Knudson v. Anderson

• Decision Date: 09 April 1937
• Docket Number: No. 31139.,31139.
• Citation: 199 Minn. 479,272 N.W. 376
• Parties: KNUDSON v. ANDERSON et al. (BUILDERS & MANUFACTURERS MUT. CASUALTY CO. et al., Garnishees.)
• Court: Minnesota Supreme Court

272 N.W. 376

199 Minn. 479

KNUDSON v. ANDERSON et al. (BUILDERS & MANUFACTURERS MUT. CASUALTY CO. et al., Garnishees.)

No. 31139.

Supreme Court of Minnesota.

April 9, 1937.

Appeal from District Court, Hennepin County; F. E. Reed, Judge.

Action by Theodore B. Knudson against E. R. Anderson and others, wherein plaintiff garnisheed the Builders & Manufacturers Mutual Casualty Company and the Hardware Mutual Casualty Company. From a judgment on an order granting the motion of the Hardware Mutual Casualty Company for judgment on the pleadings, plaintiff appeals.

Reversed.

Robert J. McDonald and Wm. H. DeParcq, both of Minneapolis, for appellant.

Sweet, Johnson & Sands, of Minneapolis, for respondent Hardware Mut. Casualty Co.

Stinchfield, Mackall, Crounse, McNally & Moore, of Minneapolis, for respondent Builders & Manufacturers Mut. Casualty Co.

JULIUS J. OLSON, Justice.

Plaintiff appeals from a judgment in favor of the garnishee Hardware Mutual Casualty Company, entered pursuant to an order granting its motion for judgment on the pleadings.

Plaintiff, a guest passenger in defendant Anderson's car, suffered personal injuries in a collision between the automobile driven by said Anderson and one driven by defendant Willard Hennings. To recover damages therefor, he brought an action against them, also joining Charles H. DeFoe and O. F. Hennings, father of defendant Willard. A verdict was directed for DeFoe on the ground that at the time of the happening of the accident Willard was not acting within the scope and course of any employment by DeFoe. The issue as to the ownership of the car driven by Willard (whether in DeFoe or O. F. Hennings) at the time of this accident was not determined, the court being of opinion that this was a fact issue. The jury found for plaintiff as against the drivers (Anderson and Willard Hennings), but exonerated O. F. Hennings. Judgment was later entered upon the verdict. An execution having issued and having been returned unsatisfied, proceedings in garnishment were instituted, it being plaintiff's claim that the garnishees herein had issued to or in behalf of the respective defendants policies of liability insurance. At the time of disclosure, the insurance underwriter of Anderson disclosed liability and that such liability was adequate to cover the entire verdict. The garnishee here involved, Hardware Mutual Casualty Company, denied liability. The trial court lucidly states the issues presented and its reasons for the conclusion reached in its memorandum, from which we quote:

"After the disclosure was completed the supplemental complaint in this action was served, in which it is alleged that the policy of insurance issued to DeFoe also covered the defendant Willard Hennings. The defendant insurance company answered, and there was a reply. And it is upon these pleadings that the garnishee contends it is entitled to judgment. Whether or not that contention is sound depends, of course, upon the language of the statutes of the state prescribing the conditions under which garnishment may be made. Section 9359, Mason's Minn.Stat.1927, reads: `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.' Section 9360, Mason's Minn.Stat.1927, provides: `and money or any other thing due or belonging to the defendant may be attached by this process before it has become payable, if its payment or delivery does not depend upon any contingency.' Section 9361, same volume, provides: `No person or corporation shall be adjudged a garnishee in any of the following cases: 1. By reason of any money or other thing due to the defendant, unless at the time of the service of the summons the same is due absolutely, and without depending on any contingency.' * * *

"Willard Hennings is a stranger to the insurance policy unless the ownership of the automobile in question is in DeFoe. On the face of the pleadings this ownership is disputed, plaintiff alleging the ownership and the garnishee denying it.

"On this state of facts it is plain that no such situation exists as is contemplated by the statute governing garnishments. There was no indebtedness owing at the time of the garnishment. There is no indebtedness absolute and without contingency, and hence there can be no valid garnishment.

