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Nebraska Supreme Court Advance Sheets

305 Nebraska Reports

SCHAEFER SHAPIRO v. BALL

Cite as 305 Neb. 669

Schaefer Shapiro LLP, a Nebraska limited 

liability partnership, appellant, 

v. Rodien Ball, appellee.

___ N.W.2d ___

Filed April 23, 2020. No. S-19-547.

1. Garnishment: Appeal and Error. Garnishment is a legal proceeding. 

To the extent factual issues are involved, the findings of a garnishment 

hearing judge have the effect of findings by a jury and, on appeal, will 

not be set aside unless clearly wrong.

2. Courts: Appeal and Error. The district court and higher appellate 

courts generally review appeals from the county court for error appearing on the record.

3. Judgments: Appeal and Error. When reviewing a judgment for errors 

appearing on the record, the inquiry is whether the decision conforms 

to the law, is supported by competent evidence, and is neither arbitrary, 

capricious, nor unreasonable.

4. Garnishment: Social Security. As a general rule, Social Security payments to a recipient on deposit with a bank are exempt from garnishment under both federal and state law.

5. ____: ____. Exempt funds such as Social Security payments remain 

exempt from garnishment, even when commingled with nonexempt 

funds, so long as the source of the exempt funds is reasonably traceable.

6. Garnishment: Attachments: Proof. One who seeks exemption from 

attachment and garnishment should prove entitlement to the exemption.

7. Verdicts: Appeal and Error. In determining the sufficiency of the evidence to sustain a verdict in a civil case, an appellate court considers the 

evidence most favorably to the successful party and resolves evidential 

conflicts in favor of such party, who is entitled to every reasonable 

inference deducible from the evidence.

Appeal from the District Court for Douglas County, Leigh 

Ann Retelsdorf, Judge, on appeal thereto from the County 

Nebraska Supreme Court Online Library

www.nebraska.gov/apps-courts-epub/

07/10/2020 08:08 AM CDT
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Nebraska Supreme Court Advance Sheets

305 Nebraska Reports

SCHAEFER SHAPIRO v. BALL

Cite as 305 Neb. 669

Court for Douglas County, Lawrence E. Barrett, Judge. 

Judgment of District Court affirmed.

James E. Riha and Michael J. Wilson, of Schaefer Shapiro, 

L.L.P., for appellant.

No appearance for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, 

Papik, and Freudenberg, JJ.

Cassel, J.

INTRODUCTION

A judgment creditor sought to garnish the judgment debtor’s 

bank account, which at one time contained funds both exempt 

and nonexempt from garnishment. We hold that funds exempt 

from garnishment remain exempt, even when commingled with 

nonexempt funds, so long as the source of exempt funds is reasonably traceable. Because competent evidence supported the 

county court’s finding that the bank account consisted solely of 

exempt funds, we affirm.

BACKGROUND

Schaefer Shapiro LLP (Schaefer) obtained a judgment 

against Rodien Ball. On December 26, 2018, Schaefer filed 

an affidavit and praecipe for summons in garnishment, asserting that the judgment against Ball totaled $1,994.99 and that a 

bank held assets of Ball.

The bank answered garnishment interrogatories indicating 

that Ball’s account contained funds other than wages in excess 

of $1,994.99. Upon Schaefer’s application to deliver nonexempt funds, the court ordered that “the non-exempt earnings, 

property, credits, or money withheld by the garnishee in the 

amount of $1,994.99 be transferred to the Court.”

