Sargent County v. State of North Dakota Doing Business

• Decision Date: 12 March 1921
• Citation: 182 N.W. 270,47 N.D. 561
• Court: North Dakota Supreme Court

182 N.W. 270

47 N.D. 561

SARGENT COUNTY, a Municipal Corporation, Respondent, v. STATE OF NORTH DAKOTA Doing Business as the Bank of North Dakota, Appellant

Supreme Court of North Dakota

March 12, 1921

Rehearing denied April 4, 1921.

From an order refusing to vacate garnishment proceedings in Sargent County, McKenna, J., the defendant has appealed.

Affirmed.

Wm Lemke, Attorney General, W. A. Anderson, Assistant Attorney General (Simpson & Mackoff and S.E. Ellsworth of counsel) for appellant.

"The industries under consideration in the present case are all public industries belonging to the state of North Dakota. None of them are private industries or enterprises, but, on the contrary, are public enterprises and businesses exclusively owned and wholly operated by the state of North Dakota in its sovereign capacity, for the use and benefit of all the people of the state,--in other words, for a public purpose." Green v. Frazier (N.D.) 176 N.W. 20.

"There are certain principles which must be borne in mind in this connection, and which must control the decision of this court upon the Federal question herein involved. This legislation was adopted under the broad power of the state to enact laws raising by taxation such sums as are deemed necessary to promote purposes essential to the general welfare of its people." Green v. Frazier (U. S.) 40 S.Ct. 501.

"It (the supreme court of North Dakota) answered the contention that the industries involved were private in their nature, by stating that all of them belonged to the state of North Dakota, and therefore the activities authorized by the legislation were to be distinguished from business of a private nature having private gain for its objective." Green v. Frazier (U. S.) 40 S.Ct. 502.

"No execution shall issue against the state on any judgment, but whenever a final judgment against the state shall have been obtained in any action the clerk shall make and furnish to the state auditor a duly certified copy of such judgment, and the auditor shall, in due course, draw his warrant upon the state treasurer for such amount, and deliver the same to the person entitled thereto." Comp. Laws 1913, § 8177.

"Attachment is a mode of obtaining security for the satisfaction of any judgment which plaintiff may finally recover, an actual seizure of the goods of a debtor in order that they may be held to satisfy the judgment which plaintiff may recover in the future." 6 C. J. 29.

Garnishment is simply a convenient method of attachment.

"Garnishment is an attachment by means of which money or property of a debtor in the hands of third parties, which cannot be levied upon, may be subjected to the payment of the creditor's claim." American Cent. Ins. Co. v. Hettler, 37 Neb. 849, 40 Am. St. Rep. 522.

"Garnishment is attachment in the hands of a third person, and is thereby a species of seizure by notice." Baemer v Winter, 41 Kan. 596.

"Garnishment while in the nature of a preceeding in rem, is in effect an action by the defendant in the plaintiff's name against the garnishee, the purpose and result of which are to subrogate the plaintiff to the rights of the defendant against the garnishee." Neufelder v. German etc. Ins. Co. 6 Wash. 336, 36 Am. St. Rep. 166.

"Garnishment" is a mode of attachment differing in no material respect from an attachment by actual levy and seizure, except in the mode of enforcement." Rood, Garnishment, § 1.

"Property exempt from execution cannot be attached." Drake, Attachm. § 244.

"Officers of the United States, and of the different states, having money in their hands to which certain individuals are entitled, are not liable to the creditors of those individuals in the process of attachment, garnishment, and the like. This rule, as far as the same is applicable to national and state officers, has never been seriously questioned, having been established at an early date in the history of our government, and ever since sustained by the adjudications of both the national and state courts." Freeman, Executions, § 132; Drake, Attachm. § 516a.

"Every consideration of policy would forbid it. No government can sanction it. It would be very embarrassing generally, and, under some circumstances, might prove fatal to the public service, to allow the means of support of the servants of the government to be intercepted in the hands of the distributing agents. If the funds of the government, thus specifically appropriated for the support and maintenance of its agents, were allowed to be devested by process of attachment, in favor of creditors or otherwise, from their legitimate object, the functions of the government might be suspended." Bank of Tennessee v. Dibrell, 3 Sneed, 383. See also Divine v. Harvey, 7 T. B. Mon. 439, and valuable notes appended to this case in 18 Am. Dec. 200.

