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Torosian v. Paulos

Supreme Court of Arizona

June 25, 1957

Edward TOROSIAN, Intervenor-Appellant, and Rillito Race Track, Inc., a corporation, Garnishee-Appellant,
v.
John J. PAULOS et al., O. J. Farness, Peter Teti, Marjorie B. Ross, and Pioneer Constructors, a corporation, Plaintiffs-Appellees.

Page 383

Page 384

[82 Ariz. 306] Lewis, Roca, Scoville & Beauchamp, by Walter Cheifetz, Phoenix, for intervenor.

Scruggs & Rucker, Tucson, for garnishee.

Darnell, Holesapple, McFall & Spaid, Tucson, for John J. Paulos et al.

Mesch, Kemper & Jasper, Tucson, for O. J. Farness.

Darrow & D'Antonio, Tucson, for Peter Teti.

Cole & Barry, Tucson, for Marjorie B. Ross.

Houston & Nihan, and Fickett & Dunipace, Tucson, for Pioneer Constructors.

UDALL, Chief Justice.

Six separate appeals, noted in the above caption, were docketed in this court and consolidated for oral argument. Inasmuch as the matters involved are so closely entwined and interrelated, we have decided to dispose of the issues raised in one opinion.

The litigation that gave rise to these appeals had its genesis in five separate actions brought by the above-named plaintiffs-appellees in the superior court of the State of Arizona in and for the county of Pima, against one Fred A. Dragonette. In each suit the respective plaintiffs obtained money judgments against defendant Dragonette[82 Ariz. 307] for amounts aggregating more than $45,000. The validity of such judgments is nowise questioned and Dragonette is not a party to these appeals.

There being four divisions of the superior court in Pima County, two of the cases against Dragonette were originally assigned to Judge Tullar in Division 3, and each of the judges in the other divisions had one of such cases. In an effort to satisfy their respective judgments each of the five sets of plaintiffs-who were represented by different attorneys-obtained writs of garnishment against Rillito Race Track, Inc., an Arizona corporation, garnishee-appellant. These writs were issued and served on garnishee and the latter filed answers to the writs. Each of the plaintiffs then filed affidavits controverting the answers of the garnishee together with pleadings tendering issue on said answers. The plaintiffs, in substance, claimed that the garnishee was in fact indebted to Fred A. Dragonette (their common judgment debtor) in the sum of $40,000. Garnishee filed replies to the pleadings tendering issue whereby it, in substance, alleged that it was indebted to Omega Loan Company or Fred A. Dragonette in the sum of $40,000 on a promissory note, which note the garnishee was informed and believed had been negotiated to persons who at that time were unknown to the garnishee.

At the time when the garnishment issue in the Paulos et al. case (our number 6210) was about to be set for trial in division 2 before Judge Garrett, intervenor-appellant Edward Torosian appeared by his counsel and, upon stipulation, the court entered an order permitting him to intervene. Torosian then filed a complaint in intervention claiming to be a holder in due course and the present owner of the note in question and demanding judgment against the maker-garnishee on the $40,000 promissory note. Rillito filed an answer to the intervenor's complaint which included a counterclaim for interpleader. By the terms of said answer, the garnishee admitted all of the allegations of intervenor's complaint and prayed that the four sets of plaintiffs, whose suits were then pending in the other divisions, be required to intervene in the Paulos action and present what

Page 385

claims they might have to the $40,000 held by the garnishee. By an amended pleading in the Paulos case the issue was raised that if a transfer of the note in question was made to the intervenor Torosian, it was with the intent to hinder, delay or defraud creditors of Dragonette, and that a fair consideration was not paid for the transfer.

There being common questions of fact for determination, by stipulation of counsel, all five cases (our numbers 6206 to 6210, inclusive) were ordered consolidated for hearing before Honorable Lee Garrett, [82 Ariz. 308] presiding judge of division 2. The order recited:

'* * * The cases are all consolidated for the purposes of determining the issues only contained in the garnishment matters in each separate case * * * that the court may herein determine all garnishment matters in all consolidated cases, and may further determine the priority of all parties in the various cases consolidated as to the date of priority and the amounts each are entitled to, and so forth.'

Thereafter the consolidated garnishment issue came on for trial before Judge Lee Garrett with attorneys for all of the parties participating. Evidence both oral and documentary was presented. The following excerpts from the minutes of July 12, 1955, outline the scope of the hearing as well as the decision of the court, viz.:

'Hearing was had on May 14, 1955, on the question of whether or not the intervenor, Edward Torosian, is a holder in due course of said note; and another hearing was had on June 29, 1955, on the question of whether or not transfer of said note to said intervenor was with the intent to hinder, delay or defraud creditors of defendant, Fred A. Dragonette. The issues raised at both hearings were taken under advisement. Briefs and memoranda were filed by all parties. Therefore,

'It is the Decision of the Court:

'(1) That said note was transferred to the intervenor, Edward Torosian, with intent to hinder, delay or defraud creditors of the defendant, Fred A. Dragonette;

'(2) That said intervenor, Edward Torosian, is not a holder in due course of said note.'

Thereafter Judge Garrett, without formal notice to the intervenor, referred four of the cases to their original divisions for the entry of final judgment. He retained the Paulos case and entered written judgment therein in favor of the plaintiff and against the garnishee; this judgment recites the findings previously made in the consolidated garnishment matter. In the four cases reassigned the presiding judge of the particular division, without taking further evidence, entered similar minute order judgments in favor of plaintiffs and against the garnishee. The intervenor's motion for a judgment in the consolidated cause, granting or denying to him the relief prayed for in his complaint in intervention, was never ruled upon by Judge Garrett. Nevertheless the intervenor, Torosian, timely filed a notice of appeal from ...


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