Roman v. Dimmick , 123 Ala. 366 ( 1898 )

HARALSON, J.

1. The 1st and 2d assignments of error are without avail to appellant. If the court erred in excluding the evidence offered in the first instance, the error was cured by its subsequent admission.—McLendon v. Grice, 119 Ala. 513, 21 So. Rep. 846.

2. After the garnishee had answered fully on oral examination, the bill of evceptions recites: “This was in substance all of the garnishee’s answer, and thereupon plaintiff asked for a judgment upon the answer of the garnishee, and the garnishee asked for a discharge. After argument, the court said he would have to refuse the motion for a judgment, and discharged the garnishee, ‘ to which ruling the plaintiff excepted; and thereupon at once and before any judgment entry, and during the term of the court, the plaintiff asked leave to file a contest of the garnishee’s answer, and submitted to the court the affidavit of the plaintiff for that purpose, * * but the court refused to entertain the motion and discharged the garnishee,” to which ruling the plaintiff excepted.

The fourth assignment questions the correctness of the ruling of the court in not allowing the plaintiff, at this stage of the proceedings, to contest the answer of the garnishee. This ruling is fully justified. The Code, (section 2196), provides, that “the plaintiff, l¡is agent or attorney, may controvert the answer of the garnishee, by making oath at the term the answer is filed, that lie believes it to be untrue, and' thereupon an issue must be made up, under the direction of the court, in which the plaintiff must allege in what respect the answer is untrue,” etc. The answer of the garnishee, as we have seen, was filed in the cause at the May term of the court, 1897, at which term the plaintiff took no steps so far as appears, to contest the answer, and it was not until the November term, 1898 — -the same being the third term after the original answer was filed— that the plaintiff took any further proceeding in the cauáe, at which term, lie made a motion to require the garnishee to answer further and orally, which motion the garnishee resisted.

This court has repeatedly and consistently held, going back, at least as far as 1845, that the time allowed the plaintiff' to contest under the provisions of the foregoing section of the Code, and similar provisions in previous Codes, does not extend beyond the term of the court at which the answer is made, unless the court, at the time, gave further time within which the contest may be instituted; and that, without such an order, the garnishee cannot be compelled to join in an issue at a subsequent term unless he has expressly or by implication Avaived his right to a discharge.—Brake v. Curd, Stinton Mfg. Co., 102 Ala. 339, and authorities there collated.

At the conclusion of the oral examination, as we have seen, the plaintiff asked for judgment upon the answer of garnishee, and garnishee asked to be discharged thereon. The court decided against plaintiff nand in favor of garnishee, when plaintiff asked to be allowed to contest garnishee’s ansAver. This the plaintiff had no right to do, even, if his right to contest before he made his motion for judgment on the answer,, had not been lost. When he asked for judgment against garnishee on his answer, this was in the nature of a demurrer to the eAddence in an ordinary action. After an adverse ruling on this motion, it was too late, to move to contest the answer as being untrue. The plaintiff waived his right so to do.—Platt v. The Bank, 17 Wis. 222; Mahoney v. McLean, 28 Minn. 63; Murphree v. City of Mobile, 108 Ala. 663; 1 Brick. Dig. 883, § 1146.

3. After the garnishe had been discharged, his counsel brought to the notice of the court by suggestion, that in the city court of Montgomery there Avere pending garnishments against garnishee on judgments recovered against the same defendant by certain named parties, all of which were sued out and served prior to the garnishment in this case, which suggestion, at the request of the garnishee by his counsel, was entered on the minutes of the court. Thereupon, the plaintiff again offered to contest the garnishee’s, answer, and asked leave to do so, Which request was denied. In this there was no error. This entry of record was not prejudicial to plaintiff, and could not have entered into a contest, if allowed, of the garnishee’s indebtedness. It was designed as a matter of precaution against liability in any (>vent, for a double satisfaction of the same indebtedness, if ultimately found to exist on the part of the garnishee.—Montgomery Y. L. Co. v. Merrick, 61 Ala. 534.

4. The only remaining question is whether or not the garnishee was liable on his answer. Under the facts stated we are of the opinion, he was not liable. He was, certainly not liable for any amount remaining due on his stock. He subscribed for $9,000 or $9,200 worth of stock which he paid for, and according to his answer,, he got the same amount in stock, though he was indefinite in his recollection whether it was for the one or the other sum. The property transferred was shown to have been worth $50,000, the amount of stock issued.. Garnishee and associates gave that for it, and added other property to it. They sold it to the new corporation for $80,000. He also stated, that the propriety of the company’s accepting this property for $80,000 was passed upon by Judge Oloption, a practicing lawyer of intelligence and ability, and he approved it. His opinion was, that it was worth the money.

It is well settled by the decisions of this court, that “When a subscription in a stock corporation is made, payable in property, the property must be taken at its reasonable money value; and though a margin may be allowed for an 'honest difference of opinion as to its value, a valuation grossly excessive, knowingly made, while its acceptance may bind the corporation, is a fraud on creditors and they may proceed against the stockholders individually as for an unpaid subscription.” Elyton Land Co. v. Birmingham W. & E. Co., 92 Ala. 407; Nicrosi v. Irvine, 102 Ala. 648; Hall & Farley v. Henderson, 114 Ala. 601; Roman v. Dimmick, 115 Ala. 233. And, in tlie absence of proof as to the value of the consideration, as we have held, the court cannot say that the stock was fictitious, or in violation of Art. XIV, § 6, of the Constitution, or of section 1254 (1662) óf the Code.—Davis v. Montgomery Furnace & Chemical Co., 101 Ala. 127.

Tlie garnishee, it is insisted by plaintiff, disclosed in his answer a liability of $9,200 and did not show any legal discharge of it. The answer stated: “We (the stockholders) had inquiry made as to the value of the property and we bought the property on the value fixed by that expert. He reported that it was worth $50,000, and we bought it on that report, and then conveyed it in payment of the $50,000 of subscription, my ninety-two shares included, and the corporation accepted the conveyance of that property in full payment of the $50,000 of stock subscription.” If that be true, as on motion to charge garnishee on his answer, it must be taken, then there remained no unpaid subscription on stock to be reached and condemned by the garnishment.

As to charging the garnishee for the bonds he got, we are at a loss to see how they can be reached by garnishment. It may be, as was said in Roman v. Dimmick, supra, that these bonds in the hands of the original holders, are invalid as claims against the corporation or other creditors, but there is nothing to sIioav a promise to pay anything for them. On the contrary, it appears, that Dimmick and associates were not to pay anything and they owe the company nothing for them. It is well settled, that in the absencé of fraud on the part of the debtor, or fraudulent collusion between him and the garnishee, only such money demands can be subjected by process of garnishment to the payment of the plaintiff’s judgment, as the defendant in judgment could in his own name and right recover in an action of debt or indebitatus assumpsit against the gárnishee.—Nicrosi v. Irvine, 102 Ala. 648. Section 2181 of the Code, which authorized unpaid subscription for stock to be reached by garnishment by a creditor of the corporation, without regard to whether the corporation can maintain suit against the stockholder for such subscription or not, has no application to these bonds, since it cannot be pretended that they constitute any part of any unpaid subscription of garnishee’s stock. It thus appears, that neither on unpaid subscription for stock, nor on debt owing by garnishee to the defendant, — The Montgomery Iron Works,' — could the plaintiff, as the court very properly decided, have judgment against the garnishee. He was properly discharged on his answer.

Affirmed.