dination to all valia prior liens, and, generally, the holder of such property cannot be deprived of his possession without being first paid, or payment tendered of the debt due' him, and is in no case liable as garnishee, unless he has possession of the property.3

The garnishee is liable only for the surplus remaining after all liens have been satisfied.1

After service of process upon a mortgagee, he cannot, to the prejudice of the attaching creditors, give the notice to proceed to foreclose such mortgage.2 But in case of conversion by the mortgagee, he cannot be held responsible, except for the balance after his own debt is paid.3

The rights and liabilities of those holding property subject to lawful liens other than those of mortgagees or pledgees, are governed by the same rules as apply to pledgees. "Lawful liens" are only those whereby the holder of the property could, if demand were made by the legal owner, lawfully withhold it until such lien be satisfied.4

it. Folkerts v. Standish. 55 Mich. 463. Foreclosure of Mortgage. When mortgaged property out of possession of mortgagee is taken by direct attachment, the mortgagee can file bill to reach his property, and is liable to attaching creditor for the surplus after its sale. Long Dock Co. v. Mallery, 1 Beas. (N. J.) 93.

Property in the possession of a mortgagor after condition broken may be attached and a replevin sued out by mortgagee does not divest attaching creditor of his lien on the surplus. Carty v. Fenstimaker, 14 Ohio St. 457; Burnham v. Doolittle, 14 Neb. 214.

Moneys accruing to the railroad company from its earnings, and in the hands of an express company as its bailee, are subject to garnishment at the suit of its judgment creditors; and such garnishments being served prior to the filing of a bill by the trustees to foreclose the mortgage, their lien must prevail over any claim asserted by the trustees. Johnston . Riddle, 70 Ala.

219.

1. Bedlam v. Tucker, 1 Pick. (Mass.) 389; s. c., 11 Am. Dec. 202; Barker v. Osborn, 71 Me. 69; Worder v. Baker, 67 Wis. 408; Reed v. Fletcher, 39 N. W. Rep. (Neb.) 437; National Bank v. Chase, 32 N. W. Rep. 202; Mensing v. Engelke, 4 S. W. (Tex.) 202; Norton v. Norton, 43 Ohio St. 509.

In Michigan, the statute (How. Stat., § 8064) contemplates that a court may appoint a receiver to dispose of property of defendant attached in the hands of a third person. This includes mortgagees of chattels. The receiver may take possession to sell, but can exercise no greater power than a sheriff could in levying execution. The mortgagee's lien is to be first satisfied by

selling the goods in gross unless mortgagee is first paid. Smith v. Circuit Judge, 53 Mich. 560.

Judgment against mortgagee should be for the general residuary interest or equity of redemption of the mortgagor and not of specific articles. Daggett v. McClintock, 56 Mich. 54, and cases cited.

2. Hobart v. Jouvett, 6 Cush. (Mass.) 105.

3. Daggett v. McClintock, 56 Mich. 51, 53; Brink v. Freoff, 40 Mich. 610; s. c., 44 Mich. 69.

Where a bank is summoned as garnishee, and subsequent to the service of summons converts and disposes of collateral securities held by it, the burden of proof is upon it to show that it has properly discharged its duty as custodian of such securities. First Nat. Bank v. Armstrong, 101 Ind. 244

4. Allen υ. Megguire, 15 Mass. 490; Jarvis v. Rogers, 15 Mass. 414; Allen v. Hall, 5 Met. (Mass.) 263; Bailey v. Ross, 20 N. H. 302; Smith Twogood & Co. v. Clark & Henley, 9 Iowa 241; Nolan v. Crook, 5 Humph. (Tenn.) 312; Curtis, v. Norris, 8 Pick. (Mass.) 280.

Such lien need not be one of contract relation with the defendant. It may be for liability incurred because of the property itself; commission merchants' lien, etc. Bank . Levy, I McMull. (S. Car.) 431. The same is true of a stableman's lien. Williamson v. Gayle, 7 Gratt. (Va.) 152.

