JOSEPH J. REYNOLDS vs. FRANCIS H. SMITH et al.

JOSEPH J. REYNOLDS vs. FRANCIS H. SMITH et al. 1. By Equity Rule 82 an attachment and garnishment may issue upon a money decree of this court. 2. That rule is valid, and was passed under the authority of section 770 of the Revised Statutes relating to" the District. 3. While a court cannot vest itself with jurisdiction by its rules, yet it may regulate its process, for that is a matter of practice. 4. A writ of attachment intended to be had against the Columbia National Bank of Washington City was returned by the Marshal indorsed “Attached credits in the hands of the Columbia National Bank by service on E. J. Parker, cashier.” The bank thereupon appeared and answered. On a motion by the judgment-debtor to quash the writ it was Held, that the absence in the return of the words “of Washington City ” was immaterial. 5. Where funds are deposited in bank in the name and to the credit of the judgment-debtor he will not, when they are attached, be allowed to set up as a defense to the attachment that he only holds such funds as agent or trustee; such a defense can only be made by the intervention in the cause of the principle or cestui que trust. In Equity. No. 8989. Decided November 19, 1888. The Chief Justice and Justices James and Merrick sitting. Appeal from an order overruling a motion to quash an attachment issued upon a money decree. The Facts are sufficiently stated in the opinion. Messrs. Watson J. Newton and Fleming J. Lavender for appellants (defendants). It is submitted that the judgment of condemnation was erroneous for the following reasons: First. That the court had no jurisdiction to issue the writ in this case. The writ of attachment was issued under the 82d equity rule. This rule was made by this court, it is assumed, by virtue of the authority conferred under the act of Congress, of March 3d, 1863. Sec. 870, R. S. D. C. By Section 760, R. S. D. G., this Supreme Court possesses the same powers and exercises the same jurisdiction as the circuit courts of the United States. And by Section 92, R. S. D. C., the laws of the State of Maryland, not inconsistent with the title of the act as the same existed on the 27th day of February, 1801, except as since modified or repealed by Congress or by authority thereof, or until so modified or repealed, continue in force within the District. These two sections are to be read together. (See U. S. vs. Schurz, 102 U. S., 393). From these restrictions it is evident that this court possesses the same powers and jurisdiction as the circuit courts of the- United States, and in addition thereto the common law jurisdiction as derived from, and as limited by, the laws of the State of Maryland as they existed at the time of cession, except as since modified or repealed by Congress or by authority thereof. “Section 917, R. S. U. S., provides that the Supreme Court of the United States shall have power to prescribe from time to time, and in any manner not inconsistent with any law of the United States, the forms of writs and other process, the modes of framing and filing proceedings and pleading, of taking and obtaining evidence, of obtaining discovery, of proceedings to obtain relief, of drawing up and enrolling decrees, and of proceedings before trustees appointed by the court; and generally to regulate the whole -practice to be used in suits in equity or admiralty, by the circuit and -district courts.” .By Sec. 918, the several circuit and district courts may, from time to time, and in any manner not inconsistent with any law of the United States, or with any rule prescribed by the Supreme Court under the preceding section, make rules and orders directing the returning of writs and processes, and otherwise regulate their own practice as may be necessary or convenient for the advancement of justice and the prevention of delays in proceedings. From the foregoing, it appears that, while both the Supreme and circuit courts have the power to make rules of court to regulate their - own practice, yet, neither have the power to make any rule inconsistent with any law of the United States, and the circuit courts cannot make a rule inconsistent with a law of the United States, nor with a rule of the Supreme Court of the United States. It follows, then, that the Supreme Court of the District of Columbia, having no more power in this' regard than the circuit courts, cannot make a rule of court inconsistent with any law of the United States, or with a rule of the Supreme Court of the United States, or .with the laws of Maryland as adopted by act of Congress at the time of the -cession. It is submitted that the power to issue an attachment instead of an execution on a decree in equity is not obtained from any rule of practice for the circuit courts sitting as courts of equity. (See Rule 8, Mitford & Tyler, 689.) It is further submitted that this court has no power to issue such an attachment under the laws of Maryland. On the contrary, Equity Rule 82 is inconsistent with the laws of Maryland as adopted by Congress at the time of the cession. It is unnecessary to enter at large upon the old method of enforcing the decree of a court of equity, as by a reference to page 199, of Alexander’s Chancery Practice, it will be seen that a new remedy was provided for the State of Maryland by the Act of 1785, Ch. 72, Sec. 25. Nothing is said in that act about an attachment on judgment or decree. In fact, the act of assembly (Act of 1715, Ch. 40, Sec. 7) which gives the process of a judicial attachment, applies only to courts of common law. See Watkins vs. Dorsett, 1 Bland, 535. The construction thus given in 1829 by the chancery court must certainly have been the law of Maryland, for •the legislature in 1831 supplemented the Act of 1785, Ch. 72, Sec. 25, by conferring the requisite power to issue attach-merits to