Ball requested a hearing, claiming that the funds were 

exempt from garnishment. At the January 2019 hearing, Ball 

testified that he received $1,790 in Social Security every month 

and that the only funds in his garnished account were Social 
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Nebraska Supreme Court Advance Sheets

305 Nebraska Reports

SCHAEFER SHAPIRO v. BALL

Cite as 305 Neb. 669

Security payments. He estimated that the total balance in the 

garnished bank account was “[$]30,000, probably.” In October 

2017, Ball sold real estate and received “[p]robably about a 

hundred thousand.” Although Ball deposited those proceeds 

into the same bank account as his Social Security payments, he 

testified: “[I]t’s all gone. Been spent, and I owed bills.” Ball 

iterated that he spent the sale proceeds but did not spend Social 

Security funds. The county court ruled from the bench: “Show 

that the testimony’s been given that the funds are exempt. They 

are ruled exempt.”

Upon Schaefer’s appeal, the district court affirmed the county 

court’s judgment. The district court highlighted the absence of 

evidence regarding how much money was in the bank account 

in October 2017, or anytime thereafter, aside from Ball’s estimation. And there was no evidence as to how much money was 

in the account before any commingling occurred or at the time 

the interrogatories were completed. The district court observed 

that the county court apparently found Ball to be credible, and 

the district court found no error by the county court appearing 

on the record.

Schaefer appealed, and we moved the case to our docket. 1

ASSIGNMENT OF ERROR

Schaefer assigns that the lower courts erred because the 

act of depositing and commingling otherwise exempt Social 

Security funds into the same bank account as nonexempt proceeds from the sale of real estate removes the exempt status, 

thereby allowing garnishment of the Social Security funds 

unless the garnishee proves the exempt status of the funds.

STANDARD OF REVIEW

[1] Garnishment is a legal proceeding. To the extent factual 

issues are involved, the findings of a garnishment hearing 

judge have the effect of findings by a jury and, on appeal, will 

not be set aside unless clearly wrong. 2

1 See Neb. Rev. Stat. § 24-1106(3) (Cum. Supp. 2018).

2 ML Manager v. Jensen, 287 Neb. 171, 842 N.W.2d 566 (2014).
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Nebraska Supreme Court Advance Sheets

305 Nebraska Reports

SCHAEFER SHAPIRO v. BALL

Cite as 305 Neb. 669

[2,3] The district court and higher appellate courts generally 

review appeals from the county court for error appearing on 

the record. 3 When reviewing a judgment for errors appearing 

on the record, the inquiry is whether the decision conforms 

to the law, is supported by competent evidence, and is neither 

arbitrary, capricious, nor unreasonable. 4

ANALYSIS

[4] As a general rule, Social Security payments to a recipient on deposit with a bank are exempt from garnishment under 

both federal and state law. 5 In an earlier case decided by this 

court, 6 there was no dispute that the bank account consisted 

solely of checks directly deposited by the Social Security 

Administration. This appeal presents a twist: What is the 

effect, if any, on exempt funds when commingled with nonexempt funds?

[5] The majority of federal 7 and state 8 courts have determined that Social Security benefits maintain their exempt 

status, even if commingled with nonexempt funds. A Virginia 

court took the contrary view, 9 but the continued validity of that 

3 Houser v. American Paving Asphalt, 299 Neb. 1, 907 N.W.2d 16 (2018); 

Millard Gutter Co. v. Farm Bureau Prop. & Cas. Ins. Co., 295 Neb. 419, 

889 N.W.2d 596 (2016).

4 Id.

5 See, Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S. Ct. 

590, 34 L. Ed. 2d 608 (1973) (implementing 42 U.S.C. § 407(a) (2018)); 

Havelock Bank v. Hog Confinement Systems, 214 Neb. 783, 335 N.W.2d 

765 (1983).

6 Havelock Bank v. Hog Confinement Systems, supra note 5.

7 See, S & S Diversified Services, L.L.C. v. Taylor, 897 F. Supp. 549 (D. 

Wyo. 1995); NCNB Financial Services, Inc. v. Shumate, 829 F. Supp. 178 

(W.D. Va. 1993); In re Lichtenberger, 337 B.R. 322 (C.D. Ill. 2006); In re 

Moore, 214 B.R. 628 (D. Kan. 1997).

