Gilloley v. Sampson

• Decision Date: 08 July 1938
• Docket Number: No. 31623.,31623.
• Citation: 281 N.W. 3,203 Minn. 233
• Parties: GILLOLEY v. SAMPSON (SEARS et al., Garnishees).
• Court: Minnesota Supreme Court

281 N.W. 3

203 Minn. 233

GILLOLEY v. SAMPSON (SEARS et al., Garnishees).

No. 31623.

Supreme Court of Minnesota.

July 8, 1938.

Appeal from District Court, Rice County; Fred W. Senn, Judge.

Action by Frank W. Shandorf, receiver of the Citizens National Bank of Faribault, against Joe Sampson, etc., on a promissory note, wherein the plaintiff recovered a judgment, which it sought to collect by garnishment proceedings against Martin Sears and others and the Erickson-Johnson Construction Company and others. From an order denying plaintiff's motion for amended findings or a new trial after judgment of dismissal with prejudice in favor of the Erickson-Johnson Construction Company and others, George A. Gilloley, receiver of the Citizens National Bank of Faribault, substituted as appellant in place of Frank W. Shandorf, appeals.

Reversed, and new trial granted.

Smith & Coughlin, of Faribault, Meighen, Knudson & Sturtz, of Albert Lea, for appellant.

Melrin, Brown & Sherman, of Minneapolis, for respondents.

PETERSON, Justice.

This action was here before in Shandorf v. Sampson, 198 Minn. 92, 268 N.W. 841, where the facts are fully stated. Plaintiff bank recovered a judgment against the defendant, Sampson, on a promissory note, which it is seeking to collect by garnishment proceedings against the S. & S. Contracting Co., a sub-contractor by whom Sampson was employed, the Erickson-Johnson Construction Company and R. B. Fraser Construction Company, the principal contractors with the state of Minnesota, Seaboard Surety Company, surety on their bond as such contractors, and the Standard Surety & Casualty Company, surety on the bond of the S. & S. Company to the principal contractors. Sampson furnished labor and equipment on a road building job to the S. & S. Contracting Company, sub-contractor of the contractors named. The main action and the garnishment proceeding were commenced in August, 1932. In February, 1934, supplemental complaints in garnishment were filed. On the former appeal we held that this proceeding in garnishment was an action against the contractors and their sureties to enforce the obligations of their bonds, but that plaintiff could not maintain the action because of its failure to show compliance with L.1929, c. 369, § 2 (Mason Minn.St.1938 Supp. § 9705), by serving a notice of claim within 90 days after completion of the contract, and commencing the action within one year thereafter, which are conditions precedent to liability on the bonds. In the opinion we said (198 Minn. 92, at page 95, 268 N.W. 841, at page 842): "There was no allegation in the supplemental complaint, and plaintiff offered no proof that such notice was filed or that the proceedings were begun within one year thereafter. The statute clearly makes the filing of such notice condition precedent to the bringing of any action on contractors' bonds. It is conceded that this is such an action. * * * It follows, therefore, that plaintiff is not entitled to recover in this action unless he can show timely notice and commencement of action." A new trial was granted. On the new trial it was stipulated that a written notice of claim, complying with § 9705, had been filed in due time by Sampson with the commissioner of insurance. Pertinent findings of the court are that Sampson furnished work and equipment to S. & S., that he received no money directly for such work and equipment but that the garnishees had paid certain claims against Sampson; that on August 13, 1932, Sampson filed statutory notice of claim with the commissioner of insurance, and that the garnishment summonses had been served on respondents on various dates between August 15, 1932, and August 29, 1932. There was no direct finding that Sampson had an unpaid claim against S. & S. for a definite amount. As conclusions of law the court held that no action upon the bonds had been commenced within one year after filing the notice of claim, and that the amount, if any, due from the garnishees on the dates of service of garnishment summonses, was due only upon a contingency. Judgment of dismissal with prejudice was ordered in favor of respondents. The bank, by Gilloley, its receiver, appeals from an order denying its motion for amended findings or a new trial.

