Appeal
from the District Court of Morton County, Berry, J.
Reversed.
Reversed and remanded.
Newton
Dullam & Young, for appellant.
When a
garnishee has contracted with the principal debtor that he
will pay the money or deliver the property to some third
person, then the plaintiff in garnishment cannot recover
because he is placed by the garnishment in the position of
the principal defendant, who himself could not recover from
the person made the garnishee. Shortridge v
Sturdivant, 32 N.D. 154, 155 N.W. 20; Petrie v. Wyman
35 N.D. 126, 159 N.W. 616.
"'When
a garnishee has contracted with the principal debtor that he
will pay the money, or deliver the property, to some third
person, then the plaintiff in garnishment cannot recover
because he is only placed by the garnishment in the position
of the principal defendant, who could not himself recover
from the person made the garnishee.' 2 Shinn, Attachm. & Garnishments, P 516; Baker v. Eglin, 11 Ore. 333, 8
P. 280. And in a case of this character the assent of the
creditor to the terms of the contract made for his benefit is
presumed. Rodgers v. Gosnell, 58 Mo. 589."
International Harvester Co. v. Hanson, 36 N.D. 84,
161 N.W. 608; Hatcher v. Plumley, 38 N.D. 155, 164
N.W. 698; Smith v. Clark, 9 Iowa 241.
The
deposit of funds to be paid upon the performance of certain
conditions removes the funds from garnishment, as belonging
to the defendant, after the performance of the conditions.
Hearn v. Foster, 21 Tex. 401.
And it
is the universal rule that a disposition in trust takes
priority over subsequent garnishment. Fidelity Trust Co.
v. New York Finance Co. 60 C. C. A. 189, 125 F. 275;
Petrie v. Wyman, supra.
"Priority
between garnishment liens, and other liens or claims upon the
same property, is generally determined by priority of time.
The right first acquired is, as a rule, superior. Rights
under garnishment are subordinate to a good, pre-existing
equitable assignment, though the latter is not perfect at
law. . . . Again, the right of subrogation which arises upon
payment by sureties of a judgment against the principal
debtor takes priority over a lien acquired by garnishment
entered after the judgment." 12 R. C. L. p. 848, §
90.
Norton & Kelsch, for respondent.
"When
a debtor becomes bankrupt, the creditor is put to an election
to proceed against the debtor or take his share of the
debtor's assets in bankruptcy. The object of the
proceedings against the debtor is in the hope that he may not
get a discharge or may not plead it, or may not take the
necessary steps to be in a position to plead it. In either of
these cases the creditor will get a judgment against the
debtor, which he can satisfy out of the property of the
debtor, if any acquired after the date of the bankruptcy
proceedings. On the other hand if the creditor wishes to
entitle himself to his share of the bankrupt's estate he
must make his proof against the estate in the court which has
the collection and distribution of it." 7 C. J. 349,
note 74.
"It
is well settled that a party may not take contradictory
positions; and where he has a right to choose one of two
modes of redress, and the two are so inconsistent that the
assertion of one involves the negation or repudiation of the
other, and his deliberate and settled choice of one, with
knowledge, or means of knowledge, of such facts as would
authorize a resort to each, will preclude him thereafter from
going back and electing again." Roney v. Halvorsen
Co. 29 N.D. 13.
NUESSLE,
J. BRONSON, Ch. J., and JOHNSON, CHRISTIANSON, and BIRDZELL,
JJ., concur.
OPINION
NUESSLE, J.
The
plaintiff and respondent, State Bank of New Salem, sued the
defendant, Fred C. R. Schultze, in contract and garnished the
Union Farmers State Bank. The respondent obtained a judgment
against the defendant Schultze which became final and remains
unsatisfied. The garnishee, Union Farmers State Bank, filed
its affidavit denying liability. Respondent elected to take
issue with the garnishee. The Farmers & Merchants State Bank
of New Salem, a corporation, intervener and appellant herein,
made application and was permitted to intervene, and
thereafter filed its complaint in intervention to which the
respondent interposed an answer. The issue thus arising on
the complaint in intervention was tried to the court, which
found in favor of the respondent. Judgment was thereafter
entered accordingly, and the intervener now appeals therefrom
to this court.
