Brosamer v. Mark
| Decision Date | 06 July 1989 |
| Docket Number | No. 27A02-8712-CV-511,27A02-8712-CV-511 |
| Parties | , 11 Employee Benefits Cas. 1365 Harold BROSAMER, Appellant (Defendant), v. Donald E. MARK and Cheryl A. Mark, Appellees (Plaintiffs), and Marion Independent Federal Credit Union, Appellee (Garnishment Defendant), and Bank One of Marion, Indiana, Appellee (Garnishment Defendant). |
| Court | Indiana Appellate Court |
Louis Rosenberg, UAW Legal Services Plan, Indianapolis, E. Dean Singleton, UAW-GM Legal Services Plan, Marion, for appellant.
Appellant-defendant Harold Brosamer (Brosamer) appeals from orders of the Grant County Court freezing and garnisheeing bank accounts consisting of Social Security retirement benefits and General Motors pension benefits, in order to satisfy a money judgment against him obtained by appellee-plaintiffs Donald and Cheryl Mark (the Marks), which accounts Brosamer claims are exempt under federal exemption statutes.
We reverse in part and affirm in part.
The facts reveal that the Marks obtained a judgment against Brosamer for unpaid rent in the amount of $718.00 plus costs on November 6, 1986. A proceeding supplemental hearing was held on September 24, 1987, at which time evidence was presented that Brosamer's only monthly income was from social security retirement benefits ($583.00), and General Motors pension benefits ($444.69). Brosamer averred he owned no real estate and no assets which were not exempt from execution.
On September 29, 1987, garnishment interrogatories were mailed to Marion Independent Federal Credit Union (Credit Union), where Brosamer had his General Motors pension benefits directly deposited, and Bank One of Marion, Indiana (Bank One), where his Social Security benefits were directly deposited. The interrogatories contained an order freezing each account. Orders garnisheeing each account were issued on November 9, 1987.
Brosamer raises two issues on appeal which we consolidate as follows:
Were the trial court's orders freezing and garnisheeing Brosamer's accounts containing the General Motors pension and Social Security benefits violations of federal exemption statutes?
PARTIES' CONTENTIONS--Brosamer claims that federal exemption statutes prohibit the freezing and garnishment of his social security and pension benefits, even after they have been paid to him.
The Marks have not favored us with an appellee's brief.
CONCLUSION--Brosamer's social security benefits are exempt from legal process, but his pension benefits are not similarly protected.
As the appellees have not filed a brief, Brosamer is only required to establish prima facie error to obtain reversal of the judgment. See Sharp v. Jones (1986), Ind.App., 497 N.E.2d 593.
We turn first to the Social Security benefits and conclude that the trial court erred in freezing and garnisheeing the account which contained Brosamer's social security benefits. This account was exempt from legal process. In Perkins v. Kocher (1988), Ind.App., 531 N.E.2d 231, this court decided this precise question.
Federal law provides that monies received under the Social Security Act are exempt from execution, levy, attachment, garnishment, or other legal process. 42 U.S.C. Sec. 407(a). In Perkins, we determined that the exemption applies even after the benefits are received by the debtor and placed in a bank account. Perkins, supra, at 233. Therefore, it was error for the trial court to freeze and garnish Brosamer's account at Bank One.
However, we must now conclude that Brosamer's pension benefits are not exempt from legal process. In Perkins, we determined that pension benefits in the pensioner's hands, which were received pursuant to a pension plan that was regulated by the Employee Retirement Income Security Act (ERISA) 1 were exempt from garnishment, attachment, or legal process. We now retreat 2 from that decision.
In Perkins, we analogized the pension benefits received from General Motors with those benefits received pursuant to the Railroad Retirement Act 3 and Social Security benefits, and concluded that the pension benefits should receive protection similar to that which had been extended to those benefits. After further analysis, it appears that pension benefits are more akin to benefits received pursuant to a spendthrift trust.
The court's analysis in In re Graham (8th Cir.1984), 726 F.2d 1268, is persuasive. There the court considered whether pension benefits governed by ERISA qualify as benefits exempted by federal law under a provision of the federal bankruptcy statutes and relied upon the legislative history of the bankruptcy statute provision, which included a list that illustrated the types of federal benefits Congress intended to be exempt by the bankruptcy statutory provision in question. The list included social security benefits, veterans benefits, and annuities and pensions received pursuant to the Railroad Retirement Act. The conclusion was that private pension benefits were not intended to be covered by the statutory provision in question:
Id. at 1274 (emphasis supplied).
In Shrader v. Maultz (1978), 58 Ill.App.3d 484, 16 Ill.Dec. 44, 374 N.E.2d 819, it was determined that pensions received pursuant to the Railroad Retirement Act were protected even after they were paid to their beneficiaries: Id. at 487, 16 Ill.Dec. at 46-47, 374 N.E.2d at 821-22. (Emphasis supplied).
An examination of relevant federal law is also instructive. The Social Security Act provides in part:
"(a) The right of any person to any future payment under [the Social Security Act] shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under [the Social Security Act] shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law."
The Railroad Retirement Act provides in part:
"[N]o annuity or supplemental annuity shall be assignable or be subject to any tax or to garnishment, attachment or other legal process under any circumstances whatsoever...."
45 U.S.C. Sec. 231m(a).
ERISA, however, provides that "[e]ach pension plan shall provide that benefits provided...
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