Accounts Management, Inc. v. Williams

• Decision Date: 09 September 1991
• Docket Number: No. 17370,17370
• Citation: 484 N.W.2d 297
• Parties: ACCOUNTS MANAGEMENT, INC., Plaintiff and Appellee, v. Bill A. WILLIAMS, Defendant and Appellant, v. JOHN MORRELL AND CO., Garnishee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 297

484 N.W.2d 297

ACCOUNTS MANAGEMENT, INC., Plaintiff and Appellee, v. Bill A. WILLIAMS, Defendant and Appellant, v. JOHN MORRELL AND CO., Garnishee.

No. 17370.

Supreme Court of South Dakota.

Considered on Briefs Sept. 9, 1991.

Decided April 15, 1992.

Mark Moreno of Schmidt, Schroyer, Colwill & Moreno, Pierre, for plaintiff and appellee.

Matthew R. Metzger of East River Legal Services, Sioux Falls, for defendant and appellant.

HENDERSON, Justice.

PROCEDURAL HISTORY

This is an appeal from an Order dated October 1, 1990, of the Fifth Judicial Circuit, Minnehaha County, the Honorable Judge Richard D. Hurd presiding. This Order denied Appellant Williams' (hereinafter Williams) Amended Answer and Claim of Exemptions and sustained Appellee Account Management's (hereinafter Garnishor) Objection to the Claim of Exemptions. All litigation/appeal flows from an attempt to collect a medical bill.

Williams filed a Notice of Appeal with the Clerk of Courts for Minnehaha County on November 30, 1990. Jurisdiction is invoked pursuant to SDCL 15-26A-3(5).

ISSUES/HOLDING

On appeal, Williams raises the following issues, which are divided into three parts for purposes of our decision:

I. That SDCL 43-45-14 and SDCL 21-18-53 violate Article VI, Section 18 of the South Dakota Constitution.

II. That SDCL 43-45-14 and SDCL 21-18-53 violate Article XXI, Section 4 of the South Dakota Constitution.

III. That House Bill 1344 (1990 S.D. Sess. Laws, Ch. 157) violates Article III, Section 21 of the South Dakota Constitution. We deny these constitutional challenges and affirm on all issues.

FACTS

This action was brought by Garnishor, seeking garnishment of Williams' wages and salary while he was an employee of John Morrell and Company. Garnishor commenced this action on September 26, 1989, seeking to collect $4,643.11 owed to McKennan Hospital for medical services. In the principal lawsuit, garnishor served Williams with a Summons and Complaint which Williams failed to answer. A Default Judgment was entered against him on November 7, 1989, in the amount of $4,703.61. Garnishor commenced garnishment proceedings (the ancillary proceeding) after Service of Notice of Entry of the Judgment and issuance of Execution of same. In response, Williams filed an Answer and Claim of Exemptions. In this document, Williams asserted that he was head of a household and that all his personal property, not absolutely exempt by law, totaled $691.30 in value, which included $67.80 of his weekly earnings. The trial court later allowed Williams to file an Amended Answer and Claim of Exemptions claiming that SDCL 43-45-14 and SDCL 21-18-53, derived from House Bill 1344 (1990 S.D. Sess. Laws Ch. 157) of the 1990 Legislative session, were unconstitutional. Garnishor replied by filing an Objection to Williams' Claim of Exemptions. Trial court denied Williams' Claim of Exemptions and sustained Garnishor's objection to Williams' Claim of Exemptions. From this ruling, Williams appeals.

Because of the effect of SDCL 43-45-14 and SDCL 21-18-53, Williams may not claim earnings as additional personal property exemptions by the fact that Williams is a wage earner. Non-wage earners, who are a head of a household and have personal property of substantial value, can receive the entire $4,000 personal property exemption.

DECISION

I. Do SDCL 43-45-14 and SDCL 21-18-53 violate Article VI, Section 18 of the South Dakota Constitution? We hold that they do not.

We briefly review the history of SDCL 43-45-14 and SDCL 21-18-53. In 1986, the South Dakota Legislature passed House Bill 1347 (1986 S.D. Sess. Law, ch. 361), thereby amending an earlier version of SDCL 43-45-4. This amendment provided:

In addition to the property provided for in Sec. 43-45-2 and 43-45-3, the debtor, if the head of a family, may, by himself, his agent or attorney, select from all other of his personal property, not absolutely exempt, goods, chattels, merchandise, money, or other personal property not to exceed in the aggregate four thousand dollars in value; and, if a single person, not the head of a family, property as aforesaid of the value of two thousand dollars, which is also exempt and which shall be chosen and appraised as provided by law. For the purpose of wage garnishment and state tax debt, the debtor may, if the head of a family, exempt fifteen hundred dollars of money or property, or, if a single person, exempt six hundred dollars of money or property.

