First Bank of Whiting v. Samocki Bros. Trucking Co., 4-585

Docket NºNo. 4-585
Citation509 N.E.2d 187
Case DateJune 17, 1987
CourtCourt of Appeals of Indiana

Page 187

509 N.E.2d 187
The FIRST BANK OF WHITING, Appellant (Garnishee-Defendant Below),
v.
SAMOCKI BROTHERS TRUCKING COMPANY, Appellee (Plaintiff Below).
No. 4-585 A 131.
Court of Appeals of Indiana,
Fourth District.
June 17, 1987.
Rehearing Denied Aug. 6, 1987.

Page 189

Robert E. Stochel, John M. O'Drobinak, P.C., Crown Point, for appellant.

David K. Ranich, East Chicago, for appellee.

MILLER, Judge.

The First Bank of Whiting (Bank) brings this appeal from a trial court judgment in proceedings supplemental in favor of Samocki Brothers Trucking Co. (Samocki). The trial court had initially granted judgment for Samocki against Region Construction Co. (Region) and James Hough on a promissory note and personal guaranty. During the course of its efforts to collect the judgment, Samocki served an order to appear, notice of adverse claim, and interrogatories upon Bank, as Region's depository bank. Bank failed to appear at hearing, filed its interrogatories two and a half months after service, honored numerous Region checks despite the adverse claim notice, and set off the remaining balances of Region's accounts to pay off notes held by Bank. Bank finally appeared before the trial court in response to a second verified motion whereupon the court entered judgment against it in the sum of $27,551.70 for Samocki's judgment against Region and accrued interest. Bank argues judgment was inappropriate 1) because Samocki's order and notice only froze Region's accounts for 60 days and it failed to obtain a second appropriate order pursuant to Ind.Code 28-1-20-1.1(a)(4) when 60 days expired, and 2) because Bank had a prior and superior right to Region's accounts pursuant to a security interest therein securing payment of Region's promissory notes. After a careful review of the relevant authority, it is our belief the trial court's decision was correct, and we affirm.

ISSUES 1

Rephrased, Bank's issues on appeal are:

1. Whether the trial court's judgment is contrary to law because Samocki lost any

Page 190

claim to Region's bank accounts when it failed to comply with Indiana's adverse claim statute;

2. Whether the trial court's judgment is contrary to law because the Bank had rights in Region's bank accounts prior and superior to Samocki's judgment. 2

FACTS

In June, 1982, Samocki filed a complaint against Region and Hough to collect monies due and owing under the terms of a promissory note and personal guaranty. On April 18, 1983, the trial court entered judgment against Region and Hough pursuant to stipulation and agreement of the parties for the sum of $16,836.16 principal, $2,873.84 accrued interest, and $3,000.00 attorney's fees. The judgment remained unpaid despite Region and Hough's agreement to make installment payments thereon.

On May 9, 1984, Samocki instituted proceedings supplemental to collect the judgment by filing a verified motion and serving summons, an order to appear and interrogatories upon Bank as garnishee-defendant. The court's order set the matter for hearing on June 11, and contained the following warning to Bank:

"Garnishee defendant is advised by this Court that disobedience of this Order to answer Interrogatories and mail or deliver same within the specified time or to appear and answer to property and obligations of the judgment debtors and bring books and records may be punished as contempt. Judgment or Order may be entered against the garnishee defendant as by default with respect to property and obligations specified in plaintiff's Motion or established as now or hereafter to be held or owing by such garnishee unless such garnishee appear and defends. Garnishee defendant further is advised that any claim or defense it may have in response to this Order or plaintiff's Motion may be raised without written answer. Garnishee defendant is also informed by this Court that this Order

Page 191

may constitute a lien in favor of plaintiff upon any property now or hereafter held for judgment debtors or any obligation now or hereafter owing to judgment debtors by such garnishee, and nay [sic] disposition of such assets after receipt of this Order and contrary to the ultimate determination of this Court as to the existence and amount of such lien will be made at the garnishee's risk."

Record, pp. 43-44.

