Opinion
42029.
ARGUED MAY 2, 1966.
DECIDED JUNE 16, 1966. REHEARING DENIED JUNE 30, 1966.
Attachment. Chatham Superior Court. Before Judge McWhorter.
Weil, Gotshal Manges, Charles L. Sparkman, Richardson, Doremus Karsman. W. Ward Newton, for appellant.
Connerat, Dunn, Hunter, Houlihan, Maclean Exley, Malcolm Maclean, Reginald C. Haupt, Stanley Feiler, Kennedy Sognier, for appellees.
1. The court erred in ruling that it had jurisdiction to render an in personam judgment against the defendant in attachment. There was no service of the declaration in attachment which would give such jurisdiction and there was no conduct of the defendant which amounted to a waiver or acknowledgment of such service as would give general jurisdiction.
2. The trial court correctly held that the agreement between the plaintiffs in attachment and the defendant to surrender possession of the jute attached, to James Talcott, Inc., for disposition, was a waiver of all defects in the attachment proceedings, including the issuance of the attachment, the levy thereunder and the declaration. The agreement is unambiguous. It plainly states that the goods had been attached. The legal consequence of the agreement is that the proceeds of the sale of the jute levied on will be subject to the judgment of the court in the absence of a judgment by the court releasing the property from the court's jurisdiction. The parties to the agreement and James Talcott, Inc., are bound to make the proceeds of the sale of the jute available to the court for distribution under the findings and orders of the court in the case under the issues made and to be made in the proceedings. (If the attachment was void, of course nothing could retroactively make it valid, but under the facts the defendant is estopped to contend that the attachment is void because by its conduct in agreeing to the disposition of the property sought to be attached it has assisted in putting it beyond the power of the plaintiffs to endeavor to correct whatever deficiencies there might have been in the attachment proceedings, if any, by having the attachment re-levied upon the property.)
3. In addition, after the rendition of the judgments of the court appealed from, a summons of garnishment was issued on the attachment affidavit and bond and was served on an attorney at law for James Talcott, Inc., which filed an amended answer to the summons in its own name, without questioning the validity of the service of the summons, showing an indebtedness to the defendant less certain credits due garnishee and expenses incurred, etc., as shown by the amended answer to the summons of garnishment. The rulings of the court on the validity of the attachment proceedings and the answer of the garnishee give the court unquestionable in rem jurisdiction of the proceeds of the sums due defendant by the garnishee, subject to other possible developments in the further progress of the case.
Under the circumstances existing we do not deem it necessary to pass specifically and in detail on the other numerous rulings by the trial judge. The omission to do so shall be without prejudice to any party to the case.
Judgments affirmed in part; reversed in part. Frankum and Pannell, JJ., concur.
ARGUED MAY 2, 1966 — DECIDED JUNE 16, 1966 — REHEARING DENIED JUNE 30, 1966 — CERT. APPLIED FOR.
Allahabad Bank, Ltd., and The Bank of Baroda, Ltd., instituted in the Superior Court of Chatham County an attachment proceeding in which it was deposed that City Trade Industries, Ltd., was indebted to them in attachment in the sum of $370,766.20 and that said defendant was selling or conveying its property liable for the payment of its debts for the purpose of avoiding the payment of the debt and that the defendant resided out of the State of Georgia. The affidavit contained no description of the property to be levied upon. The attachment directed to the sheriff or his deputy, etc., directed the seizure of "all that jute or jute backing cloth stored at the Garden City Terminals of the Georgia State Ports Authority as will make" the amount of the alleged debt to plaintiff, and to serve such summons of garnishment as might be placed in the hands of said officers and to make return to the December term, 1964, of the Superior Court of Chatham County. The attachment was signed by Judge Edwin A. McWhorter, Senior Judge of the Superior Court of the Eastern Judicial District. A deputy sheriff made the following return on the attachment: "Sheriff's Office, Superior Court, Savannah, Ga. September 4th, 1964. I have this day served the within Affidavit, Bond, Attachment upon the defendant (s) City Trade Industries, Ltd. by handing ___________ a copy thereof to James I. Newsome, Director of Operations, Georgia State Ports Authority in person. The Return of /S/ T. H. Johnson, Deputy Sheriff, Chatham Co. Ga." The plaintiff filed the following declaration in attachment: "Now come Allahabad Bank, Limited and Bank of Baroda, Limited, plaintiffs in attachment, and in accordance with Section 8-601, et seq., of the law of Georgia, state the following: 1. The property, that is jute, of defendant, City Trade Industries, Ltd., is subject to the jurisdiction of this court because the property is located within Chatham County, Georgia, to wit: at the Garden City Terminals of the Georgia State Ports Authority. Further, City Trade Industries, Ltd.: (a) is selling or conveying its property liable for the payment of its debts for the purpose of avoiding payment of a debt due the plaintiffs, and (b) said debtor resides out of the State of Georgia, both of which are grounds for an attachment. 