This amendment raised the amount of the personal property exemption from fifteen hundred dollars to four thousand dollars for debtors who are head of a family; and, additionally, from six hundred dollars to two thousand dollars for single person debtors. This amendment also limited the property exemptions for "head of family" debtors to fifteen hundred dollars and for single person debtors to six hundred dollars in wage garnishment and tax debt matters.

However, in the 1990 legislative session, SDCL 43-45-4 was again amended, whereupon the reference to wage garnishments in the 1986 amendment to SDCL 43-45-4 was deleted. In addition, House Bill 1344 added a new section to SDCL ch. 21-18 and ch. 43-45 at subsections 53 and 14, respectively. This new section provides:

The earnings of a debtor are exempt from process or levy only to the extent provided in Sec. 21-18-51 and 21-18-52.

1990 S.D. Sess. Laws, ch. 157 Sec. 5 and 9. Therefore, this bill restricted debtors to exempt their earnings only to the extent provided in Sec. 21-18-51 and Sec. 21-18-52.

We reiterate the well-known principles of review by which this Court is bound in considering the constitutionality of any act of the Legislature. Any legislative act is accorded a presumption in favor of constitutionality and that presumption is not overcome until the unconstitutionality of the act is clearly and unmistakably shown and there is no reasonable doubt that it violates fundamental constitutional principles. See, In re Request for Opinion of Supreme Court, 379 N.W.2d 822, 825 (S.D.1985); McMacken v. State, 320 N.W.2d 131, 133 (S.D.1982); South Dakota Ass'n. etc. v. State, 280 N.W.2d 662, 664-65 (S.D.1979). The constitutional question which we first consider is whether Article VI, Sec. 18 of the South Dakota Constitution prohibits the provisions of SDCL 43-45-14 and SDCL 21-18-53.

Since Williams challenges the constitutionality of SDCL 43-45-14 and 21-18-53, he bears the burden of proof that they violate a state constitutional provision. McMacken, 320 N.W.2d at 133.

Williams contends that SDCL 43-45-14 and SDCL 21-18-53 in their present form and as applied to him, unconstitutionally discriminate between debtors who have earnings and those who do not, in violation of Article VI, Sec. 18 of the South Dakota Constitution. This section declares that "[N]o law shall be passed granting to any citizen, class of citizens or corporations, privileges or immunities which upon the same terms shall not equally belong to all citizens or corporations."

In determining whether these statutes comport with Article VI, Sec. 18 of the South Dakota Constitution, we employ a two part test which has been traditionally used by this Court when a statute has been called into question because of an alleged denial of equal protection of the laws. The test that we espoused in City of Aberdeen v. Meidinger, 89 S.D. 412, 233 N.W.2d 331, 333 (1975) is as follows:

The first part of the test is whether the statute does set up arbitrary classifications among various persons subject to it.

The second part of the test is whether there is a rational relationship between the classification and some legitimate legislative purpose.

See, South Dakota Physicians Health Group v. State, 447 N.W.2d 511, 515 (S.D.1989); Lyons v. Lederle, 440 N.W.2d 769, 771 (S.D.1989); Sedlacek v. S.D. Teener Baseball Program, 437 N.W.2d 866, 869 (S.D.1989). Therefore, we view this classification in the light of the traditional test of reasonableness as opposed to strict scrutiny, there being no fundamental right or suspect classification present.

Applying the first prong, we look to see if the statute applies equally to all people. Lyons, 440 N.W.2d at 771. It is apparent that SDCL 43-45-14 and SDCL 21-18-53 do set up classes of debtors for garnishment exemption purposes. SDCL 43-45-14 and 21-18-53 do not apply equally to all debtors on their face. However, the fact that the state has distinguished between debtors in such a manner does not render the classification unreasonable or arbitrary. A statute will not be declared invalid "unless it is 'patently arbitrary' and bears no rational relationship to a legitimate governmental interest." South Dakota Physicians Health Group v. State, 447 N.W.2d 511, 515 (S.D.1989) (quoting Frontiero v. Richardson, 411 U.S. 677, 684, 93 S.Ct. 1764, 1768, 36 L.Ed.2d 583, 589 (1973)). Arbitrary is defined as follows: "In an unreasonable manner as fixed or done capriciously or at pleasure. Without adequate determining principle." Black's Law Dictionary, (6th Ed.1990).

We do not find this classification of debtors to be patently arbitrary nor unreasonable. The two classes of debtors are not economically postured in the same stance. Article VI, Sec. 18 provides, in part, that "[N]o law shall be passed granting ... privileges or immunities, which upon the same terms shall not equally belong to all citizens...." (Emphasis supplied). This constitutional provision prohibits classification between individuals that are "upon the same terms,"; it does not prohibit the Legislature from making classifications based upon differences in "terms" surrounding individuals. In other words, there may be disparate treatment between different classes of individuals, subject, however, to express constitutional classifications, though there can be no discrimination between the members of one class. See, Barnett v. Siewert, 64 S.D. 507, 511, 268 N.W. 425, 427 (1936); see generally, Roden v. Solem, 411 N.W.2d 421 (S.D...