[COURT OF APPEAL.]

MARTIN AND OTHERS, JUDGMENT CREDITORS v. NADEL, JUDGMENT DEBTOR; DRESDNER BANK, GARNISHEES.

Practice - Garnishee Order - Discretion to make Order - Incomplete discharge of Garnishee - Liability to pay a Second Time - Refusal of Order - Order XLV., rr. 1, 7.

The making of a garnishee order is discretionary, and an order which would have the effect of leaving the garnishee liable to pay the amount of his debt a second time is inequitable, and will be refused.

APPEAL from an order of Sutton J. at chambers.

An action in the High Court resulted in a judgment for 1400l. in favour of the judgment creditors against the judgment debtor, who was a foreigner resident out of the jurisdiction. An appeal was taken to the Court of Appeal, and the judgment was affirmed. The judgment debtor appealed to the House of Lords, and to enable him to do so he deposited in Court a sum of 200l. as security for costs, and was required to give a recognizance in respect of a sum of 500l. as further security. He accordingly made an arrangement with the branch of the Dresdner Bank at Berlin, where he resided, under which he paid into that bank a sum of 500l., and the garnishees, the London branch of the bank, entered into a recognizance for that amount. The appeal to the House of Lords was dismissed with costs, which were met

by the payment out to the judgment creditors of the sum deposited in Court, and a payment by the London branch of the Dresdner Bank, under the recognizance entered into, of a little more than 300l. The balance of the 500l. not required to meet costs was 198l. 9s. 8d., and the judgment creditors obtained a garnishee order nisi against the London branch of the Dresdner Bank in respect of that amount, on the ground that it was a debt due from the bank to the judgment debtor. An order absolute was subsequently made by the Master and confirmed by the learned judge, who gave leave to appeal.

The garnishees appealed.

May 14. M. Lush, K.C., and Ralph V. Bankes, in support of the appeal. In London Corporation v. London Joint Stock Bank (1) Lord Blackburn pointed out that "The garnishee, if he is to be obliged to pay the money, must be discharged from paying it to his creditor." This order appears to have been made on the ground that if Nadel sued the bank in these Courts there would be no defence. If that is so, it is no answer to the objection to this order, for if he sued the bank in Berlin there would also be no defence, for the money is owing to him there, where he paid it into the bank. It may be that the German Courts would have regard to a judgment in an action in these Courts, but they would not treat a garnishee order, which forms part of a code relating to execution, as binding upon them. That a garnishee order is a process of execution, and not the creation of a right, is shewn by Roberts v. Death (2) and Goodman v. Robinson.(3) Further, it appears from the wording of Order XLV., r. 1, that an order for attachment of debts is discretionary, and, from the general scope of the order, including the provision of r. 7, that the order can only apply to persons subject to English law.

Disturnal, for the judgment creditors. The branch bank in England would have no answer to an action in this country by Nadel for the balance of the money in their hands as money had and received to his use, and it is therefore the subject of a

(1) (1881) 6 App. Cas. 393, at p. 415.

(2) (1881) 8 Q. B. D. 319.

(3) (1886) 18 Q. B. D. 332.

garnishee order. It is said that the possibility of a claim by Nadel in Germany makes all the difference, but the question of foreign law does not arise in this case. The litigation was in this country, and the branch bank was accepted as security because it was within the jurisdiction. The garnishees cannot dispute their liability to the judgment debtor, so that there is no question of title. An enforced payment by them under the process of this Court would be recognized by a foreign Court, and would protect the Dresdner Bank wherever it might be sued from a further claim for the money so paid.

M. Lush, K.C., in reply.

May 15. VAUGHAN WILLIAMS L.J. This is an appeal from an order made by Sutton J. at chambers.

The order was made in garnishee proceedings taken under Order XLV., r. 1, and it ordered that the present appellants should forthwith pay to the judgment creditors a specified amount due from the appellants to the judgment debtor, or so much as should be sufficient to satisfy the claim of the judgment creditor. The question is whether that order was rightly made.

With regard to the debt due from the garnishees to the judgment debtor, it was, as I understand, a debt contracted in Germany. Nadel, being an appellant to the House of Lords, had to provide security for the costs of his appeal, and a sum of 200l. which he had in cash was paid into Court. He was allowed to provide for a further sum of 500l. by getting the London branch of the Dresdner Bank to become bondsmen as sureties, and he paid the amount into the branch of that bank at Berlin, and the bank credited him with 500l. Nadel failed in his appeal to the House of Lords, and accordingly a part of the money secured by the recognizance had to be paid in respect of costs, with the result that there remained a sum of money in the hands of the Dresdner Bank at Berlin, which they now hold as money had and received to the use of Nadel. It is that debt from the bank which is the subject of the garnishee order. The reason why it is suggested that the order can be made in England is that the Dresdner Bank have the

branch here which entered into the recognizance. What is said against the making of the order is that if the bank are compelled under the order to pay the execution creditors they will still remain liable to be sued in Berlin for the amount, and would not discharge their liability by reason that they had been obliged to pay, in England, the debt due from them to Nadel.

