What Cheer Savings Bank v. Mowery

• Decision Date: 26 October 1910
• Parties: WHAT CHEER SAVINGS BANK, Appellant, v. G. M. MOWERY, Appellee, and CENTRAL SAVINGS BANK, Intervenor, Appellee
• Court: Iowa Supreme Court

128 N.W. 7

149 Iowa 114

WHAT CHEER SAVINGS BANK, Appellant, v. G. M. MOWERY, Appellee, and CENTRAL SAVINGS BANK, Intervenor, Appellee

Supreme Court of Iowa, Des Moines

October 26, 1910

Appeal from Keokuk District Court.--HON.W. G. CLEMENTS, Judge.

ACTION at law. The material facts will be found stated in the opinion.

Affirmed.

Stockman & Baker, for appellant.

C. M Brown and J. C. Beem, for appellees.

WEAVER J. DEEMER, C. J. (dissenting).

OPINION

WEAVER, J.

At the time of the transactions in question, the defendant, Mowery, was, and for several years had been, engaged in the business of buying and shipping live stock at the town of What Cheer. For a considerable period he had been making frequent shipments of hogs to the packing house of T. M. Sinclair & Co. at Cedar Rapids, Iowa. To procure money with which to make his purchases, Mowery sought accommodation at the local banks, usually arranging for repayment of these advances from the proceeds of the shipments. In pursuance of that policy, Mowery, prior to the shipment hereinafter referred to, arranged with the intervener bank to pay his checks given for the purchase of hogs, and gave to the said bank a written order directed to T. M. Sinclair & Co. to deposit the balances arising in his favor to the intervener's credit with its correspondent, the Citizens' National Bank at Cedar Rapids. Thereafter on April 21, 1908, Mowery bought and shipped a car load of hogs to Sinclair & Co. On receipt of the hogs the railway company made and delivered its usual bill of lading, or shipping receipt and contract, to Mowery, who immediately turned it over to the intervener bank, together with his draft upon T. M. Sinclair & Co. in favor of intervener for $ 900, which appears to have been the estimate of the parties of the proceeds of the shipment. This draft and bill the intervener at once forwarded to its correspondent, the Citizens' Bank at Cedar Rapids, Iowa for collection. The train carrying the hogs was due to arrive in Cedar Rapids about 3 o'clock in the afternoon of the same day, but the car of hogs did not come into the possession of the consignee until the following day, April 22, 1908. On the evening of April 21st, after the car had arrived at Cedar Rapids, but before it had been delivered by the carrier, the plaintiff, What Cheer Savings Bank, claiming to have secured a judgment against Mowery, caused notice of garnishment under execution to be served upon T. M. Sinclair & Co. and sought to subject the proceeds of said shipment to the payment of its claim. The garnishment proceeding was contested by the intervener, which asserted a prior right to the fund On trial the district court found for the intervener, and plaintiff appeals.

In support of its appeal counsel for appellant argue that the delivery of the hogs to the carrier was in law a delivery and transfer of title to the consignee, and that the debt for the selling price at once became garnishable in appellant's favor. It is further contended that the intervener's favor. It is further contended that the intervener's claim asserted in this court has no support either in pleading or proof.

I. Preliminary to a discussion of the points thus made, it is well to consider just what rights a garnishing creditor acquires in or to the funds found in the hands of a garnishee. It has often been held that, generally speaking, the right of the creditor in such cases is measured by the right of the debtor, and, if as between themselves the debtor has no right to demand and receive the fund from the garnishee, then the creditor can not acquire such right by the garnishment. Streeter v. Gleason, 120 Iowa 703, 95 N.W. 242; Packer v. Crary, 121 Iowa 388, 96 N.W. 870; Kuhnes v. Cahill, 128 Iowa 594, 104 N.W. 1025; Howe v. Jones, 57 Iowa 130, 8 N.W. 451. If, then, as between the intervener and Mowery, the former, by virtue of the order directing the deposit of the fund to its credit or by virtue of the delivery to it of the bill of lading with draft attached, acquired a right to said fund superior to that of Mowery, then such right is in no manner avoided or defeated by the garnishment of the consignee.

