Morris Plan Bank of Ga. v. Simmons

• Decision Date: 05 July 1946
• Docket Number: 15466.
• Citation: 39 S.E.2d 166,201 Ga. 157
• Parties: MORRIS PLAN BANK OF GEORGIA v. SIMMONS et al.
• Court: Georgia Supreme Court

39 S.E.2d 166

201 Ga. 157

MORRIS PLAN BANK OF GEORGIA v. SIMMONS et al.

No. 15466.

Supreme Court of Georgia

July 5, 1946

Rehearing Denied July 16, 1946.

Syllabus by the Court.

Under section 67, sub. f, of the Bankruptcy Act of 1898, as amended June 22, 1938, 11 U.S. C.A. § 107, sub. a, the filing of a petition in bankruptcy, followed by an adjudication, does not automatically nullify a lien obtained through legal proceedings within four months before the filing of such petition, but such lien is merely voidable, and must be treated as valid, unless it is attacked in an appropriate manner by the trustee in bankruptcy acting for the benefit of creditors, or by some other person having a right as against it under the bankruptcy act.

(a) Accordingly, parties suing in equity to set aside a default judgment rendered against them as garnishees, on the ground that the debtor of the party suing out the garnishment filed a petition in bankruptcy and was adjudicated a bankrupt within four months after institution of the garnishment proceedings, were not entitled to relief on that ground.

(b) Nor was the judgment on which such garnishment proceedings were based rendered null and void as to the garnishees by the debtor's discharge in bankruptcy; but notwithstanding such discharge, it continued to be a sufficient support for the garnishment and for the judgment as later rendered against the garnishees.

(c) Under the preceding rulings, the petition in equity did not state any cause for setting aside the judgment against the plaintiffs as defaulting garnishees, in so far as it was based upon any fact or matter touching the bankruptcy of the principal debtor.

2. Nor did the petition show any cause for the equitable relief sought, on the ground of 'mistake,' in that, on dissolution of the garnishment, the clerk of the court in which the garnishment case was pending notified the plaintiffs (garnishees) that they were released and were not required to answer.

(a) The fact that the garnishment was dissolved did not relieve the garnishees from answering, and there being no law requiring or authorizing the clerk of the court to issue such statement as to 'release,' it afforded no excuse for the failure of the garnishees to answer.

3. The fact that the plaintiff in garnishment also obtained a judgment against one of the sureties on the dissolution bond and thereafter had a levy made upon his property, did not constitute any reason for cancelling the execution against the garnishees, or for enjoining further proceedings thereunder. A party may pursue any number of consistent concurrent remedies against different persons until he shall obtain a satisfaction from some of them.

4. The intervention filed by such surety should meet the same fate as the petition.

(a) The court erred in overruling the general demurrers to the petition as amended, and to the intervention.

