Opinion
No. 41804.
April 10, 1961.
1. Attachment in chancery — proper remedy in action against nonresident arising ex delicto.
Complainant injured in a collision with a car driven by a nonresident properly filed suit under the statute authorizing attachment in chancery against nonresident by attaching the car of the nonresident. Secs. 870, 2729, 2730, Code 1942.
2. Attachment in chancery — service of process creates lien — lien established when writ is served.
When property of nonresident motorist is attached in suit for injuries arising out of an automobile collision, service of process creates a lien on property and the lien is established when the writ is served. Secs. 870, 2729, 2730, Code 1942.
3. Attachment in chancery — lien follows proceeds from sale of property attached.
Where complainant injured in collision with car of nonresident attached the car which was sold and the proceeds paid into court and complainant recovered judgment, proceeds of the sale of the car were properly awarded to complainant. Secs. 870, 2729, 2730, Code 1942.
4. Insurance — liens — lienor as having no claim on insurance money — claim on insurance money may arise only out of contract.
One who has a mere lien on property insured has no claim on the insurance money, for a claim on such money may arise only out of contract.
5. Insurance — proceeds of insurance on automobile under mortgage clause of policy vested in mortgagee notwithstanding attachment by complainant.
Where complainant sued nonresident for damages sustained in collision and insurer paid proceeds of insurance into court and holder of chattel mortgage not recorded in Mississippi on the car intervened claiming proceeds under mortgage clause of policy and amount of debt due mortgagee exceeded amount of insurance due, right of mortgagee to insurance vested when damage was done and it was entitled to proceeds notwithstanding attachment by complainant. Secs. 870, 2729, 2730, Code 1942.
Headnotes as approved by Jones, J.
APPEAL from the Chancery Court of Hinds County; W.T. HORTON, Chancellor.
Thomas W. Crockett, Jr., Overstreet, Kuykendall, Perry Phillips, Jackson, for appellant.
I. Section 870, Mississippi Code of 1942 does not apply to this case; and, therefore, appellant's lien which was prior in time retains its priority.
A. For appellee to avail himself of Section 870 and destroy the priority of appellant's lien, he must show that he is within the class of persons protected by said sections. Drainage Dist. No. 1 of Noxubee County v. Evans, 136 Miss. 178, 99 So. 819; Grant Motors v. Federal Credit Co., 183 Miss. 872, 185 So. 196; Hollis v. Bryan, 166 Miss. 874, 143 So. 687; Salmon v. Moore, 238 Miss. 459, 118 So.2d 867; Secs. 274, 870, 5309-01 et seq., Code 1942; 38 U.S.C.A., World War Veterans Act, Sec. 454; 33 Am. Jur., Liens, Sec. 33; 50 Am. Jur., Statutes, Secs. 303, 304; 14 C.J.S., Chattel Mortgages, Sec. 136; Black's Law Dictionary (4th ed.) pp. 442, 443.
B. To be a "creditor" within the meaning of Section 870 a person must have parted with a valuable consideration. Bank of Lexington v. Cooper, 115 Miss. 782, 76 So. 659; Dixon Starkey v. LaCoste, 1 Sm. M. 70; Klaus v. Moore, 77 Miss. 707, 27 So. 612; Mayes v. Thompson, 128 Miss. 561, 91 So. 275; Pickett v. Banks, 11 Sm. M. (19 Miss.), 445; Richter Phillips Co. v. Phillips, 175 Miss. 242, 166 So. 393; Smith Oil Co. v. Jefcoat, 203 Miss. 404, 33 So.2d 629; Chap. 42, Art. 1(4), Hutchinson's Code 1848; Sec. 863, Code 1942; 45 Am. Jur., Records Recording Laws, Sec. 29; 78 C.J.S., Sales, Sec. 581.
C. Appellee has not parted with a valuable consideration and, therefore, appellant's lien retains its priority. Clark v. Ford, 179 Ky. 797, 201 S.W. 344; Green v. Powell (Mo.), 46 S.W.2d 915; International Harvester Co. v. Culley, 188 Miss. 115, 194 So. 472; Vines v. Sparks, 148 Miss. 219, 114 So. 322; Sec. 2797, Code 1906; Sec. 273, Code 1942.
