Opinion ID: 1632544
Heading Depth: 3
Heading Rank: 2

Heading: Other Minnesota Statutes

Text: Although the text and legislative history of Minn.Stat. § 524.6-203 do not provide a clear answer to the question before us, our conclusion that the burden of proving net contributions should be on account holders is consistent with Minnesota's garnishment procedure, and we are guided to our conclusion, in part, by practical considerations. Minnesota Statutes § 550.37 (2008) sets forth numerous grounds for debtors to claim exemptions from garnishment, but the burden of proving entitlement to an exemption is on the debtor. Section 550.37 provides a list of property that a debtor can claim as exempt from garnishment. Exemptions pertaining to insurance proceeds, beneficiary association payments, earnings of a minor child, and employee benefits, shall not be affected by the subsequent deposit of the funds in a bank ..., whether in a single or joint account, if the funds are traceable to their exempt source. ... The burden of establishing that funds are exempt rests upon the debtor.  Id., subd. 20 (emphasis added). Built into the garnishment statutes is the presumption for exempt property that a garnishee may retain it upon receiving a summons, but such property is not ultimately subject to garnishment if the debtor successfully establishes an exemption. An exemption form is provided to a debtor, and the debtor is allowed to claim exemptions from garnishment. Minn.Stat. §§ 571.911, 571.912, 571.913. Section 571.913, however, states that [i]f no claim of exemption is received by the financial institution within 14 days after the exemption notices are mailed to the debtor, the funds remain subject to the garnishment summons. The wording of these statutes implies that funds are first retained by a garnishee, and a debtor is subsequently allowed to object. Although the list of exemptions does not expressly address joint account funds, the approach most consistent with the overall process built into the garnishment statutes is to place the burden of proof on the account holders to prove net contributions, similar to the process for claiming an exemption. [13] Applying this approach to funds in joint accounts is also consistent with other statutory requirements, and appears to be the most workable approach for creditors, debtors, and garnishees. Under Minn. Stat. § 571.911, a garnishee's obligation to retain the money due or belonging to the debtor occurs [u]pon receipt of the garnishment summons and exemption notices. There is no provision that first allows creditors or debtors to prove net contributions before a garnishee must retain funds; a garnishee's obligation to retain funds is immediate. Therefore, some type of presumption concerning ownership of funds in a joint account is necessary to answer whether and to what extent a garnishee may initially retain funds to fulfill its statutory obligation under Minn.Stat. §§ 571.73 and 571.911. The garnishment statutes provide a safeguard for garnishees: so long as a garnishee has a good faith belief that the property retained is subject to the garnishment summons, the garnishee is not liable to the debtor, creditor, or other person for wrongful retention if the garnishee retains... money ... of the debtor or any other person, pending the garnishee's disclosure or consistent with the disclosure the garnishee makes. Minn.Stat. § 571.73, subd. 2 (emphasis added). In other words, Minnesota's garnishment statutes are written in such a way that a garnishee has an immediate obligation to retain property of a debtor that the garnishee believes, in good faith, belongs to the debtor. [14] The wording of Minn.Stat. § 571.73, subd. 2, however, takes into account that there may be situations where a garnishee retains money that, ultimately, does not belong to a debtor. This provision supports the conclusion that, as discussed further in Section III of our opinion, it is permissible to initially presume that all of the funds in a joint account belong to a debtor, particularly so that a financial institution can meet its obligation under Minn.Stat. § 571.911 to retain funds upon receipt of a summons, and account holders then have the burden of proving net contributions. If we were to place the burden on a party other than the account holders, as a practical matter, given the burden associated with attempting to prove ownership by another, it would be difficult, and perhaps impossible, to garnish a joint bank account. Thus, although the statute at issue, Minn.Stat. § 524.6-203(a), does not expressly allocate the burden of proving net contributions, we conclude that the most workable approach, consistent with the process for garnishments in Minnesota, is to place the burden on account holders to prove net contributions. That is, to apply a general rule that for purposes of a creditor serving a garnishment summons and a garnishee initially retaining funds in a joint account, the debtor is initially, but rebuttably, presumed to own all of the funds in a joint account, but any account holder may rebut that presumption upon a preponderance of evidence of ownership.