Court Opinion

ID: 9528470
Source: CourtListenerOpinion
Date Created: 2023-08-07 03:41:28.043284+00
Date Added: 2024-06-11T13:26:53.956895
License: Public Domain

SUMMERS, Justice:
May judicial proceedings in the district court be used to force a judgment debtor to pay money to the plaintiff creditor where the defendant debtor’s sole source of income is social security and disability benefits? The question has not been presented before to this Court. Upon review of the applicable federal statute and cases from other jurisdictions we answer in the negative.
The First National Bank of Ada agreed to loan Arles money for an automobile. When Arles failed to make the payments required by the terms of the loan the Bank *539obtained judgment against him. Arles failed to satisfy the judgment and the court ordered him to appear for a hearing on assets. He appeared and agreed to make payments in the amount of sixty ($60.00) dollars per month. He again failed to make payments, and the Bank filed a contempt action. Upon hearing, the court determined that Arles received social security and disability benefits in the amount of four hundred dollars ($400.00) a month. As to other possible sources of income, the attorney for the Bank made statements implying that Arles had worked for some four months during 1979, but there is no evidence to support these suggestions. The only evidence in the record is that Arles was unemployed and had no income other than the benefits received from Social Security and disability. The trial court found that Arles had wilfully failed to make the required payments, deferred judgment and sentence, and modified the amount of the required payments to fifty ($50.00) dollars per month.
Arles appealed. The Court of Appeals affirmed by unpublished opinion. We have granted certiorari to review the proposition of first instance here.
Before addressing the substance of this case, we first must inquire into our own jurisdiction to resolve the matter. Although the order complained of found that Arles was guilty of contempt, sentence was deferred for six months. A court minute in the record indicates that the parties were concerned about the appealability of such an order. The trial court offered to accelerate the deferred sentence to assure its finality. However, the record does not show such was done.
A deferred sentence in a criminal proceeding is not final order; the district court retains jurisdiction until judgment and sentence is entered pursuant an application to accelerate. Nguyen v. State, 772 P.2d 401, 403 (Okla.Crim.App.1989); 22 O.S.1981 § 991c. We recognize that an indirect contempt action is civil in nature and not governed by the criminal law, Browning v. Ray, 440 P.2d 721, 725 (Okla. 1968). However, the proceedings appear analogous in considering the appealability of an order. An order in contempt proceeding is thus not appealable until the judgment and sentence become final. See Hampton v. Hampton, 609 P.2d 772 (Okla. 1980). The finding that this was not an appealable order, however, does not necessarily preclude that its substance be reviewed. We customarily look to the content and substance of an instrument filed in this court rather than its form or title, Horizon’s, Inc. v. KEO Leasing Co., 681 P.2d 757 (Okl.1984), and sometimes treat a paper entitled “Application to Assume Original Jurisdiction” as a Petition in Error, or vice versa. Amarex, Inc. v. Baker, 655 P.2d 1040 (Okl.1983).
Here, the relief sought by Arles is a ruling by this Court to prohibit the enforcement of the trial judge’s order. We do not treat the matter as an appeal (in which case it would be premature), but rather look to its substance, and recast it as an original proceeding asking for a writ of prohibition. We now turn to the substantive issue raised by Arles to determine whether the writ shall issue.
Before us the bank urges the correctness of the trial court’s ruling. Arles argues that under the federal statute and case law from other jurisdictions, his social security and disability benefits are not subject to the “legal processes” of the state. In support of his argument, he cites as controlling 42 U.S.C. § 407(a) and Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973).
Federal law at 42 U.S.C. § 407(a) specifically exempts social security benefits from certain types of creditor remedies:1
The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or *540other legal process, or to the operation of any bankruptcy or insolvency law. (emphasis ours)
The purpose of the statute is to “preclude beneficiaries from diverting their social security payments away from the statute’s seminal goal of furnishing financial, medical, rehabilitative and other services to needy individuals.” Dept. of Health v. Davis, 616 F.2d 828, 831 (5th Cir.1980).
In Philpott v. Essex County Welfare Board, supra, the United States Supreme Court addressed Section 407(a) and its restrictions. There, an individual named Wilkes applied for assistance with the Essex County Welfare Board. As a condition to receiving benefits the Board required Wilkes to sign a reimbursement agreement. The agreement had the effect of a judgment, and allowed the Board to obtain reimbursement from property acquired subsequently. Wilkes received benefits from Essex County, and was soon awarded retroactive disability benefits under the Social Security Act. Wilkes refused to repay the money he had received from Essex County, so the Board sued to reach the bank account in which Wilkes had deposited his benefit check. The Supreme Court held that Section 407(a) prevented the Board from reaching these funds because Section 407(a) “imposes a broad bar against the use of any legal process to reach all Social Security benefits.” Id., at 417, 93 S.Ct. at 592. (Emphasis ours) In making this ruling, the Court explained that the state of New Jersey was not a “preferred creditor” as compared to any other judgment creditor. See also Bennett v. Arkansas, 485 U.S. 395, 108 S.Ct. 1204, 99 L.Ed.2d 455 (1988).
In interpreting the rule of Philpott, courts have arrived at varying conclusions. The court in Household Corp. v. Chase Manhattan Bank, 91 Misc.2d 141, 397 N.Y.S.2d 564 (N.Y.1977) held that “creditors cannot recover the proceeds of social security payments from a savings or checking account where they have been placed by a judgment debtor.” In State Central Collection Unit v. Stewart, 292 Md. 255, 438 A.2d 1311 (1981), the state sought reimbursement for medical care given by the state. The court allowed the state a judgment against only that money which was “non-exempt”; the state was not allowed a judgment against social security benefits.
