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Written by Tom Fox

October 17, 2016 at 9:09 am

Posted in Uncategorized

Texas turnover exception to wage garnishment exemption

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In Texas, current wages are exempt from garnishment.  Texas Constitution – Article 16 Sec. 28. Garnishment of wages. “No current wages for personal service shall ever be subject to garnishment, except for the enforcement of court-ordered: (1) child support payments; or (2) spousal maintenance.”

However,  garnishment is only one of many procedural methods by which a judgment creditor can collect a judgment debt in Texas. Another method is the turnover, which is a broad statutory collection remedy that allows Texas courts to assist creditors in their collection efforts.  The court may also order the turnover of a debtor’s property. Tex. Civ. Prac. & Rem.Code Ann. § 31.002 (Vernon 1997); see Schmerbeck v. River Oaks Bank, 786 S.W.2d 521, 521-22 (Tex. App.-Texarkana 1990, no writ); see generally Greiner v. Jameson, 865 S.W.2d 493, 498 (Tex. App.-Dallas 1993, writ denied).

The collection remedy of garnishment applies to debts owed to or property of the judgment debtor in the hands of third parties. The Texas turnover process extends to property or assets in the hands of the debtor herself.

Once current wages are paid to the debtor, they not only fall outsider the reach of a garnishment proceeding, they also cease to be “current wages.”  Wages cease to be “current” within the meaning of Texas exemption laws immediately on being paid to and received by the wage earner. Sutherland v. Young, 292 S.W. 581, 583 (Tex.Civ.App.—Waco 1927, no writ). Wages are no longer current, or exempt from execution to satisfy a judgment debt, when the paycheck is received by the employee.

Thus, once in the hands of the employee debtor, the money received as wages can be seized by court order.

However, the court’s order to require the turnover of money received as wages is a matter of the court’s discretion. Barlow v. Lane, 745 SW2d 451 (Tex.App. – Waco [10th Dist.] 1988, writ denied)

“Nevertheless, it is also our view and holding that the granting or not of appellant’s application for the turnover order under section 31.002 was addressed to the sound discretion of the trial judge. The statute provides in subparagraph (b) that the court (1) may order the judgment debtor to turn over nonexempt property to a designated sheriff or constable for satisfaction of the judgment; or (2) may otherwise apply the property to the satisfaction of the judgment; or (3) may appoint a receiver with the authority to take possession of the nonexempt property toward satisfaction of the judgment. The word “may” in a statute is sometimes construed as if it were “shall,” but it is not to be denied its primary and ordinary signification as a word of permission rather than a word of command unless there is something either in the subject-matter or the context of the statute to indicate a legislative intention that it was used as a word of command. American Mortgage Corporation v. Samuell, 130 Tex. 107, 108 S.W.2d 193, 198-99 (1937).

* * *

“The purpose of current wages being exempt from garnishment and execution is to protect the employee in meeting and defraying the current expenses of his living. Bell v. Indian Live-Stock Co., 11 S.W. 344, 346 (Tex.1889); Sloan v. Douglass, 713 S.W.2d 436, 440 (Tex.App.—Fort Worth 1986, no writ). In light of the use of the permissive word “may” in section 31.002 in setting forth relief that might be allowed a creditor by the court, and the predicate for entitlement for relief required to be proven by the judgment creditor, we cannot believe the Legislature intended to mandate relief in any case of proof of qualification by the creditor regardless of hardship resulting to the debtor. Appellee’s undisputed testimony in her deposition established that her paychecks are used solely and fully to provide food, shelter and other necessities for her family. We believe the trial judge was entitled to consider these facts and decide against granting the turnover relief sought where there was no showing of wages received in excess of current living expenses. Furthermore, in light of these facts, we hold there was no abuse of discretion in the court’s denial of the application.”

Barlow v. Lane, supra.

Davis v. Raborn, 754 SW2d 481 (Tex.App.— Houston [1st Dist.] 1988, writ granted) took a different path, holding that a debtor could not presently be ordered to turn over future wages not yet paid.

Subsequently, the Texas Legislature amended section 31.002 to add the following subpart (f):

A court may not enter or enforce an order under this section that requires the turnover of the proceeds of, or the disbursement of, property exempt under any statute, including Section 42.0021, Property Code. This subsection does not apply to the enforcement of a child support obligation or a judgment for past due child support.