"Before there can be an indebtedness existing between Willard Hennings and the garnishee there must be a legal determination of their rights, and this action must be prosecuted by Hennings and not by his creditor. See Stanek v. Libera, 73 Minn. 171 . Wilson v. Geiss, First State Bank of LeSueur Center, etc., 153 Minn. 211 ." (Italics supplied.)

We shall discuss the issues thus presented. The first and, we think, determinative question is whether the debt, if such there be on the part of the garnishee to defendant Willard, depends upon "any contingency" within the meaning of Mason's Minn.St.1927, § 9361.

Many cases have been before this court in proceedings similar to those had in the instant case. The section upon which such proceedings are founded is 2 Mason Minn. St.1927, § 9367, which reads as follows:

"Proceedings when debt or title is disputed — If the garnishee hold the garnished property by a title that is void as to defendant's creditors, he may be charged therefor although the defendant could not have maintained an action against him therefor; but in this, and in all other cases where the garnishee, upon full disclosure, denies his liability as such, the plaintiff may move the court at any time before the garnishee is discharged, on notice to both the defendant and garnishee, for leave to file a supplemental complaint making the latter a party to the action, and setting forth the facts upon which he claims to charge him; and, if probable cause is shown, such motion shall be granted. The supplemental complaint shall be served upon both defendant and garnishee, either or both of whom may answer, and the plaintiff may reply. The issues thus made up shall be brought to trial and tried as in other actions."

The reasoning of the court may be summarized thus: Hennings is a "stranger" to the policy, and his insurance coverage is dependent upon establishment of ownership of the offending vehicle in DeFoe at the time of plaintiff's injury; that as this ownership is denied by the garnishee's answer, therefore its obligation rests and depends upon a future event which may or may not happen, hence there was no indebtedness "absolute and without contingency" when the garnishment summons was served; that determination of such title can only be had by suitable action to be prosecuted by Hennings and not by plaintiff as his creditor.

Liability, of course, hinges upon DeFoe's ownership of the car at time of accident. If that issue is affirmatively established, then the rider attached to the DeFoe policy, according to plaintiff's claim, being one of liability and not indemnity, was immediately effective as such, and as fully operative at time of accident as if the judgment in the main action were against the named assured. The rider, as far as here material, provides:

"Additional Assureds. The unqualified word `Assured' includes not only the Named Assured but also * * * any person * * * while legally using for business or pleasure and with the permission of the Named Assured, any automobile owned by the Named Assured."

1. So the question becomes: Is the establishment of this fact issue a "contingency" within the meaning of section 9361? That necessarily involves construction of that section in connection with section 9367. We are in duty bound to construe the statute "as a whole and so as to harmonize and give effect to all its parts." 6 Dunnell, Minn.Dig. (2d Ed. & Supps.1932, 1934) § 8951, and cases cited under note 65. "The logic of words should yield to the logic of realities." Dunnell, Minn. Dig.1932 Supp. § 8951, citing DiSanto v. Pennsylvania, 273 U.S. 34, 47 S.Ct. 267, 71 L.Ed. 524. Bearing in mind that garnishment "is a mode of attaching property to secure and make effectual any judgment that may be rendered in the main action to which it is ancillary"; that it is "in the nature of a creditors' bill to reach assets of the defendant * * * a proceeding against the garnishee for the benefit of the plaintiff" (3 Dunnell, Minn.Dig.[2d Ed. & Supp.1932] § 3949), it is not difficult to reach the conclusion that mere denial by the garnishee of a fact issue does not create a "contingency" within the statutory provision under discussion. If the construction contended for by the garnishee were to be adopted, an injured plaintiff who has gone so far as to secure judgment against an insured negligent defendant might be left without remedy. The value of Mason's Minn.St.1927, § 9367, might be wholly lost. A defeated hostile defendant, one perhaps without any financial responsibility, could and in many cases undoubtedly would seek to make for naught the very security that his insurance was...