Murphy v. Merchants Nat. Bank of Mobile

• Citation: 200 So. 894,240 Ala. 688
• Decision Date: 20 February 1941
• Docket Number: 1 Div. 125.
• Parties: MURPHY v. MERCHANTS NAT. BANK OF MOBILE ET AL.
• Court: Supreme Court of Alabama

200 So. 894

240 Ala. 688

MURPHY v. MERCHANTS NAT. BANK OF MOBILE ET AL.

1 Div. 125.

Supreme Court of Alabama

February 20, 1941

Rehearing Denied March 20, 1941.

Appeal from Circuit Court, Mobile County; Claude A. Grayson, Judge.

Suit by the Merchants National Bank of Mobile against John G. Murphy as endorser and maker of promissory notes, wherein garnishments were issued to the Fidelity & Phenix Fire Insurance Company of New York and others in aid of suit. The suit was transferred to the equity docket, and defendant Murphy filed a bill in equity, as complainant, against the Merchants National Bank of Mobile, as respondent, to which the Merchants National Bank filed a cross-bill. From a decree on exceptions to the report of the register on reference, and a final adverse decree, complainant (cross-respondent) Murphy appeals.

Reversed and remanded with instructions.

Harry T. Smith & Caffey, of Mobile, for appellant.

McCorvey McLeod, Turner & Rogers, of Mobile, for appellee.

Pillans Cowley & Gresham, of Mobile, for garnishees.

THOMAS Justice.

The appeal presents questions touching the several garnishees complainant and as respondent to the cross-bill, the Merchants National Bank of Mobile, as respondent and cross-complainant against Murphy and the garnishees.

The named garnishees were necessary parties in order that a final judgment might be rendered against all parties in interest, according to their respective liabilities and as insurers of the property in question. The garnishees were brought in with Murphy as necessary parties by the answer and cross-bill of the Merchants National Bank of Mobile, appellee.

The final judgments being in favor of Murphy in the Fidelity-Phenix suit, judgments in favor of Murphy were entered in the other six suits in the respective amounts for which the garnishees subscribed in the policy of insurance, plus interest under Sections 8563-8564.

In each of the seven suits, interest was calculated at the statutory rate, the policy itself not containing an undertaking on the part of the underwriters to pay interest. Fidelity-Phenix Fire Ins. Co. of New York v. Murphy, 231 Ala. 680, 166 So. 604; Id., 299 U.S. 557, 57 S.Ct. 19, 81 L.Ed. 410.

The litigation between Murphy and Fidelity-Phenix ended on October 12, 1936, whereon the Supreme Court of the United States denied the Company's application for a writ of certiorari. Thereupon, in accordance with the stipulation, judgments were entered on October 28, 1936, in the six other cases, as appears from the statements set out in the record.

It is the insistence of the garnishees that when these judgments were entered, the garnishees were faced (1) with a claim of Murphy's counsel, for their attorneys' fees; (2) a writ of garnishment issued out of the United States District Court on a judgment therein rendered against Murphy; (3) the writ of garnishment issued by the Merchants National Bank in the main cause now pending before this court; and (4) the payment of the judgments themselves. The garnishees, on the next day after rendition of these judgments, i. e., October 29, 1936, placed a sum of money with their counsel, sufficient to pay in full all the judgments against them. On November 3d motions for payment of the attorneys' fees of Murphy's counsel were granted by the circuit court, and upon the same day counsel for the garnishee paid those attorneys' fees, which totaled $8,217.91.

The item chargeable to the Fidelity-Phenix Fire Ins. Co. of New York of $371.90, being the penalty assessed by this Court upon the affirmance of the judgment in favor of Murphy ( Fidelity-Phenix Fire Ins. Co. of New York v. Murphy, 231 Ala. 680, 166 So. 604), does not carry interest. This is the effect of our recent decisions in Montgomery Light & Water Power Co. v. Thombs, 204 Ala. 678, 87 So. 205; Jefferson County v. City of Birmingham, 235 Ala. 199, 203, 178 So. 226; Jean v. Sandiford, 39 Ala. 317.

The respective sums disclosed by the several answers that were uncontested must be taken as true. It remains only to declare the liability vel non of said garnishee's interest under the statutes which obtain.

