Clyne v. Easton, Eldrige & Co.

The trial of this cause in the superior court resulted in a judgment for the plaintiff. Defendant moved for a new trial, and its motion was granted as to some of the issues, but denied as to the others. Both parties appeal—plaintiff from that part of the order which directs a new trial of the issues as to which the findings are vacated, and defendant from the part which denies a new trial of the remaining issues. The record is of course the same on both appeals, and they have been submitted together.

The salient facts of the case are that the defendant, a California corporation, prior to the seventh day of June, 1893, had written authority from Linnie W. Goodyear and her husband, H. C. Goodyear, to sell on commission 1,244.31 acres of land belonging to Mrs. Goodyear. The land was heavily encumbered by a first mortgage to the German Bank and by a second mortgage to one Kahn. The authority to sell provided for a sale of the land in separate tracts at a fixed minimum of price, and defendant was to receive a commission of two and one half per cent of the price so fixed, and also one half of any excess received from sales of the property over and above the fixed price plus the expenses of surveying, platting, and advertising, which expenses it is clear

“Whereas, on the 25th day of January, 1893, the undersigned entered into a contract with Easton, Eldridge & Company for the sale of certain real estate in the county of Solano, state of California; and whereas, owing to the condition of the mortgages, it is absolutely necessary to sell the land as a whole: Now, therefore, it is agreed, and Easton, Eldridge & Company are hereby authorized to sell the land, viz.: 1,244 and 31-100 acres, more or less, for such sum as shall liquidate the present mortgage indebtedness, and in addition pay us the sum of twelve thousand dollars, and all excess received over and above that, as also all crop returns now in hand or due on account of crops growing on the land for the year 1893, shall belong to the said Easton, Eldridge & Company, and shall be held by them as a part of their compensation under this agreement of sale. Witness our hands this 7th day of June, A. D. 1893. [Signed] Mrs. H. C. Goodyear. H. C. Goodyear. Witness: [Signed] Geo. Easton.”

Acting under this authority and some alleged.oral modifications thereof, the defendant during the year 1893 sold the entire tract in two parcels, and out of the proceeds satisfied and discharged all the encumbrances thereon, including the mortgages above mentioned and some other liens. The twelve thousand dollars claimed by the Goodyears, however, had not been paid in full, and there was a dispute between them and the defendant as to the balance remaining due upon the account, when, on the tenth day of August, 1894, the plaintiff in this action commenced an attachment suit in Solano County against Mr. and Mrs. Goodyear to recover, with interest, the sum of $6,805 due upon their promissory notes. Summons and attachment were duly issued in said suit, and on August 11th the attachment was placed in the hands of the sheriff of San Francisco for service. No return was made thereon until March 29, 1897,—at which date the following paper was filed in the office of the county clerk of Solano County:—

"Office of the Sheriff of the City and County of San Francisco. By virtue of the annexed writ, I duly attach all moneys,

credits, and effects belonging to the defendants named in said writ, or to either of them, by serving upon each of the hereinafter named parties, personally, in the city and county of San Francisco, at the times set opposite their respective names, a copy of said writ, with a notice in writing notifying each of said parties, respectively, that such moneys, credits, and effects of said defendants, or either of them, was attached, and not to pay over or transfer the same to any one biit myself. Statement demanded. The answers were as set opposite their respective names. Names of the parties served as aforesaid: Easton . & Eldridge & Co., through G. Easton (Sec.); time of service, Aug. 11th, 1894, at 11:00 o’clock a. m.; answers,‘No funds.’ Henry B. Shaw, Aug, 11th, 1894, at 11:15 a. m.; no answer. [Signed] John J. McDade, Sheriff, by J. J. McTieman, Deputy Sheriff.”

After said writ of attachment was so served upon the defendant herein, on the eleventh day of August, 1894, nn entry was made in the margin of the ledger account, kept by said Easton, Eldridge & Co., in connection with the transactions under the contracts above mentioned, as follow»: “Attached August 11, 1894.” And thereafter said Easton, Eldridge & Co. refused to make further payments on account of such transactions to H. C. Goodyear, or Linffie W. Goodyear, giving as the reason for such refusal that it had been enjoined by the courts from paying over any more money. In the mean time Clyne had recovered a judgment in his attachment suit against the Goodyears for $7,532, with accruing interest. The date of said judgment was December 13, 1895, but execution thereon was hot issued until June 28, 1897. This writ was served on the defendant herein on July 15, 1897. In response to the accompanying notice and demand, defendant denied any indebtedness to the Goodyears; and subsequently, upon supplementary proceedings duly taken, appeared by its president before a referee appointed by the superior court of Solano County, where it again denied all indebtedness to the Goodyears exceeding fifty dollars, denied possession of any of their property, and also pleaded the statute of limitations (Code Civ. Proc., sec. 339, subd. 1) as :a separate defense to any claim in their behalf. Upon the coming in of the referee’s report to that effect the court made an order in the case of Clyne v. Goodyear authorizing

