Lancashire Ins. Co. v. Corbetts

• Decision Date: 03 April 1897
• Citation: 165 Ill. 592,46 N.E. 631
• Parties: LANCASHIRE INS. CO. v. CORBETTS.
• Court: Illinois Supreme Court

165 Ill. 592

46 N.E. 631

LANCASHIRE INS. CO.

v.CORBETTS.

Supreme Court of Illinois.

April 3, 1897.

Appeal from appellate court, First district.

Action by Hugh R. Wilson and others, copartners as Wilson Bros. & Co., against John Corbetts. A judgment charging the Lancashire Insurance Company as garnishee having been affirmed by the appellate court (62 Ill. App. 236), the garnishee appeals. Reversed.

M. H. Beach, for appellant.

Flower, Smith & Musgrave, for appellees.

CARTER, J.

The appellant insurance company had its domicile of origin in Great Britain, but, by compliance with the laws of each of the states of Illinois and Wisconsin relating to foreign corporations, it transacted business and kept agents and property in both states. In a proceeding by foreign attachment in the circuit court of Cook county against one Corbetts, who lived in Wisconsin, appellees Wilson Bros. & Co. on October 6, 1892, garnished appellant, by process that day served on its agent in Chicago, for a claim of Corbetts against it upon an insurance policy on a stock of goods in Wisconsin, which goods had on October 3d been partially destroyed by fire. Afterwards, but in the same month, garnishment proceedings were instituted in Wisconsin by one Dowling, a creditor of Corbetts, and appellant, by service upon its agent in Wisconsin, was garnished for the same debt owing to Corbetts. Under the facts as they appear, we must hold that the effect of what was done in Wisconsin was that appellant set up in proceedings there the prior garnishment in Illinois, alleging that the jurisdiction here was prior and exclusive; but it was adjudged by the Wisconsin court (a court of competent jurisdiction), following decisions of the supreme court of that state that the circuit court of Cook county, Ill. was without jurisdiction in the premises, and that its proceedings were no defense to the suit in Wisconsin. Judgment was then rendered against the garnishee, which it paid under the compulsion of the judgment and of the laws of Wisconsin, which provided that no insurance company against which any judgment existed and remained unpaid 60 days after its rendition should issue any new policy in that state, and prescribed heavy penalties against officers and agents who should violate the statute. After the first answer in this cause, filed by the garnishee in the Cook county circuit court October 6, 1872, denying all indebtedness to Corbetts, appellees took no further action for nearly two years, nor until the judgment in Wisconsin had been paid, when they filed additional interrogatories. By an amended answer to these interrogatories, appellant set up the Wisconsin proceedings, statute, judgment, and the payment of the judgment; also, that, at the time of the service of the writ in the case at bar, no proofs of loss had been made by Corbetts, and therefore the alleged debt was contingent and uncertain, as it was not, by the policy, payable until 60 days after receipt of proofs of loss, and that it was not, therefore, subject to garnishment. Upon a trial by the court upon agreed facts, the defense was overruled, and judgment rendered against appellant for the amount shown by its answer to have become due and payable to Corbetts under the policy and by virtue of the fire loss. The appellate court having affirmed the judgment, appellant now brings the record to this court, insisting that the law has not been properly adjudged to it in the courts below; that, having fully discharged its duty under the laws of both states, it should not be compelled to pay the debt twice.

