Barsco, Inc. v. H.W.W., Inc.

• Decision Date: 26 May 1977
• Docket Number: No. CC-146,CC-146
• Parties: BARSCO, INC., Appellant, v. H.W.W., INC., Appellee.
• Court: Florida District Court of Appeals

Page 134

346 So.2d 134

BARSCO, INC., Appellant, v. H.W.W., INC., Appellee.

No. CC-146.

District Court of Appeal of Florida, First District.

May 26, 1977.

Rehearing Denied June 8, 1977.

Judson Freeman, Jr., of Freeman, Richardson, Watson, Slade, McCarthy & Kelly, Jacksonville, for appellant.

Edward L. Kelly and Anderson M. Foote, Jr., of Ulmer, Murchison, Ashby & Ball, Jacksonville, for appellee.

ERVIN, Judge.

This is an appeal by Barsco from an order denying its motion for summary judgment against the garnishee bank. We treat the order as a final judgment for the purpose of review since the order effectively disposes of all justiciable issues. Briefly stated the issue before us is whether the garnishee bank, the holder of a note which has not matured but is otherwise in default at the time of the service of a writ of garnishment, may prevail over the judgment garnishor Barsco? We hold that it can and affirm.

On March 26, 1974, H.W.W., Inc., executed a promissory note in favor of Atlantic Bank of West Jacksonville in the amount of $29,958.60 maturing in 1979. The note provided that it would be payable in sixty monthly installments of $409.31 each. It was secured by an agreement covering restaurant equipment located at H.W.W., Inc.'s business. On September 18, 1974, final judgment was entered in favor of Barsco against defendant H.W.W., Inc. in the amount of $7,734.95 plus costs and attorney's fees. On September 9, 1975, garnishee bank was served with a writ of garnishment in the amount of $8,520.95 which sought any money or other personal property owed to or belonging to the defendant.

In a stipulation entered into between the parties, the bank admitted that at the time the writ was served upon it defendant had maintained accounts having credit balances in the aggregate amount of $11,881.17. The parties also agreed that prior to the service of the writ, defendant sold two cash registers named in the inventory attached to the security agreement without notifying the garnishee and that defendant failed to keep insurance on the collateral as required by the agreement. As a result thereof, the bank alleged in its answer that the defendant, prior to the service of the writ, was in default under the terms of the note and the bank was entitled to exercise its right of set-off against the deposit balance. It was finally agreed that the defendant was not in default in any of the monthly payments required by the note.

The note provided in part:

"The holder hereof shall have a right of off-set against the debtors as to any deposit account or other obligation to the debtors which right of off-set may be exercised after default without notice or other formality."

Barsco contends that the denial of its motion for summary judgment was in error because the note was not mature at the time of the service of the writ, therefore the garnishee was not entitled to exercise its right of set-off under the note to the prejudice of appellant. The precise legal issue has not been addressed by any Florida court. There is a division of authority of out-of-state cases as to whether a bank can prevail over the rights of a garnishor when a note is immature at the time of service of the writ of garnishment. One line of cases holds that even though a note may provide that the bank has the right to off-set the depositor's account without demand or notice, still the bank has the duty to take some affirmative action to accelerate when the note has not matured prior to the time of the service of the writ. See Annot., 106 A.L.R. 62 (1937), supplemented at 110 A.L.R. 1268 (1937). For cases approving the above rule, see First National Bank of Birmingham v. Minge, 186 Ala. 405, 64 So. 957 (1914); Schiff v. Schindler, 98...