Case Name: Gilmore versus Carnahan, Garnishee
Court: Supreme Court of Pennsylvania
Jurisdiction: Pennsylvania
Decision Date: 1874-11-16
Citations: 81 1/2 Pa. 217
Docket Number: 
Parties: Gilmore versus Carnahan, Garnishee.
Judges: Before Agnew, C. J., Sharswood,. Mercur, aud Gordon, JJ.
Reporter: Pennsylvania State Reports
Volume: 81 1/2
Pages: 217–220

Head Matter:
Gilmore versus Carnahan, Garnishee.
1. Amere custodian of clioses in action, having received no money upon them, is not liable to an attachment in execution.
2. The custodian of aboses in action is in no sense a debtor to the defendant in the execution.
3. Moorhead and others were partners with Adams; he used the firm name on papei for his own benefit. By agreement his partners bought his interest in the firm and gave notes payable to his order for the purchase-money, which by agreement were placed in the hands of Carnahan, their proceeds to be used in the payment of the paper. An attachment execution was issued against Carnahan before any note became due. Held, that it would not lie.
4. The proper person to be served with the attachment was the party to the note, who was the debtor.
5. The instrument was an agreement inter partes for the liquidation of a debt arid its appropriation. The person holding the notes was not a party to-it, nor was it a voluntary assignment for the benefit of creditors.
6. No property passed to Carnahan by the instrument to create a trust under the act of 1818, requiring deed of assignment to be recorded.
November —, 1874.
Before Agnew, C. J., Sharswood,. Mercur, aud Gordon, JJ.
Error to the District Court of Allegheny County, of October and November Term, 1874, No. 226.
This was an attachment execution, issued January 23d,. 1873, by D. S. II. Gilmore against Calvin Adams, defendant,, James K. Moorhead, M. K. Moorhead, John L. Boyd, and. E. B. Carnahan, being the garnishees. The judgment on which the attachment was issued was recovered against Adams, January 28th, 1873, for $2514, on a note dated August 23d, 1872, drawn by Adams, in favor of Whitten & Co.,, payable in four months, for $2500, and indorsed by Whitten & Co., and Moorhead, Adams & Co.. On the 2d of March,. 1874, the attachment was discontinued as to J. K. Moorhead,. M. K. Moorhead, and John L. Boyd.
On the 27th of November, 1879, J. II. Moorhead, M. K. Moorhead, and Calvin Adams entered into partnership uuder the name of Moorhead, Adams & Co., for the purpose of carrying on the Novelty Iron Works, the partnership to continue for five years from the 1st of January, 1870, the capital consisting of real and personal estate, and all rights,, claims, demands, and assets of every kind, of the late firm of Adams, McKee & Co., whom they had bought out, and was to be represented by 165 shares of stock, of the value of $1500 each; of these Adams held 56 shares, M. K. Moor-head 12 shares, and J. K. Moorhead 97 shai'es; all the liabilities of the firm to be paid in full on or before the 1st. day of January, 1870 ; Adams to have control of the manufacturing, employing hands, etc.; J. K. Moorhead to have-charge of the finances, correspondence, etc. ; the firm name- not to be used for indorsements under any circumstances; neither member should sell his stock without the consent of the others, but with such consent new members might be admitted into the firm; on the death of any member of the firm, if the surviving partners and the representatives of the deceased partner could not agree as to settlement of the deceased partner’s interest, his representatives and the firm should each appoint one person, and the two, 'f necessary, might appoint a third, who should fix a valuation on the deceased partner’s interest, the survivors to have the privilege of purchasing it at the valuation ; if they declined the representatives of the deceased partner might purchase, etc. On the 3d of March, 1870, John L Boyd was admitted into the firm, and by changes in the stock, made to effect this, J. K. Moorhead was to own 87 shares, Adams 46 shares, Boyd 20 shares, and M. K. Moorhead 12 shares, to be treated as having been made January 1st, 1870, Boyd to be the financial manager, under the supervision of J. K. Moorhead. On the 7th of December, 1872, an agreement was entered into between the Moorheads and Boyd of the first part, and Adams of the second part, by which Adams sold his 46 shares in the firm to his other partners, these 46 shares to be appraised as is provided in the original articles in case of a decased partner, the parties of the first part to give their notes, as partners, for the appraised value of Adams’s interest, viz., four notes of $5000, payable at 3, 6, 9, and 12 months, and the balance, if any, at 16 months, with 'interest, a note for this balance to be given when it should be ascertained. “ These notes shall be placed in the hands of some responsible person, to be^mutually agreed upon, and the proceeds thereof shall be applied to the payment of paper now outstanding on which Calvin Adams may have made nse of the firm name of Moorhead, Adams & Co. as maker, drawer, acceptor, or otherwise used the name of said firm for his personal use or benefit, and of paper on which the name of said firm is indorsed for the accommodation of said Calvin Adams.”
