Enright v. Lehmann, A06-347.
| Decision Date | 19 July 2007 |
| Docket Number | No. A06-347.,A06-347. |
| Citation | 735 N.W.2d 326 |
| Parties | Ronald ENRIGHT, as attorney-in-fact for S.E., et al., Respondents, v. Robert H. LEHMANN, Appellant, Lehmann Engineering, Inc., Defendant. |
| Court | Minnesota Supreme Court |
Carol S. Cooper, C.S. Cooper Law Firm, Ltd., Farmington, MN, for Appellant.
Robert J. Bruno, Robert J. Bruno, Ltd., Burnsville, MN, for Respondent.
Associated Bank, Burnsville, MN, for Associated Bank.
Eric J. Magnuson, Diane B. Bratvold, Minneapolis, MN, for Amicus Probate and Trust Section of MSBA.
Heard, considered, and decided by the court en banc.
Appellant challenges the garnishment of funds deposited by his wife in their joint bank account to satisfy a judgment entered against him. The district court and court of appeals, relying on Park Enterprises v. Trach, 233 Minn. 467, 47 N.W.2d 194 (1951), held that all funds in a joint account, regardless of the identity of the contributor, may be garnished to satisfy the debt of any account holder. We reverse and hold that the plain language of the Multi-Party Accounts Act, Minn.Stat. § 524.6-203(a) (2006), prevents a creditor from garnishing funds in a joint account not contributed by the debtor unless the creditor proves by clear and convincing evidence that the depositing party intended to confer ownership of the funds on the debtor.
In 1999, appellant Robert H. Lehmann, d/b/a Lehmann Engineering, Inc., entered into a lease for commercial property with respondents S.E. and Marlys Enright, d/b/a Pride-One Co. ("Enright"). In 2005, Enright sued both Lehmann and the engineering corporation for rents due. Lehmann served a pro se answer denying liability on the grounds that the corporation, not Lehmann, was party to the lease. The corporation did not answer. Enright obtained a default judgment against the corporation and continued the litigation against Lehmann individually. Enright served discovery on both the corporation and Lehmann, but neither answered Enright's discovery requests or a later district court order compelling responses. Lehmann also did not file his answer with the court. Ultimately, the court struck Lehmann's answer, granted a default judgment against him for rent due and attorney fees, and awarded judgment against him for attorney fees for his discovery violations. Lehmann has explained that illness prevented him from understanding or participating in the lawsuit, but the district court and court of appeals rejected this explanation. Enright v. Lehmann, 724 N.W.2d 546, 550-51 (Minn.App.2006).
To satisfy the judgments, Enright garnished two joint bank accounts held in the names of Lehmann and his wife, Zandra Lehmann. Lehmann asserts, and Enright agrees, that Zandra deposited all the money in the joint accounts. Lehmann claimed that the accounts could not be garnished because the funds in those accounts belonged to Zandra, and he moved for an order staying execution of the judgments, dissolving the garnishments, reinstating his answer, and allowing him to amend his answer to assert a counterclaim. The district court denied these motions. The court of appeals, relying on Park Enterprises, affirmed and held that Enright was subrogated to Lehmann's unlimited right of withdrawal of the funds in the joint accounts. Enright, 724 N.W.2d at 549.
In this appeal, Lehmann claims the funds at issue were not subject to garnishment because those funds were the property of his wife alone. At no time has Enright attempted to show that Zandra intended to confer ownership of the funds on her husband by placing them in the joint accounts; rather, Enright has taken the position that Zandra owns the funds but their location in the joint bank accounts renders them attachable by garnishment for Lehmann's debt.
As a threshold matter, Enright argues that Lehmann lacks standing to challenge the garnishment of the accounts. Although appellate review was neither requested nor granted on this issue, standing is essential to our exercise of jurisdiction. Annandale Advocate v. City of Annandale, 435 N.W.2d 24, 27 (Minn.1989). Standing is a legal requirement that a party have a sufficient stake in a justiciable controversy to seek relief from a court. Sierra Club v. Morton, 405 U.S. 727, 731-32, 92 S.Ct. 1361, 31 L.Ed.2d 636 (1972). Standing is acquired in two ways: either the plaintiff has suffered some "injury-in-fact" or the plaintiff is the beneficiary of some legislative enactment granting standing. Snyder's Drug Stores, Inc. v. Minn. State Bd. of Pharmacy, 301 Minn. 28, 31-32, 221 N.W.2d 162, 165 (1974). An injury-in-fact is a concrete and particularized invasion of a legally protected interest. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).