Set Off-Consequently set-off, other than the amount secured by his lien, cannot be allowed the garnishee when specific property is attached in his hands as belonging to the defendant. He occupies the same position as if the defendant had sued him, and can inter

12. Contracts Between Defendant and Garnishee.—To charge a garnishee with liability upon a contract, it must affirmatively appear that there is tangible property or a credit due to the principal defendant, for which an action at law would lie, at the time of service of process.

Garnishment cannot have the effect of changing the nature of a contract between the garnishee and the defendant.2 Nor can the plaintiff, where the contract is not tainted with fraud, recover from the garnishee any more than the defendant might recover pose no greater objections. Allen v. 2. Mensing v. Engelke, 67 Tex. 533. Megguire, 15 Mass. 490. Contra in When an insured has violated the conSo. Carolina, where by statute, for ex- dition of an insurance policy the credisting debt, he is considered "a cred- itors of the insured have no better right itor in possession." Mitchell v. Byrne, to compel the payment of the policy 6 Rich. (S. Car.) 171; Yongue v. Lin- under process of garnishment against ton, 6 Rich. (S. Car.) 275. the insurance company than the insured himself had. Phoenix Ins. Co. v. Willis, 6 S. W. Rep. (Tex.) 825.

Liability for charge of storage does not constitute "goods pawned or pledged," or "demised for a term." Good v. Abertauffer, 1 T. & H., Pr. (Pa.) 756.

Money deposited with a college in lieu of security for board, tuition, etc., cannot be garnished while the education of the children is in progress, unless the deposit was a fraudulent one. Poe v. St. Mary's College, 4 Gill. (Md.)

499.

1. O'Brien v. Collins, 124 Mass. 98. Not liable on a contract for which debt or indebitatus assumpsit would not lie. Lundie v. Bradford, 26 Ala. 512. See also VIII, 1, supra.

It is error to enter judgment upon an answer which states "that upon the defendant's complying with his contract he will be indebted to him." Russell v. Clingan, 33 Miss. 535.

Conditional Sale.—Goods delivered to one on trial in pursuance of negotiations for a purchase thereof which are afterwards delivered to the owner within the time limited for trial, whether before or after the service of process of garnishment upon the holder thereof, with notice that he does not intend to complete the purchase but which are left in his possession, cannot be taken by garnishment. Staniels v. Raymond, 4 Cush. (Mass.) 314.

Contracts for future delivery.-In the case of contracts for future delivery of goods or chattels, the garnishee is not liable unless he had become indebted to the principal defendant by the delivery of the property before the service of process in garnishment. Hitchcock v. Miller, 48 Mich. 603; Hopson v. Dinan, 48 Mich. 612; Jones v. Crews, 64 Ala. 368.

Where there is a breach of the contract by the principal defendant, the amount of damages can be deducted from the amount which would have been due him but for the breach. Doyle v. Gray, 110 Mass. 206.

It is so where a contract provides that if a contractor fail to pay his workmen the employers may pay them out of the contract price. Doyle v. Gray, 110 Mass. 206; Taylor v. Burlington & M. R. R. Co., 5 Iowa 114: Drake v. Harrison, 69 Wis. 99; s. c., 2 Am. St. Rep. 717.

Or all liens should first be paid. Kieley v. Bertrand, 34 N. W. Rep. (Mich.) 674.

Where a contractor was to execute a release of all claims or demands before he should receive the final amount due by his contract, held that attaching creditors could not recover until the release was executed; a common law court has no authority to make its judgment against the company operate as a release under seal by the contractor. B. & O. R. Co. v. McCullough, 12 Gratt. (Va.) 595.

Garnishee cannot be required to violate his contract, and if property is to be delivered, and unless the court appoint a receiver, he may still go on to pay if the consequence of his failing to do so might subject him to pay money instead of property. If he has failed to pay property according to his contract and rendered himself liable for the value thereof, he may be directed to pay such value to the complainant. Blackburn v. Davidson, 7 Bush. (Ky.)

101.