In respect to liability generally of a garnishee for interest pendente lite, the majority rule is thus stated by the courts, aside from statutes, in 28 Corpus Juris, p. 247, § 342, as follows: "The prevailing rule is that a garnishee is not chargeable with interest in favor of plaintiff during pendency of the proceedings, unless he has contracted to pay interest, or actually receives interest, or continues, after service of the writ, to use the money due, or wrongfully detains it, or there has been collusion or unreasonable delay on his part. In some jurisdictions, however, where a garnishee may have leave at any time to bring the debt into court, he is chargeable with interest from the time it becomes due until it is paid if he does not so relieve himself from further responsibility. * * *."

We are thus brought to a consideration of our statute, Michie's Code § 8068, which reads as follows: "When the garnishee admits indebtedness or liability to the defendant, and the defendant has not executed bond for the dissolution of the garnishment as provided in this chapter, the garnishee may, by order of the court first had and obtained, pay the amount of such indebtedness or liability, or so much thereof as the court may direct, into the hands of the clerk, to be held subject to the judgment in the cause; and such payment has the effect to discharge the garnishee from liability for the amount so paid and interest subsequently accruing thereon, but does not prevent the interposition and trial of collateral issues, as provided in this article."

The note to said section reads as follows: "After service of the garnishment, the garnishee stands in the relation of a stakeholder, and is supposed to be indifferent as between the plaintiff and the defendant. From all personal liability, and from all peril of future controversy, he may protect himself by payment into court of the debt he may owe, or by the delivery of such property in his hands, as may be subject to the garnishment. Drake on Attach. section 661; Montgomery Gas Light Co. v. Merrick & Sons, 61 Ala. 534, 536."

Counsel for garnishee admit that the question of liability of garnishee for interest "pendente lite, in the circumstances, is without precedent" in this jurisdiction. The nature of garnishees' liability to Murphy was liability under policies of insurance on which suit was brought and judgment rendered in this court. Harry J. Frahn Co. Inc., v. National Realty Management Co., Inc., 236 Ala. 681, 185 So. 162. The garnishees did not contract to pay interest; and that liability attached to the judgment under Code §§ 8563-8565. The latter section is as follows: "Judgments and decrees for the payment of money other than costs, bear interest from the day of rendition."

In Sovereign Camp, W. O. W. v. Reed, 208 Ala. 457, 94 So. 910, this court held that in a suit on a mutual benefit certificate, plaintiff should on the trial (1) be given interest from the date defendant filed initial pleading resisting payment to the date of the final judgment; (2) after judgment, or under the statutes that obtain, the amount of the judgment is determined from the value of the certificate of insurance with interest to date of rendition of judgment of affirmance in this court. Kinney v. Pollak, 223 Ala. 654, 137 So. 669; City of Birmingham v. Simmons, 222 Ala. 111, 130 So. 896, 74 A.L.R. 766.

It was agreed that the final judgment of liability in the suit against the Fidelity-Phenix would govern the liability of the other six suits. In other words, each case was governed as to the amount of the liability by its policy of insurance, credits and interest at the rate that obtained.

What of the "circumstances" that it is alleged took the garnishees without our statute, Section 8068 of the Code, and placed them within the majority rule as to interest touching a garnishee that is a mere stakeholder? The general rules of payments and credits relieving of liability by garnishee are thus stated in 28 Corpus Juris, p. 403, § 632: "Payment or other satisfaction by the garnishee of a final judgment rendered against him by a court having jurisdiction discharges the garnishee from further liability to plaintiff. Also such payment, to the amount thereof, extinguishes the indebtedness of the garnishee to defendant [White v. Simpson, 107 Ala. 386, 18 So. 151] and constitutes protection to the garnishee against a suit by defendant or his privies on the same cause of action. * * * In order that the garnishee, in an action against him by defendant or his assignee, may take advantage of payment of the judgment in the garnishment proceedings he must show that the court in such proceedings obtained jurisdiction, that judgment was rendered against defendant, that the debt for which the garnishee was charged and which he paid is identical with the debt in controversy, and that he was compelled to pay under due process of law. In other words in order to afford the garnishee protection from a second payment of the same debt or liability, payment under the garnishment proceedings must not have been voluntary. * * *."

See Bessemer Sav. Bank v. Anderson, 134 Ala. 343, 32 So. 716, 92 Am.St.Rep. 38; Mason v. Crabtree, 71 Ala. 479.

To answer the question of liability vel non of these garnishees, it should be here stated that we have found in the record no circumstances set up which would relieve them of interest.

Instead of availing themselves of the provisions of Section 8068 of the Code, whereby garnishees would have been relieved of interest on the amount of the debt admitted to be due by each of them to defendant Murphy, they placed...