be laid upon debts due the defendant, upon judgment and decrees. But further than this, it will appear that the only power, to issue attachments in this court, either at law or in equity, is the Act of 1715, Ch. 40, Sec. 7, and this power is not only limited to' an attachment on judgment on the law side of this court, but is also limited to cases in which the defendant is a non-resident or absentee. And the defendants in this case were not absent from this jurisdiction at the time of the issuance of this writ. See Evans’ Prac., 59. Attachments by this act are divided into attachments on judgment and on warrant; attachments on general judgments being grounded on the Act of 1715, Ch. 40, Sec. 7. That this act applies only to absent, defendants, is evident from the language of the statute, its scope and object. An attachment. is not the ordinary process by which to arrive at the fruits of a judgment, and will ohy lie when specially authorized as by Act of 1715, Ch. 40, Sec. 7, from the court in which the judgment was rendered against the goods, chattels, and credits of the absent defendant. Harden et al. vs. Moores, 7 H. & J., 11; Davidson vs. Beatty, 3 H. & McH. The decision in the last-mentioned case w'as rendered in 1797. It was the law of Maryland at the time of the cession, and it has never been modified or repealed by act of Congress, or overruled by this or the old Circuit Court, and it is the law to-day. But in.order to avoid all doubt as to the construction of the 7th section of the Act of 1715, we have but to turn over a few pages of the Laws of Maryland to find the legislature enacting “ That the provisions of the seventh section of the act, to which this is a supplement, be, and the same are hereby declared to extend to cases where the defendant or defendants shall be residents of this State at the time of issuing the attachment in said section provided for, or at any time afterwards.” See Dorsey’s Laws of Maryland, Vol. 2, 1067. This is the recognition by the Maryland Legislature in 1831 of the judicial construction placed upon the old Act of 1715, Ch. 40, by the court in 1797, showing that up to 1831 that decision was considered as laying down the law, and so well settled was it that it required an act of the legislature to remedy this defect. Can it be contended that Equity Rule 82, under which the writ was issued in this case, is consistent with the laws of Maryland as adopted by Congress, and which, so far as adopted, are laws of the United States in this jurisdiction? Seeond. The attachment should have been quashed in the court below, because the fund in the bank was never attached or tlm bank served as garnishee. On his return, reading as follows: “Attached credits in the hands of the Columbia National Bank by service on E. Southard Parker, cashier, and served him with copies of this writ, rule of court, and interrogatories as garnishee of defendants.” The attachment must be served upon a creditor. The bank in this case is the creditor. The cashier of a bank is not liable as garnishee of the deposit by the debtor, for the cashier is not the debtor of the depositors. Lewis vs. Smith, 2 Cranch C. C., 571. In the court below the point was made that the objection was waived by the appearance and answer of the bank, but if there was not service upon the bank it cannot appear voluntarily. And even if it could, the bank has never appeared by its answer in this case. It never has answered, as the first answer was the individual answer of the cashier (decided by the court below), and the second answer was made by the bank voluntarily without additional service, and is invalid; but, supposing it were valid, it is not under seal. “ That a corporation must answer as garnishee under seal. See Callahan vs. Hallowell, 2 Bay, 8; B. & O. RR. Co. vs. Gallahue, 12 Grattan, 655.” A seal appears on the paper, put in voluntarily as a second answer, but nothing to show that it is the corporate seal of the bank. In Branch Bank vs. Poe, 1 Ala., 396, it seems— “ If the seal be used by another than the chief officer, it should appear to have been by the express authority of the directors.” It was therefore held that an answer of a corporation, put in by its cashier, or. the individual answer, under oath of either a president or cashier, is not sufficient. See, also, Planters’ Merchants’ Bank vs. Leavens, 4 Ala., 753. Third. It is contended that The Columbia National Bank of Washington, in which the money sought to be attached is deposited, has never been attached, inasmuch as a corporation can only be attached by its corporate name. The return of the marshal shows no attachment on a bank by that name. The return says, “attached credits in the hands of Columbia National Bank.” That is not the corporate name of the bank assuming to answer; and the answer of any bank by that name is voluntary. And the judgment of condemnation against the Columbia National Bank of Washington, on an attachment levied on the Columbia National Bank is erroneous. In this case, by the certificate of the Comptroller of the Currency, filed, the words “of Washington,” are part of the corporate name. Again the answer, signed “ The Columbia National Bank, by its president, B. H. Warner,” states that some other corporation, to wit: “The Columbia National Bank, of Washington,” has on deposit, etc. It may be well to look at the rules governing payments under a judgment. In this proceeding it is an established rule that the garnishee shall not be prejudiced, and must be placed in a position to plead the condemnation judgment against any action brought against him. The payment must not be voluntary. All the facts required by statute to enable the attachment-plaintiff to hold the debt owned by the garnishee, must appear in the record of- the attachment suit, and that if it appear that the attachment was not legally