Citizens Nat. Bank of Grant County v. Harvey, 2--574A111

• Decision Date: 07 January 1976
• Docket Number: No. 2--574A111,2--574A111
• Citation: 167 Ind.App. 582,339 N.E.2d 604
• Court: Indiana Appellate Court
• Parties: CITIZENS NATIONAL BANK OF GRANT COUNTY, Appellant, v. Roy HARVEY and Delois Harvey, Appellees.

Page 604

339 N.E.2d 604

167 Ind.App. 582

CITIZENS NATIONAL BANK OF GRANT COUNTY, Appellant, v. Roy HARVEY and Delois Harvey, Appellees.

No. 2--574A111.

Court of Appeals of Indiana, Second District.

Jan. 7, 1976.

Frank J. Biddinger, John W. Campbell, Biddinger & Johnson, Marion, for appellant.

Arden W. Zobrosky, Marion, for appellees.

SULLIVAN, Judge.

In February, 1969, Appellees Roy and Delois Harvey (Harveys) entered into a retail installment sales security agreement with appellant Citizens National Bank of Grant County (Citizens) whereby Harveys agreed to pay Citizens $4,748.76 in thirty-six equal monthly payments. The Citizens' loan financed Harveys' newly purchased automobile. On September 10, 1971, Citizens filed a complaint alleging a breach of this contract by the Harveys. Citizens sought damages in the sum of $3,172.20. The Harveys were served with summons and copies of the complaint by mail and by copies left at their last known address, pursuant to Ind. Rules of Procedure, Trial Rule 4.1. The Harveys failed to respond, and default judgment was entered against them on October 5, 1971 for the full amount sought by Citizens plus costs. At no time in these proceedings have the Harveys challenged the validity of the default judgment.

On October 12, 1971, Citizens returned to the court with a Petition in Garnishment against the Harveys and their employers. Citizens, pursuant to TR. 69(E)(1) and (2), alleged in its petition that it owned a judgment against the Harveys, and that it had 'no cause to believe that a levy of execution against the defendants will satisfy said judgment.' However, it is undisputed that Citizens' petition failed to comply with TR. 69(E)(3) and (4) in that it did not provide for an order to appear to issue to the Harveys, or an order to appear or to answer interrogatories addressed to the Harveys' employers. The trial court nevertheless granted Citizens' petition on the same day that it was filed and ordered each of the Harveys' respective employers to withhold from the Harveys' weekly paychecks the maximum amount allowed under Ind.Ann.Stat. § 24--4.5--5--105 (Burns Code Ed.1974), until Citizens' judgment was paid in full.

The garnishment proceeded without apparent incident, $1,441.43 being withheld from the Ahrveys' wages and paid over to Citizens, from October of 1971 until March 20, 1973, when the Harveys' newly retained attorney filed a 'Motion to Set Aside Order in Garnishment and for Refund of Money.' We note, however, that Harveys filed their Petitions in Bankruptcy in the Federal District Court only five days previous, on March 15, 1973, and that they were discharged of all dischargeable debts on June 13, 1975. The Motion to Set Aside did not attack the judgment upon which the garnishment was premised but only the garnishment orders themselves. The Harveys' motion set forth two reasons why the garnishment orders should be set aside: (1) the orders were illegally entered because of Citizens' failure to fully comply with TR. 69(E); and (2) the orders were 'void and illegal for the reason that the Court did not have jurisdiction to enter the same.' After hearing oral argument on the Harveys' motion, the court sustained the motion on October 31, 1973, and ordered Citizens to return the $1,441.43 already collected under the garnishment orders. The ruling and order were based upon the court's 'finding that no notice was given defendants nor any hearing held on plaintiff's Petition in Garnishment and that the orders in garnishment were void.' Citizens timely filed its motion to correct errors, and now appeals from the denial of that motion.

Pursuant to this court's opinion of September 30, 1975, the parties have timely filed amended briefs. See Citizens National Bank of Grant County v. Harvey (1975), Ind.App., 334 N.E.2d 719.

Citizens has properly preserved and argued two issues: ¹

(1) Were Harveys guilty of laches so as to preclude relief from garnishment orders entered seventeen months previously?

(2) Did the filing of Harveys' Motion for Relief comport with the one year or 'reasonabe time' limitations of TR. 60?

We are limited in our review by the posture of the case as it was decided below and as it reaches us upon appeal. Therefore, while we are unable to state, as a matter of law, that the laches defense is applicable so as to require reinstatement of the garnishment orders to the extent of moneys heretofore garnished, neither are we permitted to affirm. Affirmance would presuppose that, as conclude below, the garnishment orders are void. The dilemma thus occasioned prompts us, therefore, to reverse and to remand the cause to the trial court for reconsideration of the Motion for Relief in the light of this opinion.