2. City Trade Industries, Ltd. is indebted to the Allahabad Bank, Limited, in the amount of $343,915.26 together with interest at 6% from the respective maturity dates plus protest fees on a series of negotiable trade acceptances. A list of the bills and their individual amounts is set out as Exhibit `A'. Copies of the bills are attached hereto as Exhibits `C', `D', `E', 'F', `G', `H', `I', `J', and `K'. 3. City Trade Industries, Ltd. is indebted to The Bank of Baroda, Limited, in the amount of $26,850.94 together with interest at 6% from their respective maturity dates plus protest fees on a series of negotiable trade acceptances. A list of the bills and their individual amounts is set out as Exhibit `B', and attached hereto. Copies of the bills are attached hereto as Exhibits `L', `M' and `N'. 4. Although demand has been made for payment defendant has failed and refused to do so. Wherefore, your petitioners pray that they may have judgment against the property of the defendant now in the hands of the Georgia State Ports Authority and located at Garden City Terminals in the amount of $370,766.20 plus interest at 6% from the various protest dates and all costs of this action." The declaration was amended to include other trade acceptances. It was also amended to include as a plaintiff in attachment the Bank of Tokyo, Ltd., and to show the amount of indebtedness to the three plaintiffs to be $540,138.51. The last amendment to the declaration is as follows: " Third Amendment to Declaration in Attachment. Now come the Allahabad Bank, Limited, the Bank of Baroda, Limited, and the Bank of Tokyo, Ltd., plaintiffs in attachment, and with leave of court, amend their declaration in attachment as follows: 1. By adding the following sentence after the first sentence in paragraph 1 of the declaration, to wit: `The sheriff was commanded to attach and seize so much of the jute or jute backing cloth stored at the Garden City Terminals of the Georgia State Ports Authority as will make the sum of Three Hundred Seventy Thousand, Seven Hundred Sixty-six and 20/100 ($370,766.20) Dollars and costs. That T. H. Johnson, Deputy Sheriff of Chatham County, did on September 4, 1964, levy on said property and obtain Mr. James Newsome, an officer of the State Ports Authority's agreement to hold said property for the sheriff as his agent. Mr. Newsome so advised Mr. Jacobi, Vice-President of City Trade Industries, Ltd. 2. By adding the following additional sentence after the word `Authority' in the first sentence in paragraph 1 of the declaration, to wit: `Plaintiffs show that all property of defendant stored at the Georgia State Ports Authority warehouses at the Garden City, Georgia, terminals was held subject to this attachment but was released following an agreement among the parties directed to the Georgia Ports Authority and approved by the Sheriff of Chatham County's deputy, George Kapner. A copy of the letter from Mr. Kaslow authorizing Mr. Sparkman as attorney for the defendant to enter into this agreement is attached as Exhibit I. A copy of the letter from the three attorneys involved in the matter directed to the Georgia Ports Authority and approved by the Sheriff's office of Chatham County is attached as Exhibit II. A copy of the receipt accepting this agreement from Mr. James I. Newsome, Director of Operations of the Georgia Ports Authority is attached as Exhibit III. An amendment was filed to this declaration on June 16, 1965, adding another plaintiff and showing the total amount due the plaintiffs to be Five Hundred Forty Thousand One Hundred Thirty-eight and 51/100 ($540,138.51) Dollars.' 3. Amend the prayer of the declaration to conform to the exhibits attached herewith by inserting the following language after the word 'hands': `of James Talcott, Inc., which funds arose from the proceeds of the sales carried out pursuant to Exhibits I, II and III of the jute formerly in the hands of the Georgia Ports Authority to the extent that said proceeds exceed the debt owed James Talcott, Inc. and against the remaining jute still in the hands.' Wherefore, your petitioners pray that this their amendment be allowed." The agreement to release the jute to James Talcott, Inc., is as follows: "November 30, 1964. Georgia Ports Authority, Garden City Terminals, Savannah, Georgia. Gentlemen: There is now pending in the Superior Court of Chatham County, Georgia, an attachment brought by Allahabad Bank, Ltd. and Bank of Baroda, Ltd., against City Trade Industries, Ltd., under which certain jute backing cloth has been attached. As attorneys for all the parties at interest