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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,2 and is in no case liable as garnishee, unless he has possession of the property.3

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Wis. 375;

Hare 55.

with and to support his lien, and no of the latter may not be injured, he is

Strictly and in legal pre- estopped to assert such mortgage as cision the consignor is the owner. But against creditors, who, aiter the executhe factor has such rights as to enable tion of the mortgage and before its him to sue others for interfering with filing gave credit to the mortgagor upon the goods, or to compel a delivery, or the faith that his property was unento support a claim for damages, or to cumbered, and this is so although the defeat a claim of the shipper to stop mortgagee had no intent to defraud any page in transitu. It is an ownership creditor." Sanger v. Frie Presse Co., as lien holder, and nothing more. Pat- 41 N. W. Rep. (Wis.) 436. terson v. Perry, 10 Abb. Pr. (N. Y.) And the creditor, having permitted 92. See also Grant v. Shaw, 16 Mass. the mortgagee (and garnishee) to take 341.

possession and dispose of the mort1. Consequently the priority of mort- gaged property, is not thereby estopped gagee or pledgee attachment from requiring the latter to account extends only to those legally executed for it. Sanger v. Frie Presse Co., 41 before the service of process. Cushing N. W. Rep. (Wis.) 436. v. Hurd, 4 Pick. (Mass.) 253; Worden 2. Bedlam v. Tucker, i Pick. (Mass.) v. Adams, 15 Mass. 233.

389; Cotton v. Marsh, 3 Wis. 221; Advances made upon mortgages or Cotton 7'. Watkins, 6 Wis. 629; Frispledges after service of process bee V. Langthworthy, II subject to the attaching creditor's claim Selleck v. Phelps, 11 Wis. 38o. being first satisfied. Bernard 7'. Moore, Though it has been held that pledged 8 Allen (Mass.) 273; Adams 7. Wheeler, property may be taken and offered at 10 Pick. (Mass.) 199; Jones 7. Smith, i public auction; if more is bid than the

amount of such lien it is sold; otherOtherwise if he had no notice of the wise it is returned to the pledgee. Norattachment. Adams 7. Wheeler, 10 ton v. Norton, 43 Ohio St. 509; Hills Pick. (Mass.) 199; Brinkerhoff z'. Mar- v. Smith, 8 Fost. (N. 11.) 369; Biggs v. tin, 5 Johns. Ch. (N. Y.) 327; Lansing Walker, 1 Fost. (N. H.) 72. See Stelf

Woodworth, Sandf. Ch. (N. v. llart, I N. Y. 20. Y.) 43; Barry v. Merchants' Exchange, In no case can he be charged as garSandf. Ch. (N. Y.) 314; Seymour v'. nishee if he is not in possession, and a Darrow, 31 Vt. 122; Rolt z'. Ilopkin- mortgagee is under no obligation to son, 26 Beav. 461.

take possession so as to make a fund An unrecorded chattel mortgage has capable of being attached by a creditor priority

attaching creditors. of the mortgagor. Curtis 7. Raymond, Kendall v. Ladd, 21 N. W. Rep. 29 Iowa 52; First National Bank (Minn.) 733

Perry, 29 Iowa 266. But such mortgage can, in such at

Nor can

he in the absence of an tachment, be impeached as being fraudu- agreement be compelled to sell the lent as against creditors. North Star property mortgaged or pledged to pay Boot & Shoe Co. v. Ladd, 32 Minn. his debt. Howard v. Cord, 6 Me. 353; 381.

Bedlam v. Tucker, 1 Pick. (Mass.) 389. CAMPBELL, J.: "We have heretofore 3. Stedman v. Vickery, 6 Me. 353; held that a chattel mortgage not sea- Callender 7. Furbush, 46 Me. 226; sonably filed is void against creditors Wood 7'. Estes, 35 Me. 145; Pierce v. whose right intervenes between the Henrie, 35 Me. 57; Central Bank making and the filing. And the law Prentice, 18 Pick. (Mass.) 396. does not require previous proceedings to In a proceeding against a garnishee exhaust other remedies before garnish- to whom a chattel mortgage had been ment.” Crippen v. Fletcher, 56 Mich. 389. given before he was put in possession of

Estoppel.-COLE, C. J.: "When the the property, questions as to the vamortgagee of chattels delays the filing lidity of the mortgage were of no conof his mortgage at the request of the sequence so long as there was no showmortgagor, and in order that the credit ing that he took possession by virtue of

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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 prejudice of the attaching creditors, give the notice to proceed to foreclose such mortgage. 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. selling the goods in gross unless mort

