Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-31984 February 25, 1930
PRATS & COMPANY, a registered partnership, plaintiff,
vs.
PHOENIX INSURANCE COMPANY, HARTFORD, CONNECTICUT, a corporation, defendant.
MENZI and CO., INC., and ANTONIO BRIMO, intervenors-appellants.
BEN J. S. OHNICK and JOHN R. MCFIE, Jr., respondents-appellees.
Harvey and O'Brien for intervenors and appellants.
Benj. S. Ohnick and John R. McFie, jr., in their own behalf.
No appearance for plaintiff, and defendant.
STATEMENT
In the original action, Prats & Company, a partnership, sought to recover judgment against the defendant, Phoenix Insurance Company, for and on account of a fire insurance policy which it issued to the plaintiff on its property, goods, wares, and merchandise, which was defended by the insurance company on the ground of incendiarism and a fraudulent claim. The lower court decided the case in favor of the insurance company, and on appeal the decision was affirmed by this court.1 That was a test case against a number of insurance companies by the plaintiff to recover on account of fire losses a total amount of P241,491. In this court the Phoenix Insurance Company was ordered to pay plaintiff P11,731.93, with legal interest from the filing of the complaint, for and on account of money which it received from salvage sales of the remnants of the insured stock. In the inception of this litigation, the plaintiff was legally represented by the original firm of Schwarzkopf and Ohnick as its attorneys, and later by the legal firm of Ohnick and McFie. The final decision of this court was rendered on February 21, 1921. On or about February 21, 1929, and after the decision of this court became final, Ohnick and McFie filed an attorney's lien, claiming the sum of P11,109.56 for and on account of their fees and disbursements in prosecuting the action against the insurance company, and on March 20, 1929, with the approval of Prats & Company, the lower court issued an order confirming the attorney's claim for the amount claimed, and on March 22, 1929, it directed the defendant to pay that amount to Ohnick and McFie. In this situation and on May 6, 1929, and before the money was paid, Menzi & Company, Inc., and Antonio Brimo filed a motion to intervene for the purpose of asserting and establishing a superior lien and preference as against the parties to the action, including attorneys Ohnick and McFie, for the sum of P11,731.93, with legal interest thereon at 6 per cent per annum, making a total of P14,802.14, which amount was deposited by the insurance company with the clerk of the court, and to set aside and vacate the order of the court of March 22, 1929, in favor of Ohnick and McFie, claiming and asserting that hey had a legal right to the money in question as against all persons, in which they alleged that on December 10, 1924, the intervenors commenced their respective actions against Prats & Company in the Court of First Instance of Manila, known as civil case No. 27315, to recover from Prats & Company P9,336.97, with legal interest from the filing of the complaint, and in civil case No. 27316, to recover P21,146.56, with interest and costs, in both of which cases it was alleged that a writ of attachment was duly issued out of and under the seal of the court at the instance of the plaintiffs against the property of Prats & Company, to secure any judgment that might be rendered in the actions, and that said attachment was placed in the hands of the sheriff of the City of Manila, with instructions to make the corresponding levy. That on December 11, 1924, the sheriff notified the defendant, Phoenix Insurance Company, and all of the other insurance companies, by means of process of garnishment. That by virtue of the order of attachment, copies of which were attached to the notice, the levy was thereby made upon all of the goods, effects, credits, and moneys which either of the insurance companies might owe to Prats & Company, and that any personal property which either of them had in their possession was levied upon under and by virtue of said writ, and at the same time the sheriff advised the insurance companies not to deliver any property in their possession, to any person, except to the sheriff, under the penalties provided by law. That at the time of the service of the process of garnishment, the insurance companies had in their possession the sum of P11,731.93, which was received and held by them under the provisions of certain insurance policies issued by the companies to and in favor of Prats & Company on merchandise, all of which were duly levied upon and attached by the sheriff. That on September 10, 1925, judgment was rendered in favor of Menzi & Company, Inc. for P9,663.97, with legal interest and costs, and on August 19, 1925, judgment was rendered in favor of Antonio Brimo against Prats & Company for P21,146.56, with legal interest and costs, and that in each of the judgments, the attachments, as alleged, were upheld and confirmed by the court. It is then alleged that on October 2, 1924, Prats & Company entered into a written contract with attorneys Schwarzkopf and Ohnick in substance and to the effect that, if Prats & Company should recover on its insurance policies, the attorneys should receive P18,000 for their services, but that in the event that no recovery was made, the attorneys would not receive anything for their services. That the later agreement between Prats & Company and Ohnick and McFie, to the effect that they should have and receive P10,000 for their legal services was fraudulent and collusive, and that it was made with the full knowledge that writs of attachment had been issued out of the court in the actions of Menzi & Company, Inc. and Antonio Brimo, and that on December 11, 1924, based thereon, garnishee notices were duly served upon all of the insurance companies. The intervenors then alleged that they have a preferential right to the sum of P14,802.14, now on deposit with the clerk of this court, as the proceeds of the sales of salvage of the damaged merchandise of Prats & Company, which is superior in right to the claim of attorneys Ohnick and McFie or any one else, and for an order that the money should be paid to the intervenors, and for costs.
Vigorous objections were filed to the motion of the intervenors, and after a hearing and arguments on the motion, the lower court denied the right of the petitioners to intervene, and ordered the clerk to pay Ohnick and McFie P11,109.56. The intervenors then filed a motion for a reconsideration, which was also denied, to which the intervenors duly excepted, and on appeal assign the following errors:
I. The lower court erred in denying the motion of Menzi and Co., Inc., and Antonio Brimo of May 6, 1929, to intervene in this case for the purposes stated therein,
II. The lower court erred in denying the motion of Menzi & Co., Inc., and Antonio Brimo for a reconsideration of its said order, refusing to permit their intervention in this case.