"Every banking association in this state shall be exempt from the legal process of attachment and execution. " Comp. Laws 1913, § 5188.

Appellant's Supplemental Brief.

Section 8177, Comp. Laws 1913, provides specifically that no execution shall be issued against the state on any judgment.

The authorities uniformly hold that an attachment is an execution issued in advance of trial and judgment. 2 R. C. L. 800, § 1.

So that, even under § 8177, Comp. Laws 1913, above mentioned, an attachment would not lie against the state.

That a garnishment is also an execution in advance, or at least in aid of it, see 12 R. C. L. 776, §§ 4, 5.

Therefore it follows that a garnishment also would not lie against the state.

"The legal effect of a garnishment judgment is to sequester or set aside the property or money of defendant in the hands of the garnishee for the payment of plaintiff's judgment." 12 R. C. L. 840, § 76 citing Bowen v. Port Huron Engine Co (Iowa) 47 L.R.A. 131, 80 N.W. 345.

To the same effect, see 12 R. C. L. 850, § 92, and Farrington v. Glemming (Neb.) 142 N.W. 297, 47 L.R.A. (N.S.) 742. Also Hartzell v. Vigen, 6 N.D. 117.

In that case it was held that the court has power to make all necessary orders for the ultimate application of defendant's interest in the property in satisfaction of such judgment. Also see 2 Shinn, Attachm. & Garnishment, § 466, holding that the effect of garnishment is to sequester the property in the hands of the garnishee for the payment of plaintiff's judgment.

S. A. Sweetman, State's Attorney, Engerud, Divet, Holt, & Frame, for respondent.

The first question raised in this case was whether the Bank of Georgia might be sued in the circuit court of the United States, notwithstanding the 11th Amendment to the Constitution. The reason urged why such suit could not be maintained was that the state of Georgia was a half owner in the bank. The court denies the contention, saying: "The suit is against a corporation, and the judgment is to be satisfied by the property of the corporation, not by that of the individual corporators. The state does not, by becoming a corporator, identify itself with the corporation. The Planters Bank of Georgia is not the state of Georgia, although the state holds an interest in it."

Again: "It is, we think, a sound principle that when a government becomes a partner in any trading company it devests itself so far as concerns the transaction of that company of its sovereign character, and takes that of a private citizen. Instead of communicating to the company its privileges and prerogatives, it descends to a level with those with whom it associates itself and takes the character which belongs to its associates and to the business which is to be transacted. Thus many states of the Union, who have an interest in banks, are not suable even in their own courts, yet they never exempt the corporation from being sued. The state of Georgia, by giving to the bank the capacity to sue and be sued, voluntarily strips itself of its sovereign character so far as respects the transactions of the bank, and waives all the privileges of that character. As a member of a corporation a government never exercises its sovereignty, it acts merely as a corporation, and exercises no other power in the management of the affairs of the corporation than are expressly given by the incorporating act." Bank of U. S. v. Planters Bank, 9 Wheat. 904, 6 L.Ed. 244.

A corporate body is known to the law by the powers and faculties bestowed upon it, expressly or impliedly, by the charter. The use of the term "corporation" in its creation is of itself unimportant except as it will imply the possession of these. They may be expressly conferred, and then they denote this legal being as unerringly as if created in general terms. Thomas v. Dakin, 22 Wend. 70; Gross v. Kentucky Board of Managers of the World Columbian Exposition, 43 L.R.A. 703; Hancock v. Louisville & N. R. Co. 145 U.S. 409, 36 L.Ed. 755; Dunn v. State University, 9 Or. 357.

The question raised was that the state of Kentucky being the sole proprietor of the bank, the suit was virtually against the sovereign state.

The contention is disposed of by the court by quoting with approval from Bank of United States v. Planters Bank, saying, among other things, with reference to the status of the state:

"Instead of communicating to the company its privileges and its prerogatives, it descends to a level with those with whom it associates itself, and takes the character which belongs to its associates and to the business which is to be transacted." Bank of Kentucky v. Wister, 2 Peters 318, 7 L.Ed. 437; Briscoe v. Bank of Kentucky, 11 Peters 257, 9 L.Ed. 707.

Can it be doubted under these rules of law that the Bank of North Dakota could issue bills of credit without violating § 10 of the Constitution of the United States? If it could, it is not a branch of, or an agency of, the state, but a...