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The Planters Loan and Savings Bank v. Berry

Supreme Court of Georgia1893-02-13
91 Ga. 264

Summary

Holding. The judgment was reversed. Federal law prohibits all attachments and garnishments against national banks before final judgment in any circumstance, making the garnishment and resulting void bond incapable of supporting a valid judgment against either the bank or its sureties.

A national bank challenged an attachment and garnishment action brought against it under state law. The state court issued a garnishment against one of the bank's debtors, effectively seizing the bank's property before final judgment. The bank posted a bond to dissolve the garnishment, but the bond itself was void because the underlying garnishment lacked legal authority. When the creditor obtained a judgment against the bank and its sureties on this void bond, the bank filed an affidavit of illegality to challenge execution on that judgment.

The court held that federal law prohibits all pre-judgment seizures of national bank property through attachment or garnishment, regardless of the bank's solvency. Because the initial garnishment was unlawful, the bond given to dissolve it was equally void. A void bond cannot serve as the basis for a valid judgment, and the sureties—who never appeared in the original attachment action—cannot be bound by proceedings in which they had no real opportunity to be heard or defend themselves.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

  • Whether federal law permits pre-judgment attachment or garnishment of national bank property when the bank is solvent
  • Whether a void bond can form the basis for a valid judgment in an attachment action
  • Whether sureties can be bound by a judgment when they did not appear or defend in the underlying suit

Procedural posture

The Planters Loan and Savings Bank filed an affidavit of illegality challenging execution on a judgment rendered against it and its sureties on a bond given in a garnishment action, which the city court overruled.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion

majority opinion

Bleckley, Chief Justice.

IIow the statutes of the United States stand at the present time on the subject of protecting national banks against the seizure of their effects by virtue of attachments in advance of final judgment, may be seen by reference to U. S. Rev. Stat., §5242. The only words-necessary to be how quoted are these : “And no attachment, injunction or execution, shall be issued againstsueh association or its property before final judgment- in any suit, action or proceeding, in any State, county, or municipal court.” The opinion, whether professional or judicial, which construes this legislation as allowing seizure under attachment before final judgment in case the defendant bank is solvent, and prohibiting it only where the bank is insolvent, is manifestly unsound. Certainly, no such distinction is made in the letter, and we discern no necessity for it in the context or in the reason and spirit of the legislation. The statutory policy seems to be to prevent all preference or priority in claims against these banks sought to be acquired by seizure of effects under State authority before the final adjudication of such claims, and to protect the banks from being weakened or crippled by such antecedent-seizures. The national banks created by Congress are to control their own assets and resources, as. against State interference at the instance of creditors, or of pretended creditors, until the real existence of the alleged debts has been ascertained by final judgment. Ante-judgment seizures cannot be made; a State can make-post-judgment seizures only. Mesne process will not suffice for seizing by State courts; these courts can seize alone by final process. This policy may be wise or unwise, wholesome or unwholesome, but in either event it is the one established by competent legislative authority, and must be respected and enforced accordingly. In. Pacific National Bank v. Mixter, 124 U. S. 727, Waite, C. J., said: “Although the provision was evidently made to secure equality among the general creditors in the division of the proceeds of the property of an insolvent bank, its operation is by no means confined to cases of actual or contemplated insolvency. The remedy is taken away altogether, and cannot be used under any circumstances.” Whether this was obiter or not as applied to the facts of that case, we agree with it and accept it as a sound interpretation of the statute. And we agree with the Court of Appeals of New York, that no aid can he derived from the act of Congress of July 12th, 1882, providing that the jurisdiction for suits brought against national banks shall be the same as for suits against State banks. Raynor v. Pacific National Bank, 93 N. Y. 371.

In the case at bar, the attachment was issued under a •law of this State, and was returnable to one of the courts of the State. It was levied, before final judgment, by the service of a summons of garnishment upon one of the debtors of the national bank, the defendant in attachment. This was a seizure of the debt, and the debt was the property of the bank. The seizure was utterly void, and the bond given by the bank to dissolve the garnishment was equally void. Pacific National Bank v. Mixter, 124 U. S. 728, 729 (supra). Certainly it was void as a statutory bond, for as there was no valid .statutory authority for issuing or serving the garnishment, there could be none for taking the bond. In principle, this was ruled in the case of Bruce v. Conyers, 54 Ga. 678. No suit or action has been brought upon this bond, but treating it solely as a statutory bond, and applying to it the spirit of sections 3319 and 3540 of the code, the plaintiff in attachment caused judgment upon it to be rendered against the bank and the sureties who joined with the bank in executing it. The judgment was the outcome of the original suit brought against the bank by attachment. In that suit the sureties on the bond entered no appearance, and had no •right to enter any. They were not heard, and could ■not have been heard had they so desired, save, perhaps, by some collateral motion. It is contended, however, that by giving the bond, the bank did what was equivalent, under section 3328 of the code, to appearing and making defence. Grant this was so, the result would be only that “the judgment rendered against him [the bank] in suck case shall bind all his property, and shall have the same force and effect as when there has been personal service.” Surely this would be quite enough to follow as a necessary legal incident of giving a void bond. But to render a binding judgment on the bond against the bank and the sureties, would be much more than this. It would be to change the character of the bond from void to valid, and affect the sureties by the attachment suit equally with their principal. It is manifest that in order to reach the sureties and render them hable, mere appearance, or any other act of their prin•cipal, would not suffice. Even a confession of judgment by the latter would in nowise affect the former if the bond was void. In order for anything done by him as their representative to affect them, the real relation, not merely the nominal relation, of principal and surety, would have to exist. If there was no jurisdiction to issue the attachment or the garnishment pending the attachment, and no jurisdiction to serve the garnishment or cause it to be served, there was none to require the bond or to take it, o’r to enter up judgment thereon in the attachment suit, whether jurisdiction over the defendant in that suit — jurisdiction over the bank in personam — was acquired or not.. To render judgment on the bond, such as was rendered, it was necessary to have jurisdiction over the sureties also. This could not be acquired by taking the bond, for there was no jurisdiction to take it; and there is no pretext that it was acquired otherwise. To show that the bank did enough to subject itself to a general judgment in personam under section 3328 of the code, even could this be conceded, would leave the want of jurisdiction over the sureties untouched. The Planters Loan and Savings Bank, the party now complaining, is one of these. Its property has been levied upon under a fi. fa. based upon this judgment. It has filed an affidavit of illegal ity, and in so doing lias chosen the proper remedy. It has not had its day in court; there has been no court having jurisdiction to bind it. It is not bound, and to overrule its affidavit and to order the execution to proceed was error. Let an order be entered in the city court sustaining the affidavit of illegality.

Judgment reversed.