served on the garnishee so as to reach the debt in his hands, his answering as garnishee, and the subsequent judgment against him, will not avail him. Desha vs. Baker, 3 Ark., 509; Drake on Attach., 712. Fourth. The condemnation should not have been made, because the money on deposit in The Columbia National Bank, of Washington, is not the money of the defendants-, that is shown by the answer of the defendants, sustained by affidavits; that the defendants had the right to prove this can be shown by numerous authorities. The bank, in its answer [assuming it to have answered], states that it is informed that the money belonged to the clients of the defendants; that it could do so, see Drake on Attach., 639. lb., 659. “ When a trustee deposits trust money in his own name in a bank with his individual money, the character of the trust money is not lost, but it remains the property of the cestui que trust. If such money can be traced into the bank, and it remains there, the owner can retain it. When deposited the bank incurred an obligation to repay it, which is not lessened or impaired because it incurred at the same time an obligation to pay other money belonging to the agent individually.” Wait’s Actions and Defences, Vol. 1, 503. See, also, Van Allen vs. American Bank, 52 N. Y.; 7 Sick., 1; Disbrow vs. Mills, 2 Hun., N. Y., 132 S. C., 4 N. Y., S. C. T. & C., 682. Mr. Fbanklin H. Mackey for appellee (plaintiff): The eighty-second rule of this court authorizes the issuing of an attachment against the defendant’s credits. That rule was promulgated by authority of the act of Congress, and it is idle to go back to the old Maryland statutes to seek a remedy in this case when the remedy is furnished by the rules of court. The only other defense worth noticing is the claim that the funds attached are trust funds. The reply to this contention will be found in Jackson vs. Bank of the United States, 10 Pa. St., 61, where it was held that funds of third parties deposited by a judgment-debtor in his own name are liable to attachment on a judgment against him. That case is cited with approval by Judge Drake. Drake on Attach., Sec. 491, note. See, also, Bank vs. Jones, 42 Pa. St., 536, where the court said: “We hold Jackson vs. Bank to be good law.” To the same effect is Silverwood vs. Bellos, 8 Watts (Pa.), 428. [MAJORITY — Mr. Justice Merrick] Mr. Justice Merrick delivered the opinion of the Court: In this case a decree was had against the defendants for a specific sum of money. Upon that decree an attachment by way of execution was issued, which was laid in the hands of the Columbia National Bank of Washington City, in the District of Columbia, as garnishee, the bank being summoned to appear under the garnishment, and, in answer to interrogatories, set forth that it had in its possession a certain amount of money to the credit of the defendant in the cause. A motion was made to quash the attachment upon sundry grounds: First. That the court had no jurisdiction to issue the writ of attachment in this case. Second. That the writ of attachment was not duly served. Third. That the defendant in the action, showing by an affidavit of his that the funds on deposit, although deposited to his credit, were, in point of fact, funds made up from divers sums which he had received as agent for third parties, the money was not liable to attachment, but was to be left in his hands and under- his uncontrolled disposition, with a view that he might return it to the parties for whose benefit he held it. So far as the first question is concerned — that the court had no jurisdiction to issue the writ of attachment — the argument goes upon the idea that prior to the organization of the present court the process of execution from chancery was either by Jim facias or attachment for contempt and attachment by proclamation, sequestration, &c., as provided in the Act of 1785, chapter 72, of the State of Maryland; and that in the absence of any specific legislative grant of power to issue an attachment by way of execution out of chancery this court could not do it. By Rule 82 of this court it is provided in cases of decrees for money the process either of fieri facias or attachment by way of execution shall issue for the recovery and satisfaction of the decree as at law. That rule was passed in pursuance of the provision of the act of Congress for the organization of this court, section 770, page 92, of the Revised Statutes of the District, which is .in the words following: “That the'Supreme Court in General Term shall adopt such rules, &c., as it may deem necessary for regulating the practice of the court; and from time to time revise and alter such rules.” It is objected that this is not making rules but is legislation. We are of a different opinion. We think the law is broad enough to authorize this court to control its processes and to prescribe them within the limits of the selection of a process known to the laws of the land. It was in that sense that the rule in its present form was adopted, as we understand. It has been practiced upon ever since its adoption without question, and we do not think that there is anything in the argument which has been submitted to justify us in uprooting a settled and universal acceptance of the construction of the power conferred by the statute from which I have read an extract. It might upset and disturb property interests to a degree that cannot now be foreseen and understood, if it were maintained that the court of chancery in the execution of its decrees has no power to issue an attachment by way of execution. No good purpose could follow from narrowing the construction and limiting the power which • has been heretofore exercised under the grant which I have read from the Revised Statutes. The fieri facias is granted in terms. The writ of sequestration and the attachment