At the time Bank was served on May 9, Region had two demand accounts with Bank, Account Nos. 17-648-6 and 18-558-2. During the month of May, Region Account No. 17-648-6 showed a beginning balance of -$16,410.53 and reflected credits and deposits totalling $181,359.33. After May 9, Bank also honored 27 checks written on the account in the sum of $30,947.24. At the end of May, the account's balance was -$27,564.69 although the only other check paid was for $2,000.00. In June, that same account had deposits and credits of $112,695.69, no checks honored, and a concluding balance of -$24,038.13.

Account No. 18-558-2, on the other hand, began the month of May with -$14,712.32 followed by $88,000.00 in deposits and credits. During May, Bank honored 38 checks totalling $19,509.30, at least $2,567.91 of which were honored after service of Samocki's summons. The May ending balance was calculated at -$11,223.02. In June, Account No. 18-558-2 showed deposits and credits of $89,624.05 and, as with No. 17-648-6, no checks honored. Again, June ended with a negative balance of -$19,722.51. Although there is no direct testimony on the matter, there is evidence in the record that these negative balances were caused by Bank's direct application of the remainder of Region's deposits to debts owing to Bank and that any checks were paid by the accounts only with the express approval and at the direction of Bank. In summary, during the month of May when the garnishment order was in force, Bank honored over $30,000 worth of checks while taking in deposits and credits well over $250,000. Thus, there can be no doubt that the accounts had sufficient funds, despite the withdrawals, to cover Samocki's judgment but for Bank's exercise of an offset.

The trial court held the initial hearing as scheduled on June 11, but Bank neither appeared nor filed its answers to the interrogatories despite Samocki's counsel's efforts to contact Bank and its representatives the week before. After examination of Hough on assets available for execution, the court ordered the cause continued. Again, counsel attempted to get Bank to cooperate, this time by letter to Bank's attorney, to no avail. Finally, on July 17, more than 60 days after service, Bank filed its answers to interrogatories with the court.

The interrogatories, reputedly completed in May, 3 were answered under oath as follows:

"1. Do the defendants have any sums of money on deposit with you?

ANSWER: YES

* * *

* * *

4. What sums of money are held in each of the accounts on deposit with you?

ANSWER: # 17-648-6 $6,344.63--

# 18-558-2 $9,783.41--

5. To your knowledge, are there any other liens on these accounts?

ANSWER: NO."

Record, pp. 47-48.

On August 13, Samocki's counsel once more corresponded with Bank's counsel regarding the interrogatories and the status of Region's accounts in May and June. Counsel then made demand for Bank to pay the judgment due from Region pursuant to the proceedings supplemental. Counsel followed up with further correspondence on September 27, and upon Bank's failure to respond, filed a second

Page 192

Verified Motion to Enforce Judgment by Proceedings Supplemental to Execution on October 24, naming Bank as garnishee-defendant.

Hearing was held on November 8, at which time Bank appeared by counsel and Anthony Carollo, vice-president of loan administration. At that time, Bank's counsel declared Bank did not oppose Samocki's exhibits as filed with its second Verified Motion insofar as they represented the status of Region's accounts. Instead, Bank's defense rested upon Carollo's testimony with respect to Region's debts owing to Bank. In this regard, Bank introduced without objection copies of three notes executed by Hough, as president of Region, in favor of Bank.

All three were renewal notes but varied in terms and amounts. Number 97901, dated June 17, 1983, created a "draw" up to $330,000 and was due on demand with quarterly installment payments of the interest. The second note, chronologically, was No. 97900 dated December 1, 1983. It too was a demand note, this time for $380,000.00. The last note was No. 99200, categorized as "combined," in the sum of $259,814.99. This note was executed February 9, 1984 and was due June 8, 1984. Each of the three notes were also accompanied by an allonge setting forth the terms of all the interests securing the payment of the notes according to previously executed security agreements. Among the security listed--which covered the usual accounts receivable, proceeds, equipment, fixtures, etc.--was

"any deposit balances to the credit of the debtor on the books of the Bank and any personal property of the debtor in which the debtor may have an interest which is now or may at any time hereafter come into the possession of the Bank...."

Record, pp. 99, 101, 104. (There was no testimony whether these security agreements were properly perfected.) Each note further provided the following:

"The Bank may, without notice or demand of any kind, appropriate and apply toward the payment of such of the Liabilities (whether before or after any of the Liabilities shall become due and payable), and in such order of application as the Bank may from time to time elect, any balances, credits, deposits, accounts or moneys which constitute Collateral hereunder."

