Eilken v. Morrison

Opinion

FLEMING, J.

On 11 October 1967, Thomas B. Eilken and others (petitioners) petitioned the superior court for a writ of mandate to compel the City of Thousand Oaks (City), its treasurer, Norman Morrison, and the real party in interest, Security First National Bank (Bank), to pay into court all moneys ov/ed to Conejo Valley Development Company (Conejo), against whom petitioners had secured two judgments. The petition alleged that petitioners’ judgments had been obtained on 2 December 1966 and 3 February 1967; that City was a debtor of Conejo; that on 19 September 1967, petitioners, pursuant to section 710 of the Code of Civil Procedure, had served on Morrison, the proper City official to receive service under section 710, a declaration of judgment creditors, abstracts of their judgments, and a check for $2.50; that Morrison had not performed his duty to pay into court all moneys held by him in favor of Conejo; and that mandamus was the only adequate remedy to compel him to do so.

After an alternative writ of mandate had been issued, respondents Morrison, City, and Bank filed an answer which set forth two defenses to the petition: (1) petitioners failed to allege the existence of a fund from which respondents were under a duty to make payments; (2) in 1962 Conejo had assigned to Bank as trustee for Conejo’s creditors its reimbursement rights under a certain sewage installation contract with Conejo Valley Sanitary Company, and in 1966 the liabilities of the latter had been assumed by City, and consequently City was not a debtor of Conejo but was a debtor of Bank.

Certain other pertinent facts appear from the declarations and exhibits. On 19 September 1967, the date of petitioners’ attempted garnishment, City’s annual instalment to Bank, $5,441.18 based on sewer revenues from 1966, had not been paid. Bank demanded payment from City on the ground it had a right to payment by virtue of the 1962 assignment by

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Conejo. City paid Bank on 4 October 1967 but asked for and received an indemnity agreement from Bank.

Petitioners offered no evidence that City presently had funds from sewer revenues owing to either Conejo or Bank. They contended that Conejo’s 1962 assignment of the reimbursement rights under the sewer contract to Bank only gave Bank a security interest (see Com. Code, § 9102) which had not been perfected and which remained subordinate to the lien of the judgment creditors; alternatively, that the assignment had been a fraudulent transfer without consideration which rendered Conejo unable to pay its debts as they matured. (See Civ. Code, §§ 3439.03-3439.06.) According to petitioners, therefore, City did in fact have a debt to Conejo because Conejo’s assignment of that debt to Bank was invalid, and consequently City violated section 710 when it paid its 1967 instalment to Bank after petitioners had garnished the debt. Petitioners argue that mandamus was an appropriate remedy to recover the $5,441.18 payment of 4 October 1967 and to require City to turn over to the court all amounts which were, or would become, due under the sewer contract.