Croft v. Colfax Electric Light & Power Co.

Waterman, J.

By motion to strike plaintiff’s amendment making the bank a party defendant; and by the demurrer to the bank’s cross petition, two questions are preseated: (1) Was there error in permitting equitable issues to be set up, and transferring the cause to the equity docket ? (2) Had' the trial court jurisdiction to modify the judgment in this action, or should such relief have been sought in the case in which the judgment was rendered ?

3 On the first proposition, we have to say that the first equitable matter injected into the case was at the instance of interveners, who prayed for a delivery of the certificates to them on the ground that the indebtedness for which they were pledged was fully paid. Only a court of equity could decree a delivery of these certificates. Having first transgressed the proper bounds of an action for mandamus, they cannot be heard to complain that their example was followed. After the case was fully made up, it presented equitable issues on the part of all those making contest, and therefore was properly transferred. It is not material to consider whether the cancellation of the original judgment could be rightly decreed in this proceeding; for, as will later appear, we do not think that judgment should have been interfered -with. Furthermore, the transfer and trial in equity would be without prejudice if there was no disputed question of fact for a jury to pass upon. Machine Co. v. Markert, 107 Iowa, 340. This was true in the case at bar. The facts were undisputed. Law issues only were finally submitted for decision.

4 II. This brings us to the issues involved in the merits of the case, which in statement are quite simple. Was there a valid levy of the execution under which these shares were sold? If not, was a levy made in strict conformity to the statutory requirements — a necessary prerequisite to a valid sale by the sheriff? A. consideration of the first question necessarily involves a review of the facts as to what the sheriff did. Hpon receiving tire writ of execution,, which, by the way, was directed against certain real estate as well as these shares of stock, the sheriff noted the fact of the levy on the stubs of the certificates in a book kept by the Electric Light and Power company. This was done on March 1, 1897. On the same day a notice signed by the sheriff, and describing the shares of stock and real estate, was served by that officer on the secretary of said company. The material part of the notice is in these words: “Yon are hereby notified that by virtue of a special execution to me directed, -x- * * j pave leyied upon and executed, as property of W. M. Bowles et al., the following described mortgaged or pledged stock or real estate.” Here follows a description of stock and real estate. After the description comes the phrase “of which you are in actual occupancy.” The time and place of sale are then given. This notice was directed to Bowles, Cain, the Citizens’ State Bank, Colfax Electric Light & Power Company, and others. In these facts, if at all, is to be found the evidence of the levy. Section 3894 of the Code reads: “Corporation Stock. Stock or interest owned'by the defendant in any company is attached by notifying the president or other head of the company, or the secretary, cashier, or other managing agent thereof, of the fact that the stock has been attached.” And section 3974, in respect to executions, provides: “Stock or interest owned by the defendant in any company ox corporation * * * may be levied upon in the manner' provided for attaching the same.” It is obvious from these provisions that the indorsements on the stubs of the certificates were wholly ineffective. The position taken by interveners is that the notice served was not a part of the lew, but was a mere notice of sale given to the debtors and occupant of the real estate, under sections 4023-4025, Code; that the levy was supposed to have been made by the officer noting the fact on the stubs of the certificates, and the notice assumes that fact because it recites the levy as having been made. But this view of the matter leaves out of consideration that the notice was addressed to and served upon the secretary of the Colfax Electric Light & Power Company, which was entirely needless if it were not a part of the levy, and intended as a compliance with sec* tions 3894 and 3974, set out above. That the notice has a dual character we are quite willing to concede. It was a notice to the debtors and occupant of the real estate, but it was at the same time an act done as part of the levy on the shares of stock. Certainly it- complied with every requirement of the statute relating to a levy on stock. Its main defect consists in the tense used of the verb “levy,” and we are not inclined to allow this matter of grammatical construction to outweigh the facts of the address and service of the notice. The ease of Moore v. Opera House Co., 81 Iowa, 45, relied upon by appellants, is not in conflict with this holding. In that case the notice given by the sheriff was verbal, and the holding was that it should have been in writing. Finally we may say on this point: The sheriff intended to levy on these shares. He did everything necessary to constitute a levy. It cannot affect the result that he did not appreciate the importance or the effect of each specific act.

