Case Title: McMANAMAN v. McMANAMAN

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2002-08-29T00:00:00Z

Document:
McMANAMAN v. McMANAMAN2002 WY 12853 P.3d 103Case Number: 01-229Decided: 08/29/2002
APRIL TERM, A.D. 2002

                                                                                                            

MICHAEL 
L. McMANAMAN,

Appellant(Defendant),

 

v.

 

DEBRA 
McMANAMAN,

Appellee(Plaintiff),

and

                                     
THE STATE OF WYOMING,                           

Appellee.
                                                                                                

Appeal 
from the District Court of Goshen County

 
 

Representing 
Appellant:

Jerry 
M. Smith of Sigler & Smith Law Office, Torrington, 
Wyoming

 
    

Representing 
Appellee State of Wyoming:

Hoke 
MacMillan, Wyoming Attorney General; Michael L. Hubbard, Deputy Attorney 
General; Sue Chatfield, Assistant Attorney General

 
Before 
HILL, C.J., and GOLDEN, LEHMAN*, KITE, and VOIGT, JJ.

*Chief 
Justice at time of expedited conference

 

GOLDEN, Justice.

 
 

[¶1]           
In 
this appeal, we consider whether the failure to provide mandatory statutory 
notice voids an order of garnishment and whether the trial court correctly 
determined that proceeds from the sale of cattle are not exempt from the order 
of garnishment.  After Appellant 
Michael L. McManaman's objection to garnishment and motion to quash garnishment 
were denied, his subsequent claim of exemption from garnishment was also 
denied.  He contends that these 
orders are erroneous under Wyo. Stat. Ann. §§ 1-17-102(b) and 
1-15-102(a)(vi).  We 
affirm.

ISSUES

[¶2]           
Appellant 
Michael L. McManaman states the issues as:

I.  Whether the execution/garnishment of the 
Appellant's bank account was valid or lawful when Notice of Exemptions and Right 
to Hearing was not served on the Debtor/Appellant when the Judgment was entered 
as required by W.S. § 1-17-102(b).

II.  Whether Proceeds from the sale of cattle 
qualify as "earnings" subject to exemption pursuant to Wyo. Stat. § 
1-15-102(a)(vi).

Appellee 
State of Wyoming states the issues as:

I.  Whether the district court correctly 
determined that notice after the garnishment properly protected the due process 
rights of the appellant.

II.  Whether the district court correctly 
determined business profits from the sale of cattle are not earnings and are 
subject to garnishment.

Appellee 
Debra McManaman did not file a brief.

FACTS

[¶3]           
On 
July 24, 1992, a decree of divorce was entered for McManaman and his wife.  She was granted custody of two children, 
and McManaman was ordered to pay child support of $125 per month per child.  In October of 1992, a supplemental 
judgment was entered ordering McManaman to pay the State of Wyoming $1,375 for 
child support arrearages at a rate of $23 per month.  On January 31, 2000, the State of 
Wyoming petitioned the district court for relief against McManaman's failure to 
pay child support.  On September 21, 
2000, the district court entered an order reducing the arrearage to a money 
judgment totaling $21,283.05, and, in May of 2001, permitted McManaman to pay an 
additional $100 per month towards the arrearage.  

 

[¶4]           
On 
July 23, 2001, Child Support Enforcement filed for a writ of garnishment which 
the district court had served on the Lusk State Bank.  Although the writ directed the bank to 
answer and hold any funds, the bank sent the balance of McManaman's checking 
account, $11,270.56, to the court clerk along with its answer to the 
garnishment.  After Child Support 
Enforcement was informed of the bank's action, it mailed to McManaman's attorney 
a copy of the precipe for writ of garnishment, a blank garnishee's answer to 
writ of garnishment, a copy of the order regarding modification of child 
support, and a notice of exemptions and right to hearing pursuant to Wyo. Stat. 
Ann. § 1-17-102(b).  

 

[¶5]           
McManaman 
challenged the validity of the garnishment by filing an objection to garnishment 
and motion to quash garnishment.  A 
hearing was held, and the district court ruled that Child Support Enforcement 
had failed to comply with statutes requiring that McManaman be provided with the 
May judgment as well as a copy of the notice of hearing and right to 
exemptions.  The district court 
ruled, however, that this error did not render the garnishment void, and the 
motion to quash was denied.  The 
district court ruled that McManaman had ten days to request a hearing for 
exemptions.  

 

[¶6]           
McManaman 
requested a hearing for a claim of exemption, asserting that the funds garnished 
were proceeds from his cattle operation and his only source of income and were, 
therefore, earnings as defined by statute.  
The district court ruled that the funds in McManaman's bank account were 
not future income and did not qualify under the earnings exemption statute.  The district court ordered the money be 
deposited in an interest bearing account pending appeal of this ruling.  This appeal 
followed.