-In disposing of the plaintiff’s appeal we have to consider only the particular issues to which the order granting a new trial was limited, and which relate exclusively to the question whether the debt of the defendant to Mrs. Goodyear was really attached in August, 1894, as alleged by plaintiff and denied by defendant. These issues vitally affect the plea of the statute of limitations. For whatever may have been the amount of defendant’s indebtedness to Mrs. Goodyear resulting from the sale of her lands, it is certain that it accrued prior to the alleged garnishment on August 11, 1894, and it is conceded that an action for its recovery by her would have been barred by subdivision 1 of section 339 of the Code of Civil Procedure within two years from that date. It is also conceded that there could have been no liability of the defendant to any creditor of the Goodyears by virtue of an attachment or execution levied after the debt had become barred as to them. The appeal of the plaintiff therefore must fail imlesK the evidence in the case shows without substantia] eonfiiét that the debt was attached as alleged. The appellant to sustain his contention upon this point relies upon two items of evidence: 1. The return of the sheriff above quoted;

As to the admission of defendant, consisting of a pencil entry by one of its bookkeepers on the margin of the Goodyear account in defendant’s ledger, and of the statement of its president that the debt was attached as an excuse for refusing further payments, that certainly was evidence that the debt had been attached; but it'was not conclusive evidence. It may have been nothing more than the expression of an erroneous opinion as to the effect of the service of the notice which the sheriff says he served. As to the argument that the defendant, by refusing further payments to the Good-years, upon the ground that the debt had been attached, and thereby securing an advantage to itself at their expense, is now estopped to deny the efficacy of the notice, it may be said that in a conceivable case these facts might work an estoppel in favor of the Goodyears; but it is not apparent how such estoppel can avail this plaintiff in view of the facts appearing in this record. A great deal of the argument of" appellant on this branch of the case is devoted to the proposition that the defendant has no concern in disputing the validity of an attachment the regularity of which has at all times been conceded by the Goodyears. This argument "ignores the fact that the defendant denies any indebtedness to the -Goodyears, and that an action by them is barred by the statute of limitations. The right to interpose this plea is a valuable right of which the defendant cannot be deprived by the admission of a third party, and especially of a party whose interest is adverse. If the debt was not attached, the

The plaintiff urges still another objection to the right of defendant to question the attachment of the debt. It is said that no objection to the sheriff’s return was ever made prior to the motion for a new trial, and eases are cited in which it has been held that a garnishee waives all objections to the sheriff’s return which he does not make when he appears, and other cases which deny his right to interpose technical objections to the mode of service of the writ. These cases are not in point, because they arose under the laws regulating trustee process and garnishee process in other jurisdictions where the garnishee is required by the process to appear in the action and answer, to the court. Under our attachment law a garnishee is not required and has no right to appear in the action. The only answer he makes is to the sheriff at the time of the service of the writ, and that relates only to the property actually attached which he has in his possession or under his control. He has nothing to do with the return of the writ, unless it should be false in gome particular which would subject him to a liability beyond that warranted by the facts. In this case the defendant does not object to the return. On the contrary, it.relies on the return as containing a true statement of what the sheriff did,—i. e. that he attached credits and effects, but did not attach ■ the debts. Defendant’s real objection was made in the only manner and at the earliest time it could be made. Its answer to the original complaint is not in the transcript, but by the amended pleadings the issue as to the attachment of the debt is distinctly raised by allegation on one side and denial on the other. And at the trial, when the sheriff’s return of the writ was offered in evidence, defendant objected that it was irrelevant. It is said that this was not the proper objection; that the real objection to the return, if any, was that it was

This conclusion, however, does not dispose of all the questions arising upon the plaintiff’s appeal, for the defendant contends (and in view of the further proceedings involved in the order for a new trial, the question cannot be left open) that whether the debt of defendant to the Goodyears was or was not attached in August, 1894,—that even conceding the efficacy of the attachment in that respect,-—the order granting a new trial should still be affirmed, upon the more radical ground that this plaintiff’s cause of action was barred by the same lapse of time that barred an action by the Goodyears themselves; or, in other words, that the running of the statute of limitations in favor of a debtor is not interrupted by making him a garnishee. This is really the most important, as it is the most difficult, question in the case; for its determination in favor of. respondent would seem to put an end to the present controversy, and however it may be determined our conclusion will remain a precedent of vital importance for future cases. The plaintiff claims that this question (if since the adoption of the Civil Practice Act it has ever been a question) was set at rest by the decision of Department Two of this court in Carter v. Los Angeles National Bank, 116 Cal. 374 , [ 48 Pac. 332 ], The code provision relied on is contained in section 544 of the Code of Civil Procedure, which reads as follows: “All persons having in their possession or under their control any credits or other personal property belonging to the defendant, or owing any debts to the defendant, at the time of service upon them of a copy of the writ and notice, as provided in the last two sections, shall be, unless such property be delivered up or transferred, or such

