Hustad v. Reed

• Decision Date: 17 February 1958
• Docket Number: No. 9592,9592
• Citation: 321 P.2d 1083,133 Mont. 211
• Parties: H. F. HUSTAD, Plaintiff and Respondent, v. Lyman J. REED and Marie C. Reed, Defendants, and Stephen W. Mosher and Richard M. Mosher, Appellants.
• Court: Montana Supreme Court

Page 1083

321 P.2d 1083

133 Mont. 211

H. F. HUSTAD, Plaintiff and Respondent, v. Lyman J. REED and Marie C. Reed, Defendants, and Stephen W. Mosher and Richard M. Mosher, Appellants.

No. 9592.

Supreme Court of Montana.

Feb. 17, 1958.

Paul W. Smith, David R. Smith, J. Miller Smith, Chadwick H. Smith, Helena, J. Miller Smith, argued orally, for appellant.

H. J. Luxan, Jr., A. W. Scribner, Helena, H. J. Luxan, Jr. argued orally, for respondent.

PHILIP C. DUNCAN, District Judge, sitting in place of BOTTOMLY, Justice.

This is an appeal from a judgment in proceedings supplemental to execution under the provisions of R.C.M.1947, Title 93, Chapter 59, wherein appellant garnishees, Mosher, were ordered to pay plaintiff Hustad the sum of $3,615.36 in satisfaction of a default judgment for $3,171.90, plus interest and costs plaintiff had against defendants Reed.

On April 9, 1952, plaintiff obtained the default judgment for treble rents in an unlawful detainer action. So far as appears from the record before the court nothing further was done until plaintiff had writ of execution issued January 25, 1955. Thereafter service of the writ and notice of garnishment was had upon Richard M. Mosher, Stephen W. Mosher, and the Union Bank and Trust Company on February 17, 1955, February 24, 1955, and March 1, 1955, respectively, attempting thereby to levy upon a legacy of $5,000 bequeathed to defendant, Marie C. Reed, by her late mother, Amelia H. Mosher. Garnishees Mosher answered in effect that Marie had assigned her share of the estate to the Union Bank and Trust Company, and the Bank answered in effect that it had an assignment of Marie's share of the estate in an estimated amount of $3,000 upon which it had advanced $2,200 plus interest. On June 1, 1955, plaintiff initiated the proceedings supplemental to execution and the matter was heard June 8, 1955. At the conclusion of the hearing on that day, the court pronounced orally from the bench its determination and formal written judgment was entered June 23, 1955.

From the court records and files of the estate of Amelia H. Mosher, deceased, which were considered by the trial court and are now before us, it appears that the estate was administered in the same court in which the proceedings appealed from were had; that deceased died testate February 3, 1954; that her will was executed March 18, 1953; that on February 26, 1954, the will was admitted to probate and the deceased's two sons, Stephen W. and Richard M. Mosher, were appointed and qualified as the executors; that the will bequeathed $5,000 to decedent's daughter, defendant, Marie C. Reed, $100 each to two other children, and the residue of the estate to the two sons named; that the estate consisted of about $600 in money and about $45,000 in ranch property, chiefly lands and livestock; that on January 28, 1955, the executors filed their first and final account and their petition for final distribution and report accompanying the account showing, among other things, total receipts of $22,355.17, including $5,178.29 advanced by the executors, disbursements in the same amount with no cash on hand, no money paid in or disbursed for Marie or the two other legatees, the ranching property on hand for distribution, the terms of the will, and stating that the legatees and devisees were entitled to distribution of their respective shares of the estate, and praying that distribution be made; that on February 11, 1955, the Court entered its decree of settlement of final account and distribution finding, among other things, that the will bequeathed to Marie $5,000, to two others $100 each, and the residue of the estate to Stephen W. and Richard M. Mosher, that Marie was entitled to the sum of $5,000, the two other legatees to $100 each, that Stephen W. and Richard M. Mosher were entitled to the residue of the estate, but because there was no cash they should be required to advance the same to pay the three legacies, and then ordering, adjudging and decreeing that the final account was allowed, approved and settled, the sum of $5,000 was thereby distributed to Marie, two sums of $100 each were thereby distributed to the two other legatees, and all of the residue of the estate was thereby distributed in kind to Stephen W. and Richard M. Mosher.

