Rintala v. Shoemaker

• Decision Date: 22 August 1973
• Docket Number: No. 5-73 Civ. 80.,5-73 Civ. 80.
• Citation: 362 F. Supp. 1044
• Parties: Ailie RINTALA, Trustee, Plaintiff, v. Edward A. SHOEMAKER, Defendant.
• Court: U.S. District Court — District of Minnesota

362 F. Supp. 1044

Ailie RINTALA, Trustee, Plaintiff, v. Edward A. SHOEMAKER, Defendant.

No. 5-73 Civ. 80.

United States District Court, D. Minnesota, Fifth Division.

August 22, 1973.

COPYRIGHT MATERIAL OMITTED

Paul J. Louisell, Duluth, Minn., for plaintiff.

Reavill, Neimeyer, Johnson, Fredin, Killen & Thibodeau, by John J. Killen, Jr., Duluth, Minn., for defendant.

NEVILLE, District Judge.

The question presented is whether a Minnesota resident as plaintiff, suing in this court a resident of the State of Michigan as defendant on a wrongful death cause of action arising out of an automobile accident occurring in Florida, may obtain jurisdiction quasi in rem over defendant by garnisheeing the defendant's insurer which does business in Minnesota and most if not all states in the United States and by personal service on defendant in Michigan. Such meager case authority as exists is divided and the question has never been presented to nor decided by this court or by the Minnesota Supreme Court.

FACTS

Plaintiff, a Minnesota resident, is a trustee for the purposes of this wrongful death action and claims that due to defendant's negligent operation of a motor vehicle in Lake Worth, Florida on January 20, 1973, her husband, a passenger in the vehicle, sustained injuries which caused his wrongful death. Plaintiff, attempting "long arm" service on defendant at his home in Michigan, served defendant with a copy of the summons and complaint and also a copy of a garnishee summons which had been served on defendant's insurer Aetna Casualty and Surety Company, the garnishee, licensed to do business in Minnesota, pursuant to Minn.Stat. § 60A.19 by delivering a copy to the Commissioner of Insurance of the State of Minnesota. Aetna in response to interrogatories served under Minn.Stat. § 571.49 requested information concerning its contractual relationship with defendant. The insurer responded with this motion to dismiss the garnishee summons and to strike the interrogatories, admitting however to having issued an automobile liability policy to defendant which was in force at the time of the Florida accident. Aetna claims the policy is not a proper subject for garnishment and that plaintiff in essence is attempting to bootstrap herself into jurisdiction when she cannot constitutionally acquire proper in personam jurisdiction through long arm service.

Defendant moves to dismiss claiming insufficiency of service of process since he is a Michigan resident, the accident occurred in Florida and the assertion of personal jurisdiction over him by this court is a violation of due process.

It clearly appears that the only connection defendant has with the State of Minnesota is that his insurer is duly licensed to and does business here.

It is obvious that any attempt to secure in personam jurisdiction over the defendant simply by serving a summons and complaint on him at his home in Michigan is unavailing. Thus the issue for determination is whether valid quasi in rem jurisdiction has been acquired over property owned by defendant and held by the garnishee Aetna in Minnesota through the service of the garnishee summons on Aetna and the notice¹ of the pending action to Shoemaker.

The question is twofold. First, since this is a diversity case, the court must inquire whether the Minnesota Supreme Court, acting under its garnishment statutes, would classify Aetna's obligations to defend and indemnify defendant a res suitable for seizure in a quasi in rem proceeding; second, assuming such obligations are an attachable res, does the seizure conform with the requirements of due process.

1. The Propriety of the Garnishment Under Minnesota Law

The court in this diversity case is bound to follow the decisions of the Minnesota Supreme Court. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945); Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Only if the Minnesota court would find a garnishable res may this court do so. Federal Rule of Civil Procedure 64² "seems to fairly indicate that this Court is to adopt both the substantive and procedural law of Minnesota in regard to garnishment proceedings." Ospina v. Vanelli, 34 F.R.D. 151, 152 (D.Minn.1964); cf. Baxter v. United Forest Products Co., 406 F.2d 1120 (8th Cir. 1969), cert. denied 394 U.S. 1018, 89 S.Ct. 1635, 23 L.Ed.2d 42 (1969). Though the exact question presented here has never been decided by the Minnesota Supreme Court, various inferences can be drawn from the many Minnesota cases dealing with garnishment of intangibles despite no clear holding on the precise issue. The federal court may resort to any persuasive data that is available by fair implication from other related adjudications or by reference to the rules and policies which the Minnesota Supreme Court has sought to apply. Cold Metal Process Co. v. McLouth Steel Corp., 126 F.2d 185 (6th Cir. 1942).