Reaching a contrary result, the court in Russo v. Russo, 1 Conn.App. 604, 474 A.2d 473, 477 (1984), a case relied on by Bank in its brief, ruled that “nothing in [Section 407(a)] prevents the use of the funds, when received, to pay loans or debts for which the beneficiary is obligated where the agreement to repay does not delineate the source of the repayment.” See also Tidwell v. Schweiker, 677 F.2d 560, 568 (7th Cir.1982), cert. denied, 461 U.S. 905, 103 S.Ct. 1874, 76 L.Ed.2d 806 (1983). Apparently the court found to be determinative the fact that no source was delineated in the agreement. The court there allowed the judgment to be enforced against the defendant’s social security benefits, even though this was his only source of income.
The flaw with Russo and Tidwell becomes evident when these cases are examined in light of Philpott. In Philpott no source was designated for repayment in the agreement between Essex County and Wilkes, yet the Supreme Court held that Section 407 barred “legal process” to reach the benefits. Thus, whether a source is delineated by the agreement was not relevant to the High Court; the essential inquiry was whether the funds from which repayment is sought were social security benefits. Hence, the fact that the “agreement” between Arles and the court did not specify the source of the funds is immaterial. Philpott, Id.
In the present case, Arles’ only income was the social security and disability benefits. Arles stated that he was unemployed. Specifically, the record states as follows:
Q: Mr. Arles, are you employed?
A: No, sir.
Q: Where do you get your income?
A: Disability.
Q: Okay. What kind of disability is that?
A: Social Security, SSI and Welfare.
*541Q: How much money do you receive from SSI and Welfare?
A: $336.00 on Social and $64.00 on Welfare.
Q: Do you have any other source of income besides those?
A: No.
Tr. at 3, 4. It was these benefits which, according to the trial court’s order, had to be used for repayment to the Bank.2 The record does not reflect any supplemental income as suggested by the dissent. The only evidence presented on this point was that the benefits were Arles’ sole source of income.
As to whether the proceedings before us amount to “legal process,” Section 407(a) does not limit its restrictions to those types of process specifically listed, but instead forbids use of all “other legal process.” “Legal process” has been defined as proceedings begun by writ, warrant, summons, or order, or all those proceedings which invoke the aid of judicial process or decree. See Palmer v. First Nat’l Bank of Kingman, 10 Kan.App.2d 84, 692 P.2d 386, 391 (1984); Perry v. Lorillard Fire Ins. Co., 6 Lans. 201, 204 (N.Y.Sup.Ct.1871). It has also been defined as the means or procedure whereby a court compels compliance with its demands. McCollum v. Superior Court, 121 Ariz. 119, 588 P.2d 861, 862 (App.1978); Cutler v. Cutler, 28 Misc.2d 526, 217 N.Y.S.2d 185, 188 (N.Y.App.Div.1961).
In the context of Section 407(a), “legal process” has been interpreted in its broadest sense. For example, in Moore v. Colautti, 483 F.Supp. 357, 369-70 (E.D.Pa. 1979), aff'd mem., 633 F.2d 210 (3d Cir. 1980), the circumstances surrounding the collection practices constituted “legal process” even though no judicial action was' involved. The collection department left the impression with benefit recipients that legal sanction would be had if repayment was not made. The court held that the term “legal process” encompassed “implied or express threats of formal sanctions, as well as the sanctions themselves or formal legal machinery.” Id. at 358.3
The use of the courts to enforce an agreement between two parties is “legal process.” In that respect it is no different from a suit brought to compel enforcement of a contract, or to recover damages for failure to perform under a contract. Arles was forced into court in order to avoid the threat of a judicial sanction in the form of a contempt citation. The contempt action was the procedure by which the court was attempting, through legal channels, to obtain jurisdiction over Arles and force repayment of a contractual debt. As such, it is a “legal process” forbidden by Section 407(a). Although the dissent argues that the trial court’s action in holding Arles in contempt for failure to pay is not “legal process,” we see no way that a court ordered appearance resulting in his being held in contempt for failure to repay a loan can be anything but legal process. The court thus threatened to use unauthorized judicial force to coerce Arles to satisfy his debt from federally exempted funds.
We find 42 U.S.C. § 407(a) and its interpretation as per Philpott to be controlling. Because Arles had no source of income other than the social security and disability benefits, we find that the trial court erred by ordering satisfaction of the judgment by installment payments of $50 per month. The opinion of the Court of Appeals is vacated. The Writ of Prohibition is granted prohibiting the enforcement of the order of the Trial Court.
OPALA, C.J., HODGES, V.C.J., and LAVENDER and KAUGER, JJ., concur.
*542SIMMS, J., concurs in part; dissents in part.
DOOLIN, HARGRAVE and ALMA WILSON, JJ., dissent.

. The language of this section appears as well in the Oklahoma Social Security Act at 56 Okl.Stat. 1981 § 173. It also exempts state disability benefits paid pursuant to 56 Okl.Stat.1981 § 164.

. The dissent suggests that Arles had other "potential” sources of income, and thus Section 407(a) is inapplicable. The flaw with this argument is that regardless of "potential” income, Arles’ sole source of income was Social Security and disability benefits. Philpott and Section 407 deal with present income.

. In Wyatt v. Dept. of Public Welfare, 75 Pa. Cmwlth. 347, 463 A.2d 64, 67 (1982), the court upheld the collection process of the Department of Public Welfare because the caseworker merely demanded repayment, but did not coerce or threaten legal action. See also Tunnicliff v. Dept. of Public Welfare, 483 Pa. 275, 396 A.2d 1168, 1171 (1979).