Northwestern National Insurance v. William G. Wetherall, Inc.

Digges, J., delivered the opinion of the Court. The old saying, “Two’s company, but three’s a crowd” is certainly pertinent here, for our recitation of the principal question involved in this appeal is somewhat complicated by the presence of and relationships between three corporations. Therefore, we shall attempt to simplify our statement of the issues by clearly identifying the connections between the companies. Appellee, William G. Wetherall, Inc., obtained a judgment against Bethesda Welding Service, Inc. in the Circuit Court for Montgomery County.

Later, Bethesda obtained a judgment against appellant, Northwestern National Insurance Company, also in the Circuit Court for Montgomery County. In execution on its judgment against Bethesda, in a proceeding in the Superior Court of Baltimore City, Wetherall directed the issuance of a writ of attachment which was laid in the hands of Northwestern as garnishee. The primary question which must be answered in this appeal is whether, by virtue of this attachment, Northwestern became responsible to appellee for the amount owed to Wetherall by Northwestern’s judgment creditor, Bethesda. More particularly, the issue is whether Northwestern confessed possessing assets belonging to its judgment creditor in such a manner as to authorize, without a hearing, the entry of a judgment of condemnation absolute against it pursuant to Maryland Rule F3.

We answer this question in the negative and, accordingly, reverse the judgment of the trial court. Fortunately, the facts pertinent to this appeal are easier to present as they are not disputed by the parties ³⁸¹ and are agreed to as stated in the appellant’s brief. There, the details are recited as follows: “On February 11, 1970, Wetherall obtained a judgment in the Circuit Court for Montgomery County in the amount of $15,834.38 against Bethesda. In an attempt to effect collection of that judgment Wetherall, on February 13, 1970, recorded that judgment in the Superior Court of Baltimore City and brought a garnishment action against Northwestern in that Court.

Northwestern filed a plea of nulla bona to the attachment action. On November 6, 1970, in the Circuit Court for Montgomery County, Bethesda filed a suit against Northwestern to obtain payment under a fire insurance policy. That suit, on February 4, 1972, resulted in a judgment for Bethesda against Northwestern in the amount of $20,-167.00. On February 22, 1972, in the Superior Court attachment suit, Northwestern filed an ‘Amended Plea of Garnishee and Confession of Assets’ which recited the following: ‘1.

That as the result of a judgment entered against it this Garnishee confesses that it is now indebted to Bethesda Welding Service in the amount of $20,167.00. 2. This Garnishee says that other attachments have been laid in its hands and others are claiming the amount due to the said Bethesda Welding Service, Inc., on account of said Judgment. 3. That the time for the filing of an appeal from the judgment hereinabove referred to has not expired.’ That same day, February 22, 1972, Wetherall moved for and obtained a ‘Judgment of Condemnation Absolute against Garnishee who has ³⁸² filed Confession of Assets in Attachment.’ Said judgment was in the amount of $17,851.16. [Both a copy of the motion, which was captioned Tn The Superior Court for Baltimore City,’ and the judgment of condemnation absolute were served by hand delivery to counsel for the appellant on the same February 22 date.] 1 On February 25, 1972, in the Circuit Court for Montgomery County, Northwestern was permitted to deposit in the Registry of the Court the amount of the Montgomery County judgment against Northwestern and the sum of $20,167.00 was so deposited. Notification of that action was given to counsel for Wetherall.