The
preliminary facts essential to an understanding of the
controversy are substantially as follows: In 1917 the
defendant Fred Schultze was owing the respondent bank on
account of a note. His father, Max Schultze, had signed with
him as surety. This obligation is the one on which the
judgment in the instant case is founded. At the same time Max
Schultze was indebted to the appellant for a considerable
sum. Max had sold some land in Montana to one Goeschel.
Goeschel owed a balance of $ 2,050 on the purchase price,
which, under the arrangement made, he was to pay to Fred. An
action was brought in Montana to set the transfer aside. In
October Goeschel tendered
the money that was owing, conditioned upon a favorable
termination of this suit. Max Schultze attended to the
transaction as agent for Fred. With the consent of Fred, and
at the direction of Max, Goeschel conditionally tendered the
money to the respondent to be applied on the joint note. The
respondent refused to accept the conditional tender.
Thereupon on October 23rd, 1917, the money was deposited in
the First National Bank of New Salem, which later became the
Union Farmers State Bank, the garnishee, in accordance with
the terms of a written agreement reading as follows:
"This agreement made and entered into this
twenty-third day of October, 1917, by and between Max
Schultze, the party of the first part and Oscar Goeschel, the
party of the second part.
"Witnesseth,
That whereas the party of the first part has sold unto the
said party of the second part, sections numbered ten and
eleven, in township one north of range twenty-eight east,
Montana principal Meridian, situated in the county of
Yellowstone, state of Montana, and whereas there is a balance
due on said purchaser price of two thousand fifty dollars and
whereas the said party of the first part is indebted and
owing the Farmers & Merchants State Bank of New Salem, North
Dakota, and his attorney, George W. Pierson, and is desirous
of having said sum applied to indebtedness of said bank and
his attorney and whereas there is a suit pending in the
district court of the said county of Yellowstone, wherein the
State Bank of New Salem is plaintiff, and each of the parties
hereto and Minnie Schultze and Fred C. R. Schultze are
defendants and that plaintiff in said cause is alleging, that
the said second party is holding said land in trust for the
said first party, when in truth and in fact the said second
party is the owner of said described lands.
"Now
therefore, It is hereby mutually stipulated and agreed by and
between the parties hereto, that the said party of the second
part shall make a deposit of the said two thousand fifty
dollars in the First National Bank of New Salem, and that
said deposit shall be paid as follows: Four hundred dollars
to George W. Pierson and the remainder to the Farmers and
Merchants State Bank of New Salem for the benefit of the said
first party in the event it shall be determined in the above
entitled action that the plaintiff therein is not entitled to
the possession of said lands, or any interest therein or to
any part of the purchase price thereof and in the event it is
determined said lands or the purchase price can be or shall
be subjected to the satisfaction of the claim of the
aforesaid plaintiff, then the money aforesaid deposited in
the First National Bank of New Salem, shall be payable and
returned to the party of the second part.
"In
witness whereof, each of the parties have hereunto set their
hands in triplicate.
(Signed)
Oscar Goeschel.
(Signed)
Max Schultze.
It appears that although Max Schultze had no
authority from Fred Schultze to do so at the time he made the
contract to deposit the money for the benefit of the
appellant, he was nevertheless the agent of Fred with
reference to the disposition of the moneys; that subsequently
Fred was apprised of the facts with reference to such
deposit, and the same was ratified and approved by him, and
Fred was to be reimbursed by Max.
The
First National Bank accepted the deposit on the conditions
set out in the agreement and agreed to pay the same according
to the terms thereof, as evidenced by its indorsing upon the
agreement,
"The
undersigned accepts the conditions of the aforesaid agreement
and the deposit in so far as it refers to it and agrees to
pay said money according to the terms thereof and according
to the terms of the aforesaid agreement, and a certified copy
of the judgment entered in said cause, together with the
certificate of the clerk, that the cause is finally
determined will be its warrant and justification for making
said payment.
"(Signed)
First National Bank of New Salem."
and
issued a cashier's check in the sum of $ 1,650 payable to
the Farmers & Merchants State Bank, the appellant herein, but
which it retained in its possession. Subsequently, the First
National Bank was reorganized and reincorporated as the Union
Farmers State Bank, the garnishee. The Union Farmers State
Bank,...
