Court Opinion

ID: 9852452
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:30:42.034817+00
Date Added: 2024-06-11T09:22:28.028472
License: Public Domain

UDALL, Chief Justice.
Appellee brought action in the Superior Court of Maricopa County to recover the sum of $23,950 representing damages sustained by reason of a wrongful writ of garnishment issued against him. Appellant was surety on the garnishment bond. Judgment was rendered against the surety. No Findings of Fact and Conclusions of Law were requested and none were made.
The essential facts brought out during the trial show that on June 16, 1954, D. W. Simpson purchased certain mercury mining claims located in Maricopa County, Arizona, together with the improvements and mining equipment thereon; the equipment, however, was not itemized in the contract. The agreement further provided that the buyer could abandon the property.1 The mining claims were later transferred to the International Ore Corporation, in which Simpson, Jesse H. Lochusen and Tom H. Donaldson owned all of the capital stock.
On May 23, 1955, the three stockholders pledged all their stock to appellee as security for a $25,000 loan he made to the corporation on the same day, which loan was evidenced by two notes for a total amount of $25,000 made payable to him on or before November 23, 1955. The stock was put in escrow with the agreement that if the notes executed for the loan were not paid when due the stock would be sold at public sale and the proceeds applied first on the indebtedness due the appellee, the balance, if any, being paid the stockholders.
The notes were not paid when due; on November 23, 1955, or shortly thereafter, appellee made demand upon the escrow holder to sell the stock. The demand was refused because on or before that same day International Ore Corporation commenced an action in the Superior Court against appellee and others seeking damages of $26,000 for an alleged breach of contract. In connection with the action, International Ore caused two writs of garnishment to be *274issued and served, one on the escrow holder and the other against itself; and it posted bond in the principal sum of $26;000 upon which the appellant was surety.
On June 26, 1957, judgment was rendered in favor of appellee in the action brought by the corporation. The stock was ordered sold at public sale in August of 1957, pursuant to the terms of the escrow agreement. Appellee, being the only bidder, purchased the stock for $50. Later, when execution was issued on the assets of International Ore Corporation only a few remaining mining claims were offered for sale. Appellee made a “token bid” of $2,000.2 These two sums were credited on the $26,000 bond obligation, leaving a balance due on the indebtedness of $23,950.
It was argued at the trial that by virtue of the wrongful garnishment appellee was prevented from having the stock sold as provided under the terms of the pledge agreement, and he was unable to take possession of the property owned by International Ore Corporation if the stock did not sell for the amount of the notes. Further, it was contended by appellee that the corporation at the time payment was due had ample property out of which recovery could have been realized.
Appellant admits that the writs of garnishment were wrongful but claims that under the pleadings and the evidence the appellee can recover no more than nominal damages. In support of this position it makes three assignments of error:
1. Appellee failed to prove he suffered any damages as a result of the wrongful garnishment.
2. Evidence that appellee would have been able to operate the claims and make a profit was not within the scope of the pleadings and it was speculative and conjectural. Therefore, it was improperly admitted.
3. The court erred in allowing appellee to testify as to his recollection of an assayer’s report upon 50,000 tons of dump material.
With regard to the first assignment of error appellee alleged inter alia in his complaint :
“That by virtue of the issuance and service of said Writ of Garnishment, which impounded in the hands of INTERNATIONAL ORE CORPORATION the claims and amounts due from it to the plaintiff, C. W. NASH, and his co-plaintiff above named, RALPH W. RICH, they were unable to attach or levy upon any property then owned by INTERNATIONAL ORE CORPORATION and out of *275which recovery might be had when and if judgment was entered for the recovery of the C. W. NASH notes. No such action was available until it was determined, in Cause No. 86360, that the claims of INTERNATIONAL ORE CORPORATION were without merit and that the garnishment secured by the bond of the defendant in such action was wrongful.
