishee to answer what, if anything, garnishee was indebted, etc., to E. Cannon also known as E. E. Cannon.

On September 3, 1953 there was pending in the District Court of Willacy County, Texas a suit for debt filed by Guy Thompson, Trustee for the St. Louis, Brownsville & Mexico Railway Co., against the Valley Products Corporation. Ancillary to said suit, the Trustee filed a garnishment proceeding September 3, 1953 and caused a writ of garnishment to be served on Globe & Rutgers Fire Ins. Co. on September 4, 1953. This writ not only required the garnishee to answer whether it owed the defendant Valley Products Corporation an indebtedness, but also to answer '* * * what, if anything, you are indebted to any of the following persons in the capacity of corporate officers of the said Valley Products Corporation E. Cannon, Mrs. Alpha Cannon * * * and what effects, if any, of any of the above named persons in their capacities as corporate officers, and for the benefit of Valley Products Corporation you had in your possession * * * when this writ was served.'

It will be observed that the two garnishors were proceeding against the same garnishee, but against different named debtors. Appellant Fulton Bag & Cotton Mills, one of the garnishors, based its garnishment proceedings on a judgment against E. E. Cannon. Appellee Guy Thompson, Trustee for the railroad, the other garnishor, based his garnishment proceeding on a suit for debt against Valley Products Corporation. E. E. Cannon is president of Valley Products Corporation. Alpha Cannon is Secretary-Treasurer. They are husband and wife.

On September 14, 1953 Globe & Rutgers Fire Ins. Co., garnishee in both proceedings, answered in the Dallas District Court, denying under oath that it was indebted to E. E. Cannon 'except as hereinafter set forth.' The answer then described in detail the garnishment proceeding which had been instituted against it in Willacy County, Texas.

Garnishee's answer then went on to say that on January 17, 1953 it had issued its policy No. 5339 in the amount of $2,500 on the contents of the one story metal roof ironclad building located at 514 Broadway Street in Lyford, Texas, in which policy the named insured was Alpha Cannon.

The answer further went on to say that on June 11, 1953 garnishee had issued its policy No. 5338 in the amount of $3,000 on one sheetrock, ironclad building located at 514 Broadway Street in Lyford, Texas, in which policy the named insured was Valley Products Corporation.

On August 16, 1953 a fire had occurred which damaged both the building and its contents. Thereafter proof of loss was made under policy No. 5338 by Valley Products Corporation, by E. E. Cannon, President, for $3,000 for damages to the building. And proof of loss was made under policy No. 5339 by Alpha Cannon for $2,500 for damage to the contents of the building, the latter proof being signed by both Alpha Cannon and her husband E. E. Cannon.

Garnishee's pleading is not only an answer to appellant's writ of garnishment; it is also a pleading in the nature of a bill of interpleader. Asserting that it was entitled to protection against double liability, garnishee named as defendants Guy Thompson, Trustee, Valley Products Corporation, E. E. Cannon and Alpha Cannon. The prayer asked that the defendants be required to interplead against each other and plaintiff as to the rights of each of them to the proceeds of each of the two policies. The amounts of the policies were tendered and were subsequently paid into the treasury of the court.

On September 29, 1953 garnishor in the Dallas County proceedings, Fulton Bag & Cotton Mills, controverted garnishee's answer, and on April 22, 1954 filed its amended controverting affidavit in which it alleged that garnishee's answer was incorrect in so far as it alleged directly or indirectly that E. Cannon, also known as E. E. Cannon, did not own the proceeds of both policies. It also alleged that the proceeds were the community property of E. Cannon and Alpha Cannon, and that Valley Products was a one-man corporation, a mere legal fiction, existing in name only, all the stock standing in the name of Alpha Cannon and being community property, except an insignificant number of shares.

On October 19, 1953 Alpha Cannon answered that the contents of the building were her sole and separate estate and so were the proceeds of policy No. 5339, but she disclaimed any interest in the building or the proceeds of policy No. 5338. Valley Products Corporation answered that it was the sole owner of the building and of the proceeds of policy No. 5338, but disclaimed any interest in the contents, or the proceeds of policy No. 5339. E. E. Cannon answered that he owned no interest in either the building or its contents, and therefore owned no interest in the proceeds of either policy.

On November 30, 1953 Guy A. Thompson, Trustee for the railroad, filed a motion to quash and a plea to the jurisdiction. The Trustee alleged that garnishor Fulton Bag & Cotton Mills in its application and in its writ of garnishment asserted and had no right, claim or judgment against Valley Products Corporation; that garnishor Guy Thompson, Trustee, was asserting only a claim to the proceeds of policy No. 5338 wherein Valley Products Corporation is the named insured; that the writ of garnishment which the Trustee caused to be issued out of the District Court of Willacy County is the only writ arising from a claim against Valley Products Corporation, and is prior in time and right to any claim of Garnishor Fulton Bag & Cotton Mills in regard to policy No. 5338; that the controverting answer of garnishor Fulton Bag & Cotton Mills does not challenge but admits the legal existence of Valley Products Corporation; and that the issues tendered in the controverting answer of Fulton Bag & Cotton Mills are properly triable in the District Court of Willacy County, Texas, wherein the garnishment was actually perfected against the proceeds of the policy of Valley Products Corporation.

On February 12, 1954 by agreement of all parties, garnishee Globe & Rutgers Fire Ins. Co., having paid into the registry of the court the full amount due on both policies, was finally discharged with an allowance for attorney's fees, without prejudice to the rights of the remaining parties.

On February 22, 1954 Valley Products Corporation filed a motion to quash the garnishment proceedings instituted in Dallas County by garnishor Fulton Bag & Cotton Mills. It claimed no interest in any policy issued to Alpha Cannon or E. Cannon. But it asserted that it claimed the sole interest in policy No. 5338 in which it was the named insured; that Valley Products Corporation was not a party to the suit in which garnishor Fulton Bag & Cotton Mills obtained a judgment against E. Cannon, nor had any judgment been recovered against it by said garnishor.

On April 30, 1954 the court sustained the motions to quash and the Trustee's plea in abatement (jurisdiction) directed against the garnishment proceedings instituted by garnishor Fulton Bag & Cotton Mills in Dallas County in so far as said proceedings might affect the proceeds of policy No. 5338 in which Valley Products Corporation was the named insured. The court also dismissed Valley Products Corporation and Guy Thompson, Trustee, from the Dallas County suit, and ordered the proceeds of policy No. 5338, approximately $3,074.34, transferred to the District Court of Willacy County to be subject to the orders of that Court.

The effect of the above judgment was to leave pending in the Dallas County District Court that part of appellant's garnishment suit and garnishee's interpleader suit involving insurance policy No. 5339 in the amount of $2,500 in...