First National Bank v. Denbrae Sheep Co.

The statement of facts in the majority opinion is substantially correct, and it will be noted therefrom that Hand brought her action against the Denbrae Sheep Company and attached a considerable amount of personal property, which property was released upon redelivery bonds given by respondents. Appellant obtained its judgment after the property had been released by the giving of the redelivery bonds. Prior to the entry of the order of dismissal in the Hand action, appellant's attorney notified the attorney for the intervenors therein that appellant had obtained judgment against the Denbrae Sheep Company.

One of the vital questions involved is whether appellant, having filed its original action against the Denbrae Sheep Company within thirty days from the first publication of notice of attachment in the Hand case, and securing judgment prior to the order of dismissal of said Hand case, acquired such a right under the attachment proceedings in the Hand case, by virtue of chap. 206 of the 1921 Session Laws, that it could not be deprived of such right against the attached property or its alleged right of action on the redelivery bonds given for the release of such attached property.

Chapter 206 of the 1921 Session Laws, in so far as applicable to the case under consideration, contains the following provision:

"Any creditor of the defendant, who, within 30 days after the first posting and publication of such notice (of attachment) shall commence and thereafter diligently prosecute to final judgment his action for his claim against the defendant shall share pro rata with the attaching creditor in the proceeds of defendant's property where there is not sufficient to pay all judgments in full against him."

This statute, in substance, has been before this court upon previous occasions, and held to be constitutional. Quirk v.Diana Mines Co., Ltd., 34 Idaho 30, 198 P. 672, wherein, in the course of that opinion, this court, speaking through former Chief Justice Rice, said:

"Respondent insists that the provisions of the statute quoted above are unconstitutional and void. The constitutionality of this statute was considered in Greene v. Rice, 32 Idaho 504,186 P. 249, and it was there decided that the law was valid, . . . . and we now reaffirm the decision in the Greene case. In that case . . . . the court said: 'The manifest purpose of the act is to provide a fair and equitable distribution of the available and attached assets of the debtor.' "

Further on in the opinion in Quirk v. Diana Mines Co., Ltd.,supra, this language is used:

"Under the statute if he (a creditor other than the attaching creditor) commenced his action after posting and publication of the notice and obtained judgment within sixty days, he is entitled to prorate whether his action in bringing suit was prompted by a knowledge of the giving of notice or not."

There is also authority to the effect that the purpose of the statute is to prevent the piling up of additional costs to eat into the debtor's assets by successive levies of attachment.

It would seem that a fair construction of chap. 206,supra, would be that an attachment caused to be issued by the first attaching creditor inures to the benefit of all subsequent creditors where a compliance with the statute is shown, and that an officer taking possession of the property attached holds the same for the benefit of not only the attaching creditor but for the benefit of all other creditors who diligently prosecute their claims to judgment.

When the redelivery bonds were given, the provisions of chap. 206 became a part of the bonds, and would be read into them, and the lien of statute-complying creditors under the attachment, upon the giving of the redelivery bonds, would run against the bonds to the same extent and to like effect as against the attached property. The redelivery bonds took the place of the personal property released, and were for the benefit of all creditors coming within the provisions of chap. 206 of the 1921 Session Laws. (Phoenix Iron Co. v. N.Y. WroughtIron Railroad Chair Co., 27 N.J.L. 484; Taylor v. Elliott,51 Ind. 375; Shirk v. Wilson, 13 Ind. 128; Hanness v. Smith etal., 22 N.J.L. 332.) To hold otherwise the statute would be a nullity in all cases where the attaching creditor dismissed his action, and it would only be enforceable and of benefit to other judgment creditors in such cases where judgment was finally had and the property sold.