The new section was intended to specifically exempt paychecks, retirement checks, individual retirement accounts and other such property exempted under the bankruptcy code. House Committee On The Judiciary, Bill Analysis, Tex.H.B. 1029, 71st Leg., R.S. (1989). See: Caulley v. Caulley, 806 SW2d 795 (Tex.1991)

“By prohibiting the turnover of the proceeds of property exempt under any statute, this section necessarily prohibits the turnover of the proceeds of current wages. Tex.Prop.Code § 42.002(8) (listing current wages as one of the personal property items exempt from attachment, execution, and seizure by creditors).”

Caulley v. Caulley, supra

Written by Tom Fox

June 6, 2014 at 6:36 am

Posted in Uncategorized

The Form of a Kentucky Pleading: Basic

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Amazon Kindle Edition – $0.99

Legal information how-to booklet for Kentucky civil pleadings. This covers the basics of formatting for the essential parts of Kentucky pleadings, motions and other court papers. From the type and size of paper required by the Kentucky Rules of Civil Procedure, to necessary margins, case captions, signatures and proof of service, this show you what a Kentucky civil pleading should look like and how the different parts are arranged.

Written by Tom Fox

April 24, 2014 at 10:53 am

Posted in Uncategorized

Powerful and free legal research tool

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I’ve written about it here: Are lawyers idiots? It’s an introduction to Google Scholar, a very powerful and free way to access U.S. court opinions in all jurisdictions.

Written by Tom Fox

April 8, 2014 at 9:46 am

Posted in Legal, Legal research

Texas Wage Garnishment Casebook Reader

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This is a collection of links to Texas appellate opinions touching on various aspects of wage garnishment. All links are to Google Scholar. Cases arranged by date. The Texas court system has fourteen Courts of Appeals that review both civil and criminal appeals, except for death penalty cases, a Court of Criminal Appeals that has the final appellate jurisdiction in criminal cases, and a Supreme Court which has the final appellate jurisdiction in civil and juvenile cases.

  1. Southwestern Warehouse Corporation v. Wee Tote, Inc., 504 SW 2d 592 – Tex: Court of Civil Appeals 1974
    Issue: Constitutional Due Process of pre- judgment garnishment. Not specifically wage garnishment.
  2. Prewitt v. Smith, 528 SW 2d 893 – Tex: Court of Civil Appeals, 3rd Dist. 1975
    Held that funds of the State’s retirement system are “a part of a member’s compensation or wages which are not subject to garnishment,” citing Byrd v. City of Dallas, 118 Tex. 28, 6 S.W.2d 738, 741 (1928); Tex. Const. Art. XVI, Sec. 28. Sydnor v. City of Galveston, 15 S.W. 202 (Tex.App.1890), holds that amounts due a physician for professional services for a specific sum per day are not subject to garnishment. Bonus or commissions payable to a salesman at year’s end in addition to his regular salary is exempt as current wages for personal service. J.M. Radford Grocery Co. v. McKean, 41 S.W.2d 639 (Tex.Civ.App.1931, no writ). Commissions on the sale of gasoline and oil, payable monthly to a service station operator, were exempt. Alemite Co. of North Texas v. Magnolia Pet. Co., 50 S.W.2d 369 (Tex.Civ.App.1932, no writ).
  3. King v. Floyd, 538 SW 2d 166 – Tex: Court of Civil Appeals 1976
    Money owed by Houston Oilers to former player for breach of an employment contract constituted current wages and therefore exempt from garnishment.
  4. United States v. Stelter, 553 SW 2d 227 – Tex: Court of Civil Appeals, 8th Dist. 1977
    Issue: Can the ex-wife in a Texas divorce, who has been awarded a portion of the military retirement pay of her ex-husband as her share of the community property, garnish the United States under 42 U.S.C. Sec. 659. Answer: Yes. REVERSED by Texas Supreme Court in United States v. Stelter, 567 SW 2d 797 on grounds of sovereign immunity.
  5. United States v. Fleming, 565 SW 2d 87 – Tex: Court of Civil Appeals, 8th Dist. 1978
    Military retirement pay is not “current wages,” but is property and it is not exempt from garnishment. Case reversed on other grounds.  The procedure followed was in violation of  due process rights in that it was a prejudgment garnishment; also, it was carried out under an unconstitutional statute.
  6. United States v. Stelter, 567 SW 2d 797 – Tex: Supreme Court 1978
    At the time of this case 42 USC 659 gave consent to suits for “legal obligations to provide child support or make alimony payments,” but 42 USC 662(c) specifically excluded “community property settlement, equitable distribution of property, or other division of property between spouses or former spouses” from the meaning of alimony. 42 USC 662(c) has since been repealed.
  7. United States v. Wakefield, 572 SW 2d 569 – Tex: Court of Civil Appeals, 2nd Dist. 1978
    (1) “[G]arnishment of military pay involves suit against the United States and raises the issue of sovereign immunity. An order for an allotment does not involve suing the United States. It merely requires LeMaster to direct the United States Air Force to pay the retirement benefits to Mrs. Wakefield. No issue of sovereign immunity is raised.”
    (2) “It is well settled that garnishment should be in the amount of the debt absolutely owed at the time the garnishee files his answer. Burkitt v. Glenney, 371 S.W.2d 412 (Tex.Civ.App.—Houston 1963, writ ref. n.r.e.). For LeMaster’s retirement pay to accrue he must remain alive. Therefore, the debt being garnished is contingently but not absolutely owed. The trial court erred in ordering garnishment of future accruing military retirement pay.”
  8. Texaco, Inc. v. LeFevre, 610 SW 2d 173 – Tex: Court of Civil Appeals 1980
    A New York court ordered Texaco to withhold wages. A Texas court ordered Texaco to not withhold wages. Texaco sought to resolve the conflicting court orders by way of interpleader in federal court. The Federal District Court ruled the New York wage garnishment should prevail. The Texas Court of Appeals decided the federal court judgment  should be honored.