Garnishment cannot affect the con

had he brought the action,1 or interfere with a contract entered into between the garnishee and a third person with reference to his indebtedness to the principal defendant; or prevent the garnishee from discharging his debt, by payment to a third person when such was his contract with the principal defendant.3 The liability of a garnishee is to be determined, ordinarily, by his accountability to the defendant on account of the property or the obligation. If, by any pre-existing bona fide contract, that accountability has been removed or modified, it follows that the garnishee's liability is correspondingly affected.4

A garnishee is not liable where the contract being entire, nothing is due until its completion, and the contract has not been performed at the date of service of garnishment,5 for to attach.

tract rights of mortgagees. McClintock, 56 Mich. 51.

Daggett v.

1. Healy v. Butler, 66 Wis. 9. 2. Van Staphorst v. Pearce, 4 Mass. 258; Swisher v. Fitch, 1 Smed. & M. (Miss.) 541; Vincent v. Watson, 18 Pa. St. 96; Mason v. Ambler, 6 Allen (Mass.) 124; Watkins v. Pope, 38 Ga. 514; Mines v. Pyles, 4 Houst. (Del.) 646; Callagan v. Pocasset Mfg. Co., 119 Mass. 173; St. Louis v. Regenfuss, 28 Wis. 144; Balliet v. Scott, 32 Wis. 174; McPherson v. A. & P. R. R. Co., 66 Mo. 103; Godfrey v. Macomber, 128 Mass. 188; Whiting v. Earle, 3 Pick. (Mass.) 201; Manchester v. Smith, 12 Pick. (Mass.) 113; Bray v. Wheeler, 29 Vt. 514; Russell v. Convers, 7 N. H.

343.

So where the principal defendant has previously assigned what would be due him, it cannot be taken as his property by garnishment of the person owing the debt. Hall. Magee, 27 Ala. 414; White v. Richardson, 12 N. H. 93.

It must appear that such third person stood in such a position as to have a legal right to enter into the contract, and that it was entered into with the defendant's assent. Swett v. Ordway, 23 Pick. (Mass.) 266; Wiggins v. Lewis, 19 N. H. 548.

3. See VIII., 11, supra, note. 4. B. & O. R. R. Co. v. Wheeler, 18 Md. 372; Traxall v. Applegarth, 24 Md. 183; Poe v. St. Mary's College, 4 Gill (Md.) 499; Harris v. Phoenix Ins. Co.. 35 Conn. 310; Chapin v. Jackson, 45 Ind. 153; O'Brien v. Collins, 124 Mass. 98; Ward v. Mann, 124 Mass. 586; Grant v. Shaw, 16 Mass. 341; Collins v. Brigham, II N. H. 420; Drake on Attach. (6th ed.), § 517.

So where a contract stipulated that

monthly balances of accounts should be made between railroad companies, held that there could be no settlement enforced before that time, and then the garnishee would be chargeable only for a balance remaining after settlement. B. & O. R. R. Co. v. Wheeler, 18 Md. 372. See Poe v. St. Mary's College, 4 Gill (Md.) 499.

So where the contract gives a right which cannot be enforced in an action at law by the defendant, garnishment will not lie. Lundie v. Bradford, 26 Ala. 513.

So as to money deposited by the defendant as security. Ellis v. Goodnow, 40 Vt. 237; Truitt v. Griffin, 61 Ill. 26.

His answer and proof must bring him within the rule. McCoy v. Williams, 6 Ill. 584; Crain v. Gould, 46 Ill. 239.

But in a contract of bailment of goods of the defendant, if the receipt be non-negotiable he delivers them to a third person at his peril. Smith v. Davis, 7 Ga. 104.

5. Williams v. Androscoggin & K. R. Co., 36 Me. 201; Smith v. Davis, 1 Wis. 447; Bishop v. Young, 17 Wis. 47; Wheeler v. Day, 23 Minn. 545; Kieley v. Bertrand, 34 N. W. Rep. (Mich.) 674; Warner v. Perkins, S Cush. (Mass.) 518; Robinson v. Hall, 3 Met. (Mass.) 301; Strauss v. Railroad Co., 7 W. Va. 368; Coburn v. City of Hartford, 38 Conn. 290; Kettle v. Harvey, 21 Vt. 301; Guild v. Holbrook, 11 Pick. (Mass.) 101; Hassie v. G. I. W. N. Con., 35 Cal. 378.