Foreclosure of Mortgage.- When gagee is first paid. Smith v. Circuit mortgaged property out of possession of Judge, 53 Mich. 560. mortgagee is taken by direct attachment, Judgment against mortgagee should the mortgagee can file bill to reach his be for the general residuary interest or property, and is liable to attaching equity of redemption of the mortgagor creditor for the surplus after its sale. and not of specific articles. Daggett Long Dock Co. v. Mallery, i Beas. v. McClintock, 56 Mich. 54, and cases (N. J.) 93

cited. Property in the possession of a mort- 2. Hobart v. Jouvett, 6 Cush. (Mass.) gagor after condition broken may be 105. attached and a replevin sued out by 3. Daggett v. McClintock, 56 Mich. mortgagee does not divest attaching 51, 53; Brink v. Freoff, 40 Mich. 610; creditor of his lien on the surplus. s. c., 44 Mich. 69. Carty v. Fenstimaker, 14 Ohio St. 457; Where a bank is summoned as garBurnham v. Doolittle, 14 Neb. 214. nishee, and subsequent to the service of

Moneys accruing to the railroad com- summons converts and disposes of colpany from its earnings, and in the hands lateral securities held by it, the burden of an express company as its bailee, are of proof is upon it to show that it subject to garnishment at the suit of has properly discharged its duty as its judgment creditors; and such gar- custodian of such securities. First Nat. nishments being served prior to the Bank v. Armstrong, 101 Ind. 244. filing of a bill by the trustees to fore- 4. Allen Megguire, 15 Mass. close the mortgage, their lien must pre- 490; Jarvis v. Rogers, 15 Mass. 414; vail over any claim asserted by the Allen v. Hall, 5 Met. Mass.) 263; trustees. Johnston 7'. Riddle, 70 Ala. Bailey v. Ross, 20 N. H. 302; Smith 219.

Twogood & Co. v. Clark & Henley, 9 1. Bedlam v. Tucker, 1 Pick. (Mass.) Iowa 241; Nolan v. Crook, 5 Humph. 389; s. c., 11 Am. Dec. 202; Barker v. (Tenn.) 312; Curtis, v. Norris, 8 Pick. Osborn, 71 Me. 69; Worder v. Baker, (Mass.) 280. 67 Wis. 408; Reed v. Fletcher, 39 N. Such lien need not be one of conW. Rep. (Neb.) 437; National Bank v. tract relation with the defendant. It Chase, 32 N. W. Rep. 202; Mensing may be for liability incurred because of v. Engelke, 4 S. W. (Tex.) 202; Nor- the property itself; commission merton v. Norton, 43 Ohio St. 509.

chants' lien, etc. Bank 7. Levy, In Michigan, the statute (How. Stat., McMull. (S. Car.) 431. The same is 8064) contemplates that court

true of a stableman's lien. Williamson may appoint a receiver to dispose of v. Gayle, 7 Gratt. (Va.) 152. property of defendant attached in the Set Off.--Consequently set-off, other hands of a third person. This includes than the amount secured by his lien, mortgagees of chattels. The receiver cannot be allowed the garnishee when may take possession to sell, but can ex- specific property is attached in his ercise no greater power than a sheriff hands as belonging to the defendant. could in levying execution. The mort- He occupies the same position as if the gagee's lien is to be first satisfied by defendant had sued him, and can inter.

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not

499.

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.1

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 Liability for charge of storage does himself had. Phænix Îns. Co. v. Willis,

constitute "goods pawned or 6 S. W. Rep. (Tex.) 825. pledged," or "demised for a term." Where there is a breach of the conGood v. Abertauffer, 1 T. & H., Pr. tract by the principal defendant, the (Pa.) 756.

amount of damages can be deducted Money deposited with a college in from the amount which would have lieu of security for board, tuition, etc., been due him but for the breach. Doyle cannot be garnished while the educa- v. Gray, 110 Mass. 206. tion of the children is in progress, un- It is so where a contract provides less the deposit was a fraudulent one. that if a contractor fail to pay his Poe v. St. Mary's College, 4 Gill.(Md.) workmen the employers may pay them

out of the contract price. Doyle v. 1. O'Brien v. Collins, 124 Mass. 98. Gray, 110 Mass. 206; Taylor v. BurNot liable on a contract for which debt lington & M. R. R. Co., 5 Iowa 114: or indebitatus assumpsit would not lie. Drake v. Harrison, 69 Wis. 99; s. c., 2 Lundie v. Bradford, 26 Ala. 512. See Am. St. Rep. 717. also VIII, 1, supra.