in this attachment, this will authorize and request you to release so much of this jute as ordered by James Talcott. Inc. Your responsibility is to do nothing more than furnish the three attorneys listed below with copies of such documents as you issue in connection with the release of the jute. It is understood that this agreement may be modified or terminated at any time by the plaintiffs in attachment. Very truly yours, /S/ Malcolm Maclean, Joseph M. Oliver and Charles Sparkman. (O.K., George Kapner, Deputy Sheriff, C. C. Ga.)" Summons of garnishment was issued to James Talcott, Inc. and served on its attorney in Savannah. Its amended answer to said summons is as follows: "James Talcott, Inc., garnishee, by its attorneys, Oliver Maner and Hahn, Hessen, Margolis Ryan, for its amended answer to the summons of garnishment issued herein on February 24, 1966, states: 1. James Talcott, Inc. is a corporation organized and existing under the laws of the State of New York with its principal place of business at 1290 Avenue of the Americas, New York, New York. 2. Garnishee, at the time of the service of the said summons, had no money, property or effects of the said defendant in its hands belonging to defendant, and was not indebted to said defendant. Between the time of the service of said summons and the time of interposing this amended answer, no money, property or effects of the said defendant have come into the hands of the garnishee and it has not become indebted to the said defendant, save possibly as hereinafter stated. 3. Long prior to the commencement of this suit, garnishee and defendant had entered into a financing agreement and had certain financing transactions from time to time with defendant, City Trade Industries, Ltd. (hereinafter called `C.T.I.'), a corporation with its principal office at 2 Park Avenue, New York, New York. 4. Pursuant to the aforesaid financing agreement and arrangements thereunder, garnishee, as a pledge from C.T.I., for its substantial indebtedness then or thereafter resulting to garnishee for loans and advances, obtained a security title and interest in and to quantities of jute backing cloth held in storage at the Garden City Terminal of Georgia Ports Authority at Savannah, Chatham County, Georgia. 5. Subsequent to the issuance by the plaintiffs of the execution in attachment in this action against property belonging to defendant. C.T.I., an agreement was entered into about November 30, 1964, between garnishee, defendant C.T.I., and the plaintiffs in attachment, and pursuant thereto, and as a part thereof, the attorneys for all interested parties executed and delivered to Georgia Ports Authority a letter dated November 30, 1964, a copy of which is annexed hereto, made a part hereof and marked Exhibit A. Thereafter, pursuant to the said agreement as implemented, various quantities of the jute backing cloth were released to garnishee's order and, on information and belief, sold by defendant, C.T.I., in the regular course of trade with the proceeds of such sales being remitted to and received by garnishee. 6. Garnishee applied some of the aforesaid collections to satisfy the then indebtedness of C.T.I. to garnishee for the collateralized loans made pursuant to said financing agreement and there remained on hand with garnishee from the proceeds of the aforesaid collections at the time of the service of the summons of garnishment the principal sum of $622,367.76, which, however, was and is subject to certain further claims and rights of the garnishee, as follows: (i) Garnishee has an unliquidated contingent liability arising out of the aforesaid collections from the sale of the jute on account of the deposits made by the purchasers thereof for the cores upon which the jute was found at the time of its sale and delivery to said purchasers. Garnishee has not obtained an accounting as to the exact quantity of the said cores outstanding for which deposits must be refunded and hereby reserves its rights to hold and apply a part of the aforesaid balance of collections for satisfaction of garnishee's contingent liability to the purchasers of the said jute. (ii) Garnishee has a further claim and right to hold and apply a part of the aforesaid balance of collections for its unliquidated liability arising out of the reasonable and necessary legal expenses and disbursements incurred and being incurred by garnishee for the protection of the said jute and of its security interest therein, as well as for the resulting balance of collections. Further, under the provisions of garnishee's financing agreement with C.T.I. and otherwise, garnishee hereby reserves its right to charge the costs and expenses including legal fees and disbursements, resulting from the disputes between plaintiffs in attachment and defendant, C.T.I., to the aforesaid balance of collections from the accounts receivable. Garnishee further prays leave to further amend this answer in respect to the matters hereinbefore stated. /S/ James Talcott, Inc., Garnishee, By, Vincent P. Arminio, Assistant Vice-President. Dated: New York, New York, April 20, 1966."