DISCUSSION

[¶7]           
McManaman 
first contends that the failure to provide him with the statutorily required 
notices before garnishment of his funds violated his federal and state 
constitutional right to due process, voids the garnishment, and requires the 
return of his funds with interest.   
We, however, agree with the trial court's determination that the statute 
was violated, the proper remedy for the violation was the hearing provided, and 
the violation did not require voiding the garnishment.  The relevant statute, Wyo. Stat. Ann. § 
1-17-102 (LexisNexis 2001), provides:

§ 
1-17-102. Request for hearing when property seized under 
execution.

(a) 
Except as provided in subsection (e) of this section, a person, other than a 
corporate entity, against whom a money judgment has been entered and whose 
property is seized under execution is entitled to a hearing within five (5) 
days, excluding Saturdays, Sundays and legal holidays, after the court receives 
the person's written request for a hearing to determine if the property seized 
is exempt from execution.  The 
person whose property is seized shall file a written request for a hearing with 
the clerk of court within ten (10) days after seizure of his 
property.

(b) 
Except where the judgment is solely against corporate entities, the court shall 
attach to every money judgment a notice containing the following 
information:

"You 
are informed that since the judgment is entered the prevailing party may proceed 
to seize your property, funds or wages by execution or garnishment.  In that event you may be entitled to the 
following exemptions:

(i) 
Social security benefits pursuant to 42 U.S.C. 407 and supplemental security 
income;

                        
(ii) Veteran's benefits;

                        
(iii) Black lung benefits;

(iv) 
Personal opportunities with employment responsibilities (POWER) 
payments;

(v) 
Federal civil service and state retirement system benefits as provided in 5 
U.S.C. 8346 and W.S. 9-3-426 and 9-3-620;

            
(vi) Worker's compensation benefits;

(vii) 
Unemployment compensation benefits;

(viii) 
A portion of wages as provided in W.S. 1-15-408, or in the case of consumer 
credit sales, leases or loans, as provided by W.S. 
40-14-505;

(ix) 
Homestead, personal articles and articles used for carrying on a trade or 
business to the extent provided by W.S. 1-20-101 through 
1-20-109;

            
(x) Other exemptions as provided by law.

To 
assert your right to any of the foregoing exemptions you shall file a written 
request with the clerk of court within ten (10) days after seizure of your 
property, funds or wages.  If you 
fail to make a written request for a hearing and claim one (1) or more of the 
foregoing exemptions within ten (10) days after seizure of your property, funds 
or wages, you may waive or lose your right to claim the 
exemptions."

(c) 
As to any judgment entered prior to June 11, 1986, the notice provided in this 
section shall be sent to the last known address of the judgment debtor by the 
clerk of court upon the request of any person before any property of the 
judgment debtor is seized by execution or garnishment.

(d) 
A copy of the money judgment together with the exemption information shall be 
transmitted by the court by first class United States mail, with the postage 
prepaid in envelopes furnished and properly addressed by the prevailing 
party.

(e) Notwithstanding any other provision of this section, a 
judgment debtor who is served with a writ of continuing garnishment under W.S. 
1-15-506 shall file objections to the continuing garnishment and receive a 
hearing on his objections as provided by W.S. 1-15-507 and 1-15-508.

 
 
            
            
            
      

[¶8]           
As 
McManaman asserts, the district court recognized, and Child Support Enforcement 
concedes, the court and Child Support Enforcement failed to comply with sections 
(b) and (d) by failing to provide notice in the September or May judgments and 
failing to provide the court with envelopes and postage for mailing.  McManaman provides us with authority 
establishing that statutorily created exemptions from judgment executions are a 
property right protected by due process that entitle the beneficiaries of 
exemptions to the procedural due process rights of notice and hearing.  See Goldberg v. Kelly, 397 U.S. 254, 262, 90 S. Ct. 1011, 1017, 25 L. Ed. 2d 287 (1970); Aacen v. San Juan 
County Sheriff's Dep't, 944 F.2d 691, 695 (10th Cir. 1991).  He also provides authority that due 
process requires that state laws should contain provisions adequate for 
notifying a judgment debtor that exemptions exist, certain property seized may 
qualify for exemptions, and the right to a hearing.  McManaman, however, does not challenge 
the adequacies of Wyoming's statutory provisions.  

 

[¶9]           
Instead, 
McManaman asserts that the failure to notify him of exemptions at the time that 
judgment was entered against him deprived him of an opportunity to stay 
execution on garnishment before his property was attached, and this failure 
invalidates the garnishment as a matter of law.  He does not, however, provide authority 
for this assertion, and we have found none.  The violation of the statutorily 
mandated notice requirements, and the failure to provide procedural due process, 
required that the district court provide notice and hearing to McManaman, and, 
having done so, we hold that the garnishment of McManaman's bank account was 
valid although the notice of exemptions and right to hearing was not served on 
him at the time the September 2000 and May 2001 orders on judgment were 
entered.  The district court's orders denying objection 
to garnishment and motion to quash garnishment are affirmed.