Henry C. Simmons and Louis Rosenberg, doing business as Simmons Plating Works, filed a suit in equity in the superior court of Fulton County, Georgia, against the Morris Plan Bank of Georgia. The petition as amended contained the following allegations: On April 28, 1944, a summons of garnishment was issued to the petitioners from the Civil Court of DeKalb County, Georgia, based upon a judgment theretofore obtained by the said bank in the civil court of Fulton County, against Ernest Frank Treadway; the garnishment being duly served on the petitioners on April 28, 1944. On May 4, 1944, the defendant Treadway having filed a dissolution bond, a release from the said garnishment was duly issued to the garnishees the petitioners herein, by the clerk of the civil court of DeKalb County, under the official seal of the said court. A copy of the release was attached to the petition as exhibit 'A' and made a part thereof, and was in the following language: 'State of Georgia, County of DeKalb. Case No. 10626. Clerk's office of the Civil Court of DeKalb County. Release of garnishee. This is to certify that the plaintiff's attorney has authorized me to issue a release to you as garnishee in the case of Morris Plan Bank of Georgia v. Ernest Frank Treadway. Therefore you are not required to make answer. Given under my hand and seal of office this 4 day of May, 1944. [Signed] Libby Hutchinson, Clerk, Civil Court of DeKalb County. To Louis Rosenberg & H. C. Simmons, t/a Simmons Plating Works, garnishee. [Seal of court.]' During the period from April 27, 1944, to the date of the filing of the petition in this case, the clerk of the civil court of DeKalb County, Georgia, had custody of the dockets of the said court in the absence of the judge thereof, and it was the duty of the clerk, upon request, to furnish to the public, and particularly to any person in any way involved in or connected with any case on the said dockets, information concerning the said case. The release above referred to was duly issued at the request of the defendant in said case, pursuant to such duty on the part of the said clerk, for delivery to the garnishees, in the absence of the said judge. On May 4, 1944, and for a number of years prior thereto, and up to the time of the filing of this petition, it was the custom of the said court for the clerk thereof, when a defendant in a garnishment proceeding filed a dissolution bond to deliver to the said defendant, for delivery to the garnishees, a release setting forth the status of the garnishees after the filing of such dissolution bond and his further duties, if any, in connection with such garnishment proceeding. Relying upon the said release so given, the said garnishees, the petitioners herein, did not make any answer to the said summons of garnishment. The said defendant Treadway filed his voluntary petition in bankruptcy, and was duly adjudicated a bankrupt, on May 3, 1944, and was duly discharged in bankruptcy on July 25, 1944. Notice of the said adjudication in bankruptcy of the said defendant was mailed by the referee in bankruptcy at Atlanta, Georgia, to the Morris Plan Bank of Georgia, to Houston White, as attorney for the said bank, and to Hewitt Chambers, clerk of the court in which the original judgment against Treadway was rendered, and upon which the garnishment proceeding was based, at the office of the said clerk, such notice having been mailed on June 21, 1944. The judgment upon which the garnishment proceeding was based was listed in the petition in bankruptcy of the said Treadway, and became null and void upon the discharge in bankruptcy of Treadway; and the lien of the said garnishment, having attached in less than four months prior to the adjudication in bankruptcy of Treadway, was dissolved and became null and void by virtue of the bankruptcy laws of the United States. Thereafter, and without any further notice whatsoever to the said garnishee, the petitioners herein, judgment by default was entered on September 6, 1944, against the garnishee, the petitioners herein, in the Civil Court of DeKalb County, Georgia, at the September, 1944, term thereof, and a fl. fa. was issued on the said judgment and recorded on the general execution docket, No. 125, page 236, in the office of the clerk of the superior court of Fulton County at Atlanta, Georgia, against the said petitioners in this action. Neither the said Henry C. Simmons nor the said Louis Rosenberg, the garnishees in the garnishment proceeding and the petitioners herein, knew of the entering of the said default judgment against them until some time in 1945, after several months and several terms of court had passed after the entering of the said judgment. The amount of the judgment so entered was $330.01 principal, $48.80 interest, $49.50 attorney's fees, and $23.50 costs of court. At the time of service of the said summons of garnishment, the garnishees had no property or effects belonging to the said Treadway in their possession or control, and since the service of the said summons no property or effects of the said Treadway have come into their possession or custody except wages earned as hereinafter set forth. At the time of service of the said summons of garnishment, the garnishees were indebted to the said Treadway in the sum of $47.57 gross, or $44.78 after the deduction of withholding taxes and social security taxes, for weekly wages for the week ending April 28, 1944; and of this the sum of $27.39 was exempt from garnishment and $17.39 was subject (week of seven days). Since the service of the garnishment, the garnishees have become indebted as follows: (Listing net weekly earnings subject to garnishment, except for bankruptcy, amounting to about $190.) The said Treadway terminated his employment with the garnishees, the petitioners herein, on July 24, 1944. He having been adjudicated a bankrupt on May 3, 1944, the sums earned after the week ending May 4, 1944, were not subject to garnishment. The said garnishment having been dissolved by the defendant's giving a dissolution bond, and a release having been issued to the garnishee by the clerk of the Civil Court of DeKalb County, the garnishees, the petitioners herein, did not withhold any of the said sums set forth in the petition, but paid all of the same to the said Treadway. A release from the summons of garnishment was officially issued to the garnishee, the petitioners herein, as above set forth, before the time for filing an answer to the said summons of garnishment, and no other summons was served on the petitioners herein; and relying upon the said release so issued, the garnishees, the petitioners herein, did not file an answer to the said summons of garnishment as aforesaid. The said judgment was entered by mistake, the petitioners herein having been prevented from filing their answer to the said summons of garnishment due to...