An entire contract before its final completion is not a case of debitum in præsenti, solvendo in futuro. Potter 7. Cain, 117 Mass. 238. Under an entire contract, one of the parties cannot be compelled to pay by quantum meruit

tangible property or garnishee a credit, it is essential that the property or credit exist. So, a garnishee cannot be charged with liability upon a contract which he has an option to perform in two or more different ways, while the right of action by the defendant is still undetermined. But where the garnishee is indebted, it will not vary his liability that the contract was to pay the money in another State or country than that in which the attachment is pending.3

Contracts between the garnishee and defendant, for which the garnishee has given an illegal consideration, or which are void by reason of public policy, may be recovered of the garnishee as though he were a mere depositary. If, however, the property

for work already performed. Smith v. Davis, 1 Wis. 447; s. c., 60 Am. Dec. 390; Peterson v. Loring, 135 Mass. 397. Or for crops to be grown. Reinhardt v. Hardesty, 17 Nev. 141.

If the original contract had been assigned, and the assignee had completed the contract, the debtor may be liable for the assignee's debt. Zimmerman v. Davis, 35 Mich. 39.

Sale. Where sale is for cash, and the money has not yet been paid, buyer cannot be charged as garnishee of the price, even after delivery of the property, for the title does not pass until payment. Paul v. Reed, 52 N. H. 136; Bates v. New Orleans etc. R. Co., 4 Abb. Pr. (N. Y.) 72; Case v. Dewey, 55 Mich. 116; McKay v. Evans, 48 Mich. 603.

If order be given against garnishee in any of the above cases, and his answer has shown such a state of facts, he is not estopped in action by plaintiff against him to show that the conditional indebtedness had not been com

plied with. Linder v. Murphy, 37

Kan. 152.

Wages not due until completion of contract not liable to garnishment. Rundle v. Scheetz, 2 Miles (Pa.) 330. Annuity held not subject to. Carry v. Day, 2 Miles (Pa.) 412.

1. Early v. Redwood City, 57 Cal. 193.

Nor does it help that the contract was afterwards fulfilled, for the question of liability must be settled upon the facts as they existed when the writ was served. Williams v. A. & K. R. Co., 36 Me. 201; Norton v. Soule, 75 Me. 386; Gomilla v. Milliken, 5 So. Rep. (La.) 548.

s.

2. Drake v. Harrison, 69 Wis. 99; c., 2 Am. State Rep. 717; Jones v. Crews, 64 Ala. 368.

Fire insurance company cannot be charged with liability as garnishee, while they have the option to rebuild or to replace lost or damaged goods. Marts v. Detroit F. M. Ins. Co., 28 Mich. 201; Vogel v. Preston, 42 Mich. 511. Compare Smith v. Cahoon, 37 Me. 281. And the fact that after service of process upon it, it makes an arrangement with the assured and a creditor of his, by which the insurance company pays the money to the creditor, who erects a building on his own land, is immaterial. Godfrey v. Macomber, 128 Mass. 188.

The court might, on motion, retain the case until the expiration of the period limited for rebuilding. Hurst v. Home Protection Fire Ins. Co., 81 Ala. 175.

Evidence is admissible to prove that the garnishee has a right and an interest in paying money in a particular way, which, under his contract with his creditor, he has a right to do. Drake v. Harrison, 69 Wis. 99; s. c., 2 Am. St. Rep. 717.

3. Leiber v. U. P. R. Co., 49 Ia. 688; Mooney v. U. P. R. Co., 60 Ia. 346; Nichols v. Hooper, 17 Atl. Rep. (Vt.) 134; Sturtevant -v. Robinson, 18 Pick. (Mass.) 175; Commercial Nat. Bank v. C. M. & St. P. R. Co., 45 Wis. 172; Blake v. Williams, 6 Pick. (Mass.) 286. Contra, where the contract was made in another State and nothing to be paid until the contract had been fulfilled. Hamilton v. Plummer, 34 N. W. Rep. (Mich.) 278. See CONFLICT OF LAWS, vol. 3, p. 499.

4. McGlinchy v. Winchell, 63 Me. 31; Ball v. Gilbert, 12 Met. (Mass.) 397.

5. Wagers.-The contract being void between the parties, the money in the hands of a stakeholder becomes a