There is no dispute between the parties to this appeal as to the general proposition laid down in the Exchequer Chamber in Wood v. Dunn (1), following the decision in Allen v. Dundas.(2) That proposition is stated by Channell B., in giving the judgment of the Court in the first case that I have mentioned, to this effect: "The law will never compel a person to pay a sum of money a second time which he had paid once under the sanction of a Court having competent jurisdiction." It is said that to confirm the order made in the present case would place the Dresdner Bank in the position which these cases recognize as unfair, because the bank might in proceedings by Nadel in the German Courts be made to pay the amount a second time. There was some discussion as to whether it was the law of Prussia that if Nadel sued the Dresdner Bank in Berlin they could not set up in answer to the action that they had paid the amount claimed under a garnishee order made in these Courts. I do not think that ultimately it was disputed that such a payment would be no answer to the action. It appears to me to be clear that a garnishee order is of the nature of an execution, and is governed by the lex fori; and by international law an execution which has been carried into effect in a foreign country under foreign law, and has taken away part of a man's property, is not recognized as binding. There can be no doubt that under the rules of international law the Dresdner Bank could not set up, in an action in Berlin, the execution levied in this country in respect to this debt. If we consider the converse case it is clear, to my mind, that we should take that view of a similar transaction occurring abroad. That being the case, we must consider whether the Court should refuse to permit this execution on the ground that the effect might be that the bank might be called on to pay the debt a second time in Germany. I am

(1) (1866) L. R. 2 Q. B. 73, at p. 80.

(2) (1789) 3 T. R. 125.

not going to decide on the ground that the debt was really contracted in Germany, and that prima facie German law would govern the contract. To my mind that makes no difference, and for this reason: It is said that the execution creditor has a right to this order ex debito justiti¾, but that apparently is not so. I think that the case of Roberts v. Death (1) decides in principle that this Court ought not to make an order for payment upon a garnishee application in a case where it would be inequitable to do so. It is true that in the case I have just mentioned the equity was not raised on the part of the garnishee, but by a cestui que trust behind the garnishee making the objection that the money it was proposed to attach was trust money. It is pointed out in the case that there is no express provision in the rules to enable the cestui que trust to come forward in that way. But although the case was not provided for in the rules the Court refused to allow the money to be attached, on the ground that the matter was in their discretion, and that it would be inequitable to make the order asked for. I am unable to cite any authority which directly covers this case, or covers generally the case where the obligation to pay does not give the garnishee a complete discharge from his debt. I must therefore decide this case on the ground that it would be inequitable to order the bank to pay the money to the execution creditor when that payment would leave them still liable to an action to recover the same debt brought in a competent Court at the foreign place where the parties reside. For these reasons I think the order should not have been made, and the appeal must be allowed.

STIRLING L.J. I am of the same opinion. I think that the Court is not under an obligation ex debito justiti¾ to make an order under Order XLV., r. 1, but has a judicial discretion to be exercised upon good grounds. In support of this view I may refer to what was said by Cotton L.J. in Roberts v. Death. (2) The Lord Justice, after pointing out that r. 7 of the order then in force gave power to the Court or a judge to cite any person other than the garnishee and to inquire into the nature of his claim,

(1) 8 Q. B. D. 319.

(2) 8 Q. B. D. 319, at p. 324.

continued: "But I do not rely on that, as I am of opinion that whenever the judge is informed on any reasonable ground that such an order ought not to be made, he should withhold making the garnishee order absolute for taking the money of one person to pay the debt due from another." The question, therefore, in this case is whether there is any reasonable ground why the order should not be made. The material facts are that the applicants for the order recovered judgment in an action against Nadel, who resides in Berlin, and has at the Dresdner Bank there a sum of money standing to his credit. The head office of the bank is at Dresden, and it has branches in Berlin and London. It is objected, and is to be taken as a fact, that the German law would not recognize a payment made under a garnishee order in this country, and that consequently Nadel would be entitled to sue the bank in Berlin in respect of the debt due to him.

Mr. Dicey, at p. 318 of his treatise on the Conflict of Laws, points out the rule of law that debts or choses in action are generally to be looked upon as situate in the country where they are properly recoverable or can be enforced. On the facts of this case the debt of the bank to Nadel would be properly recoverable in Germany. That being so, it must be taken that the order of this Court would not protect the bank from being called on to pay the debt a second time. That is a good reason why the order should not be made, for to make it would be inequitable and contrary to natural justice. In support of this view I may refer to the opinion of Lord Watson in London Corporation v. London Joint Stock Bank (1), where, speaking of the custom of foreign attachment in the City of London, he says that "The custom would not be a reasonable one unless it went the length of affording protection to the garnishee when he obeys the order of the Court." Order XLV., r. 7, provides, that payment by a garnishee is to be a valid discharge as against the debtor, liable under a judgment or order, to the amount paid or levied, although such proceeding may be set aside or the judgment or order reversed, but that provision cannot affect the rights of a person

(1) 6 App. Cas. 393, at p. 421.

who is not within the jurisdiction of the Court and is not subject to its jurisdiction.

I agree, therefore, that this appeal must be allowed.

Solicitors for judgment creditors: Barnett & Shirer, for Facon & Creassey, Nottingham.

Solicitors for garnishees: Oppenheimer & Southern.

A. M.