I

APPLICATION OF LACHES TO VOID OR VOIDABLE ORDERS

Citizens urges that the equitable doctrine of laches applies so as to bar relief from the garnishment orders. Citizens' argument calls into question the legal effect of the trial court's failure to strictly adhere to TR. 69(E) in issuing the garnishment orders. If disregard of TR. 69(E) procedure rendered the orders in garnishment 'void', our inquiry as to Citizens' laches argument would be indeed brief, because 'laches does not operate to preclude the opening or vacating of a void judgment, for the reason that no amount of acquiescence can make it valid.' State v. Lindsey (1952), 231 Ind. 126, 132, 106 N.E.2d 230, 232 (original emphasis); see also Slack v. Grigsby (1951), 229 Ind. 335, 97 N.E.2d 145; Misco Leasing, Inc. v. Vaughn (10th Cir. 1971), 450 F.2d 257; Taft v. Donellan Jerome, Inc. (7th Cir. 1969), 407 F.2d 807; Austin v. Smith (1962), 114 U.S.App.D.C. 97, 312 F.2d 337; 7 Moore's Federal Practice 60.25(4), p. 315 (2d Ed. 1975); 11 Wright & Miller, Federal Practice and Procedure: Civil § 2862, p. 197--198 (1973); Annot., 154 A.L.R. 818, 827. On the other hand, if the procedural irregularities surrounding the issuance of the garnishment orders rendered the orders merely voidable or erroneous, we must inquire into the substance of Citizens' laches contention to determine if the facts of this case warrant discretionary application of the doctrine.

(A) THE ORDERS IN GARNISHMENT WERE NOT VOID

Harveys asserted in their TR. 60(B) motion that the orders in garnishment were 'void' within the meaning of TR. 60(B)(6) because, since Harveys were not notified of the garnishment proceedings pursant to TR. 69(E), the trial court had no jurisdiction over their persons. Harveys further argued that the garnishment orders were void for want of jurisdiction over the subject matter of this case because the TR. 69(E) procedures were not followed. Neither of these theories are acceptable since the trial court's jurisdiction over the persons of the Harveys and of the subject matter did not depend upon the court's following the procedures outlined in TR. 69(E).

The Harveys are of course correct in their assertion that the proper procedures prescribed by TR. 69(E) were not followed before the garnishment orders were issued. But, while this improper procedure no doubt made the orders erroneous or voidable, it is an altogether different thing to say that the impropriety rendered the orders 'void'. This court has stated:

'While (the judgment) may be erroneous, it is only void if the court which rendered it lacked jurisdiction of the subject matter or of the parties. City of Huntington v. Northern Indiana Power Co., (1937), 211 Ind. 502, 5 N.E.2d 889. Failure to follow statutory requirements of procedures when the court has jursdiction of the subject matter and the parties is not void, but only voidable. Smith v. Hess, (1884), 91 Ind. 424.' Krick v. Farmers & Merchants Bank of Boswell (1972), Ind.App., 279 N.E.2d 254, 260--261. (Emphasis supplied)

See also Brindle v. Anglin (1973), Ind.App., 295 N.E.2d 860; 4 Harvey & Townsend, Indiana Practice: Rules of Procedure Annot., Civil Code Study Commission Comments, pp. 200--201; 4 Harvey & Townsend, supra, § 60.16, p. 215. Thus, only if the trial court's jurisdiction over the Harveys' persons was dependent on their receipt of the notice required by TR. 69(E) are the orders in garnishment 'void' for want of personal jurisdiction.

The trial court's jurisdiction over the Harveys' persons did not depend on their receipt of the notice required by TR. 69(E). The trial court had jurisdiction over their persons as a result of the notice to them by summons preceding the original default judgment. This jurisdiction continued throughout the proceedings supplemental. As was stated by this court in Myers v. Hoover (1973), Ind.App., 300 N.E.2d 110, 113:

'Given the terms of Trial Rule 69(E) and the procedure thereunder, we are compelled to the conclusion that in adopting the new rule, our Supreme Court intended that proceedings supplemental to execution no longer be considered new and independent civil actions. Rather, they appear to be a mere continuation of the original cause.'

This view of the continuing nature of proceedings supplemental under TR. 69 is consistent with Civil Code Study Commission's Comments on TR. 69(E), which read in part:

'Rule 69(e) retains the basic statutes upon the subject but introduces simpler pleadings and procedure. However, this rule makes some significant changes. For one thing, the court rendering judgment retains venue or jurisdiction over proceedings supplemental, contrary to prior law which fixed venue at the defendant's residence. Relief is allowed by motion, and the order to appear in proceedings supplemental is granted ex parte without hearing, thus clarifying present procedures. Necessarily, this means that the remedy is merely a continuation of the original action both in name and in cause number. This rule proceeds upon the assumption that the judgment defendant is under a duty to pay the plaintiff or inform him of assets subject to execution if the defendant insists that the plaintiff must pursue this route.' (Emphasis supplied) 4...