But in making this entirely correct statement, in response' to the claim there asserted by the intervener (and not by the garnishee, against whom an action by his creditor was not barred), it will be seen that the court took pains to add the qualification that of course the garnishee could plead any defense against the garnisher that could be pleaded against his creditor. So far from sustaining the position of plaintiff, this decision is distinctly adverse. The cases cited by plaintiff from other jurisdictions afford us no aid in construing our statute. Generally they sustain the statement in Drake on Attachment (sec. 672) to the effect that in his action against the garnishee the garnisher can claim nothing which the original creditor could not claim if suing in his own behalf; and upon this principle it would seem to follow that the plea of the statute might be interposed against the garnisher whenever it could be interposed against the original creditor. In none of the cases to which we have been cited do we find anything in conflict with this view. Of course, in those jurisdictions where service of trustee or garnishee process has the effect of making the trustee or garnishee a party to the action the statute ceases to run in his favor after service, because the claim against him is then in suit. In this dearth of authority upon the particular point in controversy we have left for consideration only the language of the statute (Code Civ. Proc., sec. 544), as affected by cognate provisions of the codes. "We think, in view of the general provisions of the statute of limitations (Code Civ. Proc., sec. 312 et seq.), and of its conceded policy, the legislature could not have intended to exclude from its equal benefit every person who happens to be made a garnishee in an action between other parties, and that the section in question was intended to apply to those eases only in which the garnishee admits his indebtedness to the defendant in the attachment or admits his possession or control of specific property of the defendant. In such case he can discharge his admitted obligation by paying the debt to the sheriff or delivering possession of the defendant’s property. This it is not only his

Our conclusion upon the whole matter is that whether or not the writ and notice served on defendant in the suit of Clyne v. Goodyear effected a garnishment of its indebtedness to them, or either of them, the statute which had begun to run in their favor continued to run,- and that the right to maintain this action was barred before the original complaint was filed. The only inconvenience that could result from this construction of the statute is this: It might happen, and in many cases no doubt would happen, that a judgment in favor of an attaching creditor could not be obtained until after the statute had barred an action against the garnishee; and if the right of the attaching creditor to sue the garnishee

It seems unnecessary, however, in view of the points decided, to enter upon any detailed discussion of the questions presented by the defendant’s appeal. This involves a construction of the original and substituted authorizations to defendant to sell the land, and the amount and character of

It is ordered that so much of the -order appealed from as grants a new trial be affirmed, and so much thereof as denies a new trial of other issues be reversed.

McFarland, J., Henshaw, J., and Lorigan, J., concurred.

I concur in the judgment and in all of the opinion of the chief justice, except the part thereof to the effect that where a garnishee, in his answer to the sheriff, admits that he is indebted to the defendant, the service of the garnishee process in such eases interrupts the running of the statute of limitations on the debt, and in fact prevents its again running until the attachment is discharged or the plaintiffs’ debt paid. The provision of section 544 of the Code of Civil Procedure, which is said to have this effect, applies alike to cases where the garnishee owes a debt' to the defendant and to those where he has in his possession personal property belonging to the defendant. Where the garnishee has property which he admits he holds as custodian of the defendant, the statute of limitations does not run, and cannot begin to run, so long as he admits that he holds as such custodian, nor until in some manner he asserts a claim thereto adverse to the defendant. The admission in the answer to the sheriff in such cases, therefore, would of itself be evidence that the statute had not begun to run. But where a matured debt exists at the time of the service of the garnishee process the statute of limitations has already begun to run against it, and an admission that the debt still exists does not ordinarily stop or interrupt the running of the statute. There are strong grounds for holding that section 544 was not intended to give any greater effect in this respect to an admission contained in an answer to the sheriff on garnishee process than in ordinary cases, and that the full meaning of that section, so far as this point is concerned, is that after the service of garnishee process upon a third person the garnishee, if he keeps the property or does not pay the debt to the sheriff, shall thereafter be liable to the attachment plaintiff in the same manner and to the same extent that he was theretofore liable to the defendant, but no farther, and that

As this question is not involved in the case, I do not think any opinion should be expressed concerning it.

Van Dyke, J., and Angellotti, J., concurred in the foregoing.

Rehearing denied.