“At the time of the filing and service of said Writ of Garnishment, and upon the date of the garnishment bond issued by the defendant in said action, INTERNATIONAL ORE CORPORATION had ample property out of which recovery could have been made on plaintiffs’ notes.”
Appellant contends that garnishment of the stock in the hands of the escrow in nowise affected appellee’s right to bring suit against International Ore, attach the assets and levy execution after judgment. This argument ignores the thrust of the complaint; for the $25,000 debt, as well as the stock, was garnished in the hands of the debtor — the corporation itself. He could not proceed against the corporation on the notes for the reason that the indebtedness to him was held in abeyance pending the disposition of the suit by International Ore. Gillespie Land & Irrigation Co. v. Jones, 63 Ariz. 535, 164 P.2d 456 (1945). Furthermore, had he been able to pursue the debt to judgment, no execution and sale in satisfaction thereof would have been possible. A.R.S. § 12-1578 provides: “From and after the service of a writ of garnishment, the garnishee shall not pay to defendant any debt or deliver to him any property * * The fact that both the debt and the security were garnished left appellee completely powerless to realize on his claim or prevent it from becoming worthless while the writs remained in force.
Proof that the debtor corporation became insolvent, or could no longer pay the debt after collection was delayed by the wrongful garnishment, would therefore justify recovery on the bond. American Surety Co. v. Florida Nat. Bank & Trust Co., 94 F.2d 126 (5th Cir.1938); Taylor v. Wilbur, 170 Wash. 265, 16 P.2d 457 (1932). Such proof would, of course, have to be accompanied by evidence that the stock by which the debt was secured had also declined in value. But both the debtor’s inability to pay and the depreciation of the stock could be established by comparison of the corporation’s worth in 1955 with its worth in 1957 when the garnishment was finally discharged. See In re Frank’s Estate, 123 Or. 286, 261 P. 893, 57 A.L.R. 1155 (1927) to the effect that the “book value” of stock in a close corporation is prima facie evidence of its value. Cf., American Surety Co. v. Duvall, 22 Ariz. 261, 196 P. 457 (1921); Wineinger v. Kay, 58 S.W.2d 876 (Tex.Civ.App.1933).
*276At trial testimony was offered by the appellee which tended to establish the existence and value of property and equipment on the premises of the mine at the time of the wrongful garnishment. Merton I. Root, a maintenance and mill operator employed by International Ore Corporation testified concerning a large number of items of equipment placed on the premises by Mr. Simpson and International Ore. Listed among these items were two 1955 Chevrolet pickup trucks; a new Caterpillar power plant; a crusher, rebuilt at a cost of $1150; an air tugger or hoist; a retort that was built under his supervision;3 two one-ton chain hoists; a large assortment of tools and miscellany used in the mining operation including jack hammers, electric drills, welding equipment, wrench sets, tap and dies, drafting tools, etc.
The evidence indicates that the two new pickup trucks and the Caterpillar power plant were being purchased under contract. The record is silent as to the equity which International Ore had in the two trucks but it does show that International Ore had an equity, at the time of the loan, of $2,000 in the power plant. The record does not disclose that there were any other liens or encumbrances on any of the property. International Ore failed to make the payments on the Caterpillar power plant after the garnishment was served, although the power plant remained in its possession for nearly a year, and as a result of the garnishment the $2,000 equity was lost as an asset of International Ore.
Mr. Paul R. Corwin, an employee and overseer of International Ore’s operation, testified as to the value of the equipment on the mining premises as of October 19, 1955 as follows:
“Q How much experience have you had in mining ?
“A Twelve years
“Q You have purchased mining equipment, I presume, during that time ?
“A I have.
“Q Would you be able to state what the value of that equipment that you have listed was as of October, 1955?
“A Completely installed where it was located, I would say in the neighborhood of $100,000. Of course, the cost of the units themselves in Phoenix or Los Angeles would be different altogether. If you are asking for the complete installation of each setup there, I would say in the neighborhood of $100,000.”
