Opinion ID: 2054340
Heading Depth: 1
Heading Rank: 5

Heading: Nature and Grounds of Garnishment as a Remedy

Text: The Court of Special Appeals, in this case, stated that [g]arnishment is a remedy created and controlled by statute. Bragunier, 139 Md.App. at 293, 775 A.2d at 467. See Mears v. Adreon, 31 Md. 229, 237 (1869) (stating that proceedings under attachment are a special remedy conferred by statute); Chromacolour Labs, Inc. v. Snider Bros. Property Management, Inc., 66 Md.App. 320, 503 A.2d 1365 (1986) (noting that garnishment is a statutory proceeding). In Northwestern National Insurance Co. v. William G. Wetherall, Inc., 267 Md. 378, 384, 298 A.2d 1, 5 (1972), we stated: An attachment by way of garnishment issued after judgment is a mode of execution and its function is approximately the same as that of a writ of fieri facias. As attachment proceedings are in derogation of the common law, their existence is dependent upon special provisions authorizing them. Authority for courts in this State to entertain attachments after judgment has long been established in our laws. The origin of this authority is found in the Acts of 1715, Ch. 40, § 7. W. Hodge and R. McLean, the Law of Attachment in Maryland, § 251 (1895).... Under the established law of this State, a garnishment proceeding is, in essence, an action by the defendant (judgment debtor) against the garnishee for the use of the plaintiff (judgment creditor). [Citations omitted.] Recently, this Court, in Parkville Federal Savings Bank v. Maryland National Bank, 343 Md. 412, 681 A.2d 521 (1996) discussed the well-established nature and function of a garnishment proceeding. We stated: A writ of garnishment is a means of enforcing a judgment. It allows a judgment creditor to recover property owned by the debtor but held by a third party.... `A garnishment proceeding is, in essence, an action by the judgment debtor for the benefit of the judgment creditor which is brought against a third party, the garnishee, who holds the assets of the judgment debtor. An attaching judgment creditor is subrogated to the rights of the judgment debtor and can recover only by the same right and to the same extent that the judgment debtor might recover.'  Id. at 418, 681 A.2d at 524 (citing Fico, Inc. v. Ghingher, 287 Md. 150, 159, 411 A.2d 430, 436 (1980) (citations omitted)). See Hoffman Chevrolet, Inc. v. Washington County Nat'l Sav. Bank, 297 Md. 691, 696, 467 A.2d 758, 761 (1983); Northwestern Nat'l Ins. Co., 267 Md. at 384, 298 A.2d at 5; Walsh v. Lewis Swim. Pool Constr. Co., 256 Md. 608, 610, 261 A.2d 475, 476 (1970); Peninsula Ins. Co. v. Houser, 248 Md. 714, 717, 238 A.2d 95, 97 (1968); Messall v. Suburban Trust Co., 244 Md. 502, 506-07, 224 A.2d 419, 421 (1966); Cole v. Randall Park Holding Co., 201 Md. 616, 623-24, 95 A.2d 273, 277 (1953). The opinions of this Court have emphasized the principle, growing out of the nature and function of a garnishment proceeding, that the creditor merely steps into the shoes of the debtor and can only recover to the same extent as could the debtor. In the case sub judice, the Court of Special Appeals appropriately noted how in garnishment proceedings, the judgment creditor (here petitioner) is subrogated to the rights of the judgment debtor (here Crough, Inc.). Moreover, the judgment creditor/garnishor can recover against the garnishee (here respondent) only to the extent that the judgment debtor could have done so. Thus, the nature of the rights acquired by petitioner are no more than the rights Crough, Inc. would have had against respondent. As we have indicated, and as the intermediate court stated, an action in garnishment is derived from statute, with the creditor stepping into the shoes of the debtor; the creditor's rights in garnishment, therefore, cannot rise above the rights the debtor would have had against the garnishee. See Peninsula Ins. Co. v. Houser, 248 Md. 714, 238 A.2d 95 (1968); Messall v. Suburban Trust Co., 244 Md. 502, 224 A.2d 419 (1966); Bendix Radio Corp. v. Hoy, 207 Md. 225, 114 A.2d 45 (1955); Thomas v. Hudson Sales Corp., 204 Md. 450, 105 A.2d 225 (1954); Cole v. Randall Park Holding Co., 201 Md. 616, 95 A.2d 273 (1953). In an attachment case involving claims to title to real property, we noted in our case of Kolker v. Gorn, 193 Md. 391, 399, 67 A.2d 258, 262 (1949), that: But attachment and execution proceedings seem to be in a class by themselves, where the real ownership is in issue and equitable defenses are available. We think an execution creditor, who is a stranger to the transaction ... stands in the shoes of the debtor subject to all outstanding equities ... [Citations omitted.] We noted well over a hundred years ago that: There is nothing in the attachment law of this State to justify the conclusion that it was designed, by allowing garnishment to be made, to place the garnishee in a worse position, in reference to the rights and credits attached, than if he had been sued by the defendant. The attaching creditor seeks to have himself substituted to the rights of his debtor as against the garnishee, and by laying his attachment, he acquires no superior right to that of his debtor. The right of condemnation must, therefore, be subject to any such right of set-off or discharge existing at the time of garnishment, as would be available to the garnishee if he were sued by the defendant. Any other rule would, in many cases, work gross injustice, and might, moreover, be subject to great abuse. Farmers & Merchants Bank v. Franklin