W & D ACQUISITION, LLC v. First Union National Bank

• Court: Connecticut Supreme Court
• Writing for the Court: BORDEN, J.
• Citation: W & D ACQUISITION, LLC v. First Union National Bank, 262 Conn. 704, 817 A.2d 91 (Conn. 2003)
• Decision Date: 18 March 2003
• Docket Number: (SC 16657)
• Parties: W & D ACQUISITION, LLC v. FIRST UNION NATIONAL BANK

262 Conn. 704

817 A.2d 91

W & D ACQUISITION, LLC v. FIRST UNION NATIONAL BANK

(SC 16657)

Supreme Court of Connecticut

Argued October 22, 2002

Officially released March 18, 2003

Borden, Norcott, Katz, Palmer and Zarella, Js.

Bruce L. Elstein, with whom, on the brief, was Henry Elstein, for the appellant (plaintiff).

Edward P. McCreery III, with whom was Peter S. Olson, for the appellee (defendant).

Opinion

BORDEN, J.

The dispositive issue in this appeal¹ is whether, as a matter of law, a banking institution has until the "midnight deadline" described in General Statutes § 42a-4-104 (a) (10)² to comply with garnishment process under General Statutes § 42a-4-303 (a).³ The plaintiff, W & D Acquisition, LLC, claims that the duration of the "reasonable time" period in which to comply with garnishment process pursuant to § 42a-4-303 (a) is not defined by the midnight deadline, but is to be measured by a "reasonable time," considering the facts of the case.⁴ We agree with the plaintiff and, accordingly, we reverse the judgment of the trial court to the contrary.

The plaintiff brought this writ of scire facias alleging that the defendant, First Union National Bank, had failed to secure garnished funds held in the accounts of one of its customers, R.K.E. Associates (R.K.E.), which was a defendant in the underlying action. The defendant moved for summary judgment, arguing that it was not obligated to secure the garnished funds until its midnight deadline,⁵ at which time only a nominal sum remained in the accounts subject to garnishment. The trial court ruled that, as a matter of law, a banking institution has until that time to secure garnished funds. Accordingly, the court granted the defendant's motion for summary judgment, except as to the nominal sum that remained in the accounts at the midnight deadline, as to which the court rendered judgment for the plaintiff. This appeal followed. The parties presented the following undisputed facts on the motion for summary judgment. The plaintiff is a construction materials supplier that brought an action against R.K.E., a building contractor, for breach of a provisional credit contract. In that action, the plaintiff alleged that it had supplied R.K.E. with $45,436.40 worth of construction materials on credit and that R.K.E. had failed to pay any of that balance. After demonstrating to the trial court that there was probable cause to believe that a judgment would enter in its favor, the plaintiff obtained an ex parte prejudgment garnishment order for up to $70,000 of the goods or estate of R.K.E. to secure the potential judgment. The defendant was one of four named garnishees, all of which were banking institutions where R.K.E. allegedly had deposited funds. At approximately noon⁶ on October 27, 1997, the plaintiff served a copy of the writ of garnishment and a copy of the complaint on the defendant at one of the defendant's branch locations in Danbury. At that time, R.K.E. held two accounts with the defendant, which are known here as account 1 and account 2. The balance in account 1 was $34,163.79, and it fluctuated with debits and credits throughout the ensuing hours. The balance in account 2 was $30.54, and it remained at that level throughout the entire relevant time period.

The defendant did not secure the money in either account when the garnishment papers were served. At 3:26 p.m. on that same day, an agent of R.K.E. entered the same Danbury branch location of the defendant and, by means of a counter withdrawal,⁷ withdrew $32,318.26 in cash from account 1, leaving a balance of approximately $1845. Additional credits and debits reduced the balance of account 1 to $200.39 at the close of business on October 27, and $30.43 at the close of business on October 28. At midnight on October 28, 1997, the midnight deadline following the garnishment,⁸ the balance of account 1 remained at $30.43.

The plaintiff then brought this writ of scire facias to recover funds that it alleged the defendant should have secured in response to the garnishment. The defendant moved for summary judgment on the basis that it was not obligated to secure the garnished funds until the midnight deadline. The trial court granted the motion, and rendered judgment for the plaintiff in the amount of $60.97, the sum that remained in R.K.E.'s accounts at the midnight deadline.

