Supreme Court of Rhode Island, 1862

Clarke v. Farnum, Same v. Holbrook

Supreme Court of Rhode Island · Decided March 6, 1862 · Ames

7 R.I. 174

Counsel

James Tillinghast, for the attaching creditors: — I. The words of our statute concerning foreign attachment are more inclusive than those of the statute of Massachusetts, (Rev. St. Ch. 183, § 3,) and the railroad iron was in the garnishee's possession, in the sense of our statute. Ward v. Lamson and trustees, 6 Pick. 358; Arnold v. Elwell and trustee, 13 Maine, 261; Lane v. Nowell and others and trustee, 15 Ib. 86. II. The garnishee was bound to know whether Holbrook's guaranty was paid by him through his friends, to the Bay State Iron Company, and his affidavit must therefore be construed to state that it was so paid. Sebor v. Armstrong, 4 Mass. 206 ; Graves v. Walker, 21 Pick. 160; Ormsbee v. Davis Co., 5 R.I. Rep. 442. III. The assignees of Farnum, in Massachusetts, have not claimed, as it appears, this property, and it is still in the possession of Slater. IV. The garnishee cannot set off his debt of fifteen or twenty thousand dollars, due to him from Farnum, against this railroad iron, since it is not a debt, but goods upon which the garnishee has no specific lien. Durfee, for the garnishee: — I. This railroad iron is not property in the hands of Slater, who has put it into the possession of the Boston and New York Central Railroad Company, under a contract which gives them a qualified interest in it; so that the union is complete in them, of possession and interest. He has reserved a mere power over it, liable to be defeated at any moment, upon tender by the railroad company of the amount due to the guarantors, with interest. II. The railroad iron affixed to the road of the company, under the license of Slater, is not personal property, and cannot be attached in this mode. Providence and Worcester Railroad Co. v. Wright, 2 R.I. Rep. 459. III. But if this be personal property, the railroad company possess it, not as the agent of Slater, but under their contract, — call it lease or sale; and the power of the garnishee to enter upon the road, and take possession of the iron, is like that of a mortgagee to take possession of the mortgaged property, and to sell it for the satisfaction of his mortgage. Parsons compares such a contract as this to a mortgage. Parsons on Contracts, 610. IV. By the 9th and 10th sections of Ch. 183 of the Revised Statutes, the garnishee has the right to surrender the property in his hands in his own relief; and the power to charge him, and his power thus to discharge himself, are commensurate rights. Now, the interest, if any, of the defendants in this railroad iron, is in an unascertained portion of rails laid down on a railroad in Massachusetts; and the delivery must be to the officer here. There are eight guarantors; part of whom have paid and part not, and none have any rights in the iron except for their indemnity. If you take it up you destroy its value in great part, and how can you divide it amongst the guarantors? V. The property is attachable in Massachusetts by the creditors of the defendants, if at all, and so cannot be delivered up by the garnishee. VI. The defendants have no attachable interest in the iron, but a mere lien or equity, under the garnishee's power, considered as a trust for them; and the railroad company who furnished their note and thirty of their mortgage bonds to the garnishee, to secure the payment for these rails, would be entitled to have their interests represented in any proceeding by the guarantors against the garnishee to enforce the execution of this trust. The garnishee is not liable to the guarantors at law, and so cannot be in this proceeding, to their creditors. Drake on Attachment, § 457. VII. As to the attachment in the suit against Farnum, he has assigned all his interest, if any, in the iron, and it is in his assignee. Ib. § 526. VIII. As to the attachment in the suit against Holbrook, it does not appear that he has ever paid his guaranty. Ib. § 549. IX. The garnishee, notwithstanding his power, reserved in the contract with the railroad company, has no right to take up these rails, to the destruction of the public interest, by breaking up a public highway after it has been once opened, and travel, contracts, and interests have been adjusted, made, and grown up, upon the faith that the road shall be kept open. If he should attempt it, he would undoubtedly be enjoined; and hence cannot be chargeable by this process.

Opinion of the Court

Ames, C. J.

There are two fatal objections to these attachments ; one, that the garnishee has no possession of, and the other, that the defendants have no attachable interest in, the property *180 attached. The purpose of the arrangement set forth in the garnishee’s affidavit was, to supply the Boston and New York. Central Railroad Company, which lacked credit, with iron for the use of their road; and this purpose not only suggests the legal relation of the several parties to the arrangement, but the construction to be put upon the contracts entered into to carry it out.

The garnishee, who acted as the agent and trustee for all ¡larties, purchased the iron of the Bay State Iron Company, paying for it with the note of the Boston and New York Central Railroad Company, secured for about one-half of the amount by thirty of its mortgage bonds, which, together with the note, were delivered'to him by the railroad company for that purpose, and secured, for the other half, by the personal guaranty of eight of the friends of the road, for five thousand dollars each ; three of the guarantors being the garnishee himself and the two defendants. Instead of delivering the iron in full property to the railroad company, he loaned the same to them to be laid down and used on their railroad, the loan to become a sale if the company paid for the iron as stipulated ; and he reserved to himself, in default of such payment, the power to take up and repossess himself of the iron, for the purpose, amongst other things, of indemnifying the guarantors.

The railroad company, with whose note and for whose use the iron was bought, and to whom it had been delivered under the above arrangement, was in possession of the iron which had been laid down on their track, at the time these writs were served on the garnishee ; and although the company was in default, all that the garnishee held for the benefit of the defendants, was a power, in the nature of a trust, to take up and repossess himself of the iron rails, for their indemnity as guarantors. Subject to this power, the company had, so far as the guarantors were concerned, not only the possession and use, but the whole beneficial interest in the rails, and could, at any time, defeat the garnishee’s power to take up the rails, at the instance of the guarantors, by giving them indemnity. The railroad company did mot possess these rails as the agent of the garnishee, nor, in equity, as his mere lessee ; but as the owner of the same, pledged to the garnishee for his own indemnity and that of the guarantors. In no proper *181 sense can the possession of the company be said to be his ; since it is protected by their own rights, by virtue of which they can, at any moment, abrogate his power -to disturb them, and complete their title to the property purchased for them, and possessed by them. The garnishee is no more in possession of the property sought to be attached in these cases, than every mortgagee in trust of personal property is, after the mortgage has been forfeited, and before he has taken possession for sale. Such mortgagee has the legal title and the. right to possession ; but whoever supposed that he was in possession of the mortgaged property under such a defeasible title, so that he could be compelled, by garnishee process, to surrender,' or account for it, at the suit of a creditor of his cestui que trust ?

This view of the relativé rights of the parties to the property in question shows, too, that the defendants have no attachable interest in it. Their right is a mere equity, to compel the enforcement of a power over it, in trust for their benefit. It is a right to nothing tangible, for indemnity only, and is defeasible, so far as the property is concerned, at the will of the railroad company.

Without regarding the difficulties which have been suggested in any attempt to break up a railroad by stripping it of its iron, after it hacl begun to run, and the hardship of compelling a garnishee to surrender or account for property thus placed by contract in another state, and beyond his probable control, we are, fór these reasons, of the opinion, that the garnishee is not chargeable, and direct these attachment suits to be dismissed, for want of service of the writs.

Case-law data current through December 31, 2025. Source: CourtListener bulk data.