Allaire v. Laurel Canyon Mining Co. ( 1920 )

CUNNINGHAM, C. J.

(After Stating the Facts as Above.) — The issue joined and tried involved the inquiry whether or not the money paid to the bank by Ruff and Carlson, lessees, as payment of rent on a lease for the occupation of mines belonging to the Laurel Canyon Mining Company, received by the bank and paid to the hank pursuant to instructions of the Laurel Canyon Mining Company, and held by the bank to be distributed to the creditors of the Laurel Canyon Mining Company pro rata, subjected the hank to the garnishment process as one indebted to the defendant mining company while holding such money — $2,077.14—for distribution among the creditors of the defendant mining company.

Of course, the question whether the money in the hank is liable to the garnishment depends upon the inquiry as to whether the hank was holding the money for the defendant as its agent or bailee or other like relation, or whether the bank was holding the money as the trustee of the creditors of the defendant mining company, over which the mining company had no control. If the garnishee bank was holding the money as the agfent of the defendant mining company, subject to orders the mining company could subsequently give to the bank directing the disposition of the money, then the bank was the agent of the defendant company, and its discharge from the garnishment process was erroneous. Otherwise, if the bank was holding the money as a trustee for the use and benefit of the creditors of the defendant company, provided, of course, said creditors bad expressly or impliedly assented to such arrangement for their benefit, and accepted the bank as such trustee, then whenever the facts appear that the trustee has been accepted by the creditors — and such facts do appear from the record — such creditors so accepting the changed conditions of payment of their claims thereafter look to the trustee for payment, and they have a vested interest in the money in the trustee’s hands to the extent that the same is applicable to their respective claims. The trustee is not then the agent of the defendant debtor, but it is the agent, the trustee, of the said creditors, and owes such creditors, and not the defendant, the money in its possession. This fair principle was applied in Strayhorn v. Webb, 47 N. C. 199, 64 Am. Dec. 580, and the cases cited in notes.

Under our statutes (chapter 2, tit. 6, Eev. Stats. Ariz. 1913), and as recognized by the garnishment laws generally, to render a person liable to garnishment, he must have in his possession, belonging to the defendant, property, money, credit or effects, or he must be indebted to the defendant (Smith v. Davis, 1 Wis. 447, 60 Am. Dec. 390), and the Arizona statute, supra, gives recourse to shares of stock owned by the defendant in a corporation served as garnishee.

The plaintiff admitted at the trial, through his attorney, that he received pro rath payment on his judgment debt from the bank, as late as the fourth day of December, 1918. Tbe answer of tbe garnishee was filed in this matter on the nineteenth day of October, 1918. There are some, although not very satisfactory, statements in the record tending to show that the plaintiff received a dividend payment from the bank prior to December 4, 1918. The fact clearly appears from the record that the plaintiff, Thomas Allaire, was notified of this transaction of the mining company and the bank, and that he acquiesced in the transaction to the extent of accepting a portion of the benefits provided for him by the transaction after, if not before, he commenced this proceeding.

It would be assuming inconsistent positions for the plaintiff to accept dividends under the transaction for a time, and then change his mind and attempt to forestall other creditors similarly situated from receiving their dividends and appropriate an entire fund to the payment of his claim to the exclusion of the other creditors, ■ as well as to the hindering and. delaying of the other creditors. Hence, conceding that the transaction was designed to hinder and delay creditors, and for that reason the transaction was liable to be annulled at the suit of a creditor thereby injured, yet neither the plaintiff nor other creditors who accepted a dividend, or other benefits, knowing the same was offered and paid pursuant to the said transaction, can be heard to complain that he has been hindered, delayed or defrauded by that particular agreement, for the reason that such creditor has impliedly become a party to and is benefited by such transaction.

We find no error in the record. The order appealed from is therefore affirmed.

ROSS and BAKER, JJ., concur.