The arguments of counsel have been chiefly addressed to the second question, viz. whether, at the time of the service of the writ upon the garnishee, the alleged debt to Corbetts was anything more than a contingent liability, dependent upon the compliance by Corbetts with the provision of the policy requiring proofs of loss to be furnished by him to appellant within a certain time. But, from the view we take of the case, it will not be necessary to consider this question. We are free to say, at the outset, that we cannot look with favor upon any construction of the law which would impose a double liability upon a garnishee who, without collusion, fraud, or negligence, has undertaken to fully discharge his duties under apparently conflicting laws of different jurisdictions. It is, of course, true that every state must enforce its own laws within its own borders for the protection of its citizens; but either the law, or the construction of it by the courts, in one or the other of the states, is contrary to natural justice, which requires of a garnishee, standing indifferent between creditors contending in different states for the same debt, the payment of that debt more than once. It seems to be the doctrine in Wisconsin, as laid down by the supreme court of that state in Renier v. Hurlbut, 81 Wis. 24, 50 N. W. 783, that in garnishment proceedings the jurisdiction of the court is dependent upon the situs of the debt sought to be appropriated to the payment of the plaintiff's demand, and that, if the situs of the debt is without the jurisdiction, the court has no power to proceed, or to render any judgment against the garnishee. Now, it is the generally accepted doctrine that, so far as so intangible a thing as a debt can be held to have a situs, if follows the creditor, or owner of the credit, and is at his domicile. Holbrook v. Ford, 153 Ill. 633, 39 N. E. 1091;Pomeroy v. Rand-McNally Co., 157 Ill. 176, 41 N. E. 636;Manufacturing Co. v. Lang, 127 Mo. 242, 29 S. W. 1010; Story, Confl. Laws, § 362; Tank-Line Co. v. Collier, 148 Ill. 259, 35 N. E. 756. And the notion that the situs of the debt determines the jurisdiction of the court in garnishment has led to the creation of the fiction that for the purposes of garnishment the situs of the debt is changed, and becomes the place where the garnishee lives, and not at the domicile of his creditor. As before said, the proceedings must be had in the jurisdiction of the garnishee, where service can be had upon him, but it does not at all follow that it is because that is the situs of the debt. Thus, it is said by Shinn, in his late work on Attachment and Garnishment (page 863): ‘Foreign corporations are subject to the process of garnishment in all cases in which an original action may be commenced against them in the courts of this state to recover the debt in respect to which the garnishment process is served. This is in harmony with the rule before stated, that the demand must be one on which an action at law could be brought by the principal debtor.’

Take the case at bar. Actual service of process in the different suits could be and was had on the appellant company in both states, Illinois and Wisconsin, and it was subject to garnishment in both states; and it would have been subject to similar proceedings in any other states in which, in compliance with their laws, it had established itself for business purposes. Evidently, however, this would not be so for the reason that the debt had a situs in each and all of such states at one and the same time, when it also had a situs at the domicile of the creditor of the garnishee, but the true reason is that the garnishee insurance company was liable to suit by its creditors for the collection of the debt in each and all of the states where it had so established itself for business purposes. To hold that the situs of the debt determines the question of jurisdiction is practically to hold that a debt cannot be garnished at all in foreign attachments, for the very ground of a foreign attachment is the nonresidence of the principal defendant, who, in cases of garnishment, is the creditor of the garnishee; and, if the debt which the garnishee owes to his creditor can be reached only by proceeding had where such creditor resides (that is, where the debt has its situs), it cannot be reached in foreign attachment at all. This is clearly pointed out in an exhaustive opinion by Pitney, V. C., in Insurance Co. v. Chambers, 53 N. J. Eq. 468, 32 Atl. 663, where he shows the utter fallacy of the reasoning used to support decisions that jurisdiction in such cases depends on the situs of the debt attached or garnished. A further reason readily presents itself, in the fact that no proceedings in garnishment of any kind can be maintained where the principal defendant has his domicile (that is, at the situs of the debt), unless the debtor to be served with garnishee process is within the jurisdiction of the court. The principal defendant in attachment proceedings may, except for the purpose of obtaining a personal judgment, be brought into the court by constructive service, but jurisdiction of the garnishee can be obtained only be actual service of process. 2 Shinn, Attachm. 1000. Thus, it is seen that in garnishment proceedings the place of the residence of the garnishee is of far more importance than the place of residence of his creditors, in obtaining jurisdiction to render a judgment against a garnishee. Id. § 490. And it has been expressly decided by this court that a foreign corporation, having property and agents in this state and transacting business here, may be garnished in our courts for a debt due a resident of the state of its domicile of origin. Railroad Co. v. Crane, 102 Ill. 249. See, also, Railroad Co. v. Dougan, 142 Ill. 248, 31 N. E. 594. And the reason given is that the foreign corporation had become subject to the process of our courts. And while the courts of Wisconsin and some other states seem to hold to the doctrine that, where there is no personal service of process on the principal defendant, the proceedings must be instituted in the jurisdiction where the debt has its situs (that is, the domicile of the principal defendant), or else at the domicile of origin of the garnishee corporation, we are satisfied that the great weight of modern authority is otherwise, and is in harmony...