Id. Bank formally demanded payment for these notes on or about June 22, 1984.

During examination of Carollo, counsel for both parties elicited various bits of information regarding Region and Bank's relationship: At the time of the November 8 hearing, Region owed $795,000 principal and approximately $125,000 interest on all its outstanding indebtedness to...

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25 practice notes
  • Prime Mortgage Usa, Inc. v. Nichols, No. 49A04-0610-CV-586.
    • United States
    • April 23, 2008
    ...we are constrained to treat a trial court's judgment as being general only." First Bank of Whiting v. Samocki Bros. Trucking Co., 509 N.E.2d 187, 192 (Ind.Ct. App.1987), trans. denied. We will not disturb a trial court's judgment regarding a proceedings supplemental unless the record does n......
  • Matter of US Marketing Concepts, Inc., Bankruptcy No. 89-10202.
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
    • March 29, 1990
    ...881 (1892); Cooke v. Ross, 22 Ind. 157, 159 (1864); Radiotelephone, supra, 531 N.E.2d at 240; First Bank v. Samocki Bros. Trucking Co., 509 N.E.2d 187 (Ind. App.1987); Lakeshore, supra, 474 N.E.2d at 1026-1027; Union Bank & Trust, supra, 101 N.E.2d at 727. It is a specific lien upon identif......
  • In re Paeplow, Bankruptcy No. 82-30928-RKR
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
    • September 24, 1990
    ...reply at 11 (September 5, 1990) (citing Hubble v. Berry, 180 Ind. 513, 103 N.E. 328 (1913), First Bank v. Samocki Bros. Trucking Co., 509 N.E.2d 187 (Ind.App.1987), and Radiotelephone Co. of Indiana v. Ford, 531 N.E.2d 238 The defendants distinguish the court's decision in Gilbert due to th......
  • McKinney, Inc. v. Wyman Corp., 67102
    • United States
    • United States Court of Appeals (Ohio)
    • April 11, 1995
    ...to the depositor, and is inconsistent with claiming setoff. Id.; First Bank of Whiting v. Samocki Bros. Trucking Co. (Ind.App.1987), 509 N.E.2d 187, 199. There are circumstances, however, where honoring checks does not constitute a waiver. A waiver is defined as an intentional relinquishmen......
  • Request a trial to view additional results
25 cases
  • Prime Mortgage Usa, Inc. v. Nichols, No. 49A04-0610-CV-586.
    • United States
    • April 23, 2008
    ...we are constrained to treat a trial court's judgment as being general only." First Bank of Whiting v. Samocki Bros. Trucking Co., 509 N.E.2d 187, 192 (Ind.Ct. App.1987), trans. denied. We will not disturb a trial court's judgment regarding a proceedings supplemental unless the record does n......
  • Matter of US Marketing Concepts, Inc., Bankruptcy No. 89-10202.
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
    • March 29, 1990
    ...881 (1892); Cooke v. Ross, 22 Ind. 157, 159 (1864); Radiotelephone, supra, 531 N.E.2d at 240; First Bank v. Samocki Bros. Trucking Co., 509 N.E.2d 187 (Ind. App.1987); Lakeshore, supra, 474 N.E.2d at 1026-1027; Union Bank & Trust, supra, 101 N.E.2d at 727. It is a specific lien upon identif......
  • In re Paeplow, Bankruptcy No. 82-30928-RKR
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
    • September 24, 1990
    ...reply at 11 (September 5, 1990) (citing Hubble v. Berry, 180 Ind. 513, 103 N.E. 328 (1913), First Bank v. Samocki Bros. Trucking Co., 509 N.E.2d 187 (Ind.App.1987), and Radiotelephone Co. of Indiana v. Ford, 531 N.E.2d 238 The defendants distinguish the court's decision in Gilbert due to th......
  • McKinney, Inc. v. Wyman Corp., 67102
    • United States
    • United States Court of Appeals (Ohio)
    • April 11, 1995
    ...to the depositor, and is inconsistent with claiming setoff. Id.; First Bank of Whiting v. Samocki Bros. Trucking Co. (Ind.App.1987), 509 N.E.2d 187, 199. There are circumstances, however, where honoring checks does not constitute a waiver. A waiver is defined as an intentional relinquishmen......
  • Request a trial to view additional results

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