Booge v. First Trust & Savings Bank

THE COURT. Plaintiff recovered a judgment in the superior court against one Reinicke and caused execution to be issued thereon and levied upon all moneys or other assets in possession of defendant and belonging to or owing to said Reinicke. The" defendant answered that it had in its possession and under its control certain funds belonging to Reinicke, but claimed that by virtue of spendthrift provisions of a certain trust indenture said funds were exempt from execution and declined to pay over any of the money. Plaintiff then secured an order for the appearance and examination of defendant pursuant to the provisions of section 717, Code of Civil Procedure. Defendant appeared and filed an answer setting forth the spendthrift provisions of the trust in greater detail and claimed that by reason of the trust provisions it had an interest in the trust property adverse to the judgment debtor and denied that it was [881]indebted to said Reinicke. The referee thereupon issued an order restraining defendant from making any transfer of the money until an action could be commenced and prosecuted to judgment. Plaintiff then filed this action in the municipal court. Defendant demurred on the ground, among others, “that the court had no jurisdiction of the subjeetof the action” because of the very limited equitable jurisdiction conferred upon that court by the code (section 89, Code of Civil Procedure). The demurrer was sustained without leave to amend. From the judgment of dismissal plaintiff appeals.

The jurisdiction of the municipal court depends on whether this is an action at law or an action in the nature of a creditor’s bill to discover and apply property of the judgment debtor, in the possession of a third person, to the satisfaction of plaintiff’s judgment.

Before statutory provision was made for proceedings supplemental to execution, it was necessary for a judgment creditor, where he could not reach assets of his debtor by execution, to invoke the jurisdiction of a court of equity in what was called a creditor’s bill or suit. This additional suit meant additional expense, delay and trouble. In order to obviate as much of this difficulty as possible statutory proceedings supplementary to execution have been developed. (Sections 714-721, Code of Civil Procedure.) It has been said in a number of eases in this state that these proceedings were intended as a substitute for a creditor’s bill. (See McCutcheon v. Superior Court, [1933] 134 Cal. App. 5 [24 Pac. (2d) 911] and eases therein cited on page 8.) In this connection, however, three things must be kept in mind. They are.- (1) The statutory procedure is not by its terms made exclusive; (2) The statutory proceedings supplemental to execution are authorized in the same action in which the execution issues, up to the point where the garnishee denies the existence of a debt or claims an interest in the property adverse to the judgment debtor; (3) The necessity of an independent action where the third person either claims an interest in the property adverse to the judgment debtor or denies the debt is recognized by statute in section 720, Code of Civil Procedure. It is therefore apparent that the right to maintain an independent action in the nature of a creditor’s bill in order to reach and subject assets of a judgment