Court Opinion

ID: 4120849
Source: CourtListenerOpinion
Date Created: 2017-01-30 16:07:10.331832+00
Date Added: 2024-06-11T12:53:00.927242
License: Public Domain

FILED
                                                                                Jan 30 2017, 8:26 am

                                                                                        CLERK
                                                                                    Indiana Supreme Court
                                                                                       Court of Appeals
                                                                                         and Tax Court

      ATTORNEY FOR APPELLANT                                     ATTORNEY FOR APPELLEES
      Curt J. Angermeier                                         Joseph H. Harrison, Jr.
      Evansville, Indiana                                        Evansville, Indiana

                                                  IN THE
          COURT OF APPEALS OF INDIANA

      Dennis Garner,                                             January 30, 2017
      Appellant-Defendant,                                       Court of Appeals Case No.
                                                                 82A01-1512-PL-2362
              v.                                                 Appeal from the Vanderburgh
                                                                 Superior Court
      Gregory Stewart Kempf and                                  The Honorable Richard G.
      Vanderburgh County Clerk,                                  D’Amour, Judge
      Appellee-Plaintiff.                                        Trial Court Cause No.
                                                                 82D07-1310-PL-4775

      Altice, Judge.

                                                 Case Summary

[1]   Dennis Garner appeals from the trial court’s order denying his motion for

      proceedings supplemental.

      Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017                           Page 1 of 14
[2]   We reverse and remand with instructions.1

                                        Facts & Procedural History

[3]   In 2013, the Vanderburgh Superior Court awarded Garner a civil judgment

      against Gregory Kempf in the amount of $20,600. Garner has been unable to

      collect on the judgment.

[4]   On July 30, 2015, criminal charges were filed against Kempf in an unrelated

      matter in Vanderburgh Superior Court, and a $5,000 bond was posted on

      Kempf’s behalf. The next day, Garner filed a motion for proceedings

      supplemental in the civil case seeking to garnish the bond proceeds and naming

      the Vanderburgh County Clerk (the Clerk) as a garnishee defendant. On the

      same date, Garner served a copy of the motion on the Clerk along with a letter

      advising the Clerk that Garner held a lien against the bond proceeds and that

      the Clerk could be held liable if it released the funds to anyone else. Garner did

      not, however, file anything in the criminal matter or otherwise give the criminal

      court notice of the lien. The Clerk did not make a note of the lien on the

      Chronological Case Summary (CCS) in the criminal case, and there is no

      indication that the criminal court had any knowledge of its existence. The

      parties do not dispute that Garner notified Kempf of the lien. On July 31, 2015,

      1
       We held oral argument in this matter on December 15, 2016, and we extend our thanks to counsel for their
      presentations.

      Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017                   Page 2 of 14
      the civil court issued an order requiring Kempf and the Clerk to appear at a

      hearing on the motion for proceedings supplemental on August 26, 2015.

[5]   On August 13, 2015,2 Kempf asked the criminal court to release the bond

      proceeds to his criminal defense attorney, and Kempf’s attorney filed a written

      motion to that effect the next day. The criminal court, apparently still unaware

      of Garner’s pending motion for proceedings supplemental, granted the request

      and ordered the proceeds of the bond released to Kempf’s defense attorney on

      August 14, 2015.

[6]   The hearing on Garner’s motion for proceedings supplemental was

      subsequently reset for September 22, 2015. At the hearing, the Clerk indicated

      that the bond proceeds had been paid to Kempf’s criminal defense attorney

      pursuant to the criminal court’s order. On September 29, 2015, the civil court

      entered a written order denying Garner’s motion for proceedings supplemental

      and declining to enter judgment against the Clerk. Garner filed a motion to

      correct error, which the trial court denied after a hearing. This appeal ensued.

                                            Discussion & Decision

[7]   This court has set forth the standard of review applicable to appeals from

      judgments regarding proceedings supplemental as follows:

      2
       On August 3, 2015, the original criminal case was dismissed because the State had filed formal felony
      charges under another cause number. The bond was transferred to the new criminal case.

      Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017                     Page 3 of 14
              Our system vests trial courts with broad discretion in conducting
              proceedings supplemental. [I]n proceedings supplemental, we
              are constrained to treat a trial court's judgment as being general
              only. We will not disturb a trial court’s judgment regarding a
              proceedings supplemental unless the record does not provide
              sufficient support for any theory on which the judgment may be
              sustained. We will affirm the trial court's judgment on any legal
              theory supported by the evidence most favorable to the judgment,
              together with all reasonable inferences to be drawn therefrom.

      Prime Mortg. USA, Inc. v. Nichols, 885 N.E.2d 628, 669 (Ind. Ct. App. 2008)

      (internal quotation marks and citations omitted).

[8]   On appeal, Garner argues that the Clerk wrongfully released the bond proceeds

      to Kempf’s attorney after the attachment of an equitable lien and, as a result, is

      liable to him in the amount of $5,000. The trial court rejected this claim,

      reasoning that it was incumbent upon Garner to see to it that an entry was

      made on the CCS in the criminal case so as to notify that court of the lien. In

      support of this conclusion, the trial court relied on a purported “rule” issued by

      the Vanderburgh Circuit and Superior Courts. Appellant’s Appendix at 12.

[9]   The “rule” relied upon by the trial court, a copy of which is attached to its

      written order, is not a rule at all. Instead, it appears to be an internal memo,

      dated February 5, 2003, from the “Vanderburgh Circuit and Superior Courts”

      to a former Vanderburgh County Clerk. Id. at 13. This memo is not a part of

      the Vanderburgh County Local Rules, and there is no indication that it was

      ever even published or otherwise made available to the public. The memo

      reads as follows:

      Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 4 of 14
               Please be advised that when a Court releases a bond in a criminal
               case, the release of the bond is subject to any garnishment orders,
               liens, or assignments placed against the bond. In order for such a
               claim to be placed against the bond, a minute must be entered on
               the Chronological Case Summary for the criminal case, which
               minute must state the existence of that claim against the bond. If
               such claims exists, they should be honored and paid after any
               costs, retention charges, public defenders fund reimbursement,
               fines, restitution, and other fees, if any of these are ordered by the
               Court to be retained from the bond, but before payment to the
               person who posted the bond. Priority should be given to the
               claim entered the earliest on the Chronological Case Summary.
               Please circulate this notice to all necessary personnel. Thank
               you.

       Id. (emphasis in original). It is apparent from the language of the memo that it

       was intended to provide guidance to the Clerk and court personnel, not the

       public. Indeed, the Clerk appears to implicitly concede as much by declining to

       cite or rely upon the memo in its brief. We therefore conclude that the trial

       court erred by relying on the memo in reaching its decision to deny Garner’s

       motion for proceedings supplemental. It does not necessarily follow, however,

       that the trial court’s ultimate judgment was in error. As we noted above, we

       must treat a trial court’s ruling on a motion for proceedings supplemental as a

       general judgment and affirm on any legal theory supported by the evidence.

[10]   On appeal, Garner relies on Fifth Third Bank v. Peoples Nat’l Bank for the

       proposition that “[i]t is well settled under Indiana law that a judgment creditor

       acquires an equitable lien on funds owed by a third party to the judgment

       debtor from the time the third party receives service of process in proceedings

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 5 of 14
       supplemental.” 929 N.E.2d 210, 214 (Ind. Ct. App. 2010). Further, “the third

       party in proceedings supplemental is liable for paying out funds in a manner

       inconsistent with the judgment creditor's lien.” Id. (quoting Radiotelephone Co. of

       Ind., Inc. v. Ford, 531 N.E.2d 238, 241 (Ind. Ct. App. 1998)).

[11]   The Clerk does not appear to dispute that Garner’s argument in this regard is an

       accurate reflection of the law in general. Instead, the Clerk seems to argue that

       an exception exists when a creditor seeks to garnish the proceeds of a bond

       posted in a criminal matter and held by the clerk of that court. Specifically, the

       Clerk claims that “[t]he Indiana Supreme Court has specifically held that

       proceeds of a cash bail bond posted in a criminal case are not subject to

       garnishment for a judgment obtained in a civil case.” Appellee’s Brief at 3. In

       support of this assertion, the Clerk cites O’Laughlin v. Barton, 549 N.E.2d 1040

       (Ind. 1990).

