Case ID: ga_11/html/0413-01.html
Source: Caselaw Access Project
Author: {"author": "Nisbet, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

No. 56.
    George Field and others, plaintiffs in error, vs. Seaborn Jones and John Schley, defendants in error.
    [1.] A bill being filed to subject certain property in the hands of a third person, to the payment of judgments in favor of the complainants, and a receiver being appointed to collect and hold the rents, issues and profits ; the bill was demurred to for want of equity, and the demurrer sustained and bill dismissed: Held, that the functions of the receiver ceased inter paries, but that his amenability continued, as an officer of the Court, to the Court, and that the fund itself was subject to the order of the Court, and would rightfully return to the party as whose fund it was taken and impounded, unless retained upon a claim properly made known and presented to the Chancellor.
    [2.] Held, also, that a party having a claim upon a fund so situated, will he heard before the Chancellor pro interesse suo, upon a proper application made ; and that he will pass such order as will comport with the rights of all parties in interest.
    [S.'| Held, thata receiver is but the officer of the Court — that his possession is the possession of the Court, and that he is not subject to the process of garnishment.
    
      In Equity, in Muscogee Superior Court. Decision by Judge Powers, November Adjourned Term, 1851.
    Seaborn Jones and John Schley filed a bill in the Superior Court of Muscogee County, charging that they were creditors by judgment, against the Southern Life Insurance and Trust Company of Florida, located beyond the limits of this State ; that George Field, its former Cashier, had procured titles in himself to certain real estate in the City of Columbus, which really belonged to the said company; that Philip T. Schley, as the agent of Field, was controlling the property and receiving the rents, issues and profits. The prayer was, that the property and the rents and issues thereof, be appropriated to the payment of the debts of complainant. Afterwards, by consent, Philip T. Schley was appointed receiver to receive the rents and issues of the property.
    Subsequently a demurrer was filed to the said bill for want of equity, which being overruled, wras by writ of error carried to the Supreme Court — where the demurrer was sustained and the bill ordered to be dismissed. By order of the Superior Court, Philip T. Schley made return of the amount in bis hands as receiver, whereupon counsel for Field moved an order, requiring Schley the receiver, to pay over to the counsel for Field, the amount in his hands. Counsel for Jones and Schley, and the receiver himself, resisted the granting of this motion, on the ground, that since the dismissal of said bill summons of garnishment had been served on the said Field by the said Jones and Schley, and also by other creditors of the Southern Life Insurance & Trust Company.
    The Court refused to grant the order as moved, but passed the same, with the addition, or condition, that the assignees of Field should execute and deliver to the said receiver, a bond in the sum of fifteen thousand dollars, conditioned to refund the amount paid over by him, in the event he is made liable on the garnishment pending against him.
    To this order and decision counsel for Field excepted, and this decision is assigned as error.
    
      W. Dougherty, for plaintiff in error.
    Benning & H. Holt, for defendant.
   By the Court.

Nisbet, J.

delivering the opinion.