Payments were thereafter made on April 3, 1972, from the Registry upon Petition and Order of Court as follows: (1) $7,343.16 to Glenn O. Hall, Jr. and David Kayson; (2) $4,423.80 to Robert L. Hillyard, Attorney for Earle M. Dupee, and (3) $350.16 to George A. Chadwich, Jr. On April 5, 1972 Northwestern filed with the Circuit Court for Montgomery County a ‘Petition to Not Pay Further Funds from the Registry of the Court.’ That Petition has not been heard nor formally acted upon by the Montgomery County Court. In the meantime, on March 2, 1972, Northwestern filed, in the Superior Court attachment suit, a Motion to Strike the Judgment of Condemnation Absolute alleging in part: ‘That said judgment was entered on the assumption that the Garnishee had “confessed assets” when in reality Garnishee’s amended plea reflected that its indebtedness ³⁸³ to Bethesda Welding Service, Inc. was not final and, even if it were, that there were several claimants after the funds being held by the Garnishee.’ The Motion to Strike the Judgment also informed the Court that Northwestern had paid into the registry of the Circuit Court for Montgomery County the sum of $20,167.00, as set forth in detail above. On March 17, 1972 Wetherall filed an answer in opposition to Northwestern’s Motion to Strike the Judgment. The Motion to Strike the Judgment was heard before Judge Anselm Sodaro on April 5, 1972, at which time Northwestern made a formal request that the case be transferred to Montgomery County.

At the conclusion of the hearing, Judge Sodaro denied Northwestern’s Motion to Strike the Judgment of Condemnation Absolute, ordered Northwestern to file an Interpleader Proceeding in the Superior Court of Baltimore City within thirty days, ordered Wetherall not to execute on its judgment against Northwestern until after the determination of the rights of all interested parties in the Inter-pleader Proceeding and denied Northwestern’s request to transfer the case to the Circuit Court for Montgomery County. On April 10,1972 Judge Sodaro denied Northwestern’s request to reconsider his rulings of April 5, 1972, whereupon, on May 2, 1972, Northwestern noted an appeal to this Honorable Court. On April 11, 1972 Bethesda, through counsel, made its initial entry into the case by filing a Motion to Strike the Judgment of Condemnation Absolute. That Motion is still pending.” In order to decide the various questions presented on this appeal, it is necessary to examine generally the law regulating attachments and specifically the application ³⁸⁴ of that law to the facts here.

An attachment by way of garnishment issued after judgment is a mode of execution and its function is approximately the same as that of a writ of fieri facias. As attachment proceedings are in derogation of the common law, their existence is dependent upon special provisions authorizing them. Killen v. American Casualty, 231 Md. 105 , 189 A. 2d 103 (1963). Authority for courts in this State to entertain attachments after judgment has long been established in our laws.

The origin of this authority is found in the Acts of 1715, Ch. 40, § 7. W. Hodge and R. McLean, The Law of Attachment in Maryland, § 251 (1895). But, to effectuate such an attachment there must be compliance with the regulating provisions. See Maryland Code (1957, 1968 Repl.

Vol.), Art. 9, § 17; Rules 623 and Fl-5. An attachment on a judgment is a tool by which a judgment creditor can reach the assets of a judgment debtor in the hands of a third party, the garnishee. And, when properly laid in the hands of the garnishee, such an attachment creates an inchoate lien that is binding on goods, monies and credits of the judgment debtor which the garnishee then has in his possession, as well as all those which come into his hands down to the trial and judgment in the garnishment action. 2 Messall v. Suburban Trust, 244 Md. 502 , 224 A. 2d 419 (1966). This inchoate lien becomes consummate with the entry of a judgment of condemnation absolute.

Under the established law of this State, a garnishment proceeding is, in essence, an action by the defendant (judgment debtor) against the garnishee for the use of the plaintiff (judgment creditor). Bendix Radio Corp. v. Hoy, 207 Md. 225, 229 , 114 A. 2d 45 (1955). This proceeding generally brings to a ³⁸⁵ test whether the garnishee has in his hands funds, property or credits for which the debtor would himself have a right to sue. Walsh v. Lewis Swim.

Pool Constr., 256 Md. 608, 610 , 261 A. 2d 475 (1970). Keeping this general background in mind, we now consider the specifics as they relate to the conceded facts of this case and the legal contentions of the appellant. Preliminarily, we point out that, in an execution on a judgment held by a judgment creditor against a judgment debtor, monies owed under a separate judgment by the garnishee to the judgment debtor against whose credits the attachment is directed, are specifically made attachable by the provisions of the Code, Art. 9, § 17. 3 Additionally, we note that Rule G47 a, relating to attachments on original