Opinion ID: 2670481
Heading Depth: 2
Heading Rank: 3

Heading: Garnishment of Deutsch Account 95497

Text: PS Business argues that the total sum of deposits made to Deutsch account 95497 during the garnishment period are subject to the garnishment summons. PS Business contends that the circuit court erred in not entering an order of payment in favor of PS Business in the amount of $726,049.43, the entire amount of its judgment, because more than $1.2 million in deposits primarily, but not exclusively, from G&D account 61663 were made into Deutsch account 95497 during the garnishment period. We agree with PS Business that the circuit court erred in ordering payment of only $15,050.11 from Deutsch account 95497, the amount remaining in that account on the date that SunTrust answered the garnishment summons. Code § 8.01-501 provides, in relevant part, Every writ of fieri facias shall, . . . be a lien from the time it is delivered to a sheriff or other officer, or any person authorized to serve process pursuant to § 8.01-293, to be executed, on all the personal estate of or to which the debtor is, or may afterwards and on or before the 8 return day of such writ or before the return day of any wage garnishment to enforce the same, become, possessed or entitled, in which, from its nature is not capable of being levied on under such sections. (Emphasis added.) Thus, a lien is created on the property held by a third party debtor on the date the writ of fieri facias is delivered to the officer or authorized individual. In re Lamm, 47 B.R. 364, 368 (E.D. Va. 1984). However, the lien is not enforceable against a third party indebted to the judgment debtor until a garnishment summons is issued and served on the third party garnishee. Under Code § 8.01-511, the garnishment summons must direct the garnishee to withhold from the judgment debtor any sums of money to which the judgment debtor 'is or may be entitled' during the period between the date of service of the summons and the date of the garnishee's appearance in court to answer the summons. Virginia Nat'l Bank v. Blofeld, 234 Va. 395, 400, 362 S.E.2d 692, 695 (1987). Thus, upon service of the summons on the garnishee, the debts already due to the judgment debtor when the summons in garnishment is served upon the garnishee [and] any indebtedness of the garnishee to the judgment debtor which arises between the date of service of such summons on the garnishee and the return date of the summons is subject to garnishment. Id. 9 As a bank is a third party debtor to its account holders, any money that an individual or corporation deposits into an account held by the bank, unless otherwise specified, becomes the property of the bank and the bank is indebted to the holder of the account for the amount of the deposit until it is withdrawn. Bernardini, 223 Va. at 521, 290 S.E.2d at 864 (holding that the sum of any deposits made to the judgment debtor's account immediately become[s] property of the bank, and the latter becomes [a] debtor of the depositor.). Therefore, a bank may be a third party debtor subject to garnishment of the funds in its possession that are owed to the judgment debtor. In the present case, SunTrust is a bank and third party debtor because it holds funds to which Deutsch is entitled in its account 95497. The lien on the funds within Deutsch account 95497 became enforceable against SunTrust on March 5, 2013, when service of the garnishment summons was completed. The return date on the garnishment summons was April 12, 2013. Thus, any funds that reached the account between March 5, 2013 and April 12, 2013, the garnishment period, were funds that Deutsch was entitled to and, consequently, were funds subject to garnishment. The bank statement for Deutsch account 95497 indicates that more than $1.2 million in deposits reached that account during 10 the garnishment period. Moreover, Dolson testified during the hearing on the motion to quash that beginning with the service date . . . and continuing through the closing of the garnishment window in April, the[] zero balance arrangement ties were left in place[, thus] causing the subsidiary accounts to be overdrawn or to have negative posted balances which caused funds to flow into them from the master. While the large majority of these funds flowed from and to G&D account 61663, the bank statements in evidence also reveal credits from and debits to accounts other than G&D account 61663 during the garnishment period. When the sums were credited to Deutsch's account, they became subject to SunTrust's obligation as debtor to the depositor, Deutsch, and thus subject to garnishment by Deutsch's judgment creditors, including PS Business. Bernardini, 223 Va. at 521, 290 S.E.2d at 864. Thus, based upon the bank statements for Deutsch account 95497 and the testimony of Dolson, the amount of indebtedness of SunTrust to Deutsch during the period of the garnishment clearly exceeded the $15,050.11 that SunTrust paid to the court, which SunTrust represented to be the amount remaining in the account when it answered the garnishment. Therefore, the circuit court erred in ordering payment to PS Business of only $15,050.11 from Deutsch account 95497. However, the extent to which the deposits exceeded $15,050.11 is not clear from the record before us because the 11 circuit court did not make any factual determination to ascertain funds held by SunTrust in Deutsch account 95497 during the garnishment period as requested by PS Business in its crossmotion. Absent this requisite inquiry, the record is silent as to which deposits were funds circulating between G&D account 61663 and Deutsch account 95497 during the garnishment period, and which deposits contained new funds. Code §§ 8.01-519 and 8.01-565 provide the requisite steps for initiating a challenge to the garnishee's stated liability to the judgment debtor over the garnishment period in a garnishment proceeding. Code § 8.01-519 provides, in relevant part, if it be suggested that [the garnishee] has not fully disclosed his liability, the proceedings shall be according to §§ 8.01-564 and 8.01-565, mutatis mutandis. Code § 8.01-565 provides that the plaintiff must raise a challenge to whether the codefendant, the garnishee, has fully disclosed the debts owing by him, or effects in his hands belonging to the principal defendant in such attachment. Upon a plaintiff's challenge to the garnishee's disclosure, the court, without any formal pleading, shall inquire as to such debts and effects, or, if either party demand, it shall cause a jury to be impaneled for that purpose. Code § 8.01-565 (emphasis added). The record establishes that PS Business made a challenge before the circuit court to SunTrust's answer to the garnishment 12 summons on Deutsch account 95497 in the amount of $15,050.11. PS Business stated, [Y]ou can see from the statements that are in evidence . . . there was more money that was drawn down from the 61663 account. In fact, 1.2 million during just the March portion of the garnishment period, from March 5 to April 12. Just during the March portion of that, there's 1.2 million drawn down from the 61663 account. And so I'd submit to the court that is the amount of money that Deutsch[] had available to it. That is the amount of money that is subject to garnishment, and that is the amount of money this court should enter an order for payment for to enforce the judgment that this Court itself has entered. Once PS Business challenged SunTrust's answer to the garnishment summons, the circuit court was required by Code § 8.01-565 to initiate an inquiry into SunTrust's indebtedness to Deutsch over the garnishment period. The circuit court failed to do so. At the same time that the circuit court denied PS Business's garnishment against the funds in G&D account 61663 because Deutsch's name was not on that account, the court summarily denied any claim by PS Business to funds from the Deutsch account beyond the unchallenged $15,050.11 based upon what the bank has testified to. The alleged unreliability of the account statement does not exempt the account from review, as the plain language of Code § 8.01-565 necessitates a detailed inquiry into the debts and effects of the judgment debtor's account during the garnishment 13 period, irrespective of the surrounding circumstances. Because the circuit court failed to conduct this requisite inquiry into the total sum of the funds deposited into Deutsch account 95497 during the garnishment period, the record is insufficient for this Court on appeal to resolve the amount of indebtedness in excess of $15,050.11 of SunTrust to Deutsch, and therefore PS Business, during the garnishment period. When we determine that a circuit court has erred and that error has been challenged by the appellant, it is our responsibility to direct the circuit court to take appropriate action to correct the error in order to afford the appellant the relief to which it is entitled.