II. Appellant is entitled to the insurance proceeds because its rights to them did not depend on its rights to the insured automobile and, therefore, the failure to record its mortgage on the automobile did not affect its rights to the said proceeds.
A. The writ of garnishment on the possessor of the insured automobile did not entitle appellee to the proceeds of the insurance. Bernheim v. Beer, 56 Miss. 149; Collette v. Long, 179 Miss. 650, 176 So. 528; Federal Land Bank of New Orleans v. Thames Lumber Supply Co., 160 Miss. 335, 134 So. 54; Silverman v. Dew, 182 S.C. 457, 189 S.E. 756; Anno. 5 A.L.R. 2d 300.
B. The writ of garnishment served on Emmco Insurance Company bound no property or effects of the mortgagor defendant in the hands of that insurance company. Cox v. Hartford Fire Ins. Co., 172 Miss. 841, 160 So. 741; Mansfield v. Stevens, 31 Minn. 40, 16 N.W. 455; Manson v. Phoenix Ins. Co., 64 Wis. 26, 24 N.W. 407; State Farm Mutual Ins. Co. v. McKay, 209 Miss. 706, 48 So.2d 349; Sun Ins. Office v. Scott, 284 U.S. 177, 76 L.Ed. 229, 52 S.Ct. 72; 44 C.J.S., Insurance, Sec. 1; 46 C.J.S., Insurance, Sec. 1183; Appleman on Insurance Law Practice, Sec. 14564.
III. The attempted garnishment of the insurance proceeds failed because at the time of the service of said writ garnishee's debt was unliquidated and not subject to garnishment on an attachment in Chancery. Blair v. Kansas City M. B.R. Co., 76 Miss. 478, 24 So. 879; Craig v. Gaddis, 171 Miss. 379, 157 So. 684; Travelers' Ins. Co. v. Inman, 157 Miss. 810, 126 So. 399, 128 So. 877; Sec. 2729, Code 1942; 38 C.J.S., Garnishment, Sec. 90; Griffith's Mississippi Chancery Practice (2d ed.), Sec. 486.
F.J. Lotterhos, Daniel, Coker Horton, Jackson, for appellee.
I. The appellee's rights under Section 2729, Mississippi Code of 1942, cannot be defeated by the appellant as here attempted. Adamson v. Fogelstrom (Mo.), 300 S.W. 841; Aetna Ins. Co. v. Robertson, 126 Miss. 387, 88 So. 883; Austin Clothing Co. v. Posey, 105 Miss. 720, 64 So. 5; Bean v, Bean, 166 Miss. 434, 147 So. 306; Clark v. Louisville N.R. Co., 158 Miss. 287, 130 So. 302; Comstock v. Rayford, 1 Sm. M. (9 Miss.) 423; Dinwiddie v. Glass, 111 Miss. 449, 71 So. 745; Freeman v. Guion, 11 Sm. M. (19 Miss.) 58; Holt v. Lucas (Kan.), 96 P. 30; Ledis-Zukoski Mercantile Co. v. McIntyre, 93 Miss. 806, 47 So. 435; Lougbridge v. Bowland, 52 Miss. 546; Martin v. Adams Mercantile Co., 203 Miss. 177, 33 So.2d 633; Matthews v. Thompson, 231 Miss. 258, 75 So.2d 438; McFadden v. Blocker, 2 Ind. T. 260, 48 S.W. 1043; Midsouth Paving Co. v. Trinidad Asphalt Mfg. Co., 197 Miss. 751, 21 So.2d 646; Mississippi Industries for the Blind v. Jackson, 231 Miss. 135, 95 So.2d 109; Nugent v. Priebatsch, 61 Miss. 402; Regina Flour Mills Co. v. Lehmann, 117 Miss. 575, 78 So. 515; Sack v. Gilmer Dry Good Co., 149 Miss. 296, 115 So. 339; Safford v. McNeil (Comm.), 129 A. 721; Scruggs v. Blair, 44 Miss. 406; Statham v. New York Life Ins. Co., 45 Miss. 581; Vines v. Sparks, 148 Miss. 219, 114 So. 322.