Bank, 31 Md. 404, 412 (1869); see Employers' Liability Assur. Corp. v. Perkins, 169 Md. 269, 181 A. 436 (1935); Farley v. Colver, 113 Md. 379, 77 A. 589 (1910). Additionally, the opinions of other courts have emphasized the principle that the creditor merely steps into the shoes of the debtor and ordinarily can only recover to the same extent as could the debtor, or that the nature of the creditor's rights cannot rise above those of the judgment debtor. [11] See Alejandre v. Telefonica Larga Distancia, de Puerto Rico, Inc., 183 F.3d 1277, 1286 (11th Cir.1999) (the plaintiff [garnishor] steps into the shoes of the judgment debtor and can assert only the rights that the judgment debtor could have asserted....); Sapp v. Greif, 961 F.Supp. 243, 246 (D.Kan.1997) (in garnishment, plaintiff-creditor stands in shoes of defendant-debtor); Ellefson v. Centech Corp., 606 N.W.2d 324, 334 (Iowa 2000) (right of the judgment creditor is measured by the right of the debtor); Ray v. Caudill, 266 Kan. 921, 924, 974 P.2d 560, 562 (1999) (In a garnishment proceeding, the creditor ... takes the place and stands in the shoes of its debtor, Caudill, taking only what he could enforce against the third-party garnishee.); Culie v. Arnett, 765 P.2d 1203, 1205 (Okla.1988) (judgment creditor stands in the shoes of the judgment debtor and may claim no greater rights against the garnishee); Rice v. American Communications Consultants of North America, 31 P.3d 1075, 1077 (Okla.Civ.App.2001) (In a garnishment proceeding the judgment creditor stands in the shoes of the judgment debtor to enforce a liability owed to the latter by a third partythe garnishee. The former may claim no greater rights against the garnishee than the latter himself possesses.) (quoting Culie, 765 P.2d at 1205); Rowley v. Lake Area Nat'l Bank, 976 S.W.2d 715, 719 (Tex.App.1998) (By strict compliance with the garnishment statutes, a plaintiff in garnishment merely steps into the shoes of his debtor as against the garnishee....); Network Solutions, Inc. v. Umbro Int'l, Inc., 259 Va. 759, 768, 529 S.E.2d 80, 85 (2000) ([A] proceeding in garnishment is substantially an action at law by the judgment debtor in the name of the judgment creditor against the garnishee, and therefore the judgment creditor stands upon no higher ground than the judgment debtor and can acquire no greater right than such debtor ... possesses.) (quoting Lynch v. Johnson, 196 Va. 516, 521, 84 S.E.2d 419, 422 (1954)). In Sapp v. Greif, 961 F.Supp. 243 (D.Kan.1997), a case with somewhat similar facts, the federal District Court also held that a garnishor stands in the shoes of its debtor. In that case, an insured bank director joined in a mutual release with the insurance company that carried director's coverage. The insurance company, the garnishee, contended that it was not subject to a garnishment because it was not holding any funds of the debtor, nor was it liable to pay any funds on behalf of the judgment debtor, because Mr. Greif, in whose shoes the plaintiffs stand, released the Garnishee from `any and all claims by any person or entity against any of the Settling Defendants in their capacities as directors and/or officers of the Banks....' Id. at 246. The plaintiffs contended that the release was not binding on them because they were not parties to it, and that the court should not permit the garnishee to conspire and collude with Mr. Greif to arbitrarily take away their rights. The court responded in relevant part: Kansas law provides that a garnishment action is the proper procedure for determining a garnishee-insurer's liability. However, the plaintiff-creditor, who stands in the shoes of the defendant debtor, is only entitled to enforce that which the defendant-debtor could enforce against his or her insurer. ... Kansas law does not require an officer/director of a corporation to obtain or maintain director/officer insurance. Nor does Kansas law prevent an officer/director of a corporation from releasing his or her director/officer insurer from liability.... ... Thus, because Mr. Greif legally waived his rights under the Policy, the plaintiffs, as Mr. Greif's creditors, have no rights under the Policy. Id. at 246 (citations omitted). See also Union Bank v. Federal Deposit Ins. Corp., 111 Nev. 951, 956, 899 P.2d 564, 567 (1995) (Consistent with the principle that a garnishor stands in the shoes of the debtor, NRS 31.360 simply affords a garnishee the right to deduct out of the property of the debtor, prior to payment to the garnishor, all demands against the debtor....). In the old garnishment case of Jaseph v. People's Savings Bank, 132 Ind. 39, 47, 31 N.E. 524, 527 (1892), the Supreme Court of Indiana stated: [T]he general rule [is] that the creditor stands in the shoes of the debtor, and unless the debtor himself could have maintained an action against the garnishee..., the creditor can not hold him as garnishee. See also Day's Executrix v. Traders' Nat'l Bank, 232 Ky. 662, 24 S.W.2d 576 (1930). In examining the limitations period in a garnishment action, the Supreme Court of Arkansas stated: Whether we consider either date as the cessation of Andrews' authority as a licensed agent, it is obvious that the two year statute of limitation upon the bond is a bar to this action. This is true because it was not until May 5, 1964, the issuance of garnishment, that any action was brought to enforce liability upon the securities posted in lieu of the required bond. Wells v. Hill, 239 Ark. 979, 981, 396 S.W.2d 946, 947 (1965).