[12]   The Clerk’s reliance on O’Laughlin is misplaced. It is well settled in Indiana

       that the proceeds of bail bonds are subject to garnishment. See, e.g., Germann v.

       Tom’s 24-Hour Towing, Inc., 776 N.E.2d 932, 934 (Ind. Ct. App. 2002); Turner v.

       Clary, 606 N.E.2d 878, 880-81 (Ind. Ct. App. 1993). The law of bailment

       provides guidance in cases involving the disposition of bail bond proceeds.

       Turner, 606 N.E.2d at 880. “A bailment is an express or implied agreement

       between a bailor and a bailee in which the bailee is entrusted to accomplish a

       specific purpose with the bailor’s personal property and when the purpose is

       accomplished, the property is returned to the bailor.” Id. at 880. Because a

       bailment generally involves no transfer of ownership, the depositor’s interest in

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 6 of 14
       a cash bail bond is not extinguished unless and until the bond is forfeited. 3 Id.

       O’Laughlin stands for the uncontroversial proposition that once a bail bond is

       forfeited, the depositor’s interest therein is extinguished and the funds must be

       transferred to the Treasurer of the State for deposit into the Common School

       Fund. O’Laughlin, 549 N.E.2d at 1042.4 See also Ind. Const. art. 8, sec. 2. In

       this case, however, Kempf’s bond was never forfeited. Because his interest in

       the bond proceeds was not extinguished, O’Laughlin is inapposite and the funds

       remained subject to garnishment.5

[13]   Citing Ind. Code § 35-33-8-7(b), the dissent asserts that our General Assembly

       has limited the circumstances under which a third-party creditor may garnish

       bail proceeds to cases in which the criminal charges arise out of the “same

       transaction or occurrence” as that giving rise to the civil judgment. We cannot

       3
         The dissent suggests that the fact that a bailment does not effect a transfer of ownership means that the
       property in question is not subject to garnishment. To the contrary, the fact that the bailor maintains
       ownership is precisely why the property remains subject to garnishment. The entire purpose of garnishment
       is to allow creditors to reach property owned by a debtor but being held by a third party.
       4
        At issue in O’Laughlin was the date on which the defendant’s bail was forfeited and whether the bail could
       be forfeited after being previously revoked. Id. at 1041-42. Whether a bond that had not been forfeited was
       subject to garnishment was not in dispute, and the dissent specifically noted that such funds were subject to
       attachment by creditors. Id. at 1043 (reasoning that “[a]t the time of revocation, the cash deposit was not
       subject to a declaration of forfeiture, ceased to operate as bail, and was the property of [the defendant]. The
       deposit was therefore properly ordered subjected to attachment by creditors.” (DeBruler, J., dissenting) (emphasis
       supplied)).
       5
        The Clerk’s reliance on Dillman v. State, 2 N.E.3d 774 (Ind. Ct. App. 2014) and Goffinet v. State, 775 N.E.2d
1227 (Ind. Ct. App. 2002), trans. denied, is likewise misplaced. Both of these cases addressed the trial court’s
       application of bond proceeds to pay court costs and other fees owed by a defendant. In both instances, this
       court held that the diversion of bond proceeds was improper because it was not authorized by Ind. Code § 35-
       33-8-3.2. Neither case addressed the issue presented here—a creditor’s attempts to garnish the proceeds of a
       bond. Dillman and Goffinet are not relevant to this case.

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017                            Page 7 of 14
       agree with this interpretation of the statute. I.C. § 35-33-8-7(b) provides as

       follows:

               In a criminal case, if the court having jurisdiction over the
               criminal case receives written notice of a pending civil action or
               unsatisfied judgment against the criminal defendant arising out of
               the same transaction or occurrence forming the basis of the
               criminal case, funds deposited with the clerk of the court under
               section 3.2(a)(2) of this chapter may not be declared forfeited by
               the court, and the court shall order the deposited funds to be held
               by the clerk. If there is an entry of final judgment in favor of the
               plaintiff in the civil action, and if the deposit and the bond are
               subject to forfeiture, the criminal court shall order payment of all
               or any part of the deposit to the plaintiff in the action, as is
               necessary to satisfy the judgment. The court shall then order the
               remainder of the deposit, if any, and the bond forfeited.