II. The failure of appellant's chattel mortgage as against the appellee eliminated any interest of appellant in the proceeds of the collision insurance on subject automobile. Loughbridge v. Bowland, supra; Martin v. Adams Mercantile Co., supra; Vines v. Sparks, supra.
III. The principal defendant's interest in the insurance proceeds was properly subject to attachment as an indebtedness under Section 2729, Mississippi Code of 1942. Crescent Ins. Co. v. Moore, 63 Miss. 419; Ford v. Mutual Life Ins. Co., 194 Miss. 519, 13 So.2d 45; Keathley v. Hancock, 212 Miss. 1, 53 So.2d 29; Meridian Land Industrial Co. v. Ormand, 82 Miss. 758, 35 So. 179; Travelers Ins. Co. v. Inman, 157 Miss. 810, 126 So. 399.
APPELLANT IN REPLY.
I. The cases cited by appellee are not in point because none of them involve an attachment based on an unliquidated tort claim. Dixon Starkey v. LaCoste, 1 Sm. M. 70; Dodd v. Parker, 40 Ark. 540; Holt v. Lucas (Kan.), 96 P. 30; Loughbridge v. Bowland, 52 Miss. 546; McFadden v. Blocker, 2 Ind. T. 260, 48 S.W. 1043; Martin v. Adams Mercantile Co., 203 Miss. 177, 33 So.2d 633; Nugent v. Priebatsch, 61 Miss. 402; Sack v. Gilmer Dry Goods Co., 149 Miss. 296, 115 So. 339; 2729, Code 1942; Sec. 4743, Mansfield's Digest, Arkansas.
II. The right to the insurance proceeds does not depend upon the right to the insured property; therefore the failure to record the chattel mortgage does not defeat appellant's right to the proceeds. Collette v. Long, 179 Miss. 650, 176 So. 528; Cox v. Hartford Fire Ins. Co., 172 Miss. 841, 160 So. 741.
III. The claim of Bowen against the insurance company is not subject to a garnishment issued pursuant to a chancery attachment. Craig v. Gaddis, 171 Miss. 379, 157 So. 684; Crescent Ins. Co. v. Moore, 63 Miss. 419; Meridian Land Industrial Co. v. Ormond, 82 Miss. 758, 35 So. 179.
This case was appealed from the Chancery Court of the First Judicial District of Hinds County. In May 1959, Clark was injured as a result of an automobile collision, he colliding with a car owned and driven by W.C. Bowen. In June of that same year, Bowen being a nonresident, Clark filed suit in the chancery court under our statute authorizing attachments in chancery against nonresidents, seeking to recover damages for such injuries. The company having possession of the car of Bowen, which had been damaged in said collision, was made a party, as was Emmco Insurance Company, which company held the collision insurance on Bowen's car. Associates Discount Corporation filed an intervention petition alleging it held a chattel mortgage (which was not recorded in Mississippi) executed under the laws of the State of Louisiana on the car which had been attached, and that as mortgagee it was entitled to the proceeds of the insurance on said car by reason of the mortgage clause in the policy, and that it was also entitled to enforce its mortgage lien against the car.
Before the final hearing, the insurance company paid the insurance money amounting to $1250.67 to the chancery clerk, awaiting final disposition by the court. By agreement, the automobile was sold and the proceeds of such sale amounting to $625 was also held by the clerk of the court for final determination. On the final hearing, Clark recovered a judgment against Bowen for the sum of $15,000. There is no appeal by Bowen and that issue is not before us.
In the final decree the lower court directed the payment of the proceeds of the sale of the car as well as the proceeds of the insurance to Clark and dismissed the claim of Associates Discount Corporation thereto, from which order the said Associates Discount Corporation appeals.
There are two questions involved: (a) Does the word "creditor" in Section 870 of the Mississippi Code of 1942 include such a claimant as Clark? (b) Do the proceeds of the collision insurance follow the car, and as between Clark and Associates Discount Corporation, which would be entitled to receive same? Our statute governing attachments in chancery are Sections 2729 and 2730, Mississippi Code of 1942, and read as follows:
"Section 2729: Nonresidents — absent or absconding debtors. The chancery court shall have jurisdiction of attachment suits based upon demands founded upon any indebtedness, whether the same be legal or equitable, or for the recovery of damages for the breach of any contract, express or implied, or arising ex delicto against any nonresident, absent or absconding debtor, who has lands and tenements within this state, or against any such debtor and persons in this state who have in their hands effects of, or are indebted to, such nonresident, absent or absconding debtor. The court shall give a decree in personam against such non-resident, absent or absconding debtor if summons has been personally served upon him, or if he has entered an appearance."
