State ex rel. Auto Loan Co. v. Jennings
Decision Date | 08 May 1968 |
Docket Number | No. 41289,41289 |
Citation | 14 Ohio St.2d 152,237 N.E.2d 305 |
Parties | , 43 O.O.2d 250 The STATE ex rel. AUTO LOAN CO., Inc., Appellant, v. JENNINGS, Clerk of Cincinnati Municipal Court, Appellee. |
Court | Ohio Supreme Court |
Syllabus by the Court
1. In a mandamus action, where the relator, a judgment creditor, seeks an order to require a clerk of a Municipal Court to pay such judgment creditor funds which were paid to the clerk by a garnishee under a garnishment order, the relator must show that the clerk is under a clear legal duty to pay such funds to him, a plain dereliction of that duty.
2. Where a garnishee, under a garnishment order issued by a Municipal Court, pays the garnished funds to the clerk of the court, the garnished funds are not shielded from a trustee in bankruptcy where the judgment debtor is insolvent at the time the garnishment order is issued by the court.
3. Where a trustee is bankruptcy seeks an order in a Municipal Court requiring the clerk of such court to pay to such trustee funds which were paid to such clerk by a garnishee under a garnishment order, and the court denies the trustee the relief which he seeks and orders such funds paid to the judgment creditor, and thereafter the trustee seeks an order in a federal bankruptcy court requiring the clerk of the Municipal Court to release such funds to him, and the bankruptcy court orders the clerk of the Municipal Court to pay the funds to the trustee in bankruptcy, the judgment creditor can not support an action in mandamus in a state court on the ground that the Municipal Court's order was res judicata on the question before the federal bankruptcy court where such judgment creditor was listed as a creditor in the bankruptcy court proceedings and failed in that action to plead and prove the affirmative defense of res judicata.
This is an action in mandamus instituted in the Court of Appeals. The facts are stipulated.
The relator made an auto loan to one Margaret Wheeler. Thereafter, the relator contended that Wheeler had fraudulently induced the loan and relator sued Wheeler in the Cincinnati Municipal Court to recover damages allegedly caused by the fraud.
On May 5, 1967, a judgment was entered for the relator against Wheeler. In order to satisfy the judgment the relator garnished the judgment debtor's wages and the Municipal Court, on May 23, 1967, ordered Wheeler's employer to pay $69.20 into court pursuant to the garnishment.
On May 31, 1967, the debtor filed a voluntary petition in bankruptcy in the United States District Court. She listed relator as one of her creditors and was adjudged bankrupt on that date.
On June 2, 1967, the bankruptcy court enjoined relator's garnishment in the Municipal Court and ordered the $69.20, held by the garnishee, to be released. The judgment debtor filed a motion in the Municipal Court to dissolve the garnishment proceeding, and the trustee in bankruptcy appeared and joined in arguing for the motion to dissolve the garnishment.
On July 31, 1967, the Municipal Court overruled the motion to dissolve the garnishment. The garnishee paid the $69.20 to respondent, the Clerk of the Municipal Court. The trustee in bankruptcy did not appeal the ruling of the Municipal Court on the motion.
On August 29, 1967, the trustee obtained an order from the United States District Court directing the respondent to pay over to the trustee the fund held by him. The respondent, the clerk of the Municipal Court, who was confronted with conflicting orders of the Municipal Court and the United States District Court regarding the person entitled to the funds, did not comply with either order.
The relator, the judgment creditor, filed the instant action to compel the respondent to make payment of the fund pursuant to the order of the Municipal Court. The Court of Appeals dismissed the mandamus petition on the ground that the relator had an adequate remedy in the ordinary course of the law and, therefore, mandamus would not lie.
The cause is before this court upon an appeal as of right.
Lee B. Kasson, Jr., Cincinnati, for appellant.
William A. McClain, City Sol. and Donald E. Hardin, Cincinnati, for appellee.
The question presented to this court for determination may be stated thus: Is the appellee under a clear legal duty to perform the official act demanded?
In support of the proposition that a clear legal duty exists, appellant argues (1) that the May 23, 1967, order of the Municipal Court vested it with title to the fund, thereby shielding the fund from recovery by the trustee, and (2) that the trustee's appearance in the Municipal Court precludes him from obtaining the August 29, 1967, order in the United States District Court. Appellant does not contend that Wheeler was solvent, within the meaning of Section 1(19), Title 11, U.S.Code, on May 23, 1967, when the Municipal Court issued its garnishment order.
Determination of this question requires an examination of the federal bankruptcy law and of appellant's interest in the funds when the debtor filed her bankruptcy petition. Section 107(a)(1), Title 11, U.S.Code, provides:
'Every lien against the property of a person obtained by attachment, judgment, levy, or other legal or equitable process or proceedings within four months before the filing of a petition initiating a proceeding under this Act by or against such person shall be deemed null and void (a) if at the time when such lien was obtained such person was insolvent * * *.'
In addition, Section 110(c), Title 11, U.S.Code (1968 Supp.), states:
* * *'
These sections empower the trustee to void certain liens obtained within four months of bankruptcy and vest the trustee with title to the bankrupt's property on that date. See Lewis v. Manufacturers National Bank of Detroit (1961), 364 U.S. 603, 81 S.Ct. 347, 5 L.Ed.2d 323.
The appellant suggests that under Ohio law the Municipal Court's entry ordering the garnishee to pay the money into court vested title in the judgment creditor and thereby defeated the trustee's attempt to void the lien under Sections 107(a) and 110(c), Title 11, U.S.Code. See Nadler, The Law of Bankruptcy (2d), Section 678 (1948). See, also, Humphrey v. Tatman (1905), 198 U.S. 91, 25 S.Ct. 567, 49 L.Ed. 956; Thompson v. Fairbanks (1905), 196 U.S. 516, 25 S.Ct. 306, 49 L.Ed. 577. Appellant contends, therefore, that the order of the bankruptcy court requiring appellee to pay over the funds to the trustee is a nullity.
Appellant asserts that the appellee is confronted with only one 'valid' order and that this valid order places the appellee under a clear legal duty to pay the funds to the appellant.
Appellant's contention is not persuasive. The creditor's 'inchoate' right of action is extinguished where the adjudication in bankruptcy occurs when the debtor was insolvent at the time the garnishment order was issued. Paragraph four of the syllabus in Secor v. Witter (1883), 39 Ohio St. 218, reads:
Explaining the effect upon a judgment creditor of an order directing the garnishee to pay, the court, in Secor v. Witter, supra, said, at page 231, that it See Alsforf v. Reed (1888), 45 Ohio St. 653, 17 N.E. 73; Section 2715.11 et seq., Revised Code; Section 1911.33 et seq., Revised Code.
The order of garnishment provides the judgment creditor with a chose in action. Being a mere chose in action, the judgment creditor's right to the funds ceases upon the adjudication of bankruptcy, where the debtor is insolvent at the time the garnishment order is issued.
In Neyer v. Reuben H. Donnelly Corp. (1946), 78 Ohio App. 216, 69 N.E.2d 435, a judicial sale to satisfy a judgment creditor's lien was held on the same day that the bankruptcy petition was filed. Confronted with the necessity to determine whether the judgment creditor or the trustee was entitled to the fund obtained in the judicial sale, the court said the question was 'whether the defendant's (judgment creditor's) title had become so complete and absolute at that time as to make it paramount to the claim of the trustee in bankruptcy.' The court found that it had not, and held that ...
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