Welbourne Development Co. v. Affiliated Clearance Corp., 23211

• Decision Date: 23 June 1970
• Docket Number: No. 23211,23211
• Citation: 28 Colo.App. 313,472 P.2d 684
• Parties: , 7 UCC Rep.Serv. 1375 WELBOURNE DEVELOPMENT CO., a Colorado corporation, Plaintiff in Error, v. AFFILIATED CLEARANCE CORP., a corporation, Defendant in Error. . I
• Court: Colorado Court of Appeals

Page 684

472 P.2d 684

28 Colo.App. 313, 7 UCC Rep.Serv. 1375

WELBOURNE DEVELOPMENT CO., a Colorado corporation, Plaintiff in Error, v. AFFILIATED CLEARANCE CORP., a corporation, Defendant in Error.

No. 23211.

Colorado Court of Appeals, Div. I.

June 23, 1970.

Burnett, Watson & Horan, Edward R. Gleason, Wm. Horan, Denver, for plaintiff in error.

Hyman D. Landy, Denver, for defendant in error.

SILVERSTEIN, Chief Judge.

This case was originally filed in the Supreme Court of the State of Colorado and subsequently transferred to the Court of Appeals under authority vested in the Supreme Court.

Affiliated Clearance Corp. (ACC) obtained a judgment against Van Blair, dba Blair Remodeling Co., for $1,349. On April 13, 1967, ACC caused a writ of garnishment to be served on Welbourne Development Co. (Welbourne), to which Welbourne answered that it owed Blair $1,038.80 'for painting' and on open account. On April 19, Welbourne prepared amended answers to the interrogatories in which it stated that its indebtedness to Blair was only $168.10. In its motion to file amended answers, granted on June 23, Welbourne asserted that its original answers had been made in 'error and inadvertence'. ACC then filed a traverse of the amended answers, asserting that the original figure of $1,038.80 was the correct amount owed to Blair.

At the hearing on the traverse, Welbourne presented a 'Joint Payment Agreement' between itself and Blair to justify the amended answers. This document, dated January 17, 1967, provided, in pertinent part:

'In consideration of the advance of materials and/or money necessary for the completion of the job known as Welbourne Warehouse * * * which the undersigned Contractor has contracted to do for me, I hereby agree that all payments for said job will be remitted jointly to The Glidden Company * * * and the undersigned Contractor until total indebtedness due said The Glidden Company from the undersigned Contractor relating to said job or contract is paid in full. * * *

s/ Welbourne Devel. Co.

Owner or General Contractor

By John Wood

Accepted and agreed to

this 23 day of Jan., 1967.

s/ Blair Decor.

Contractor

By Van Blair'

Welbourne testified that it had discovered this agreement after filing the original answers and thereafter, on April 28, had paid directly to Glidden $870.70, leaving the sum of $168.10 owing solely to Blair which was the figure given in its amended answers.

At the conclusion of the hearing the court entered the following order: '(T)he Court * * * doth order that judgment enter in favor of the Defendant and against the Garnishee Defendant * * * in the sum of $1,038.80. Further order that said sum be paid into the Registry of the Court for distribution per Court Order.' Welbourne appeals from the judgment entered pursuant to this order.

Welbourne asserts to us that the joint payment agreement required it to pay jointly to Blair and Glidden the amount due Glidden from Blair. Blair was entitled, therefore, only to $168.10 from Welbourne after his indebtedness to Glidden was satisfied. ACC was entitled to no more than was Blair under general principles of garnishment and could garnish no more than $168.10 from Welbourne.

ACC replies that Welbourne, after service of the writ of garnishment, was limited to the remedy in R.C.P.Colo. 103(h), entitled 'Garnishee Not Required to Defend Claims of Third Persons':

'A garnishee who has notice of the claim of a third person to any * * * credits * * * of the defendant in his possession or control * * * shall state in his answer that he is informed that such * * * credits * * * are claimed by such person. When such an answer has been filed the court shall issue a summons to the alleged claimant * * *, requiring him to appear * * * for answer and set up and defend his claim or be thereafter barred. * * *'

By not stating in its answer that Glidden claimed part of the sum owing to Blair, Welbourne usurped the court's responsibilities at its peril and should deposit the entire $1,038.80 for a proper distribution to Blair's creditors.

The issue before us, therefore, is whether Welbourne improperly paid Glidden $870.70 without a release of garnishment or an order of the court. The payment was improper.

The rights of the parties are governed by the Uniform Commercial Code, C.R.S....