Opinion ID: 2054217
Heading Depth: 2
Heading Rank: 5

Heading: Application of Herman v. Siney: Smith's Judgment of Recovery Against First American Bank

Text: We first consider Smith's judgment of recovery against First American Bank (Appeal No. 93-CV-61). Under Herman, if [t]he receiver was appointed in a suit to which the [judgment creditor was] not [a party] and after the garnishment had been completed[,]... [t]he appointment of a receiver ... [does] not divest the lien acquired by the garnishment. Herman, 190 A.2d at 652. Smith served its first writ of attachment and interrogatories on First American on November 13, 1992, and the Delaware Chancery Court issued its Seizure and Injunction Order four days later, on November 17. Accordingly, the Delaware Chancery Court's Seizure and Injunction Order, which effectively appointed a receiver for CUIC, did not divest the lien Smith had already acquired through its November 13 attachment of funds held by First American. [33] CUIC disputes the amount of money the trial court awarded to Smith in its judgment of recovery. CUIC contends that Smith's recovery should not exceed $319,423.62, in contract with the $516,577.24 the court ordered, because First American's initial response to Smith's writ of attachment was limited to the smaller amount. CUIC argues that First American amended its answer to say it was holding $516,577.24 only because Smith obtained a second writ of attachment, which Smith served on the bank on December 8, after the Delaware Chancery Court had issued its Seizure and Injunction Order. According to CUIC, the difference in amounts between First American's first and second responses$197,153.62represents the amount that was subject to Smith's second writ of attachment, which does not have priority over CUIC's receiver because it was served after the receiver's appointment. CUIC therefore asserts that Smith's judgment of recovery should be reduced to $319,423.62 to exclude the additional $197,153.62 that First American added to its initial response. It is possiblealthough Smith does not suggestthat the entire $516,577.24 was in CUIC's bank accounts at First American on November 13, when Smith served its first writ of attachment on the bank, and that First American's initial response that it was holding $319,423.62 was merely an error, which it later attempted to correct by amending its response. Without regard to that possibility, Smith argues that the first writ, served on November 13, legally intercepted all funds that came into the seized accounts before entry of Smith's judgment of recovery against First American on January 5, 1993, even if they were not in the account on November 13, and, accordingly, that the court properly ordered judgment of recovery against First American in the amount of $516,577.24. Smith adds that it served the second writ of attachment and interrogatories on First American on December 8 merely out of an abundance of caution in order to avoid any possible question as to Smith's entitlement to the additional funds. We agree with CUIC that Smith's November 13 garnishment writ covers only those funds held by First American on November 13 and that any funds the bank received thereafter belong to CUIC's receiver, not to Smithas elaborated below. After entry of a judgment, [a]n attachment shall be levied upon credits of the defendant, in the hands of a garnishee, by serving the garnishee with a copy of the writ of attachment and of the interrogatories accompanying the writ, and a notice that any property or credits of the defendant in his [or her] hands are seized by virtue of the attachment. D.C.Code § 16-546. The garnishee must file an answer to the interrogatories in the writ and send a copy of the answer to the defendant and the judgment creditor. See D.C.Code § 16-552(a) (1989); Super.Ct.Civ.R. 69-I(d). After the garnishee answers the writ, the judgment creditor may file a motion for judgment of recovery, and a judgment shall be entered against [the garnishee] for the amount of credits admitted or found, not exceeding the amount of the plaintiffs judgment, and costs, and execution shall be had thereon not to exceed the credits in his [or her] hands. D.C.Code § 16-556(a); see also Super.Ct.Civ.R. 69-1(e). This leaves the following question: Does a writ of attachment cover funds owed to the judgment debtor that come into the hands of the garnishee after service of the writ? It appears that as a general rule, apart from statutory provisions to the contrary, an attachment or garnishment can have no effect on property subsequently coming into the hands of the defendant or garnishee. 6 AM.JuR.2d Attachment and Garnishment §§ 94, 461 (1966); see Everson v. Atlas Tie Co., 73 Idaho 91, 92-93, 245 P.2d 773, 774-75 (1952) (only those debts owing at time of service of notice of garnishment are subject to garnishment, and debts arising by reason of subsequent transactions between garnishee and creditor are not bound by garnishment); Dufield v. Davis, 152 Kan. 404, 103 P.2d 778, 780 (1940) (attachment lien covers only actual interest of debtor in property existing at time of levy and does not extend to subsequently acquired interest); North-western Nat'l Bank of Bloomington-Richfield v. Delta Studios, Inc., 289 Minn. 202, 184 N.W.2d 3, 4 (1971) (garnishment summons attaches and binds only personal property, money, or indebtedness owed defendant and in garnishee's possession at time summons is served); Johnson v. Dutch Mill Dairy, Inc., 237 Minn. 117, 54 N.W.2d 1, 3 (1952) (deposits made in principal defendant's bank account after service of garnishment summons on bank were not impounded by such garnishment, but were subject to subsequent garnishment by defendant's creditors); Holly v. Dayton View Terrace Improvement Corp., 25 Ohio Misc. 57, 53 O.O.2d 393, 263 N.E.2d 337, 342-43 (Ohio Ct.Com. Pleas 1970) (it is also generally held that an attachment covers only the interest of the defendant in the property levied on existing at the time of the levy and that it does not extend to property previously transferred or to an interest in property subsequently acquired by the defendant). In some cases, however, usually by virtue of particular statutory provisions, a garnishment is regarded as binding effects or credits of the defendant coming into possession of or owning by the garnishee after service of the writ. 6 Am.Jur.2d Attachment and Garnishment § 461; see International Bedding Co. v. Terminal Warehouse Co., 146 Md. 479, 126 A. 902, 905 (1924) (contrary to general rule, attachment in Maryland binds all property or credits of debtor in hands of garnishee or which may come into garnishee's hands after laying attachment and before trial); Flat Iron Mac Assoc. v. Foley, 90 Md.App. 281, 600 A.2d 1156, 1159-60 (1992) (writ of garnishment included property which came into garnishee's possession after service but prior to judgment); Steer v. Dow, 75 N.H. 95, 71 A. 217 (1908) (same). We perceive no sound basis for rejecting the general rule and accordingly conclude that the District of Columbia follows that rule: a writ of garnishment covers only the property of the debtor in the hands of the garnishee at the time the writ is served. [34] Applying this ruling to the facts of this case, we conclude that the writ of garnishment Smith served on First American on November 13 covered only those funds that First American was holding for CUIC on that date. Based on our review of the record, however, we cannot determine the amount of money that First American was holding for CUIC on November 13. The record does not reveal whether First American amended its response to Smith's writ of attachment because of an error in its first response or because additional funds were deposited into CUIC's accounts after its first response. We therefore cannot determine whether First American was holding $319,423.62 or $516,577.24 on November 13; we must remand to the trial court for further proceedings to sort out Smith's proper recovery.