 
   
           

[¶10]      
McManaman 
next contends that the district court erred in determining that the statutory 
exemption for earnings does not apply to proceeds from the sale of his 
cattle.  He contends that his 
ranching operations are his sole source of income and the legislature intended 
to exempt earnings which provide for the basic necessities of life.  We proceed with our discussion of this 
issue, but note that a majority of jurisdictions now recognize that support 
orders are exceptions to statutory limitations on collection.  Because the parties here did not raise 
or brief the issue whether the garnishment statutory exemptions apply to 
court-ordered child support and arrearages reduced to money judgment, we assume 
without deciding that the statutory exemptions apply to this garnishment 
proceeding.  

 

[¶11]      
Wyo. 
Stat. Ann. § 1-15-102 (LexisNexis 2001) defines earnings as follows:  

(a) 
As used in this chapter unless otherwise defined:

* 
* * *

(vi) 
"Earnings" or "earnings from personal services" means compensation paid or 
payable for personal services, whether denominated as wages, salary, commission, 
bonus, proceeds of any pension or retirement benefits or deferred compensation 
plan or otherwise;

* 
* * *

[¶12]      
McManaman 
relies upon our decision in Lingle State Bank of Lingle v. Podolak, 740 P.2d 392 (Wyo. 1987).  
Podolak considered an earnings exemption available under § 
1-17-411, now superseded, and decided the legislature intended the earnings 
exemption to apply to income produced by farming and ranch.  Id. at 394.  Because new statutory provisions had 
taken effect at the time of the Podolak decision, we noted that the case 
was consequently circumscribed in future application.  Id. n.1.  Relying upon this footnote and our 
decision in Coones v. FDIC, 796 P.2d 803 (Wyo. 1990), the State contends 
that this Court has already decided that proceeds from the sale of cattle are 
not exempt under § 1-15-102(a)(vi).  

 

[¶13]      
In 
Coones, the general exemption statutes, Wyo. Stat. Ann. § 1-20-101 
through 1-20-110, did not provide any provision for earnings exemption; however, 
the appellants in the case contended that a transferred application of the 
garnishment statute execution, § 1-15-102, provided a basis for allowing a 
rancher or farmer to claim a seventy-five percent exemption of proceeds from the 
sale of non-purchase money livestock and seventy-five percent of the value of 
crops planted and livestock born after the security interest was perfected.  Id. at 805.  Coones rejected appellant's 
contention, first, by noting that Podolak provided no precedent because 
the statute addressed in it no longer existed, and, secondly, because the 
statutory language "earnings for personal services" could not be interpreted to 
include any income other than that periodically payable by a third party.  Specifically, Coones 
stated:

We 
find from a comparison of the changed phraseology that the broadly based rules 
found in earlier Wyoming law were constricted by the 1987 definition which 
itemizes a character of identical rights, e.g., wages, salary, commission, bonus 
and proceeds of any pension or retirement benefit or deferred compensation 
plan.  Statutes are entitled to a 
reasonable interpretation and we consider the character of benefits clearly 
defined within a wage and salary characterization.  Profits and business earnings are 
outside the meaning of wage and salary.  
This interpretation gathers support from the garnishment statute 
provision which recognizes an obligation to pay as being different from profit 
or business earnings which involve a right to receive.

Appellants 
further contend that the word "otherwise" could suffice to provide entitlement 
for the broad character of rights found in Podolak to result from the 
prior statute.  We cannot accept 
this thoughtful contention since its effect would be to disassociate the 
structure of the clause when relating to one character of exempt funds by adding 
an almost unlimited character of other funds which would have no particular 
validation within the constraints of a continuing wage garnishment statutory 
system. We limit any application of "otherwise" in W.S. 1-15-102(a)(vi) to a 
character of third-party obligations payable for services rendered by the 
claimant for exemption.  Intrinsic 
to the meaning of W.S. 1-15-102 are the provisions of W.S. 1-15-408 which are 
related to earnings for personal services periodically payable.  Business profits and receipts from crop 
and livestock simply cannot be logically impressed with the garnishment 
concept.

Id. 
at 
805-06.  

 

[¶14]      
Although 
Coones involved bankruptcy issues, this last holding broadly sweeps and 
does not permit McManaman's argument to prevail.  McManaman's bank account funds are not 
traceable to a third-party obligation payable periodically.  Additionally, if the exemption did apply 
when the funds were owing, McManaman has not provided any argument or authority 
that the exemption was not extinguished upon payment of the earnings into his 
bank account.  We, therefore, hold 
that McManaman's bank account funds are not exempt from the writ of garnishment 
and affirm the district court's order.