*277Appellee Nash, a civil engineer with 16 years mining experience, testified as to some of the assets at the mine and the replacement value of some of the equipment that was removed or left in virtual ruin after the writs of garnishment issued. He stated: ■“It would have required $13,000 to replace the portable equipment. It would have required $7500, at a minimum, to restore the machinery and building so that they could be used, and $3,000 to replace the equipment in the camp to house the workmen.”
On the question of value the facts show that the stockholders invested $200,000 in this mining venture, for which they asserted a claim against the corporation, after they acquired the property in the summer of 1954, and that the mining enterprise was a going concern up until about the first of November, 1955; that for the month of September, 1955, twenty-two flasks of mercury were produced having a value of $5,500. For the month of October, fourteen flasks had been produced of a value of $4,480. About 40 to 45 tons of ore were being mined each day and sent to the mill. Besides indicating the corporation’s substantial value as a going concern, this evidence bolsters the testimony relating to the value of the mining equipment and other personal property then on the premises.4
Admittedly, the replacement value, or the value of the equipment as an integrated portion of the mining operation may have been greater than any amount appellee could have realized on a sale of the assets. Nevertheless, we think the evidence of value was sufficient to justify a finding by the trial court that the $25,000 debt could have been fully satisfied.
 The question was raised at trial whether the evidence established that the equipment was owned by International Ore. As we have seen, the trucks and power plant were being purchased on contract. *278We believe, however, that the trial court could have concluded that the other equipment was corporate property. There is no doubt that International Ore had exclusive possession. Unless explained or qualified, such possession is prima facie proof of ownership. Starkweather v. Conner, 44 Ariz. 369, 38 P.2d 311 (1934). Ownership was thus a question of fact and the finding will not be disturbed on appeal.
Appellant argues that no evidence was introduced which would show that the corporate assets, in 1955, exceeded the liabilities. We disagree. It was clearly established that the stockholders’ $200,000 claim was subrogated in favor of appellee. An audit of the corporate books at the time the loan was negotiated shows an indebtedness of approximately $26,000 and the ap-pellee testified that after the loan was made “all of the current debts of the corporation were paid up to that date.”
The appellant asserts that its agent reported, on the 19th of October 1955, that payroll checks should have been made on the 17th to the 14 men working at the mine and that the payments had not been made on the 18th. Further, it appears that Mr. Corwin had two of his paychecks dishonored. This evidence, however, does not in any way show that the payroll and other operational debts were not fully paid. Appellant argues that International Ore was in very bad financial condition in September, October, and November, 1955. It was at this very time, however, that the corporation showed so much faith in the financial structure of the mining property that it filed a suit against the appellee and had the writ of garnishment served to prevent the appellee from getting possession of the mining claims and mining equipment.
Even assuming that the October 17 payroll was not met, and that the two dishonored checks were not paid, their total would be an infinitesimal liability compared to the value of the assets of International Ore Corporation placed at $100,000 or more at the time the writ of garnishment was served.
The record does not disclose that any other debts were incurred by International Ore between the date of the loan and the date the writ of garnishment was served. The burden, of course, was on appellee to establish that the assets exceeded the liabilities, but we think that the foregoing evidence was enough to support a conclusion that the net worth of the corporation was substantial and far in excess of appellee’s claim.
Another fact that must be considered before the case can be disposed of is the question of what became of the mining equipment and personal property that was located on the site. Mr. Root testified that when he and Mr. Morgan went to the mine on the 8th of August, 1957, “the only thing that was there was the crusher that had been *279repaired; it was still there * * * and the refrigerator and these two beds — the air tugger and the Caterpillar diesel electric plant, and everything was all gone.” Mr. Joseph Morgan corroborated his testimony as follows: “We went * * * [to the mine in August of 1957] * * * we found that all or practically all of the machinery and equipment had been removed from that property, and that there was very — practically no machinery and equipment there, and that the mine was in very bad shape.”