On appeal, the plaintiff claims that the trial court improperly determined that, as a matter of law, a banking institution has until the midnight deadline described in § 42a-4-104 (a) (10) to comply with garnishment process pursuant to § 42a-4-303 (a). Specifically, the plaintiff claims that General Statutes §§ 42a-4-303 (a) and 52-329⁹ require a bank to comply with garnishment process within a "reasonable time" period, the precise duration of which will vary from case to case, depending upon the factual circumstances. We agree with the plaintiff.

First, we set forth the standards of review applicable to the plaintiff's claim. "[T]he standard of review of a trial court's decision to grant a motion for summary judgment is well established. Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Elliott v. Waterbury, 245 Conn. 385, 391, 715 A.2d 27 (1998). Furthermore, the plaintiff's claim presents a question of statutory interpretation "over which our review is plenary. State v. Ehlers, 252 Conn. 579, 589, 750 A.2d 1079 (2000)." Waterbury v. Washington, 260 Conn. 506, 547, 800 A.2d 1102 (2002). "The process of statutory interpretation involves a reasoned search for the intention of the legislature. Frillici v. Westport, [231 Conn. 418, 431, 650 A.2d 557 (1994)]. In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply. In seeking to determine that meaning, we look to the words of the statute itself, to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter. . . . Bender v. Bender, [258 Conn. 733, 741, 785 A.2d 197 (2001)]. Thus, this process requires us to consider all relevant sources of the meaning of the language at issue, without having to cross any threshold or thresholds of ambiguity. Thus, we do not follow the plain meaning rule.

"In performing this task, we begin with a searching examination of the language of the statute, because that is the most important factor to be considered. In doing so, we attempt to determine its range of plausible meanings and, if possible, narrow that range to those that appear most plausible. We do not, however, end with the language. We recognize, further, that the purpose or purposes of the legislation, and the context of the language, broadly understood, are directly relevant to the meaning of the language of the statute.

"This does not mean, however, that we will not, in a given case, follow what may be regarded as the plain meaning of the language, namely, the meaning that, when the language is considered without reference to any extratextual sources of its meaning, appears to be the meaning and that appears to preclude any other likely meaning. In such a case, the more strongly the bare text supports such a meaning, the more persuasive the extratextual sources of meaning will have to be in order to yield a different meaning." (Emphasis in original; internal quotation marks omitted.) State v. Courchesne, 262 Conn. 537, 577-78, 816 A.2d 562 (2003).

The statutory provision primarily at issue in this appeal is § 42a-4-303 (a). We first turn to its language. The language of § 42a-4-303 (a) strongly suggests that the relevant time period is a reasonable time depending upon all of the relevant facts and circumstances, rather than a fixed period terminating on the bank's midnight deadline.

Section 42a-4-303 (a) provides that "[a]ny ... legal process served upon ... a payor bank comes too late to terminate, suspend, or modify the bank's right or duty to pay an item or to charge its customer's account for the item if the . . . legal process is received or served and a reasonable time for the bank to act thereon expires ... after the earliest of the following: (1) [t]he bank accepts ... the item; (2) the bank pays the item in cash . . . ." (Emphasis added.) In other words, under § 42a-4-303 (a), a banking institution is obligated to secure funds within a "reasonable time" after receiving garnishment process, a form of "legal process," to prevent distribution of those funds in response to an "item." The "item[s]" at issue in this case include a withdrawal slip¹⁰ tendered in exchange for $32,318.26 in cash as well as several checks drawn against account 1 in the hours that followed.¹¹

Section 42a-4-303 (a) expressly provides that a banking institution must act within a "reasonable time"; it does not expressly provide that a banking institution must act before its midnight deadline. We do not decide the meaning of "reasonable time," as used in § 42a-4-303 (a), in a vacuum. General Statutes § 42a-1-204¹² further defines "reasonable time" as used in § 42a-4-303 (a). Section 42a-1-204 (1) specifically provides that the standards that it contains apply to conduct governed by "this title . . . ." "[T]his title" is title 42a of the General Statutes, the Uniform Commercial Code. The requirement in § 42a-4-303 (a) that a bank act within a "reasonable time," is a provision of the ...