The bill, by virtue of which Mr. Schley was appointed receiver and came into the possession of this fund, was dismissed upon demurrer — the legal consequence of which was, to dispense with the functions of the receiver as a depository of the parties litigant. His duties ceased with the termination of the litigation between the parties to the bill, and that ceased when it went out of Court upon the demurrer. But his relations to the Court of Chancery from which he received his appointment did not determine — his amenability to that Court as receiver, continued. That is to say, he was still an officer of the Court. His possession of the fund was the possession of the Court. Both he and it, were subject to the order of the Court. Upon the determination of the litigation for the purposes of which he was appointed, the money which he had received by natural equity, and according to the course of Chancery jurisdiction, belonged to the party, Fields, as whose moneyit had been seized and impounded. The decision on the demurrer, determining that the complainants in the bill had no equity, determined also, that the fund in question had been wrongfully placed in the custody of the receiver. This being so, it was the duty of the Chancellor to order it to be paid to Fields or his assignees, without conditions, unless withheld from so doing by the claim of other persons, rightfully and according to the forms of Chancery proceedings, brought to his cognizance. In accordance with these views, it seems that the assignees of Fields, Messrs. Iverson, Dougherty & Hargrave, exhibiting their title as such, moved the Court that the money in the hands of the receiver, Mr. Schley, be paid to them. Messrs. Jones & Schley, who are judgment creditors of The Southern Life Insurance & Trust Company, and also the receiver himself, resisted this motion, showing for cause against it, that summons of garnishment had issued in their favor and had been served upon the receiver, since the dismissal of the bill; and claimingtbat the money which had come into Schley’s hands as receiver, should not be paid over to Iverson, Dougherty $• Hargrave, but remain subject to their recovery on the garnishment. Was the service of garnishment on the receiver, sufficient to justify the Chancellor in denying the motion of the assignees of Fields ? Was this such an exbibition'of a claim upon the fund as would defeat the equitable right of Fields, and prevent the return of the money to him or his assignees ? The presiding Judge ruled, that the money be paid to them, upon their giving bond and security to the receiver, conditioned to refund the same, in the event that he should be made liable upon the garnishment. The Judge erred in annexing the condition of the bond to refund.

That a claimant upon a fund so situated shall be heard, and that the Chancellor will protect the equitable rights of such claimant, there can be no question. According to the English practice, when a party is interested in a fund, or in property in the possession of a receiver, he can be heard before the Master, upon á proper application, pro interesse suo, and he will protect the rights of such party by such order as may comport with the rights of all parties, subject to the review of the Chancellor. Story’s Eq. Ju. §§833, 891. 9 Vesey R. 338. 1 Keene’s R. 749. The Chancellor here will do the same.

But he will not regard the pendency of a process of garnishment against the receiver, as such an exhibition of an interest in the fund as will justify him in passing an order to hold the fund up to await the result of that process. The receiver is-not subject to garnishment. The process against him is a nullity, and the Chancellor must so regard it. If it be a nullity,, then there is nothing before him which evidences a claim upon the fund ; nothing to prevent the fund from taking that course which the principles of Equity give to it — that is, nothing to prevent its going back to the original owner. When there are adverse claimants upon a fund put into the possession of a receiver, whilst for the purposes of controlling the fund, the possession of the receiver is the possession of the Court; yet when the litigation is determined, the right to the possession is in him who finally prevails. Story’s Eq. Ju. §833. 3 P. Williams’ R. 379.

Upon this principle it is, that when the bill was dismissed which deposited this money in the hands of Mr. Schley, it became, he prevailing, the right of Fields to have it paid over to him. There being then, I repeat, nothing before the Chancellor which would authorize any farther retention of it, he had no alternative but to order it to be paid to him or his assignees, unconditionally. The receiver is not at liberty to bring'or defend actions without special leave of the Court. He is but the agent of the Court and cannot involve it in litigation. He could not defend this garnishment but by leave of the Court. It such leave were granted, it would be. a descent of the Court of Chancery into a Court of Lawq there to become a litigant about a fund qver which it has itself jurisdiction. For the Court of Chancery, and not the receiver, would be the party. It is true, that where the question to be tried is pure matter of title to property in possession of a receiver, the Court wúll generally, from motives of justice and convenience, authorize a suit to be brought, taking care, however, to give such directions as will protect the possession. Story’s Eq. Ju. §833. 9 Vesey, 338. 1 Jac. & Walk. 178. 1 Coxe’s R. 422.

But where the question is as to the appropriation of a fund, it is not to be credited that a Court of Chancery will yield its own unquestioned jurisdiction, and take its place at the bar of a Court of Law as a party. The possession of the receiver is deemed the possession of the Court, and the Court will not permit itself to be made a suitor in a Court of Law. Story’s Eq. Ju. §§833, 891.

Another very obvious reason why a receiver is not subject to garnishment is, that such liability would defeat the ends for which receivers are appointed. His duties as receiver would be defeated by judgments at Law on garnishment, and the beneficial jurisdiction of Chancery, in this regard, divested.

So we think the Court erred in requiring the bond to be given, and reverse the judgment,