Hiatt v. Edwards

• Decision Date: 18 November 1935
• Docket Number: 24789.
• Citation: Hiatt v. Edwards, 52 Ga.App. 152, 182 S.E. 634 (Ga. App. 1935)
• Parties: HIATT v. EDWARDS.
• Court: Georgia Court of Appeals

182 S.E. 634

52 Ga.App. 152

HIATT v. EDWARDS.

No. 24789.

Court of Appeals of Georgia, Second Division

November 18, 1935

Syllabus by the Court.

An attorney is not subject to garnishment by a creditor of his client as for money or other effects still in his hands where the attorney, after depositing his client's funds to his own credit in a bank, had drawn and delivered to his client an ordinary check in the amount of the funds belonging to the client, and especially where such check had been indorsed and delivered by the client to a third person prior to the service of the garnishment on the attorney.

Error from Superior Court, Terrell County; C. W. Worrill, Judge.

Garnishment proceeding by W. S. Hiatt, receiver, etc., against Tom Edwards. Judgment for garnishee, plaintiff in garnishment's motion for a new trial was overruled, and plaintiff in garnishment brings error.

Affirmed.

W. L Ferguson, H. A. Wilkinson, and Henry A. Wilkinson, all of Dawson, for plaintiff in error.

R. R Jones, of Dawson, for defendant in error.

JENKINS Presiding Judge.

It was said by this court in Parker-Fain Grocery Co. v Orr, 1 Ga.App. 628, 631, 57 S.E. 1074, 1075: "The presumption is that a check is only intended as conditional payment, and if dishonored, and the holder is not guilty of laches causing loss to the drawer, the latter is liable upon the original cause or debt for which the check was given; * * * and a check is always so far payment, until dishonored, that, after its delivery, the drawer cannot be garnished as debtor of the payee in respect to the debt for which the check is given." Similar language was used in Watt-Harley-Holmes Hardware Co. v. Day, 1 Ga.App. 646, 648, 57 S.E. 1033. The authority for these statements seems to have been Morse on Banks and Banking (4th Ed.) § 543, cited in the cases mentioned. What was thus said, however, was later questioned by the court in Kirby Planing Mill Co. v. Titus, 14 Ga.App. 1, 3, 4, 80 S.E. 18, where the language quoted was said to have been obiter. The decision in the instant case has, therefore, been reached with considerable difficulty. There are two well-recognized principles of law, relied on by counsel for the garnishing creditor, the plaintiff in error, which have rendered the decision difficult. The first of these is that "bank checks and promissory notes are not payment until themselves paid." Code 1933, § 20-1004. This general rule obtains unless the check or note is accepted by the creditor as payment, or it is agreed that it is to be so taken. Mims v. McDowell, 4 Ga. 182; Butler, Stevens & Co. v. Barnes, 8 Ga.App. 513 (3), 69 S.E. 923. The second of these principles is that, under the provisions of the Negotiable Instruments Law, "a check of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is not liable to the holder unless and until it accepts or certifies the check." Code, § 14-1707. This latter statute, which is in accordance with what seems to have always been the majority rule, merely follows that rule as previously adopted in this state. In Reviere v. Chambliss, 120 Ga. 714, 715, 716, 48 S.E. 122, it was held that "an unaccepted check, drawn in the ordinary form, not describing any particular fund, or using words of transfer of the whole or any part of any amount standing to the credit of the drawer, does not amount to an assignment, at law or in equity, of the money to the credit of the drawer." In the opinion in that case it was said: "The crucial test is that the assignor must not retain any control over the fund-any authority to collect or any power of revocation. The transfer must be of such a character that the holder of the fund can safely pay, and is compellable to do so, though forbidden by the assignor. Christmas v. Russell, 14 Wall. [81 U.S. (69)] 84, 20 L.Ed. 762." 120 Ga. 714, at page 716, 48 S.E. 122, 123.

1. We deal now with the first question involved, irrespective of any question made by the indorsement of the check by the payee client to a third person. That is to say, we now consider merely whether the delivery of the check by the attorney to his client, representing as it did an order on the bank for the transfer by the bank of a fund belonging to the client, would render the fund free from process of garnishment of the attorney by a creditor of the client. If the attorney's order to the bank to turn over to his client the money had been merely a check given for the purpose of paying a debt owing by the attorney to his client instead of an order to turn over funds already belonging to the client, the Code provision that a check is not payment until itself paid would seem to throw considerable doubt on what was said by this court in the two decisions above quoted from in the first volume of the Georgia Appeals Reports, although there is respectable authority cited by the court in support of what was there said; the theory of those decisions being that, while a check is not completed payment, still it is conditional payment until dishonored, and in this sense amounts to such payment as will forestall garnishment. As we see it, however, the instant case does not involve a question of payment by the attorney, neither does it involve a question of an assignment of the attorney's funds to the client; but, as was said in McIntire v. Raskin, 173 Ga. 746, 754, 161 S.E. 363, 367: "The funds were not those of the drawers, but those of the payee. The purpose of the drawers of this check was to remit these funds to their client." This being the case, even if the Code section as to payment by check were rigidly construed, and even if the section providing that a check does not operate as an assignment of the fund should in like manner be rigidly construed, these sectons would have no proper application where there was no debt to be paid and no equitable title to be assigned, but the deposit was a trust fund actually belonging to the client, and where the purpose of the check was not to pay a debt or make an assignment of the title, but merely to relinquish the attorney's legal custody and control over the fund to its rightful owner. The attorney, giving the order to his client on the fund held by him merely as the agent and custodian for the client as the true owner, did nothing but what the law compelled him to do. This being true, after the delivery of the check to the client, the relationship of attorney and client with...