Case Name: VAN NESS v. McLEOD
Court: Idaho Supreme Court
Jurisdiction: Idaho
Decision Date: 1892-12-21
Citations: 3 Idaho 439
Docket Number: 
Parties: VAN NESS v. McLEOD.
Judges: Sullivan, C. J., and Huston, J., concur.
Reporter: Idaho Reports
Volume: 3
Pages: 439–?

Head Matter:
(December 21, 1892.)
VAN NESS v. McLEOD.
[31 Pac. 798.]
-Attachment — Garnishee — Defraud Creditors. — 1. An. attachment suit is commenced by the First National Bank of Hailey against Bews, J. W. Hodgman et a!., and the writ of attachment is served upon George A. McLeod, as garnishee. Thereafter Van Ness brings suit against McLeod, on two promissory notes.
Notes Transferred to Defraud. — 2. McLeod files a motion supported . by affidavit for a suspension of proceedings in the latter suit, until his liability as garnishee in the attachment suit be determined, alleging that the notes upon which he is sued are the property of Hodgman, and were transferred to Van Ness to defeat and defraud his creditors.
Pbocess of Garnishment. — 3. Held, that proceedings in the latter suit should be suspended until the liability of McLeod in the garnishment proceedings are determined. Held, also, that property or debts transferred by a defendant in attachment in fraud of creditors may be reached by the creditors by process of garnishment, although the defendant 'could not recover them himself. Appeal from Alturas county. Judgment reversed.
(Syllabus by the court.)
APPEAL from District Court, Alturas County.
Angel & Loy, for Appellant.
Tbe garnishee cannot plead the pendency of the attachment suit in abatement of an action, subsequently brought against him, by the debtor in the attachment. Nor can he safely pay his creditor, the debtor in attachment, so long as the proceedings by attachment are in force. The proper course is for the court to order a suspension of the action against the garnishee-by his creditors until the attachment proceedings are disposed of. (3 Estee’s Pleading and Practice, sec. 4175; McFadden-v. O’Donnell, 18 Cal. 160; McKeon v. McDermott, 22 Cal. 667,. 83 Am. Dec. 86; Pierson v. McCahill, 21 Cal. 122.) Stipulations for attorneys’ fees -are not rigid, unbending contracts,, to be enforced literally under any and all circumstances, but are under the control o-f the court. They are in the nature of the stipulated damages for breach of contract. (Peyser v. Oole, 11 Or. 39, 50 Am. Eep. 451, 4 Pac. 520; Balfour v. Davis,, 14 Or. 47, 12 Pac. 89; Jaquith v. Hudson, 5 Mich. 123; Myer v, Hart, 40 Mich. 517, 29 Am. Eep. 553.)
Bruner & Parsons, for Eespondent.
The garnishee is not chargeable unless the defendant could' recover of him what the plaintiff seeks to .secure by garnishment. (Waples on Attachments, see. 202; Drake on Attachments, sec. 458; Sickman v. Abernathy, 14 Colo. 174, 23 Pae. 447; Perea v. Bank, 6 N. Mex. 1, 27 Pac. 322; Hassie v. Congregation, 35 Cal. 378; Grain v. Aldrich, 38 Cal. 520, 99 Am.. Dee. 423.) There being no statement or bill of exceptions,. nothing can be considered but the judgment-roll. (McOoy v. Oldham, 1 Idaho, 465.)

Opinion:
MORGAN, J.