From the evidence adduced at the hearing on June 8, 1955, it appears that until service of the writ of execution and notice of garnishment on February 17, February 24, and March 1, 1955, on appellants Mosher and the Union Bank and Trust Company, none of them had any actual knowledge of the judgment against Marie C. Reed and her husband; that in September 1954, by three checks signed, 'Mosher Livestock by Richard M. Mosher', each containing a notation on their face, 'Partial Distribution Amelia H. Mosher Estate', a total of $2,000 was paid to Marie C. Reed; that on November 9, 1954, Marie C. Reed executed to Union Bank and Trust Company a written assignment of all of her interest in Amelia's estate and on the same day the executors accepted it in writing as to the balance of Marie's distributive share in the estate; that between November 9, 1954, and January 17, 1955, inclusive, the Bank paid to Marie C. Reed on the assignment a total of $2,200; that on March 4, 1955, Richard M. Mosher paid the Bank the $2,200, plus $6.96 accrued interest, and took a receipt therefor from the Bank made to himself and Stephen as co-executors of the estate; that the executors in February 1955, discovered for the first time a promissory note dated June 15, 1950, made by Marie C. Reed to Amelia H. Mosher for the principal sum of $3,931.42, plus interest at the rate of 2 percent per annum, payable on demand, and, as such executors, as of February 15, 1955, endorsed the note to themselves as individuals and credited thereon the sum of $800; that the note was never mentioned in any inventory and appraisement or any of the other court records or files in the estate of Amelia H. Mosher, deceased.

There are a number of specifications of error, but they all resolve themselves into the question as to whether the district court had the power to make the judgment it did.

The judgment was made in proceedings supplemental to execution, as stated, and in this case was made pursuant to the authority of R.C.M.1947, Sec. 93-5906, reading:

'The judge or referee may order any property of a judgment debtor, not exempt from execution, in the hands of such debtor or any other person, or due to the judgment debtor, to be applied toward the satisfaction of the judgment.'

It is well-settled in Montana that this statute may be made the basis of an order, such as we have here, only when the supplementary proceedings result in the discovery of property or assets in the hands of the third person which indisputably belong to the debtor. If the ownership of the property is in dispute the court is powerless and completely without jurisdiction to make an order directing its delivery to the creditor. If there is a denial, the office of the court is not to determine whether the denial is good or bad, true of false, but may only invoke the provisions of R.C.M.1947, Sec. 93-5907, by ordering that an action be instituted to determine the fact in dispute, or discharge the garnishee. Wilson v. Harris, 21 Mont. 374, 54 P. 46; Johnson v. Lundeen, 61 Mont. 145, 200 P. 451; Brindjonc v. Brindjonc, 96 Mont. 481, 31 P.2d 725; Letz v. Letz, 123 Mont. 494, 215 P.2d 534.

Plaintiff admits the correctness of these rules but asserts that they are inapplicable here, maintaining that where a denial is based on fallacious legal reasoning or the undisputed facts disclose an indebtedness there is no denial at all, citing Finch v. Finch, 12 Cal.App. 274, 107 P. 594, 598; Milliken v. Mannheimer, 49 Minn. 521, 52 N.W. 139; Davis v. Spencer, 87 Mont. 12, 285 P. 193.

Plaintiff initially contends appellants Mosher did not deny the indebtedness of the estate to Marie C. Reed, but in fact confessed it and attempted to assert a personal claim against her as justification for their refusal to comply with the writ. Plaintiff bases this assertion upon the circumstance that the records of the estate show that no money was advanced to the estate to pay Marie's legacy or paid direct from the estate to her for that purpose, and the various documents filed with the court by appellants and entered by the court in the distribution proceedings show the estate owed Marie the bequest on entry of the decree of distribtion, and the evidence at the hearing was that all payments made to Marie were paid personally by appellants from their separate funds prior to decree and none from the estate thereafter.

One answer to this is that plaintiff's argument presupposes that appellants' personal claim against Marie does not attach to or involve the indebtedness of the estate to Marie on account of the legacy, or, if it does, it is inferior as a matter of law to that of plaintiff thereto; a supposition that is erroneous. Appellants' claim against the indebtedness due from the estate to Marie is superior under well-recognized principles of law.

First, the evidence is undisputed that appellants had no actual knowledge of the judgment against Marie until service of the writ, which was after decree of distribution. As to any assertion that the judgment itself constituted a lien prior in time to any claim of appellants on the indebtedness of the estate to Marie for her legacy, or operated in some other chimerical way, as by constructive notice to appellants, so as to give plaintiff a superior right to the indebtedness, attention is called to the only relevant statutes, R.C.M.1947, Secs. 93-5708 and 93-5710, declaring the effect of docketed judgments. The only lien created is against the real property of the debtor and it follows that any incident of constructive notice would apply only to real property. Here only personal property is involved, the indebtedness of the estate of...