Opinion ID: 2636890
Heading Depth: 1
Heading Rank: 2

Heading: payment of judgment from clearing account

Text: ¶ 7 The question of whether Ms. Johnson's judgment can be paid from the Department's clearing account, the account from which the Department has paid the other refunds, is determinative of whether a writ of mandamus should issue. Payments from the clearing account are governed by section 7.1 of title 62 of the Oklahoma Statutes which provides: At least once each month each state agency shall transfer monies deposited in agency clearing accounts to the various funds or accounts, subdivisions of the state, or functions as may be provided by statute and no money shall ever be disbursed from the agency clearing account for any other purpose, except in refund of erroneous or excessive collections and credits. If the judgment is in the nature of a refund for purposes of this statutory provision, the Department has authority to pay it from the clearing account. ¶ 8 The Department argues that, under the doctrine of merger, Johnson's claim for a refund was merged into the judgment, and the refund claim ceased to exist. The Department posits that section 7.1 allows it to disburse funds from its clearing account for refunds of erroneous or excessive collections but not for money judgments. The Department continues that, because Ms. Johnson has a judgment and no longer has a refund claim, it is not authorized to pay the judgment out of the clearing account. Relying on article 5, section 55 of the Oklahoma Constitution [2] , the Department advocates that the only remedy available to Ms. Johnson is through a legislative appropriation. ¶ 9 The doctrine of merger is a common law principle in which a cause of action is merged into a judgment, extinguishing the underlying cause of action. Cooper v. Federal Res. Bank of Richmond, 467 U.S. 867, 874, 104 S.Ct. 2794, 81 L.Ed.2d 718 (1984). Under the general rule, the judgment replaces the old debt which ceases to exist, Randerson v. McKay, 1920 OK 84, 77 Okla. 238, 188 P. 323, 324, and extinguishes all the remedial rights which accompany the underlying claim. Restatement (Second) of Judgments § 24(1). Under the rule of merger, the judgment does not annihilate the debt and the essential nature of the debt remains intact. Milbourn v. State, 1934 OK 268, 168 Okla. 168, 32 P.2d 291, 292. In the present case, the essential nature of the debt is a refund. The judgment in favor of Ms. Johnson did not change the nature of the debt. The judgment for Ms. Johnson, although a money judgement remains in the nature of a refund and falls within the purview of section 7.1 of title 62. ¶ 10 The doctrine of merger is part of the law of res judicata. Swan v. Sargent Industries, 1980 OK CIV APP 49 n. 1, 620 P.2d 473, 475 n. 1 (approved for publication by the Supreme Court). The doctrine of merger is generally utilized to prevent a second suit from being brought on a claim after judgment has been entered on the claim. See Restatement (Second) of Judgments § 18. The purpose of the rule of merger is to promote justice. See Milbourn v. State, 1934 OK 268, 32 P.2d at 292. ¶ 11 The rule of merger is not without exception and will be extended only so far as necessary to further its purpose. Id. The rule of merger will not be applied when to do so will create unjust or inequitable results. Id. When a cause of action is extinguished because it is merged into a judgment, the advantages which attached to the original claim may be preserved. Restatement (Second) of Judgments § 18 cmt. g. For example, a lien is not extinguished merely because a creditor obtains a judgment against a debtor. Id. Likewise, a creditor does not forfeit its priority in bankruptcy by obtaining a judgment. Id. ¶ 12 To apply the rule of merger in the present case would create inequitable and unjust results and would undermine the rule's purpose. Under the Department's assertion, it could forever avoid the payment of the refund by refusing to pay a claim and forcing the claimant to obtain a judgment. Then a claimant would never be able to recover a refund. The scenario would be, the Department refuses to pay a rightfully entitled claimant a refund, the claimant obtains a judgment, and the absurd result would be that the Department would then lack authority to pay the refund. Under the Department's argument, the purpose of the rule of merger would be thwarted. ¶ 13 This Court will not apply an explicit statute such as section 7.1 of title 62 of the Oklahoma Statutes in such a manner to result in an absurdity. State ex rel. Macy v. Bd. of County Comm's of Oklahoma County, 1999 OK 53 n. 27, 986 P.2d 1130. Logical application of section 7.1 requires that a refund be paid to a claimant entitled to a refund whether the refund is sought through the administrative process or the claimant is forced by the Department to obtain a judgment. Further the clear language of section 7.1 authorizes payment of refunds whether they be administrative in form or in the form of a judgment because both are in the nature of a refund for an erroneous or excessive collection.