Garnishment is "essentially a statutory remedy." Gustafson v. Johnson, 235 Minn. 358, 373, 51 N.W.2d 108, 116 (1952). Accordingly "authorities from other states and general statements in texts have little value without reference to the statutes upon which they are based." Id. at 373, 51 N.W.2d at 116. In Minnesota a debt is garnishable, and for the purposes of garnishment a debt has a situs wherever the garnishee may be found and could be sued by the defendant-creditor for the debt's recovery. Starkey v. Cleveland R. Co., 114 Minn. 27, 130 N.W. 540 (1911). See Harris v. Balk, 198 U.S. 215, 25 S.Ct. 625, 49 L.Ed. 1023 (1905), which relied on the Minnesota case of Harvey v. Great Northern Ry. Co., 50 Minn. 405, 52 N.W. 905 (1892), in reaching its decision. In Minnesota it long has been held that the garnishment statute is remedial in nature and is to be liberally construed to protect creditors. Knudson v. Anderson, 199 Minn. 479, 272 N.W. 376 (1937).

The clarity in the case law ceases however when defining which intangibles are subject to garnishment. Some very old cases hold that garnishment of insurance policies is improper until there is a proof of loss filed. Gies v. Bechtner & Kottman, 12 Minn. 279 (1867); Smaltz Goodwin Co. v. Poppe, Inc., 172 Minn. 43, 214 N.W. 762 (1927). In Swedish-American Nat'l Bank v. Bleecker, 72 Minn. 383, 75 N.W. 740 (1898), although the court stated that a garnishment statute is remedial and should be liberally construed, 72 Minn. at 388, 75 N.W. at 741, it refused to allow garnishment of insurance proceeds due a North Dakota resident from an English insurance company licensed to do business in Minnesota. The garnishee summons was issued and served in the same manner as in this case. Aetna may well cite this case as controlling since it deals with the issue presented here.³ Yet subsequent cases put the question in a different light and, more important, a recently enacted Minnesota statute seems to be decisive.

The major argument against a ruling that Aetna's obligations to the defendant are a garnishable res is the apparently contingent nature of those duties. Although the policy certainly includes a duty to indemnify up to the face amount of the policy for any judgment the defendant suffers as a result of an automobile accident, the defendant has suffered no judgment at this time and Aetna does not owe him a liquidated sum. And it may never owe him anything on this policy except perhaps a defense. To rule that this latter duty alone is garnishable leads to the difficult problem of assigning it a value. If this duty is the only basis for jurisdiction the defendant well may argue that garnishment of this ancillary duty is simply a method to produce a judgment on the accident which may then cause the insurer's duty to indemnify to become due and owing.

The difficulty in attempting to fit Aetna's obligations into traditional notions of an attachable res is apparent. The New York Court of Appeals first dealt with the issue in Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312 (1966). There the court found the various duties which the insurer incurred as soon as an accident happened constituted a "debt". As such it was subject to attachment under the New York civil practice statute which provided for attachment of a debt which is past due or which is yet to become due, certainly or upon demand of the judgment debtors.⁴ The Seider decision was criticized for its method of acquiring jurisdiction:

"Although it recognized the contingent nature of these obligations, the court in Seider chose simply to ignore it. It reasoned that once the accident occurred, sufficient duties arose to bring the insurance policy within the coverage of the attachment statute."

Note, Minichiello v. Rosenberg: Garnishment of Intangibles — in Search of a Rationale, 64 N.W.U.L.Rev. 407, 412 (1969). Other states, interpreting their own attachment statutes, have failed to find similar obligations by insurer's to be an attachable res because they are contingent obligations. Housley v. Anaconda Co., 19 Utah 2d 124, 427 P.2d 390 (1967); De Rentiis v. Lewis, 106 R.I. 240, 258 A.2d 464 (1969); Howard v. Allen, 254 S.C. 455, 178 S.E.2d 127 (1970); State ex rel. Gov't Employees Ins. Co. v. Lasky, 454 S.W.2d 942 (St.L. Mo.App.1970); Contra Turner v. Evers, 31 Cal.App.3d Supp. 11, 107 Cal.Rptr. 390 (Super.1973).

Although some states have permitted attachment of contingent obligations, Brainard v. Rogers, 74 Cal.App. 247, 248, 239 P. 1095, 1096 (1925); Baumgold Bros. v. Schwarzschild Bros. Inc., 276 App.Div. 158, 93 N.Y.S.2d 658 (S.Ct.1949); the case law indicates that the general rule in Minnesota is that contingent obligations are not subject to garnishment. Murphy v. Casey, 150 Minn. 107, 184 N.W. 783 (1921); S. T. McKnight v. Tomkinson, 209 Minn. 399, 296 N.W. 569 (1941); Cf. Minn. Stat. § 571.43(1) (1969). The contingency must be one that controls the obligation to pay and not simply the timing or form of payment. Irwin v. McKechnie, 58 Minn. 145, 59 N.W. 987 (1...