1. On the former appeal (198 Minn. 92, 268 N.W. 841) the contention of the present respondents was sustained that the proceeding in garnishment upon the supplemental complaint against the garnishees was an action on the bonds which had to be brought within one year. The question now is whether that action against the garnishees was commenced within one year after Sampson filed the notice of claim against the garnishees under the bonds. The action against the garnishees was commenced within one year if it was begun at the time of the service of the garnishment summonses but not if it was commenced at the time of the filing of the supplemental complaint. A supplemental complaint in garnishment is a continuation of the pending garnishment against the garnishee. Mahoney v. McLean, 28 Minn. 63, 9 N.W. 76; Trunkey v. Crosby, 33 Minn. 464, 23 N.W. 846; S. E. Olson Co. v. Brady, 76 Minn. 8, 78 N.W. 864. Mahoney v. McLean, supra, holds that the supplemental complaint is in continuation of the pending garnishment proceeding; that, if the garnishee is discharged upon the disclosure, the proceeding is ended; that the proceeding on the supplemental complaint is not a new action and that if the pending garnishment has been terminated by a discharge of the garnishee it cannot be continued at all, whether by supplemental complaint in garnishment or otherwise. In Trunkey v. Crosby, supra, the garnishee denied liability and leave to file a supplemental complaint was granted, which was served not upon the garnishee personally, but upon his attorney who appeared for him at the disclosure. It was claimed that the service on the attorney was not good on the ground that the notice was in the nature of original process to bring the garnishee into court. In holding that the garnishee was already a party to the proceeding before leave was granted to serve and file the supplemental complaint, Mr. Chief Justice Gilfillan said (page 847): "But it is not process, nor does it bring the party into court. The proceeding is already pending by service of the garnishee summons; and the application for leave to serve and the service of the supplemental complaint are only further continuations of such pending proceeding, and the attorney who has appeared for the defendant or the garnishee is the proper person upon whom to serve the notice." In S. E. Olson Co. v. Brady, supra, holding that the supplemental complaint in garnishment only continues the pending garnishment and is not the institution of a new action, we distinguished cases holding that a proceeding by supplemental complaint under statutes somewhat different from ours is the institution of a separate action.

That the conclusion reached in Mahoney v. McLean, Trunkey v. Crosby and S. E. Olson Co. v. Brady, supra, is clearly right is manifest from the purpose of and procedure in garnishment. The purpose of garnishment is to reach property of the defendant in the hands of the garnishee, to apply it in satisfaction of the judgment. Knudson v. Anderson, 199 Minn. 479, 272 N.W. 376. The procedure in garnishment is with an eye solely to that purpose. A garnishment is a proceeding in the main action. It is not an independent action but merely an ancillary proceeding, to secure and make effectual any judgment recovered in the main action. Where the court has jurisdiction in personam of the defendant, the proceedings are much in the nature of a creditor's bill by which the garnishee is brought in as an additional party, and take on a dual aspect — that of an action against the defendant to recover judgment upon the cause of action set forth in the complaint in the main action and that of an action in the nature of a creditor's bill against the defendant and the garnishee to reach property of the defendant in the latter's hands to be applied in satisfaction of the judgment. Aultman, Miller & Co. v. Markley, 61 Minn. 404, 63 N.W. 1078. From the service of the summons to the entry of judgment, garnishment is but a single proceeding, adversary in character, resulting in a determination of the liability of the garnishee. Mason Minn.St.1927, § 9356 (as amended by L.1929, c. 215), provides that in the "summons and all subsequent proceedings in the action the plaintiff and defendant shall be so designated, and the person against whom such summons issues shall be designated as garnishee." The parties are such in fact and not in name only. Judgment may be entered against the garnishee upon a default. Security State Bank v. Thor, 184 Minn. 156, 238 N.W. 52. Adverse claims in intervention in garnishment may be determined. State ex rel. Security State Bank v. District Court, 150 Minn. 498, 185 N.W. 1019. Service of the garnishment summons operates as an attachment upon which subsequent proceedings are based. Section 9359 provides in part: "The service of the summons upon the garnishee shall attach and bind all the property and money in his hands or under his control belonging to the defendant, and all indebtedness owing by him to the defendant at the date of such service, to respond to final judgment in the action." It is fundamental that plaintiff can assert rights of the defendant against the garnishee only as of the time of, and not before or after, service of the garnishment summons. Nash v. Gale, 2 Minn. 310, Gil. 265; McLean v. Sworts, 69 Minn. 128, 71 N.W. 925, 65 Am.St.Rep. 556; Melin v. Stuart, 119 Minn. 539, 138 N.W. 281; Dunnell, Minn.Dig.(2 ed.) § 3957. The liability of the garnishee is determined as of that date. A disclosure of the garnishee is had under the statutes which may be a sufficient basis for judgment against him. But the disclosure is not conclusive or final against the plaintiff. If the...