[14]   This statute places no limitations on the rights of creditors. Instead, it places a

       limitation on the ability of a criminal court to declare bond proceeds forfeited.

       Specifically, where a criminal court has notice of an unsatisfied civil judgment

       or a pending civil action “arising out of the same transaction or occurrence

       forming the basis of the criminal case,” the criminal court may not declare bond

       proceeds forfeited. Instead, the criminal court must order the clerk to continue

       to hold the bond proceeds, and payment of the civil judgment must be made

       from those funds before any remainder may be forfeited. Essentially, by

       protecting the bond proceeds from forfeiture where the criminal court has

       notice of a pending civil action or unsatisfied civil judgment arising out of the

       same circumstances giving rise to the criminal case, I.C. § 35-33-8-7(b) provides

       an additional safeguard for the victims of the crime for which the defendant is

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 8 of 14
       being prosecuted. The statute does nothing, however, to undermine the general

       law applicable to other types of creditors seeking to garnish bond proceeds

       posted in unrelated criminal cases.

[15]   Ind. Code § 34-25-3-1 specifically provides that “all officers who may collect

       money by virtue of their office, including . . . clerks of the circuit and superior

       courts” are subject to garnishment “in the same manner as and to the same extent

       that other persons are subject to garnishment.” (emphasis supplied). See also Bowyer

       Excavating, Inc. v. Ind. Dep’t of Envtl. Mgmt., 671 N.E.2d 180, 184 (Ind. Ct. App.

       1996) (explaining that “a garnishment applies where a third party possesses or

       controls the defendant's property” and that in such cases, the garnishment

       statutes are controlling), trans. denied. It is undisputed that Garner took the

       steps required of him under the garnishment statutes to preserve his claim to the

       bond proceeds in this case. Garner named the Clerk as a garnishee defendant

       in his motion for proceedings supplemental and served the Clerk with a copy of

       that motion, along with a letter notifying the Clerk that he held a lien on the

       bond proceeds and that the Clerk could be held liable for paying out the funds

       in a manner inconsistent with the lien. This was sufficient to put the Clerk on

       notice of Garner’s claim so as to create an equitable lien. See Fifth Third Bank,
929 N.E.2d at 214. Upon receiving such notice, it was incumbent upon the

       Clerk to take steps to preserve the property in its possession. I.C. § 34-25-3-3

       (providing that “[f]rom the day of the service of the summons, the garnishee is

       accountable to the plaintiff in the action for the amount of money, property, or

       credits in the garnishee’s possession or due and owing from the garnishee to the

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 9 of 14
       defendant”).6 The Clerk could have satisfied this obligation by making a

       notation of the lien on the CCS in the criminal case and bringing the lien to the

       criminal court’s attention upon receiving the order to release the funds to

       Kempf’s attorney.

[16]   The trial court essentially concluded that it was Garner’s duty to provide notice

       of the lien to the criminal court. The parties have not directed our attention to

       any authority supporting the trial court’s conclusion that Garner was required

       to take an additional step not set forth in the garnishment statutes to preserve

       his claim to the bond proceeds, and any such requirement would appear to

       conflict with I.C. § 34-25-3-1. The Clerk’s failure to fulfill its duty as a

       garnishee defendant prevented Garner from collecting on his lien and,

       consequently, the Clerk is liable to Garner in the amount thereof.7 We

       therefore reverse and remand with instructions for the civil court to enter

       judgment accordingly.

       6
         We note that Ind. Code § 35-33-8-7(c) provides that “[a]ny proceedings concerning the bond, or its
       forfeiture, judgment, or execution of judgment, shall be held in the court that admitted the defendant to bail.”
       Ind. Trial Rule 69(E), on the other hand, provides that “[n]otwithstanding any other statute to the contrary,
       proceedings supplemental to execution may be enforced by verified motion or with affidavits in the court
       where the judgment is rendered[.]” (emphasis supplied). See also Branham Corp. v. Newland Res., LLC, 44
N.E.3d 1263, 1272 (Ind. Ct. App. 2015) (explaining that proceedings supplemental “are initiated under the
       same cause number in the same court that entered judgment against the defendant”). To the extent that I.C.
       § 35-33-8-7(c) and T.R. 69(E) are in conflict, T.R. 69(E) controls. Ritchie v. State, 809 N.E.2d 258, 268 (Ind.
       2004) (“In general, if a statute conflicts with a validly adopted Trial Rule, the rule prevails.”). Thus, Garner’s
       motion for proceedings supplemental was properly filed in the civil court under the same cause number as the
       original civil judgment.
       7
         The Clerk has not at any point in these proceedings argued that it is immune from liability for releasing the
       funds in a manner inconsistent with Garner’s lien, and we therefore do not address that issue.