Or all liens should first be paid. It is error to enter judgment upon Kieley v. Bertrand, 34 N. W. Rep. an answer which states that upon the (Mich.) 674. defendant's complying with his con- Where a contractor was to execute a tract he will be indebted to him." Rus- release of all claims or demands before sell v. Clingan, 33 Miss. 535.

he should receive the final amount due Conditional Sale.-Goods delivered to by his contract, held that attaching one on trial in pursuance of negotiations creditors could not recover until the for a purchase thereof which are after release was executed; a common law wards delivered to the owner within court has no authority to make its the time limited for trial, whether be judgment against the company operate fore or after the service of process of as a release under seal by the congarnishment upon the holder thereof, tractor. B. & O. R. Co.v. ŇcCullough, with notice that he does not intend to 12 Gratt. (Va.) 595. complete the purchase but which are Garnishee cannot be required to violeft in his possession, cannot be taken late his contract, and if property is to by garnishment. Staniels v. Raymond, be delivered, and unless the court ap4 Cush. (Mass.) 314.

point a receiver, he may still go on to Contracts for future delivery.-In the pay if the consequence of his failing to case of contracts for future delivery of do so might subject him to pay money goods or chattels, the garnishee is not instead of property. If he has failed to liable unless he had become indebted to pay property according to his contract the principal defendant by the delivery and rendered himself liable for the of the property before the service of value thereof, he may be directed to process in garnishment. Hitchcock v. pay such value to the complainant. Miller, 48 Mich. 603; Hopson v. Dinan, Blackburn v. Davidson, 7 Bush. (Ky.) 48 Mich. 612; Jones v. Crews, 64 Ala.

Garnishment cannot affect the con

101.

368.

had he brought the action, or interfere with a contract entered into between the garnishee and a third person with reference to his indebtedness to the principal defendant;2 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 garnishce 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, for to attach

tract rights of mortgagees. Daggett v. monthly balances of accounts should be McClintock, 56 Mich. 51.

made between railroad companies, held 1. Healy v. Butler, 66 Wis. 9.

that there could be no settlement en 2. Van Staphorst z'. Pearce, 4 Mass. forced before that time, and then the 258; Swisher v'. Fitch, I Smed. & M. garnishee would be chargeable only for a (Miss.) 541; Vincent r. Watson, 18 Pa. balance remaining after settlement. B. St. 96; Mason?'. Ambler, 6 Allen & O. R. R. Co. v. Wheeler, 18 Md. 372. (Mass.) 124; Watkins v. Pope, 38 Ga. See Poe v. St. Mary's College, 4 Gill 514; Mines v. Pyles, 4 Houst. (Del.) (Md.) 499. 646; Callagan v. Pocasset Mfg. Co., So where the contract gives a right 119 Mass. 173; St. Louis 7'. Regenfuss, which cannot be enforced in an action 28 Wis. 144; Balliet z'. Scott, 32 Wis. at law by the defendant, garnishment 174; McPherson v. A. & P. R. R. Co., will not lie. Lundie v. Bradford, 26 66 Mo. 103; Godfrey 7. Macomber, 128 Ala. 513. Mass. 188; Whiting 2. Earle, 3 Pick. So as to money deposited by the de(Mass.) 201; Manchester 1. Smith, 12 fendant as security. Ellis v. Goodnow, Pick. (Mass.) 113; Bray 2. Wheeler, 29 40 Vt. 237; Truitt v. Griffin, 61 III. 26. Vt. 514; Russell v. Convers, 7 N.H. His answer and proof must bring him 343

within the rule. McCor 1. Williams, 6 So where the principal defendant has 111. 584; Crain v. Gould, 46 III. 239. previously assigned what would be due But in a contract of bailment of him, it cannot be taken as his property goods of the defendant, if the receipt by garnishment of the person owing be non-negotiable he delivers them to a the debt. Hall z'. Magee, 27 Ala. 414; third person at his peril. Smith v. White v. Richardson, 12 N. H. 93. Davis. 7 Ga. 104.

It must appear that such third person 5. Williams V. Androscoggin & K. stood in such a position as to have a R. Co., 36 Me. 201; Smith v. Davis, 1 legal right to enter into the contract, Wis. 447; Bishop 2'. Young, 17 Wis. and that it was entered into with the 47; Wheeler v. Day, 23 Minn. 545; defendant's assent. Swett v. Ordway, Kieley v. Bertrand, 34 N. W. Rep. 23 Pick. (Mass.) 266; Wiggins v. Lewis, (Mich.) 674; Warner ro. Perkins, S 19 N. H. 548.

Cush. (Mass.) 318; Robinson v. Hall, 3. See VIII., 11, supra, note.

