Hudelson v. Sanders-Swafford Co.

• Decision Date: 24 June 1924
• Citation: 227 P. 310,111 Or. 600
• Parties: HUDELSON ET AL. v. SANDERS-SWAFFORD CO. (DODD, GARNISHEE.
• Court: Oregon Supreme Court

227 P. 310

111 Or. 600

HUDELSON ET AL. v. SANDERS-SWAFFORD CO. (DODD, GARNISHEE.

Supreme Court of Oregon

June 24, 1924

In Banc.

Appeal from Circuit Court, Union County; J. W. Knowles, Judge.

Action by A. B. Hudelson and W. A. Hudelson, partners under the firm name of A. B. Hudelson & Son, against the Sanders-Swafford Company, in which N.E. Dodd was garnishee. Judgment for plaintiffs, and garnishee appeals. Reversed and remanded with directions.

A. A. Smith, of Baker, and Colon R. Eberhard, of La Grande (Cochran & Eberhard, of La Grande, on the brief), for appellant.

John S Hodgin, of La Grande, for respondents.

RAND J.

The defendant, N.E. Dodd, appeals from a judgment which the plaintiffs recovered against him as garnishee. The material facts are: The Sanders-Swafford Company, a corporation, was the owner and in possession of certain personal property consisting of horses, cattle, hogs, and certain farm implements and machinery upon a farm in its possession at North Powder, Or. The corporation, on March 25, 1921 borrowed from A. A. Smith, trustee, the sum of $4,000, giving a promissory note therefor signed by the corporation and by E. M. Sanders individually. By its terms the note was payable one year after date. To secure its payment the corporation executed a chattel mortgage upon 90 head of its milk cows, steers, heifers, and calves. This mortgage was placed of record on March 29, 1921. Subsequently, and on March 31, 1921, the corporation borrowed from S.W. Holmes the sum of $3,000, giving its promissory note therefor payable nine months after date and secured the payment thereof by a second chattel mortgage upon the personal property covered by the first mortgage and upon the remainder of the personal property owned by the corporation, which mortgage was duly recorded on April 30, 1921. These mortgages became due and were unpaid. In order to secure their payment an agreement was entered into between the corporation and the mortgage creditors that the mortgaged property should be sold and the proceeds applied in payment of said debts. It was agreed that the corporation should advertise all of said mortgaged property for sale at public auction and that the defendant N.E. Dodd should act as clerk of said sale and collect the proceeds thereof and apply them in payment of the mortgage debts. A sale was had in the manner agreed upon on October 27, 1922, at which time the property was sold at public auction and the moneys realized from the sale were turned over and paid to Dodd, as agent and trustee for the mortgage creditors and with the understanding and agreement between the corporation and the mortgage creditors that all sums realized from said sale should be applied in satisfaction of the mortgages to the extent of the amount due thereon. The amount realized from said sale was less than sufficient to pay the amount due upon either of said mortgages. On the day of the sale and before the moneys received from the sale had been turned over by Dodd to the mortgage creditors, the plaintiffs commenced this action against the corporation and garnished the proceeds of said sale in the hands of Dodd, but no attempt was made to attach the property then being sold. The property itself was offered for sale and was sold by one D. M. Cartmill, as auctioneer, who had been selected by the corporation and the mortgage creditors for that purpose.

In answer to the notice of attached property served upon the defendant Dodd he made two answers, first stating, in effect. that he would hold the money until it was ascertained whether it should be applied in payment of the mortgages or upon the attachment, and later he answered stating that he had no funds or money in his hands belonging to the defendant Sanders-Swafford Company. His answer being unsatisfactory to the plaintiffs, they applied to the court for an order, which was made requiring the garnishee to appear and be examined on oath concerning the same, and at the same time written allegations and interrogatories were filed and, together with a copy of said order, served upon the defendant Dodd. Dodd appeared and answered, and, upon the trial, judgment was rendered against him.

On the day of the trial, the Sanders-Swafford Company being in default, a judgment for the amount demanded in the complaint was entered against the corporation for want of an answer. As first prepared and signed by the circuit judge, the judgment entry contained no reference to any attached property, nor did it refer in any way to the garnishee defendant. During the trial of the action against the garnishee he moved the court for an order dismissing the proceedings upon the ground that the entry of a judgment against the principal defendant, which contains no order for the sale of attached property, operates to discharge the attachment lien and releases the garnishee from any liability growing out of the attachment proceedings. At the same time the plaintiffs applied to the court for permission to amend the judgment by inserting therein an order for the sale of the property attached in the action. Defendant's motion was denied, and plaintiffs were permitted to amend. Thereupon a second judgment entry, which included an order for the sale of attached property, was signed by the court and entered in the circuit court journal. This ruling, the garnishee contends, was erroneous.