"Section 2730. Attachments against nonresidents — how effects or indebtedness bound. When a bill shall be filed for an attachment of the effects of a nonresident, absent or absconding debtor in the hands of persons in this state, or of the indebtedness of the defendant in this state to such nonresident, absent or absconding debtor, it shall be sufficient to bind such effects or indebtedness, that the summons for the defendant resident in this state shall have stated in or endorsed upon it the nature and object of the suit, and that it is to subject the effects in the hands of the resident defendant, and the indebtedness of such defendant to the nonresident, absent or absconding debtor, to the demand of the complainant; or, instead of such statement on the summons, a copy of the bill may be served with the summons, and shall bind the effects or indebtedness from the time of such service."
Section 870 of said Code reads: "Mortgages, deeds of trust, and other liens on personal property executed out of this state shall only be binding on such property in or when removed into this state, as against creditors and bona fide purchasers without notice, from the time such mortgage, deed of trust, or other instrument, duly acknowledged or proved, or a duly certified copy of the record thereof, shall be delivered to the proper clerk in this state for record."
(Hn 1) It will be noted that the statute on attachments in chancery provides that the chancery court shall have jurisdiction of such suits upon any indebtedness against a nonresident, whether legal or equitable, for breach of contract or arising ex delicto. There can be no question as to the right of Clark to proceed in this manner to recover damages in his tort action. (Hn 2) When property is attached in these proceedings, the service of process creates a lien on the property and the lien is established when the writ is served. Slattery v. Renoudet Lumber Co., 125 Miss. 229, 87 So. 888; Vines v. Sparks, 148 Miss. 219, 114 So. 322; Vining, et al. v. Smith, 213 Miss. 850, 58 So.2d 34. This last suit was an action to recover property damages because of an automobile collision.
It is clear that under our statute the complainant acquires a lien on the property of a nonresident bound under these statutes from the date of the service of the writ and the complainant becomes a lienholder against such property, the suit, as stated in the Vining case, being an action in rem. A lienholder would be protected and would be within the purview of Section 870 above quoted.
(Hn 3) The lower court was correct in awarding the proceeds of the sale of the car to Clark. The policy of insurance issued on the car provided that the proceeds of such insurance would be payable to the insured Bowen and Associates Discount Corporation as their interests might appear. It is agreed that the amount of the debt due Associates Discount Corporation exceeded the amount of the insurance due. The right of Associates Discount Corporation to the insurance vested when the damage was done to the car. 46 C.J.S., Section 1183, page 93. Section 870 of the Code does not destroy the debt due by Bowen or the unrecorded mortgage. Insurance is the subject of contract. (Hn 4) One who has a mere lien on the property insured has no claim on the insurance money for a claim on the insurance money may arise only out of contract. Federal Land Bank vs. Thames, 160 Miss. 335, 134 So. 154. Policies of insurance are not incidents of or to the property. They are contracts between the insurers and the assured for indemnity of the assured, and not for loss or damages which another person may have sustained because of the destruction of the property. Collette, et al. v. Long, 179 Miss. 650, 176 So. 528. There are other authorities cited in these two Mississippi cases. (Hn 5) We think, however, it is sufficient to say that under the contract of insurance the proceeds of the insurance became payable to Associates Discount Corporation; that the attachment of the car did not change the insurance contract and that when the writ of garnishment was served on the insurance company, the insurance company was not indebted to Bowen but was indebted to Associates Discount Corporation.
The lower court was in error in awarding the proceeds of the insurance to Clark and that portion of the decree is reversed, and it is directed that the proceeds of the insurance be paid to Associates Discount Corporation, and judgment to that effect is entered here.
Affirmed in part and reversed in part.
Lee, P.J., and Arrington, McElroy and Rodgers, JJ., concur.