JOHNS, J.:
In the final analysis, the real question presented is whether or not the bill of intervention stated facts sufficient to give the intevenors the relief for which they pray. Many and different legal questions have been ably presented by oppossing counsel. As we analyze the record, the dates are important and decisive. The intervenors alleged that their respective action were commenced against Prats & Company on December 10, 1924, and that the writs of attachment were issued on December 11, 1924, when the process of garnishment was served on the respective insurance companies. It is also alleged that final judgment was rendered in case No. 27315 on September 10, 1925, and in case No. 27316 on August 19, 1925. There are no allegations anywhere in the petition as to what was done after the service of the garnishee process. Neither is there any allegation that the insurance companies made default in the service, or that any interrogatories or cross-interrogatories were ever filed or that any hearing was ever had before any court on the garnishment proceedings, or that any judgment was ever rendered against the garnishee. In truth and in fact it does not appear that anything whatever was done by the intervenors after the service of the garnishee process or that the intervenors at any time ever claimed or asserted any right, title or interest in the money in question until they filed their motion to intervene on May 6, 1929. That is to say, it does not appear from the bill of intervention that, beyond serving of the garnishee notices on the insurance companies, the intervenors ever did anything to prosecute or perfect their garnishee proceedings or that they ever claimed or asserted any right, title or interest in the money in dispute until the 6th day of May, 1929.
In that situation, the law laid down in Corpus Juris, vol 28, p. 359, is square in point.
(2) Abandonment or Delay in Prosecution. — It is good ground for dismissal of the garnishment proceedings or discharge of the garnishee that plaintiff does not at all undertake to maintain the garnishment, or fails to prosecute his remedy with due diligence, thus in effect abandoning the proceeding, for the garnishment statute contemplate speedy proceedings and the cause cannot be kept open for a considerable period of time without either a continuance in form or consent or acquiescence by the garnishee. However, laches of or delay by plaintiff may be waived, and it has been held that the right to have the summons set aside or dismissed for delay in prosecution is in the court's discretion. There is also some authority that plaintiff's laches in prosecuting the garnishment is not ground for dissolution, particularly where the garnishee is not prejudiced. But under the rules of some lower courts in the same jurisdiction, it is held otherwise, unless a sufficient cause for the delay is shown. Among acts or omissions on the part of plaintiff which have been held an abandonment or discontinuance of the proceedings are: Extraordinary delay in bringing in defendant, failure to exhibit interrogatories or to take the deposition, answer, or examination of the garnishees as required by statute, failure or refusal to proceed as required by statute where the garnishee disputes his liability, failure to appear on the return day of a summons to the garnishee to show cause why judgment should not be entered against him, failure to set the case for trial at the term to which it was continued, failure for two years to prosecute the proceedings or to bring it to hearing, taking out an alias or pluries execution against defendant, and suffering several terms to elapse, without taking proper steps to bring into court to contest the validity of the transfer, the transferee disclosed by the garnishee's answer. It has, however, been held that the garnishee is not entitled to dismissal because neither party moves for trial at the next term after judgment against defendant, as permitted by statute. Among matters which have been held not an abandonment or discontinuance of the proceedings are: Return by the sheriff of the fieri facias without retaining copy thereof after service on the garnishees but before they had answered, the mere pendency of the cause for fifteen months, defendant not having raised the question of laches, and the rendition of judgment against defendant before examining the garnishee. However, under the statutes and practice of some jurisdictions the taking of judgment against defendant without having had the trustee or garnishee charged operated as an abandonment and discontinuance of the proceedings against the trustee or garnishee. In these jurisdictions vacation of the judgment pursuant to statute eliminated the discontinuance as to the garnishee. Of course the garnishee cannot complaint of a delay caused by his own act, as where he procured a continuance, nor can he urge that such delay constitutes an abandonment by plaintiff.
That rule of law is well sustained by the authorities cited in the notes, and particular, the case of Wooding vs. Puget Sound Nat. Bank (11 Wash., 527, 535; 40 Pac., 223), in which that court says:
Waiting for two years after the service before citing the garnishees to appear and answer should be held equivalent to an abandonment of said proceedings, regardless of the fact as to whether such final action was barred by the statute of limitation. A creditor should diligently prosecute his proceedings against garnishees. The services of the writs upon the garnishees was not the commencement of an action against them. No issue was formed which they could force to trial, and they were not put in a position where they could take any action in the premises to have the question of their liability put at rest. Such action rested with the plaintiff creditor, the moving party, and he should be required to prosecute the same with reasonable diligence.
In the instant case, after service of the garnishee notices on the insurance companies on December 11, 1924, it is not claimed or alleged that the intervenors ever did anything to enforce or protect their legal rights under the garnishment until they filed the motion to intervene on May 6, 1929, covering a period of four years, four months, and twenty-five days. In this situation, we are clearly of the opinion that the intervenors lost any legal rights which they may have had under the garnishee notice of December 11, 1924. Hence, it is unnecessary to discuss or decide the numerous other legal questions presented by opposing counsel in their respective briefs.
The judgment of the court is affirmed, with costs, So ordered.
Johnson, Malcolm, Villamor, Ostrand, Romualdez and Villa-Real, JJ., concur.
Footnotes
152 Phil., 807.
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