Turner v. Williams
Decision Date | 08 December 1923 |
Docket Number | 24,397 |
Citation | 221 P. 267,114 Kan. 769 |
Parties | C. C. TURNER, an Insane Person, by PERRY TURNER, his Guardian, Appellee and Appellant, v. I. F. WILLIAMS, and GEORGE WESTERMAN, Appellees (THE REXFORD STATE BANK, Appellant) |
Court | Kansas Supreme Court |
Decided July, 1923.
Appeal from Thomas district court; CHARLES I. SPARKS, judge.
Judgment affirmed.
SYLLABUS BY THE COURT.
1. GARNISHMENT--Moneys in Debtor's Checking Bank Account--Garnishee Summons Reaches Only What Actually Belongs to Debtor. Where a tenant of a farm sold the landlord's share of the crop and deposited the proceeds in his own checking account in a bank, the landlord's claim to the money thus deposited is superior to that of a creditor who garnisheed the money in the debtor's checking account under the general rule that garnishment only reaches what actually belongs to the debtor.
2. SAME--Checking Account Impressed with a Trust. Under the circumstances stated in syllabus No. 1, the tenant's deposit and checking account is impressed with a trust in the landlord's favor, where no rights of innocent third parties will be prejudiced thereby.
3. SAME--Debtor's Checking Bank Account Not Assigned. The evidence offered in support of a claim that the debtor's account had been assigned to the garnisheed bank examined and held insufficient to establish such assignment.
4. SAME--Money in Debtor's Checking Account--Subject to Check by Consent of Mortgagee Bank. Where a bank knowingly permitted its debtor (who was also its depositing customer) to keep in the debtor's ordinary deposit and checking account the proceeds of a sale of wheat on which the bank had a mortgage, and permitted him to check on such account in the usual course of the debtor's business, the bank thereby elected to treat the fund as the debtor's property, and such fund was amenable to garnishment at the instance of another creditor.
5. SAME--Defect in Garnishment Affidavit. A defect in a garnishment affidavit is waived by a garnishee who answers the garnishment summons on the merits.
6. SAME--Garnishment Undertaking Valid. Defects urged against the garnishment undertaking considered and held not of sufficient gravity to vitiate it.
7. SAME--Answer of Bank to Garnishee Summons Interpreted. The answer of the bank as garnishee to the garnishment summons examined, and held that, taken as true, it did not disclose a better right to the debtor's checking account than the garnisheeing creditor, for reasons discussed in the opinion.
8. SAME--Proceedings in Garnishment Regular. Plaintiff's proceeding in garnishment was neither irregular nor improper although the basis of his action, to which the garnishment was ancillary, was two promissory notes, one of which was not due when the garnishment proceedings were first begun.
9. SAME--Bank Holding Debtor's Checking Account as Trust Fund. The evidence did not necessarily require a finding of fact that the bank held the debtor's checking account as a trust fund in the bank's own favor.
10. SAME--Rights of Garnisher, Garnishee and Interpleader. Record and judgment touching the rival rights of a garnisher, a garnishee, and an interpleader, to an unresisting insolvent debtor's checking account in a bank, examined, and no error discerned therein.
Asa M. Smith, and V. L. C. Smith, both of Colby, for the appellant, C. C. Turner; E. H. Benson, of Colby, for the appellant, The Rexford State Bank.
E. S. Rice, and W. S. Rice, both of Smith Center, for the appellee, George Westerman.
This appeal relates to the rights of precedence of rival litigants, garnisher, garnishee, and interpleader, all of whom were creditors of the defendant debtor, I. F. Williams.
In 1920, Williams was a tenant farmer, thresherman and grain buyer at Menlo in Thomas county. The precipitate decline in the price of wheat in the autumn of that year caused his insolvency.
Westerman, interpleader, was the owner of a quarter section of wheat land which was farmed by Williams on equal shares of the crop. Williams raised about 2,700 or 2,800 bushels of wheat on the Westerman land; he sold it and placed the proceeds in his own general deposit and checking account in The Rexford State Bank. Westerman did not learn of this sale and conversion until some weeks thereafter.
The Rexford State Bank was a creditor of Williams to the extent of $ 3,700, for the security of which it held a mortgage on certain chattels of Williams and on a small pile of wheat belonging to him located on a certain town lot in Menlo. In this bank Williams was a depositing customer, and the proceeds of all of Williams' sales of grain were deposited therein and checked out again as needed in the course of his business transactions. During October and November, 1920, Williams' deposit and checking account fluctuated between $ 6,981.34 maximum and $ 1,950 minimum. The bank figures as garnishee as well as creditor in this action.
Turner, the plaintiff, held two unsecured notes of Williams, one for $ 800, due November 14, 1920, and one for $ 3,000, due January 1, 1921.
On November 29, 1920, Turner commenced this action against Williams on these notes, and garnisheed Williams' checking account in The Rexford State Bank, which at that time was $ 2,355.34.
On December 3, 1920, the bank filed its verified answer alleging that it was not indebted to Williams in any manner "excepting he has in his checking account $ 2,355.34, which, however, represents money from the sale of wheat on which this bank had a chattel mortgage, and this money we claim should be applied on his note to us."
On February 17, 1921, Westerman filed his interplea alleging his ownership of a quarter section of land leased to Williams and that he had furnished the seed wheat for its sowing, in consideration whereof he was to receive one-half the crop delivered at market free of cost except his proportionate charge of the cost of threshing. He alleged that $ 1,706.98 of the money in Williams' checking account was proceeds of his share of the wheat raised on and sold from the Westerman land.
Thereafter, on June 20, 1921, plaintiff filed an amended and supplemental petition setting forth anew his two causes of action on the two notes--the chief supplementary matter being that both notes were then past due and unpaid, whereas only the $ 800 note was due at the time the original petition was filed and the original garnishment undertaken.
Some minor matters in these and other pleadings will not need to be stated.
Plaintiff Turner was given judgment for $ 4,168.66 against Williams on the two notes of $ 800 and $ 3,000 and the interest thereon. And thereupon the issues framed by the garnishment proceedings and by Westerman's interpleader were tried. Evidence was introduced, and the trial court made extended findings of fact and conclusions of law. The latter, in part, read:
Plaintiff appeals, complaining because he was not given the entire bank deposit of Williams to apply on his judgment.
The bank urges certain defects in the garnishment proceedings, that it had no notice that any portion of the money deposited was proceeds of the Westerman rent wheat and that it traced the sale of the wheat covered by its chattel mortgage into the bank deposit, that Williams before suit had assigned the deposit to the satisfaction of his indebtedness to the bank, and that it held the deposit as a trust fund to be applied on the note of Williams when Williams should finish selling all of the wheat covered by the bank's mortgage. These contentions are made the basis of various errors assigned which, so far as necessary, will be noticed.
Considering first the points raised by plaintiff: It is fundamental that under garnishment proceedings,...
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