W. C. Caye & Co. v. Milledgeville Banking Co.

• Decision Date: 17 March 1955
• Docket Number: No. 35598,No. 2,35598,2
• Citation: W. C. Caye & Co. v. Milledgeville Banking Co., 86 S.E.2d 717, 91 Ga.App. 664 (Ga. App. 1955)
• Parties: W. C. CAYE & CO., Inc., v. MILLEDGEVILLE BANKING COMPANY
• Court: Georgia Court of Appeals

Page 717

86 S.E.2d 717

91 Ga.App. 664

W. C. CAYE & CO., Inc., v. MILLEDGEVILLE BANKING COMPANY.

No. 35598.

Court of Appeals of Georgia, Division No. 2.

March 17, 1955.

Syllabus by the Court.

1. A garnishee to whom the defendant in the main case owes money on a past due obligation has a lien on the funds of such defendant in the garnishee's possession at the time of the service of the summons of garnishment, which is superior to the lien of the judgment creditor in the garnishment proceeding.

2. The motion to overrule certain former decisions of this court is denied, for the reason that the rule of law expressed in headnote 1 hereof and enunciated in the decisions sought to be overruled is considered sound, and is in accord with common-law principles.

3. The lien of the garnishee is not lost because of failure to apply the funds of the defendant in its possession to the debt due it by the defendant before or at the time of the service of summons of garnishment, provided it is so applied prior to the filing of the garnishee's answer.

W. C. Caye & Co., Inc., plaintiff in this garnishment proceeding, after obtaining a judgment against Hansell Hall, caused a summons of garnishment to be issued against the garnishee, Milledgeville Banking Company, the defendant in error here, in the Superior Court, of Baldwin County, which summons was served on February 4, 1954. On April 16, 1954, the garnishee filed its answer, which was traversed by the plaintiff, and this issue was tried by the court without a jury on an agreed statement of facts, as follows: that at the time of the service of summons of garnishment, the defendant Hall was indebted to the garnishee on three past-due promissory notes, on one of which, dated January 16, 1953, there was a past-due balance of $4,000 plus interest; that at the same time the garnishee bank was indebted to the defendant in the sum of $921.21, the credit balance of his checking account; that on March 10, 1954, the bank applied this balance as follows: $25.33 to the payment of interest on the above note, and the balance of the $921.21 against the principal thereof; that no other property or effects of the defendant came into its hands. The sole question for decision was whether the garnishee had a right, after the time of service of summons and before filing its answer, to credit the balance shown by the checking account against its matured notes owing to it by the defendant Hall. The court found in favor of the garnishee and against the traverse, and this judgment is assigned as error.

Erwin Sibley, Milledgeville, for plaintiff in error.

Frank W. Bell, Milledgeville, for defendant in error.

TOWNSEND, Judge.

1. 'A bank has the right to set off against the amount of a general deposit belonging to a customer a matured claim due by the customer to it.' Bank of Lawrenceville v. Rockmore & Co., 129 Ga. 583, 587, 59 S.E. 291, 293. 'A garnishee, if the debtor be indebted to him, has a lien on funds coming into his hands, or future indebtedness to the debtor on his part, superior to that of the plaintiff in garnishment. He is entitled to pay himself before he is required to collect for the benefit of others, and this applies to any past indebtedness due him by the defendant.' Mutual Reserve Life Ins. Co. v. Fowler, 2 Ga.App. 537(2), 59 S.E. 469. In this latter case it was held that, by reason of a contract between the defendant and the garnishee, the right was specifically given the garnishee by contract to set off indebtedness of the defendant to it against its indebtedness to the defendant. The law, however, gives to a bank the same right of setoff as existed in the Fowler case by reason of the contract, and 'The position of a garnishing plaintiff with respect to the garnishee is no better than the position of the defendant employee; and if the defendant could not sue and obtain a judgment against the garnishee, then the garnishing plaintiff is not entitled to recover against the garnishee on a summons of garnishment.' Adair-Levert, Inc., v. Atlanta Envelope Co., 70 Ga.App. 685(1), 29 S.E.2d 323. The same is true, of course, whether the defendant is an employee of the garnishee or bears some other relation to him, provided the right of setoff exists, and that, after such setoff, the garnishee is not indebted to the defendant in any amount. See, in this connection, Singer Sewing Machine Co. v. Southern Grocery Co., 2 Ga.App. 545, 59 S.E. 473; First Nat. Bank of Tifton v. Ramsey-Wheeler Co., 17 Ga.App. 442, 87 S.E. 679; Aiken v. Smith, 68 Ga.App. 538, 542, 23 S.E.2d 584; Holmes v. Pope & Fleming, 1 Ga.App. 338(1), 58 S.E. 281. Accordingly, the right of setoff existed in the bank prior to the time it filed its answer in this case, and, having exercised this right, it is conclusive that it was not indebted to the defendant in any amount.

2. Counsel for the plaintiff in error has made a motion to overrule all the cases cited in the first division of this opinion on the ground that the statutory lien of garnishment attaches at the time of service of the summons and should therefore take precedence over a right of setoff by the garnishee against the defendant. Two of those cases were considered in a third, First Nat. Bank of Tifton v. Ramsey-Wheeler Co., supra, and the ruling was expressly adhered to. We consider the rule a sound one, and refuse the request to overrule those cases. Although possession, coupled with a right of setoff, does not...