3 Met. (Mass.) 301; Strauss 2. Rail4. B. & O. R. R. Co. v. Wheeler, 18 road Co., 7 W. Va. 368; Coburn ?. Md. 372; Traxall v'. Applegarth, 24 City of Hartford, 38 Conn. 290; Kettle Md. 183; Poe v. St. Mary's College, 4 v. Iarvey, 21 Vt. 301; Guild v. HolGill (Md.) 499; Harris zi. Phænix Ins. brook, u: Pick. (Mass.) 101; Hassie . Co.. 35 Conn. 310; Chapin v. Jackson, G. I. W. N. Con., 35 Cal. 378. 45 Ind. 153; O'Brien 7. Collins, 124 An entire contract before its final Mass. 98; Ward v. Mann, 124 Mass. completion is not a case of debitum ir 586; Grant v. Shaw, 16 Mass. 341; præsenti, solvendo in futuro. Potter Collins V. Brigham, II N. H.

420; 7. Cain, 117 Mass. 238. Cnder an en. Drake on Attach. (6th ed.), $ 517. tire contract, one of the parties cannot So where a contract stipulated that he 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,4 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

Ala. 175.

for work already performed. Smith v. Fire insurance company cannot be Davis, i Wis. 447; s. c., 60 Am. Dec. charged with liability as garnishee, 390; Peterson 7. Loring, 135 Mass. while they have the option to rebuild 397. Or for crops to be grown. Rein- or to replace lost or damaged goods. hardt 7. Hardesty, 17 Nev. 141.

Marts V. Detroit F. M. Ins. Co., 28 If the original contract had been as- Mich. 201; Vogel v. Preston, 42 Mich. signed, and the assignee had completed 511. Compare Smith ?'. Cahoon, 37 the contract, the debtor may be liable Me. 281. And the fact that after serfor the assignee's debt. Zimmerman vice of process upon it, it makes an arv. Davis, 35 Mich. 39.

rangement with the assured and a credSale.- Where sale is for cash, and itor of his, by which the insurance the money has not yet been paid, company pays the money to the creditor, buyer cannot be charged as garnishee who erects a building on his own land, of the price, even after delivery of the is immaterial. Godfrey v. Macomber, property, for the title does not pass un- 128 Mass. 188. til payment. Paul 7'. Reed, 52 N. H. The court might, on motion, retain 136; Bates ?'. New Orleans etc. R. Co., 4 the case until the expiration of the Abb. Pr. (X. Y.) 72; Case v'. Dewey, 55 period limited for rebuilding. Hurst Mich. 116; McKay 7. Evans, 48 Mich. 2. Home Protection Fire Ins. Co., 81 603

If order be given against garnishee Evidence is admissible to prove that in any of the above cases, and his an- the garnishee has a right and an interswer has shown such a state of facts, est in paying money in a particular he is not estopped in action by plaintiff way, which, under his contract with against him to show that the condi- his creditor, he has a right to do. Drake tional indebtedness had not been com- 7'. Harrison, 69 Wis. 99; S. C., 2 Am. St. plied with. Linder v'. Murphy, 37 Rep. 717:

3. Leiber v. U. P. R. Co., 49 Ia. Wages not due until completion of 688; Mooney v. U. P. R. Co., 60 la. contract liable to garnishment. 346; Nichols v. Hooper, 17 Atl. Rep. Rundle v. Scheetz, 2 Miles (Pa.) 330. (Vt.) 134; Sturtevant -v. Robinson, Annuity held not subject to. Carry v. 18 Pick. (Mass.) 175; Commercial Day, 2 Miles (Pa.) 412.

Nat. Bank v. C. M. & St. P. R. Co., 1. Early v. Redwood City, 57 Cal. 45 Wis. 172; Blake v. Williams, 6 193

Pick. (Mass.) 286. Contra, where the Nor does it help that the contract contract was made in another State and was afterwards fulfilled, for the ques- nothing to be paid until the contract tion of liability must be settled upon had been fulfilled. Hamilton v. Plumthe facts as they existed when the writ mer, 34 N. W. Rep. (Mich.) 278. See was served. Williams V. A. & K. R. CONFLICT OF LAWS, vol. 3, p. 499. Co., 36 Me. 201; Norton v. Soule, 75 4. McGlinchy v. Winchell, 63 Me. Me. 386; Gomilla v. Milliken, 5 So. 31; Ball v. Gilbert, 12 Met. (Mass.) Rep. (La.) 548.

397 2. Drake 7. Harrison, 69 Wis. 99; s. Wagers. The contract being C., 2 Am. State Rep. 717; Jones v. void between the parties, the money in Crews, 64 Ala. 368.

the hands of a stakeholder becomes a

Kan. 152.

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