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017                         Page 10 of 14
[17]   Judgment reversed and remanded with instructions.

[18]   Bradford, J., concurs.

[19]   Pyle, J., dissents with opinion.

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 11 of 14
                                                   IN THE
           COURT OF APPEALS OF INDIANA

       Dennis Garner,                                             Court of Appeals Case No.
                                                                  82A01-1512-PL-2362
       Appellant-Defendant,

               v.

       Gregory Stewart Kempf and
       Vanderburg County Clerk,
       Appellees-Plaintiff.

       Pyle, Judge dissenting.

[20]   I respectfully dissent from the majority’s opinion. Bail is a right guaranteed

       under Article 1 § 17 of Indiana’s Constitution. It is a cherished and traditional

       right. Fry v. State, 990 N.E.2d 429 (Ind. 2013). Appearing under INDIANA

       CODE §§ 35-33-8-0.1 through 35-33-8-11, bail bonds are regulated by statute. A

       “bail bond” is defined as “a bond executed by a person who has been arrested

       for the commission of an offense, for the purpose of ensuring (1) the person’s

       appearance at the appropriate legal proceeding; (2) another person’s physical

       safety; or (3) the safety of the community.” IND. CODE § 35-33-8-1. No other

       purpose is stated. To further these, and only these, purposes, the bail statutes

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017            Page 12 of 14
       allow certain fees (including attorney fees) to be deducted from the amount of

       bail deposited with clerk; the bail statutes also provide a deadline within which

       bail deposits must be returned to the defendant upon disposition of the case. I.C. §

       35-33-8-3.2. In addition, the only condition under which our General Assembly

       permits a third party to attach bond monies to satisfy a civil judgment against a

       criminal defendant is when the criminal charges arise out of “the same

       transaction or occurrence . . . .” I.C. § 35-33-8-7(b) (emphasis added). Because

       bail statutes are criminal statutes which must be strictly construed, I would

       conclude that the absence of legislative authorization allowing unrelated third

       parties to bring civil judgments into criminal courts to attach bond money

       means that there is no error in this case. See Hook v. State, 775 N.E.2d 1125

       (Ind. Ct. App. 2002). Despite any local rule to the contrary, Garner was

       without authority to seek attachment of the bond money in this criminal case.

[21]   In addition, allowing third parties to bring civil judgments into criminal courts

       also ignores the common law governing bail bonds. We have held that the law

       of bailments governs bail bonds. J.J. Richard Farm Corp. v. State, 642 N.E.2d
1384 (Ind. Ct. App. 1994). “‘A bailment is an express or implied agreement

       between a bailor and a bailee in which the bailee is entrusted to accomplish a

       specific purpose with the bailor’s personal property and when the purpose is

       accomplished, the property is returned to the bailor.’” Id. at 1386 (quoting Norris

       Automotive Service v. Melton, 526 N.E.2d 1023, 1025 (Ind. Ct. App. 1988)

       (emphasis added)). There is no transfer of the right of ownership in a bailment

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 13 of 14
       contract. Id. In other words, Garner also has no common law basis for

       attempting to attach bond money with a civil judgment.

[22]   Here, Kempf’s bond money was to serve the specific purposes listed in

       INDIANA CODE § 35-33-8-1. Fees could be deducted and/or attached only as

       authorized by statute. Otherwise, once the specific purpose was accomplished

       upon the disposition of the criminal case, any remaining balance must be

       returned to Kempf.

       Court of Appeals of Indiana | Opinion 82A01-1512-PL-2362 | January 30, 2017   Page 14 of 14