The garnishment bond executed by the appellant provided that the American Surety Co. of New York
“[acknowledged itself] bound to pay to C. W. Nash, Defendant, the sum of $26,000, conditioned that the above-bounden International Ore Corporation, plaintiff in the above entitled cause, will prosecute its suit to effect and will pay all damages and costs that may be sustained by the defendant by reason of the wrongful suing out of said garnishment.”
The appellant frankly acknowledges that the suing out of the garnishment was wrongful. The law clearly holds that any damages accruing to the defendant in a garnishment action that naturally flow from the wrongful suing out of the writ are recoverable to the extent of the damages shown, not exceeding the amount of the bond executed by the surety. A.R.S. § 12-1572; De Wulf v. Bissell, 83 Ariz. 68, 316 P.2d 492 (1957).
In a case tried to the court in which no request for findings of fact is made, the judgment will be upheld, if possible, on any theory within the issues and supported by the evidence. Julian v. Carpenter, 65 Ariz. 157, 176 P.2d 693 (1947).
We conclude that the evidence taken in its strongest light shows that if the appellee could have enforced the terms of his agreement with the stockholders and immediately after the default of payment had the stock sold, the stock would probably have brought enough to pay the indebtedness due the appellee. If at the time of the sale of the stock the appellee had become the purchaser at the amount of or less than his claim he could have obtained immediate possession of the mining equipment and personal property then located on the mining premises. We further conclude that had the appellee acquired the stock at that time, under the terms of the agreement there was sufficient mining equipment and personal property at the mine at the time of the wrongful garnishment, that belonged to International Ore, out of which appellee could have satisfied his claim based on the promissory notes for $25,000.
“A judgment will not be disturbed when there is any reasonable evidence to support it.” Patzman v. Marshall, 90 Ariz. 1, 363 P.2d 599 (1961).
*280Since we have approved the ruling oi the trial court with reference to the first assignment of error, we do not find it necessary to rule on the questions raised by the other assignments.
Judgment affirmed.
BERNSTEIN, J., and CHARLES C. STIDHAM, Superior Court Judge, concurring.
Note: Vice Chief Justice LOCKWOOD and Justice JENNINGS having announced their disqualification, the Honorable WILLIAM W. NA-BOURS, Judge of Superior Court, Yuma County, and the Honorable CHARLES C. STIDHAM, Judge of Superior Court, Maricopa County, were called to sit in their stead.

. “Should the buyer decide to abandon the property he shall leave the same in a safe condition and shall not remove any permanent improvements therefrom, or remove anything that will leave the mine in an unsafe or dangerous condition, and will pay or cause to be paid all royalties that may be due at time of the abandonment of the property.” (Contract of Sale.) There was no prohibition in the contract against removal of the mining equipment by the purchaser.

. Mr. Morgan testified, “tlie only property that could be levied on at that time was some claims that had been located by the International Ore, mining claims.”

. In connection with his testimony concerning the retort he stated that the International Ore expended approximately $2,000 on. the material that went into the rebuilding of the retort and approximately $800 to $900 in labor.

. The general principle recognizing this type of value was stated in Kimball Laundry Co. v. United States, 338 U.S. 1, 69 S.Ct. 1434, 93 L.Ed. 1765 (1949): “The value of all property, * * * is dependent upon and inseparable from individual needs and attitudes, and these, obviously, are intangible. As fixed by the market, value is no more than a summary expression of forecasts that the needs and attitudes which made up demand in the past will have their counterparts in the future. * * * The only distinction to be made, therefore, between the attitudes which generate going-concern value and those of which tangible property is compounded is as to the tenacity of the past’s hold upon the future: in the case of the latter a forecast of future demand can usually be made with greater certainty, for it is more probable on the whole that people will continue to want particular goods or services than that they will continue to look to a particular supplier of them. * * * But as the probability of continued patronage gains strength, this distinction becomes obliterated, and the intangible acquires a value to a potential purchaser no different from the value of the business’s physical property.”