Enright argues that Lehmann lacks standing to challenge the garnishment because the funds belong to Lehmann's wife. This argument is without merit. According to the terms of the account contract, Lehmann possesses the power to withdraw and use the funds in the account regardless of the original source of the deposit. We conclude that, as an invasion of this interest, garnishment of the funds causes him an injury-in-fact and vests him with standing to challenge the garnishment.
Enright also argues that this case is moot because the bank paid the garnished funds to Enright's attorney, who — despite the fact that the funds were the subject of ongoing litigation — gave them to Enright rather than depositing them in his client trust account. An issue is moot if a court is unable to grant effectual relief. In re Schmidt, 443 N.W.2d 824, 826 (Minn.1989), Because we have the power to grant Lehmann relief by ordering Enright to repay any wrongfully garnished funds, this case is not moot.
Lehmann and amicus curiae Probate and Trust Law Section of the Minnesota State Bar Association argue that because the Multi-Party Accounts Act (MPAA) states that Lehmann does not own funds contributed by his wife to a joint account, those funds cannot be garnished to satisfy his debt. They also argue that by enacting the MPAA, the legislature abrogated Park Enterprises and any common law based on it. Enright responds that Park Enterprises is still good law and that the garnishment statute, Minn.Stat. § 571.73 (2006), grants him power to garnish the funds.
Construction of a statute on appeal is a legal question subject to de novo review. Lewis-Miller v. Ross, 710 N.W.2d 565, 568 (Minn.2006). "When the words of a law in their application to an existing situation are clear and free from all ambiguity, the letter of the law shall not be disregarded under the pretext of pursuing the spirit." Minn.Stat. § 645.16 (2006).
In 1973, the Minnesota legislature enacted the MPAA. Act of May 23, 1973, ch. 619, 1973 Minn. Laws 1472, 1472 (codified at Minn.Stat. § 528.01 (1974)). In 1994, the legislature renumbered the MPAA to make it part of the Probate Code, but did not alter its text. Act of Apr. 20, 1994, ch. 472, § 63, 1994 Minn. Laws 375, 415 (renumbering Minn.Stat. §§ 528.01-528.15 as Minn.Stat. §§ 524.6-201 to 524.6-214 (2006)).
Section 4 of the MPAA, titled "Ownership During Lifetime," provides that "[a] joint account1 belongs, during the lifetime of all parties, to the parties in proportion to the net contributions2 by each to the sums on deposit,3 unless there is clear and convincing evidence of a different intent." Minn.Stat. § 524.6-203(a). The preceding section provides that "[t]he provisions of sections 524.6-203 to 524.6-205 concerning beneficial ownership as between parties * * * are relevant only to controversies between these persons and their creditors and other successors, and have no bearing on the power of withdrawal of these persons as determined by the terms of account contracts." Minn.Stat. § 524.6-202 (2006).
The language of the MPAA is unambiguous. In a controversy between parties to a multi-party account and their creditors, funds in a joint account belong to the parties in proportion to their net contributions. A party's net contribution is the amount of money deposited by or for him, less withdrawals made by or for him. Therefore, we hold that where one party has contributed all the money in a joint account, a creditor cannot garnish the account to satisfy a debt belonging to a noncontributing party unless the creditor provides clear and convincing evidence that the depositor intended to confer ownership of the funds on the debtor.
Enright asserts that in enacting the MPAA the legislature must not have intended to abrogate Park Enterprises () because there is no mention in the statute of creditor rights except the statement that sections 6-203 to 6-205 are "relevant only to controversies between these persons and their creditors and other successors." Minn.Stat. § 524.6-202. Enright contends that this language is "opaque" because it is not clear how, exactly, the sections are "relevant." On the contrary, we find the MPAA quite clear: section 6-203 applies where a creditor attempts to reach funds in a joint account, while section 6-202 allows the account contract to define the parties' power of withdrawal.
Although our holding does not require us to look beyond the plain language of Minn.Stat. §§ 524.6-202 to -203, a brief review of the policy behind the enactment of the MPAA is illuminating. At common law, jurisdictions applied four different theories to determine ownership of funds in joint accounts: contract theory, gift theory, trust theory, and joint tenancy theory. Note, The "Poor Man's Will" Gains Respectability: Using the Minnesota Multi-Party Accounts Act, 1 Wm. Mitchell L.Rev. 48, 50 (1974). Although Minnesota generally applied gift theory, in which the intent of the depositor to make or not make an inter vivos gift determined ownership of funds in a joint account, "the...
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