Section 308, Or. L., provides:

"If judgment is recovered by the plaintiff, and it shall appear that property has been attached in the action * * * the court shall order and adjudge the property to be sold to satisfy the plaintiff's demands."

By force of this statute it has been the uniform holding of this court that when property has been attached and judgment in the action is recovered by the plaintiff, the court must order and adjudge that the property attached be sold to satisfy the plaintiff's demand and that entry of a judgment in favor of the plaintiff and against the principal defendant, which fails to direct the sale of attached property, operates, because of such failure, as a waiver and discharge of the attachment lien. See Bremer v. Fleckenstein, 9 Or. 266; Moore Mfg. Co. v. Billings, 46 Or. 403, 80 P. 422; Mertens v. Northern State Bank, 68 Or. 273, 135 P. 885; Fraley v. Hoban, 69 Or. 180, 133 P. 1190, 137 P. 751; Smith v. Dwight, 80 Or. 1, 148 P. 477, 156 P. 573, Ann. Cas. 1918D, 563. But, where the property attached consists of a debt which has matured and is due, there is no statutory authority for its sale, and an order directing the sale of such debt would be a nullity. See Murphy v. Bjelik, 87 Or. 329, 169 P. 520, 170 P. 723, where this court, speaking through Mr. Justice Harris, said:

"Construing sections 233, 234, and 308, L. O. L., together it is plain that section 308 does not contemplate an order directing the sale of a debt which has matured and is due; but it is collected for the plaintiff by the sheriff in the manner pointed out by section 234. Whitney v. Day, 86 Or. 268, 168 P. 295."

Applying that principle to the facts in this case, if the money received by Dodd from said sale was, while in his possession, subject to garnishment, as contended for by plaintiff, the statute made it his duty, upon demand, to immediately pay the same over to the sheriff, so that it could be applied in satisfaction of plaintiff's judgment. His possession of the money, therefore, coupled with his refusal to pay it over to the sheriff, the amount being definite and certain, made it the duty of the sheriff, under section 234, Or. L., without any order for the sale of attached property, to "levy on the property of the garnishee for the amount thereof * * * as if the execution was against the property of the garnishee."

But regardless of these considerations, even if an order for the sale of attached property had been necessary, it was clearly within the power of the court to grant the amendment, since all of the parties, whose rights could be affected by the amendment, were before the court and had notice of the proposed amendment, and none of them had in any manner changed his position or done any act in reliance upon the original judgment entry.

It is within the inherent power of circuit courts of this state, in any proper case, at any time during the term, to modify or amend, set aside or vacate any order, judgment, or decree made by said court during said term. Ladd & Tilton v. Mason, 10 Or. 308; Deering v. Quivey, 26 Or. 556, 38 P. 710; Ayers v. Lund, 49 Or. 303, 89 P. 806, 124 Am. St. Rep. 1046; Zelig v. Blue Point Oyster Co., 61 Or. 535, 113 P. 852, 122 P. 756; Silliman v. Silliman, 66 Or. 402, 133 P. 769; First Christian Church v. Robb, 69 Or. 283, 138 P. 856; Anderson v. Anderson, 89 Or. 654, 175 P. 287; School District No. 1 v. Astoria Const. Co., 97 Or. 238, 190 P. 969.

Defendant further contends that the description contained in the amended judgment entry of the attached property which the court ordered to be sold was so indefinite and uncertain that it is impossible to determine therefrom what property was directed to be sold. What we have already said disposes of this contention, for, since no order for the sale of attached property in this case was necessary, the objection to the sufficiency of the judgment entry for lack of such description is untenable.

At the conclusion of the taking of the testimony the plaintiffs and the defendant each moved for a directed verdict. The court refused to direct a verdict in favor of either party and submitted the issues involved to the jury for their determination. The jury found for the plaintiffs. Defendant assigns the refusal of the court to direct a verdict in his favor as error.

It is settled by the decisions of this court that, where the plaintiff and ...