8 See, In re Estate of Merritt, 272 Ill. App. 3d 1017, 651 N.E.2d 680, 209 

Ill. Dec. 502 (1995); Dean v. Fred’s Towing, 245 Mont. 366, 801 P.2d 579 

(1990); General Motors Acceptance Corp. v. Deskins, 16 Ohio App. 3d 

132, 474 N.E.2d 1207 (1984).

9 Bernardini v. Central Nat. Bank, Etc., 223 Va. 519, 290 S.E.2d 863 (1982).
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SCHAEFER SHAPIRO v. BALL

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decision has been questioned due to later legislation. 10 Most 

courts, however, require that the exempt source of the funds 

be traceable. 11 We now hold that exempt funds such as Social 

Security payments remain exempt from garnishment, even 

when commingled with nonexempt funds, so long as the source 

of the exempt funds is reasonably traceable.

[6] When there is a dispute about whether funds are exempt, 

which party carries the burden of proof becomes key. One 

who seeks exemption from attachment and garnishment should 

prove entitlement to the exemption. 12 This is in accord with the 

general rule that the burden of proving an exemption rests on 

the party claiming it. 13 It is also in line with the teaching of a 

treatise concerning Social Security: “[O]nce it is determined 

that an account contains commingled funds, the burden shifts 

to the claimant to prove that the remaining funds constitute 

exempt social security funds.” 14 Ball, as the party claiming 

that the funds were exempt, had the burden to prove that they 

were exempt.

[7] In considering whether Ball met his burden, we are 

constrained by our standard of review. The county court determined that all of the funds in the bank account were exempt. 

And the findings of the county court have the effect of findings 

10 See, In re Delima, 561 B.R. 647 (E.D. Va. 2016); In re Meyer, 211 B.R. 

203 (E.D. Va. 1997).

11 See, In re Lichtenberger, supra note 7; In re Moore, supra note 7; In re 

Estate of Merritt, supra note 8; Dean v. Fred’s Towing, supra note 8;

General Motors Acceptance Corp. v. Deskins, supra note 8.

12 See Novak v. Novak, 2 Neb. App. 21, 508 N.W.2d 283 (1993), affirmed in 

part and in part reversed and remanded 245 Neb. 366, 513 N.W.2d 303 

(1994). See, also, Scottsbluff Nat. Bank v. Pfeifer, 126 Neb. 852, 254 N.W. 

494 (1934); Stull v. Miller, 55 Neb. 30, 75 N.W. 239 (1898).

13 See, State v. Erpelding, 292 Neb. 351, 874 N.W.2d 265 (2015) (exemption 

to criminal nonsupport); Hamilton Cty. EMS Assoc. v. Hamilton Cty., 291 

Neb. 495, 866 N.W.2d 523 (2015) (Industrial Relations Act exemption);

Fort Calhoun Bapt. Ch. v. Washington Cty. Bd. of Eq., 277 Neb. 25, 759 

N.W.2d 475 (2009) (tax exemption).

14 2A Social Security Law and Practice § 34:8 (2019).
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SCHAEFER SHAPIRO v. BALL

Cite as 305 Neb. 669

by a jury—they will not be set aside unless clearly wrong. 15

With respect to a jury verdict, we have stated that it is sufficient if there is competent evidence presented to the jury upon 

which it could find for the successful party. 16 And in determining the sufficiency of the evidence to sustain a verdict in a civil 

case, an appellate court considers the evidence most favorably 

to the successful party and resolves evidential conflicts in favor 

of such party, who is entitled to every reasonable inference 

deducible from the evidence. 17

Viewing the evidence most favorably to Ball and giving 

him the benefit of every reasonably inference, we cannot say 

that the county court’s finding was clearly wrong. Ball testified that the bank account contained only his Social Security 

payments and that he spent all of the nonexempt money that 

had been deposited in the account. The county court accepted 

this testimony.

