Opinion
33894.
DECIDED FEBRUARY 19, 1952. REHEARING DENIED MARCH 6, 1952.
Garnishment; from Fulton Civil Court — Appellate Division. October 9, 1951.
C. E. Moore, for plaintiff.
Smith, Kilpatrick, Cody, Rogers McClatchey, E. D. Smith Jr., for defendant.
The test of whether funds in the hands of a third person are subject to garnishment is whether or not the original defendant could himself recover such funds by suit directly against the garnishee. Accordingly, since the evidence here discloses that the title to the fund in which the defendant participates is held by a trustee of the garnishee, such trustee, and not the garnishee, owes the defendant. Applying the foregoing rule, therefore, to this case, the defendant could not himself recover by suit directly against the garnishee, and the plaintiff cannot enforce collection of her judgment by this means.
DECIDED FEBRUARY 19, 1952 — REHEARING DENIED MARCH 6, 1952.
the plaintiff in error, Mrs. Yates Peeke Foster, obtained a judgment in the amount of $135.40 against Leland O'Callaghan in the Civil Court of Fulton County, and thereafter issued a garnishment proceeding thereon in the same court against Southern Bell Telephone Telegraph Company. The defendant in garnishment answered not indebted, which answer was traversed by the plaintiff. A trial on this issue revealed the following evidence on behalf of the plaintiff: That O'Callaghan was a former employee of the defendant in garnishment; that on May 11, 1950, he was retired and thereafter drew a pension of $149.02 per month; and that sums accruing under the pension were paid to the employee by Bankers Trust Company of New York and mailed to him from New York. The connection of the defendant in error with the monthly stipend received by O'Callaghan was that in 1913 the telephone company had established a Plan for Employees' Pensions, Disability Benefits and Death Benefits, by which retired employees would receive regular amounts of pension to be determined by their salary and length of service in the company; that Bankers Trust Company of New York, as the named trustee therein, administered the fund according to the purposes of the plan, and that the sole obligation of the telephone company was to "maintain this fund by periodic charges to operating expenses and payments to the fund in such amounts that when employees are retired . . there will be available in the pension fund an amount sufficient to provide for them pensions in the amounts stated in the plan." The company under this arrangement had no right to change or terminate the plan in any way which would affect the right of any former employee to any benefit or pension which had previously accrued to him.
At the close of the plaintiff's evidence, the court granted a motion for nonsuit, and the exception is to this judgment.
It is the plaintiff's contention that the various agreements entered into between the employer and its trustee, Bankers Trust Company, created the relationship of principal and agent as between them, the employer retaining control of the disposition of the funds in the hands of the trustee; and that for this reason the obligation of the trustee to pay over the monthly pension was in reality a debt owing to the employer by Southern Bell Telephone Telegraph Company. The test of whether funds in the hands of a third person are subject to garnishment is whether or not the original defendant could himself recover such funds by suit directly against the garnishee. Butler v. Billups, 101 Ga. 102 ( 28 S.E. 615); Bates Co. v. Forsyth, 69 Ga. 365; Johnson v. Varnum, 43 Ga. App. 737 ( 159 S.E. 908); Hodges v. Ocean Accident c. Corp., 66 Ga. App. 431 ( 18 S.E.2d 28). And, as is pointed out in the brief of counsel for the defendant in error, this relationship must be determined by the laws of New York, both parties being New York corporations and the trust being administered in that State. See Sinnott v. Moore, 113 Ga. 908 ( 39 S.E. 415); Clark v. Baker, 186 Ga. 65 ( 196 S.E. 750). Under the decision in Brown v. Spohr, 180 N.Y. 201 ( 73 N.E. 14), the four elements essential to the creation of a valid trust, as distinguished from a relationship of principal and agent, age: (1) that there must be a designated beneficiary; (2) a designated trustee; (3) a fund sufficiently identifiable to enable title thereto to pass to the trustee; and (4) the legal assignment of the fund and actual delivery thereof to the trustee with the intention of passing title. Voluminous documentary evidence was introduced on the trial of the case involving the creation and operation of the trust agreement. It appearing from the instruments creating and governing the trust that the employer undertook the obligation to pay into the fund amounts which would be sufficient to cover employees generally under the pension scale set up in the agreements, and that this obligation was irrevocable insofar as it affected employees whose rights had previously accrued, and it further appearing that the employer had no other rights over the fund, such as the right to recall any portion thereof to be administered by itself or some other agent rather than by the designated trustee — it appears that the legal title to the fund was vested in the trustee, and that the employer's obligation was an obligation under its agreement to pay funds to the trustee, but not an obligation to pay any funds to the defendant. It follows, therefore, that if payments had not been forthcoming, a retired employee of the company, or his beneficiaries in case of his death, would have no right to proceed directly against the settler of the trust, but his remedy in the first instance would be by claim against the trust fund established for his benefit. The administration of the trust fund was carried on under the sole supervision of Bankers Trust Company in New York from assets located in that State. It thus affirmatively appears that no legal obligation existed between the garnishee and its former employee which could have been enforced by the latter, since the obligation to pay arises by virtue of an agreement between the garnishee and a third party, under the terms of which the third party has undertaken the sole responsibility of making such payments, and apparently is making them, from funds delivered to it for that purpose. Since the employee would have no right of action against its former employer under these circumstances, it follows that the plaintiff in garnishment could not enforce collection of her judgment by this means.
The trial court did not err in granting the motion for a nonsuit.
Judgment affirmed. MacIntyre, P. J., and Gardner, J., concur.