for contempt have always existed, and the writ of sequestration is very nearly akin to and is substantially the same in all its practical operation with the attachment by way of execution. Therefore, as we have said, there is no good purpose to be subserved in attempting to narrow the construction. Process is a very different thing from jurisdiction. If it were a question of jurisdiction this court could not vest itself with jurisdiction by a rule. But process, which is the flower, or the fruit rather, of jurisdiction, is a matter to be regulated, and has always been regulated from the earliest time, by the practice of the court. The familiar processes to which I have .just adverted, attachments 'with proclamation, process of sergeant-at-arms and sequestration, followed by the statutory addition of fieri facias, have all been the outgrowth of chancery regulation itself, and not the growth of statute. It is only another familiar means-to carry out the end, the power to accomplish which end had already been delegated by the proper legislative power. The second objection, that the writ was not properly served, we think is likewise untenable. The writ was intended to attach credits in the hands of the Columbia National Bank of Washington City, by service upon the cashier. He was served with copies of the writ and interrogatories for the garnishee and upon the return of the writ the Columbia National Bank of Washington City appeared and answered. Its first answer not being- under seal was objected to, and thereupon the answer was amended to .as to appear under the common seal of the bank. The garnishee was sufficiently identified, as we think by the service of the attachment and the response to it under the circumstances and in the maimer indicated. It is perfectly true that a person cannot make himself voluntarily a garnishee; but the bank did not make itself voluntarily a garnishee in this case. The process was served upon it and it was identified by a name. It had that recognized name, and although .the name was not given in full, it appeared by its full name and answered. That, it seems to us, was a sufficient service and a sufficient designation of the garnishee to accomplish the purposes of the writ and to subject the garnishee to the process of the court, and relieve it from the imputation of having voluntarily come in and answered to a writ which had never been served upon it. The third objection, and the one of most importance as a practical question is, that upon the return of the writ and of the motion of the defendant it was suggested to the court that the funds attached did not belong to the defendant, he having set forth in his motion to quash and in the affidavit of his own clerk appended thereto, that the funds belonged to the several parties for whom he was an agent and on whose behalf he had deposited the funds, although they were deposited' in his own name and to his general credit. Upon an examination of the authorities it appears to be well settled that while a debtor having funds deposited in his own name in bank, which really belong to another person, are not absolutely, by force of the fact of. having been so deposited in his own name, subject to the right of the depositor’s creditors, yet the question always is who shall be the party by whose instrumentality they shall be exempted. Prima facie they are the funds of the debtor, being deposited in his name. While it is perfectly true that his creditor may follow those funds, or rather, his cestui que trust, the man in whose behalf he has deposited the funds, may come in and vindicate his title to them, and claim them, and that the creditors of the party whose funds are attached can have no better right to the funds than the debtor himself, yet the proper person must come into court for the purpose of asserting that right. Public policy forbids the debtor himself, who has deposited the funds in his own name, from setting up the pretense that he holds them as trustee for another. If the party for whom he is trustee comes in, intervenes in the case by way of claim of property, or other suggestion, and demands the funds as his, and proves in point of fact that they are his by tracing the identity of the funds, although covered up with the name of the debtor, the court will withdraw its hand and allow the true owners to take the funds. But public policy forbids us to receive a suggestion of that sort from the debtor, for the debtor himself, the very next day, may resume the control which he had as between him and the garnishee over the funds and defeat both the attaching creditor and his own cestui que trust. These distinctions are fully set forth in the case of Jackson against the Bank of the United States, in 10 Pa. St., where it is said that, although it may be suggested that the funds belong to another, that is nq defense. In 57 Pa. St., 202, explaining Jackson vs. The Bank, it is said that where notice is given and the claim is made on behalf of the cestui que trust of the funds, and he establishes clearly his title to them, the hand of the court will be withdrawn, and the court will award that the funds be paid over to the true owner. In 111 Mass., 496, reiterating the doctrine of both of these cases, the court declared explicitly that public policy forbids the court to allow such a defense to be made on behalf of the debtor himself. The true owner has the right to come in, and if the true owner stands by and remains silent, public policy requires that the funds shall be treated as the funds of the debtor and condemned under the attachment. For these reasons we are of opinion that there is nothing in the various objections which were taken to the attachment; and that the judgment of the circuit court in overruling the motion and granting final judgment of condemnation was correct and must be affirmed.