Schaefer argues that it is “mathematically impossible” for 

the $30,000 balance in the account to consist solely of exempt 

Social Security funds. 18 According to Schaefer, it would take 

at least 17 months for the account balance to go from $0 to 

$30,000 at $1,790 per month, but that only 14 months passed 

from the commingling of the funds in October 2017 to the 

filing of the garnishment in December 2018. Presumably, 

then, it would be mathematically possible for Ball’s account 

to contain $25,060 as of December 2018 (time of service of 

garnishee summons) or $26,850 as of January 2019 (time 

of hearing).

The county court was not bound to accept Ball’s estimation of the account balance. The question posed at the hearing was, “And how much is in the account?” The question 

inquired about the present balance of the account rather than 

the balance at the time of the garnishment filing, although that 

15 See ML Manager v. Jensen, supra note 2.

16 See Wulf v. Kunnath, 285 Neb. 472, 827 N.W.2d 248 (2013).

17 Id.

18 Brief for appellant at 5.
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SCHAEFER SHAPIRO v. BALL

Cite as 305 Neb. 669

hearing occurred approximately 3 weeks later. Ball answered, 

“I don’t know. Thirty — 30,000, probably.” The county court 

may have believed that the account contained an amount lesser 

than $30,000.

Schaefer further argues that federal law should govern a 

bank’s review of an account to determine whether an exempt 

benefit was paid during the 2-month lookback period. 19 Under 

federal regulations, a financial institution must issue a notice to 

the account holder named in the garnishment order where (1) 

a benefit agency deposited a benefit payment into an account 

during the lookback period, (2) the balance in the account on 

the date of the account review was above $0 and the financial institution established a protected amount, and (3) there 

are funds in the account in excess of the protected amount. 20

Schaefer asserts that applying the 2-month lookback period to 

Ball’s Social Security benefits would leave any amount in the 

bank account over $3,580 ($1,790 per month × 2 months) subject to being garnished.

It is not clear from the record whether the federal regulations apply here. The federal regulations were added “to 

implement statutory provisions that protect Federal benefits 

from garnishment by establishing procedures that a financial 

institution must follow when served a garnishment order 

against an account holder into whose account a Federal 

benefit payment has been directly deposited.” 21 The regulations specify:

Benefit payment means a Federal benefit payment 

referred to in § 212.2(b) paid by direct deposit to an 

account with the character “XX” encoded in positions 54 

and 55 of the Company Entry Description field and the 

number “2” encoded in the Originator Status Code field 

of the Batch Header Record of the direct deposit entry. 22

19 See 31 C.F.R. § 212.3 (2018).

20 31 C.F.R. § 212.7(a) (2018).

21 31 C.F.R. § 212.1 (2018) (emphasis supplied).

22 31 C.F.R. § 212.3 (emphasis omitted) (emphasis supplied).
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Nebraska Supreme Court Advance Sheets

305 Nebraska Reports

SCHAEFER SHAPIRO v. BALL

Cite as 305 Neb. 669

Because our record contains no evidence that Ball’s Social 

Security payments were directly deposited into his account, 

we cannot speak to whether the federal regulations apply. But 

even if they did apply, exempt funds remain exempt, 23 and 

Ball testified that his account contained only Social Security 

funds.

The parties presented scant evidence to the county court. 

But Ball’s testimony that the account contained only exempt 

funds, if believed, provided a basis for the county court to rule 

accordingly. We cannot say that the county court’s finding was 

clearly wrong. Like the district court, we see no error appearing on the record.

CONCLUSION

Because the county court’s decision conforms to the law, 

is supported by competent evidence, and is neither arbitrary, 

capricious, nor unreasonable, we affirm the decision of the district court affirming the judgment of the county court.

Affirmed.

23 See, 42 U.S.C. § 407(a); Tuan Thai v. Ashcroft, 366 F.3d 790 (9th Cir. 

2004) (federal regulation cannot empower action prohibited by federal 

statute).