    We hold that Texaco was entitled to submit the cause to the federal district court, that that court was empowered under the above mentioned statutes to determine the questions involved and that our state court was bound to follow the decision of the federal district court even if the effect would be to allow the garnishment of wages, which our state court could not do because of the prohibition of art. 3836 and art. 4099, V.A.C.S., and art. 16, § 28 Constitution of the State of Texas.

  9. Benton v. Wilmer-Hutchins Ind. Sch. Dist., 662 SW 2d 696 – Tex: Court of Appeals, 5th Dist. 1983
    A school district decided it had overpaid its teachers by mistake one year and that it would simply deduct the over-payments from salary the next year. The Texas Court of Appeals ruled this to be improper.

    The district contends that since it has a duty to recover public funds paid out under a mistake of fact, it may resort to self-help by deducting the overpayments from current salaries due. We do not agree. By such action the district is treating current salaries as already paid to the extent of the previous overpayments, contrary to the common-law rule that mutual debts do not extinguish each other in the absence of agreement or judicial action.

    The teachers could either agree to the repayment or the school district could sue the teachers and prove the claim. But, the school district could not just withhold the money.
  10. Davidson Texas, Inc. v. Garcia, 664 SW 2d 791 – Tex: Court of Appeals, 3rd Dist. 1984
    A creditor sought to garnish money owed by Santa Fe Energy to debtor, who was not an employee. Debtor  provided personal service as a leasing agent and real estate title examiner for Santa Fe Energy’s oil and gas business without being on Santa Fe Energy’s payroll. He was paid $200 per day for his services, plus expenses. He did no work for any business other than Santa Fe Energy. He worked for Santa Fe Energy full time. Santa Fe did not withhold taxes or pay any share of debtor’s Social Security. Although the debtor’s daily activity was self-supervised, he was very specifically directed by Santa Fe Energy to the oil and gas lands they were interested in. The creditor argued that as an independent contractor, and not an employee, the debtor’s payments from Santa Fe Energy were not “wages” exempt from garnishment.
    The Texas Court of Appeals stated, “The garnishment exception for current wages applies without regard to whether compensation is denominated as “wages” or “salary,” the controlling issue being whether it is compensation for personal service.” citing King v. Floyd, 538 S.W.2d 166 Tex.Civ.App.1976. Additionally,

    In Prewitt v. Smith, 528 S.W.2d 893, 896 (Tex.Civ.App.1975, no writ) this Court held that funds of the State’s retirement system are “a part of a member’s compensation or wages which are not subject to garnishment,” citing Byrd v. City of Dallas, 118 Tex. 28, 6 S.W.2d 738, 741 (1928); Tex. Const. Art. XVI, Sec. 28. Sydnor v. City of Galveston, 15 S.W. 202 (Tex.App.1890), holds that amounts due a physician for professional services for a specific sum per day are not subject to garnishment. Bonus or commissions payable to a salesman at year’s end in addition to his regular salary is exempt as current wages for personal service. J.M. Radford Grocery Co. v. McKean, 41 S.W.2d 639 (Tex.Civ.App.1931, no writ). Commissions on the sale of gasoline and oil, payable monthly to a service station operator, were exempt. Alemite Co. of North Texas v. Magnolia Pet. Co., 50 S.W.2d 369 (Tex.Civ.App.1932, no writ).