This action was brought June 22, 1891, by J. H. Van Ness, plaintiff, against George A. McLeod, defendant, on two promissory notes executed and delivered by said defendant to one David Earhart, who assigned said notes to plaintiff herein before maturity. Defendant demurred to the complaint, on the ground that it did not state facts sufficient to constitute a cause of action. On December 8, 1892, defendant tiled a motion in the district court for Alturas county, where this action was pending, to suspend further proceedings in above cause pending a decision in the case of First National Bank of Hailey v. J. W. Hodgman et ad., then pending in said court, in which proceeding defendant had been garnished, as debtor of said Hodgman, by said bank. By the provisions of section 4308 of the Bevised Statutes of IdahOj the plaintiff in an attachment suit, if he is informed or has reason to believe that any person is owing any debt to the defendant in said suit, may require the sheriff to serve upon said person a copy of the writ, and a notice that such credits or other property or debts are attached in pursuance of such writ. Section 4309 provides that all persons having in their possession or under their control such credits, unless such debts be paid to the sheriff, shall be liable to the plaintiff for the amount of such debts, until the attachment be discharged, or any judgment recovered by him be satisfied. It is a general rule under these statutes, and the decisions of the courts in reference thereto, that the garnishee is liable to the attaching creditor to the amount of his indebtedness to the defendant in the attachment suit; and, if the garnishee is sued by his creditor (the defendant in the attachment suit) he can procure a suspension of proceedings in said action, until his liability to the attaching creditor shall be determined. The method of procuring such suspension is by motion based upon an affidavit stating that he has been garnished in a suit wherein his creditor is defendant, and asking a stay of proceedings until his liability in the attachment suit then pending shall be determined. Hpon presentation of this motion, and a proper affidavit, further proceeding in the cause should be suspended. (3 Estee's Pleading and Practice, sec. 4175; McFadden v. O'Donnell, 18 Cal. 160; McKeon v. Mc-Dermott, 22 Cal. 667, 83 Am. Dec. 86; Pierson v. McCahill, 21 Cal. 122; Winthrop v. Carlton, 8 Mass. 456; Wade on Attachments and Garnishments, sec. 501.) The plaintiff, how-ever, contends that the indebtedness of McLeod to' Hodgmar cannot be reached by the attaching creditor by garnishment* because the notes which were the evidence of such indebtedness had been transferred to Yan Ness (plaintiff in this action), and cites Waples on Attachments, 202, 215, and .other authorities. These authorities do not sustain the contention. It is true the general rule is, as stated, that the garnishee is not chargeable unless the defendant in the attachment suit could recover of him what the creditor seeks to secure by garnishment; but an exception exists in the case where the debt, or the evidence thereof, is transferred to a third party, for the purpose of its being reached by his creditors, or in fraud of their rights. In such a case the defendant in the attachment could not recover the indebtedness, but his creditor may. The fraudulent transfer debars the defendant from suing for it, but it is no estoppel should the plaintiff in the attachment suit seek tc Teach the property in the assignee's hands by process of garnishment. (Waples on Attachments, 215.)
The plaintiff in the attachment suit could treat the property or debt as still belonging to the defendant, though in the hands of a third person; yet-the defendant could not claim it as his, and have his right of action against such third person. In the case at bar the defendant, McLeod, alleges in his- affidavit that the said notes are actually the property of J. W. Hodgman, the defendant in the attachment, and that they were given to said Earhart and transferred! to Yan Ness at the request of Hodgman, without consideration, in fraud of and with the view of preventing his creditors from reaching them. If this is true, and it must be taken as true for the purpose of this motion, then the further prosecution of the case against McLeod should have been suspended until the determination of the principal suit. (Sickman v. Abernathy, 14 Colo. 174, 23 Pac. 447.) The validity of the assignment, and the question as to whether the notes in fact were and are the property of the defendant J. W. Hodgman, may be tried in the garnishment proceeding instituted by the First National Bank against Bews, Hodgman >et al., and this suit should await the trial of such issue. (Lee v. Tabor, 8 Mo. 233; Perea v. Bank, 6 N. Mex. 1, 27 Pac. 322.) The contrary doctrine would compel this court to assist in .making successful a fraudulent transfer of choses in action to defeat the claims of creditors, and would enable the debtor in many eases to defeat his creditors by a fraudulent transfer of his property — a position against law and good conscience. It is the opinion of this court that the judgment of the district court should be reversed, and the cause suspended until the question of the liability of the defendant, McLeod, to the attaching creditor be determined; and it is so ordered. Costs awarded to appellant.
Sullivan, C. J., and Huston, J., concur.