5 III. But, if appellants’ claim on this branch of the case be allowed, we think the sale must still be held valid. We take up now for consideration the question of the necessity of a formal levy to sustain the execution sale. In Freeman, Executions, section 274, it is said the authorities are in conflict on the subject. The author, however, goes on.to say that the object of a levy is to give notice to the debtor and to other persons that the property has been taken into the custody of the law. But, when both of tírese ob-jects are otherwise accomplished, in his opinion the sale is valid. He admits that a sale without a levy is so irregular that on proper application it would be prevented, but concludes that after being made it is the policy of the law to protect innocent purchasers from secret vices in the proceedings. In support of these views are cited Blood v. Light, 38 Cal., 654; R v. Thornton, 19 Ga., 149; McIntire v. Durham, 7 Ired. 151; Riddle v. Bush, 27 Tex. 675. In this last case it is said the title of the purchaser does not rest on the levy. He is bound to show only a valid judgment, execution and deed. Any defect in the levy is but an irregu larity of the officer, and 'does not defeat the title.

Before going further, we desire to emphasize two facts of the case at bar, in order to avoid any misunderstanding: (1) The attack upon the sale here is made by the judgment debtors; (2) no question was made as to the regularity of any of the proceedings until after the sale was had and the judgment cancelled1. What is noted above as said by Freeman relates to all executions. We have no occasion to determine whether the rule as stated would receive our indorsement if applied to a general execution. While, under our statute, no distinction is made as to the duty to levy special executions, or the manner of doing it, yet it does not necessarily follow that the consequences of a failure to levy would be the same as in case of a general writ. Where execution is awarded against specific property, the judgment designates what is to be sold, and gives ample notice to all parties concerned. In such an instance the failure to levy does not vitiate the sale. Ewing v. Hatfield, 17 Ind. 513; Smith v. Burns, 8 Kan. 197. While section 3970, Code, provides that “no execution shall be a lien on personal property before the actual levy thereof,” this does not mean there may not be a contract lien existing before. Every special execution is based upon a contract lien, which is confirmed and established by the judgment. In the case at bar the judgment creditor had possession of the certificates under a contract of pledge which gave it a lien that could have been enforced by notice and sale. Code, section 4285. Appellants seem to claim that, if foreclosure proceedings are resorted to, the lien is lost after the commencement of such an action, and only regained by the levy of execution. We discover no warrant for any such rule. Foreclosure in court is one method of enforcing the contract lien, which merges in the judgment, and there subsists, to be made effective by special execution. Gode, section 4286. As somewhat in poin in this proposition, .see Bank v. Jackaway, 80 Iowa, 512. It is true, the requirement as to notice in making tbe levy on stock is tbe same for all cases, yet reasons that support it where tbe certificates are in tbe possession of tbe judgment debtor do not apply to a state of facts sucb as exists in tbe case at bar. If tbe consequences of a failure, in tbe first instance mentioned, to give tbe notice, would be to avoid tbe sale, we cannot believe it was intended sucb a result should follow in 'the others. Unless tbe terms of tbe statute explicitly demand a different construction, we think a rule should never go beyond its reason, and we discover no sucb demand in this case.

Our conclusion oil tbe whole case is that plaintiff is tbe lawful owner of tbe shares of stock in controversy, having acquired a valid title by bis purchase at tbe execution sale, 'and that be is entitled to an order to compel tbe transfer of tbe same to him on tbe books of tbe Oolfax Electric Light & Power Company. It follows from this bolding that all costs should be taxed to interveners. On interveners’ appeal tbe decree is affirmed, and on plaintiffs’ appeal it is reversed.