First Nat. Bank of Commerce v. Latiker

• Decision Date: 11 May 1983
• Docket Number: CA-0050,Nos. CA-0048,s. CA-0048
• Parties: FIRST NATIONAL BANK OF COMMERCE v. Lorenza LATIKER. The BANK OF NEW ORLEANS AND TRUST COMPANY v. Joseph CLAY. FIRST NATIONAL BANK OF COMMERCE v. Gary J. COOPER, et al. to
• Court: Court of Appeal of Louisiana — District of US

Page 293

432 So.2d 293

FIRST NATIONAL BANK OF COMMERCE v. Lorenza LATIKER.

The BANK OF NEW ORLEANS AND TRUST COMPANY v. Joseph CLAY.

FIRST NATIONAL BANK OF COMMERCE v. Gary J. COOPER, et al.

Nos. CA-0048 to CA-0050.

Court of Appeal of Louisiana Fourth Circuit.

May 11, 1983.

Mark C. Landry, Newman & Drolla, New Orleans, for plaintiff-appellant, First Nat. Bank of Commerce.

G. Edward Merritt, Jean Melancon, New Orleans, for garnishee-appellee, Trustees of the New Orleans S.S. Assn., Intern. Longshoremen's Assn., AF of L-C.I.O. Pension, Welfare, Vacation and Holiday Funds.

Before WARD, SCHOTT, and KLEES, JJ.

WARD, Judge.

In these consolidated suits, the Banks obtained judgments against the defendants who are longshoremen. After the judgments became final, the Banks filed garnishments against the Trustees of the N.O. Steamship Association, International Longshoremen's Association, AF of L-CIO, Pension, Welfare, Vacation and Holiday Funds. The Trustees are custodians of a fund established through payments which are deposited weekly by the various employers of longshoremen for the credit of longshoremen they employ. Disbursements from the funds are made to longshoremen in December of each year. The defendants, now judgment debtors, were eligible for payment benefits from the Vacation and Holiday Fund when the garnishment was served on the Trustees.

The Trial Judge held that the entire fund due to each defendant could be garnished, but that the funds are disposable earnings and that State and Federal statutes which exempt 75% of disposable earnings from seizure by garnishment also exempt 75% of these funds. We agree with the judgment of the Trial Judge and hold that these funds are disposable earnings and enjoy a 75% exemption from seizure by garnishment.

The Banks argue that the Trial Judge erred when he denied garnishment of the entire fund of each defendant. They claim that these funds are fringe benefits, not periodic payments of wages and, therefore, not subject to the exemptions of LSA-R.S. 13:3881 and 15 U.S.C. 1673 (1982), and primarily rest their argument on the case of Legier v. Legier, 357 So.2d 1203 (La.App. 4th Cir.1978). In that case, a plaintiff-wife sought to garnish this same trust fund to satisfy her husband's obligations under a child support judgment. In refusing to apply the statutory exemptions, the Court stated:

We find merit, however, to plaintiff's contention that the trial judge erred when he applied the statutory exemption to the funds held by the garnishees. LSA-R.S. 13:3881 provides that 75% of a debtor's "disposable earnings for any week " (emphasis ours) are exempt from garnishment. Significantly, the statute refers to earnings for any "week". The statute also refers to an employee's "pay period". We interpret, therefore, the exemption to apply to garnishment of weekly, biweekly or monthly earnings at the time they are paid to the employee. We conclude also the exemption does not apply to accumulated fringe benefits which have accrued prior to the garnishment. By analogy, we find support for this conclusion in Kokoszka v. Belford, 417 U.S. 642, 94 S.Ct. 2431, 41 L.Ed.2d 374 (1974), a bankruptcy case dealing with the Federal Consumer Credit Protection Act and its statutory 25% garnishment limitation of a debtor's disposable earnings. The United States Supreme Court, in affirming the Court of Appeals' holding that the exemption did not apply to the debtor's income tax refund, stated, supra, at page 2436,

"The Court of Appeals held that the terms 'earnings' and 'disposable earnings', as used in 15 U.S.C. 1672, 1673, did not include a tax refund, but were limited to 'periodic payments of compensation and [do] not pertain to every asset that is traceable in some way to such compensation.' 2 Cir., 479 F.2d at 997. This view is fully supported by the legislative history. There is every indication that Congress, in an effort to avoid the necessity of bankruptcy, sought to regulate garnishment in its usual sense as a levy on periodic payments of compensation needed to support the wage earner and his family on a week-to-week, month-to-month basis. * * * "

Similarly, in our case, though the husband's accrued fringe benefits like his income tax refund are related to his labor, the accumulated fund is not a periodic payment subject to exemption.

As the Court stated in Legier, LSA-R.S. 13:3881, which governs exemptions from seizure of 75% of "disposable earnings", defines "disposable earnings" as "that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld." While we agree with the holding of Legier --the fund is subject to seizure--we believe that 75% of the fund is exempt under State and Federal Statutes. We distinguish Legier, supra, because that seizure was for payment of child support; the policy considerations which presumably played a role in that decision are not present in a case such as the instant one where the garnishment and seizure seeks to satisfy ordinary debts. We also decline to follow the Legier decision because another distinction is readily apparent; the nature of the fund was not fully explained in the Legier case. (See J. Lemmon's concurring opinion in that case). In this case, however, Mr. Francis A. Garrity, employed by the Trustees of the fund, more fully explained the details of the fund. He testified that the employers of longshoremen pay contributions to the fund each week for vacation and holiday pay to their employees who are longshoremen. He also explained why, because of the unique hiring practices of longshoremen who have multiple employers during a year, the portion of their wages which is their vacation pay is held in trust. He testified that this arrangement was created...