On the trial, March 2d, 1874, before Kirkpatrick, J.
R. B. Carnahau,garnishee, called by the plaintiff, testified:
The parties could not agree upon any one in whose hands-to place the notes, and it was agreed that they should be placed in the hands of the witness until some further arrangement should be made. They were put into his hands, and remained there ever since. . The attachment was issued about a month afterwards. One of the notes was for $5000, another for $4481.85, and a third, for $1052.07. There should have been, under the agreement, four notes, for $5000 each, but by the agreement of the parties, a $5000 note, the one which would have been last due, was applied, December 11th or 12th, 1872, to take up an outstanding note, and would reduce one of these notes to $4681. The notes were delivered to witness about January, 1373, shortly after the appraisement of the property, and after the date of the articles of dissolution. The $501)0 note was applied, about December 12th, 1872, to take up the outstanding paper; that was the note of Calvin Adams, drawn to the order of Moorhead, Adams & Co., and indorsed by that firm name. It was one of the notes that came under the agreement; witness to take charge of notes under the clause in the agreement that the notes were to be placed with a responsible person; but it was understood, to be a temporary arrangement. No other arrangement had been made.. The agreement of dissolution was riot recorded. At that time it was supposed Adams was able to pay his debts. It turned out that hé was insolvent, and he had been declared a bankrupt. He was insolvent December 7th, 1872.
Adams testified that events subsequent to December 7th, 1872, showed that he -was at that time insolvent, but he did not then suppose that he was so. He could not then have paid his liabilities. Witness’s interest in the works was appraised.
The following are. points of plaintiff. They were denied Dy the Court:
1. Th'e paper of December 7th, 1872, and the selection of B. B. Carnahan as trustee thereunder, constitutes an assignment for the benefit of creditors, and not being recorded is void, and the plaintiff is entitled to recover.
2. If the Court refuse to charge as requested in the first point, then the contract of December 7th, 1872, is an agreement for indemnifying J. E. Moorhead, M. E. Moorhead, and John L. Boyd, against certain paper on which said Calvin Adams used the name of Moorhead, Adams & Co., for his personal use, and as the note upon which judgment was obtained against Calvin Adams in the case on which this attachment has issued is one of said notes, the attachment is an appropriation to the purposes intended, and the plaintiff is therefore entitled to recover.
The Court instructed the jury that their verdict should be for the garnishee. They so found.
The plaintiff removed the record to the Supreme Court, and there assigned for error the answers to his points and the instruction of the Court.
Aughinhaugh $ Duff and D. T. Watson. Every grant or transfer by a debtor of his property placing it beyond the reach of an execution, and charging it with a trust for the payment of his debts, is within the acts of Assembly relating to assignments for the benefit of creditors, and is void unless recorded, etc., according to the acts of Assembly: Lucas v. Sunbury and Erie Railroad, 8 Casey, 458. Here, under the agreement of December 7th, 1872, there was property, a trustee, Adams insolvent, creditors to take under the trust, and the debtor giving a preference to favored creditors: Miners’ National Bank’s Appeal, 7 P. E. Smith, 193 ; Watson v. Bagaley, 2 Jones, 164.
The fact that the other partners, after Adams’s interest was fixed by the appraisement, gave their notes, payable to his order, passed a complete title to him for the amount ascertained by the appraisement.
J. H. Hampton, M. W. Acheson, and B. JB. Carnahan, for defendant in error.
The transaction of December 7th, 1872, was a bona fide purchase and indemnity for partners who had been wronged by the improper acts of their parmer, made, too, at a lime when he and all the others supposed he was solvent.
The attachment was not an appropriation of the,notes in the hands of the garnishee. The duty of the “ responsible person ” mentioned in the articles of dissolution was to apply their proceeds to the indemnity of the other partners. An attachment could not control him unless the three partners were relieved from the liability on the notes improperly indorsed by Adams. The trustee would even then have to-make a pro rata distribution to the paper described in the articles, but the attaching creditor here seeks to take all.

Opinion:
Judgment was entered in the Supreme Court, November 16th, 1874.
Per Curiam.
A mere custodian of choses in action, who has received no money upon them, is not liable to an attachment in execution. He is in no sense a debtor to the defendant in the execution. The proper person to be ser-ved with the attachment is the party to the note or other chose, who is the debtor, and is to be warned not to pay over'to his creditor. Mr. Carnahan was not a proper garnishee.
The paper referred to was an agreement inter partes for the liquidation of a debt and its appropriation. Mr. Carnahan was not a party to it, and was not a voluntary assignee for the payment of creditors. No property passed to him by the instrument to create a trust under the act of 1818, requiring the deed of assignment to be recorded.
Judgment affirmed.