    Under the specific facts of this case, the court held that the money owed was for personal services and therefore exempt from a garnishment.
  11. Hennigan v. Hennigan, 666 SW 2d 322 – Tex: Court of Appeals 1984

    The Texas Turnover and do an attorney’s receivables have the characteristics of ‘wages’ exempt from execution? This is the case to look to for some answers. If garnishment is not an effective method for collecting a judgment from canny uncooperative debtors, like lawyers, Texas has Civil Practice &. Remedies Code § 31.002 (former TEX.REV.CIV.STAT.ANN. art. 3827a), the Texas Turnover Statute, which allows courts to assist creditors collect judgments by digging a little deeper.

    The question of whether attorney fees constitute current wages, thus being exempt from garnishment, was answered negatively in First National Bank of Cleburne v. Graham, 22 S.W. 1101 (Tex.Civ. App.1889, no writ). Almost as if it were anticipating our question, that court stated:

    “Can an attorney’s fee for legal services rendered or to be rendered in a single case, or in the transaction of a single matter, or in the transaction of any amount of legal business, in any manner be correctly termed “current wages,” where he has not been hired for his services by the day, week, or month, to be paid at the expiration of the time for which he was hired, and not in proportion to the business done? We think not.”
  12. City of Houston v. Nelius, 693 SW 2d 567 – Tex: Court of Appeals 1985
    This is another case where an employer (City of Houston) withheld pay from an employee (a police officer) who owed the city money, along the lines of Benton v. Wilmer-Hutchins Ind. Sch. Dist.. Like the Benton case, the employer lost.
  13. Sloan v. Douglass, 713 SW 2d 436 – Tex: Court of Appeals, 2nd Dist. 1986
    x
  14. Barlow v. Lane, 745 SW 2d 451 – Tex: Court of Appeals, 10th Dist. 1988
    x
  15. Cain v. Cain, 746 SW 2d 861 – Tex: Court of Appeals, 8th Dist. 1988
    x
  16. Davis v. Raborn, 754 SW 2d 481 – Tex: Court of Appeals 1988
    x
  17. Schmerbeck v. River Oaks Bank, 786 SW 2d 521 – Tex: Court of Appeals, 6th Dist. 1990
    x
  18. Caulley v. Caulley, 806 SW 2d 795 – Tex: Supreme Court 1991
    x
  19. Orange County v. Ware, 819 SW 2d 472 – Tex: Supreme Court 1991
    x
  20. Tamez v. Tamez, 822 SW 2d 688 – Tex: Court of Appeals, 13th Dist. 1991
    x
  21. AMERICAN EXP. v. Harris, 831 SW 2d 531 – Tex: Court of Appeals 1992
    x
  22. Knighton v. IBM, 856 SW 2d 206 – Tex: Court of Appeals 1993
    x
  23. Bergman v. Bergman, 888 SW 2d 580 – Tex: Court of Appeals, 8th Dist. 1994
    x
  24. Foreness v. Hexamer, 971 SW 2d 525 – Tex: Court of Appeals, 5th Dist. 1997
    x
  25. General Elec. Capital Corp. v. ICO, INC., 230 SW 3d 702 – Tex: Court of Appeals 2007
    x
  26. TEXAS WORKFORCE COMMISSION v. BUSKE LINES, INC., Tex: Court of Appeals, 12th Dist. 2010
    x
  27. Stanley v. Reef Securities, Inc., 314 SW 3d 659 – Tex: Court of Appeals, 5th Dist. 2010
    x
  28. Marrs v. Marrs, 401 SW 3d 122 – Tex: Court of Appeals 2011
    x
  29. Heller v. Heller, 359 SW 3d 902 – Tex: Court of Appeals, 9th Dist. 2012
    x
  30. Stephens v. DYCK O’NEAL, INC., Tex: Court of Appeals, 1st Dist. 2012
    x
  31. Palmer v. Palmer, Tex: Court of Appeals, 2nd Dist. 2012
    x
  32. Free v. Lewis, Tex: Court of Appeals, 13th Dist. 2012
    x
  33. Spencer v. GC Services Limited Partnership, Tex: Court of Appeals, 1st Dist. 2013
    x

Written by Tom Fox

April 4, 2014 at 7:28 am