The rule is well settled that the lien of an attaching creditor is wholly a creature of the statute and unknown at the common law. Being entirely statutory, it is within the power of the legislature to place any restrictions upon the extent of the writ of an attaching creditor deemed advisable. The legislature of this state has said to any creditor of a defendant who runs an attachment and obtains an attachment lien, that any other creditor of the same defendant who, within 30 days of the first posting and publication of notice of attachment, shall commence and diligently prosecute to final judgment his claim against the defendant, shall prorate with the attaching creditor in the proceeds of the defendant's property. This is a restriction placed by the legislature upon the extent of the right of an attaching creditor. He does not get an unqualified, vested, lien, but the lien secured to him, by virtue of his attachment, is subject to the statute defining the rights of other creditors. With the wisdom of this legislation we have nothing to do. The statute is clear and unambiguous, defining the rights of the more diligent creditor and the rights of those who are forced to be diligent by proceedings instituted by the creditor who first files his action and runs an attachment.

I am therefore of the opinion that appellant acquired a lien under the attachment levied in the case of Hand v. DenbraeSheep Company; that this lien came into existence and attached immediately upon compliance by appellant with the provisions of chap. 206, supra (Shirk v. Wilson, supra; Cummins v. Blair,18 N.J.L. 151, 153); and that when the redelivery bonds were given, the lien attached to the bonds to the same extent and with like effect as it had theretofore attached to the property in the hands of the officer under the writ.

This state does not stand alone in upholding statutes for the prorating of the assets of a judgment debtor taken under attachment in the absence of successive levies of attachment; neither does it stand alone in holding that not only is a lien provided under an attachment to the attaching creditor, but to all creditors as well who prosecute their claims to judgment as by statute provided. (6 C. J. 303, 304, and cases cited under notes 28 and 29. While the cases referred to were not decided under statutes containing the same provision as the one under consideration, the principles therein announced support the view herein expressed.)

Having reached the conclusion that chap. 206, supra, creates a lien not only in favor of the first attaching creditor but in favor also of all creditors of the debtor complying with the provisions of the statute, there is yet to be met the contention that appellant's complaint does not state a cause of action in that it is apparent therefrom that appellant did not appear in opposition to the motion made by plaintiff and intervenors in the Hand action to dismiss the same; that it further appears that the intervenors in that action are not parties to this action; and that it is a collateral attack upon the court's judgment unavailable to appellant.

Hand would not be further interested in the proceeding after accepting from the Portland Cattle Loan Company a stipulated price for her claim against the Denbrae Sheep Company. Neither did the Brownlee Sheep Company, apparently, have any further interest after the settlement with Hand by the Portland Cattle Loan Company. The inference may be indulged that Hand, Portland Cattle Loan Company and the Brownlee Sheep Company, had a mutual understanding that by settling Hand's claim against the Denbrae Sheep Company and dismissing that action, appellant would lose its attachment lien, — the Portland Cattle Loan Company having taken a chattel mortgage on all the property of the Denbrae Sheep Company before the Hand action was dismissed. But the action of the trial court in dismissing the Hand action against the Denbrae Sheep Company and the complaints in intervention therein, should not prejudice the rights of appellant or destroy its attachment lien. Respondents were aware of the fact that as soon as the writ of attachment was served, the service operated as a lien not only in plaintiff Hand's behalf but in behalf of every other creditor who complied with the provisions of the statute, chap. 206, supra. It could never have been the intent of this act that a suit by writ of attachment issued and served could be dismissed or the redelivery bonds exonerated by agreement between the original plaintiff and certain creditors, to the exclusion of other creditors. (Cummins v. Blair, supra.) The dismissal of the action and the exoneration of the surety on the redelivery bonds were without due notice to appellant. In such circumstances I am forced to the conclusion that the order of the trial court discharging and exonerating the surety from liability under the redelivery bonds, in so far as affecting appellant's rights, was beyond and without the jurisdiction of the court and absolutely void, which being true such order is subject to attack, collaterally or otherwise.

Whether or not the action of appellant against the Denbrae Sheep Company was diligently prosecuted, would be a question of fact to be determined upon the trial.

The judgment should be reversed, the demurrer overruled, and respondents required to answer.

Givens, J., concurs.

Petition for rehearing denied.