II. The mere fact that the intervener furnished the money or paid the checks given for the purchase of the hogs, or that Mowery promised to make payment from the proceeds of the venture, is of course, insufficient to vest it with any rights in said property or to create a lien thereon in its favor. If, however, the money was furnished under any agreement or understanding by which the proceeds of the sale of the property so purchased were set aside or appropriated to the payment or security of the debt, or if the legal effect of the manner of shipment, and the delivery to the intervener of the bill of lading with draft attached, was to vest it as against Mowery with the right to demand and receive the proceeds of the sale, then the trial court was right in denying a recovery to the plaintiff. Whether the title to the hogs had vested in Sinclair & Co. at the time of the garnishment as argued by appellant is therefore immaterial, except as one of the facts bearing upon the ultimate inquiry whether Mowery or intervener was entitled to demand payment of the selling price. If A. procures money from B. to purchase property for resale to C. and agrees that C. shall pay the price thereof direct to B. and not to A., and this arrangement is made known to C, he is bound to account to B. for the agreed price, even though B. never had any title to or lien upon the property. In such case garnishment of C. at the instance of a third person claiming to be a creditor of A. will be ineffectual. The case at bar is essentially parallel to the supposed case above stated. If we accept the correctness of appellant's claim that the delivery of the shipment to the carrier was a delivery to Sinclair & Co., to whom it was consigned, then Sinclair & Co. became at the same instant bound to pay the price thereof, not to Mowery, but to the intervener bank in accordance with the written direction already given them.

III. But the intervener's right has other sufficient foundation. Conceding, for the purpose of this phase of the argument, that appellant is correct in its contention that the delivery of the hogs to the carrier was in legal effect a delivery to Sinclair & Co., then, as we have already pointed out, said consignees became at once indebted to Mowery or to the intervener for the price. It is the theory of the appellant that the debt was due to Mowery, and as such was subject to garnishment upon the judgment against him. Assuming this also to be true, we have still to inquire whether the appellant's garnishment was made before any material change had been effected in the status of the fund sought to be reached in said proceeding. The record shows without controversy that garnishment was not served on Sinclair & Co. until the evening of the day of shipment, and that several hours before such service Mowery had turned the bills of lading with draft attached over to the intervener bank, which advanced the money for the purchase of the hogs. If this was done for the purpose of transferring to the intervener the title to the hogs or to the proceeds of the shipment, or to secure said intervener for its advancements to Mowery, or in the nature of an order upon Sinclair & Co. for this particular fund, which, when received, was to be credited upon Mowery's debt, then upon the delivery of such instrument the intervener obtained a right, legal or equitable, to receive the payment, and it was no longer garnishable upon the demand of a third person. In re Hanna (D. C.) 105 F. 587; Dolese v. McDougall, 182 Ill. 486 (55 N.E. 547); Slobodisky v. Curtis, 58 Neb. 211 (78 N.W. 522); Gillette v. Murphy, 7 Okla 91 (54 P. 413); Building Association v. Coleman, 94 Va. 433 (26 S.E. 843); Zilke v. Woodley, 36 Wash. 84 (78 P. 299, 90 Am. St. Rep. 346); Harlow v. Bartlett, 96 Me. 294 (52 A. 638); Bank v. Barnes, 18 Mont. 335 (45 P. 218, 47 L. R. A. 737, 56 Am. St. Rep. 586); Walcott v. Richman, 94 Me. 364 (47 A. 901); Marsh v. Garney, 69 N.H. 236 (45 A. 745); Pollard v. Pollard, 68 N.H. 356 (39 A. 329); Brill v. Tuttle, 81 N.Y. 454 (37 Am. Rep. 515); McDaniel v. Maxwell, 21 Ore. 202 (27 P. 952, 28 Am. St. Rep. 740); Warren v. Bank, 149 Ill. 9 (38 N.E. 122, 25 L. R. A. 746); Moore v. Lowrey, 25 Iowa 336; McWilliams v. Webb, 32 Iowa 577; Foster v. Dayton, 10 Daly 225; The Elmbank (D. C.) 72 F. 610; Ruthven Brothers v. Clarke, 109 Iowa 25; Shannon v. Mayor, 37 N.J.Eq. 123; Kirtland v. Moore, 40 N.J.Eq. 106 (2 A. 269); Burn v. Carvalhol, My. & Cr. 690; Fletcher v. Morey, 2 Story 555, Fed Cas. No. 4,864; Houston v. Jordan, 82 Tex. 352 (18 S.W. 702); Porter's Bills of Lading, section 494; Bank v. Dearborn, 115 Mass. 219 (15 Am. Rep. 92). But the delivery of the hogs to the carrier and the receipt by the shipper of a bill of lading naming Sinclair & Co. as consignees were not of themselves sufficient to transfer to the consignees the title to the property, nor did such transaction operate to make Sinclair & Co. the debtors of the shipper. So far as it appears from the record, the consignees were under no legal or contract obligation to accept the hogs or to pay for them. The bill of lading had never been delivered or tendered to them. Had the hogs died en route the loss would have fallen on the shipper, or upon the person holding the bill of lading, and not upon the consignees. The retention of the bill of lading and its delivery to the bank to be delivered to Sinclair & Co upon payment of the price is sufficient evidence of the purpose of the shipper to retain title until payment was made. Bank v. Dearborn, 115 Mass. 219 (15 Am. Rep. 92); Ela v. Express Co., 29 Wis. 611 (9 Am. Rep....