G.A.C. Trans-World Acceptance Corp. v. Jaynes Enterprises, Inc.

• Decision Date: 17 December 1973
• Docket Number: TRANS-WORLD,No. 73--165,73--165
• Parties: G.A.C.ACCEPTANCE CORPORATION, Appellant, v. JAYNES ENTERPRISES, INC., d/b/a Jaynes Mobile Homes, et al., Appellees.
• Court: Arkansas Supreme Court

Page 651

502 S.W.2d 651

255 Ark. 752

G.A.C. TRANS-WORLD ACCEPTANCE CORPORATION, Appellant, v. JAYNES ENTERPRISES, INC., d/b/a Jaynes Mobile Homes, et al Appellees.

No. 73--165.

Supreme Court of Arkansas.

Dec. 17, 1973.

Fitton, Meadows & Adams, Harrison, for appellant.

Bill F. Doshier, Harrison, for appellees.

BYRD, Justice.

At issue here is the constitutional validity of Ark.Stat.Ann. § 31--501 (Repl.1962), in so far as it authorizes a prejudgment garnishment without notice. The trial court, relying upon Sniadach v. Family Finance Corporation, 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), held the statute void in so far as it authorized the issuance of a garnishment by a clerk without notice and prior to judgment. For reversal appellant, G.A.C. Trans-World Acceptance Corporation, points out that the garnishment here involved is against certain accounts receivable due to appellee, Janyes Enterprises, Inc., a business corporation and contends that the holding in Sniadach v. Family Finance Corp., supra, is limited to wages.

In making its argument appellant recognizes that the United States Supreme Court in Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), has construed the Sniadach case contrary to its contentions. However, it says that since the Fuentes case is only a four to three decision with two justices not participating, there is a question as to its effectiveness as a precedent. Cases from other jurisdictions have gone both ways upon the contentions made. Roofing Wholesale Co., Inc. v. Palmer, 108 Ariz. 508, 502 P.2d 1327 (1973), would support appellant's position. Etheredge v. Bradley, 502 P.2d 146 (Alaska 1972), supports the trial court's position. There are some dissenting opinions in both cases.

For a number of reasons, we are inclined and do accept the interpretation of the Sniadach ruling as set forth in the Fuentes case until such time as the United States Supreme Court rules to the contrary. Some of such reasons are:

1. Other decisions of the United States Supreme Court such as Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1969), and Bell v. Burson, 402 U.S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1970), have extended the same Due Process principle of notice and a fair hearing to welfare rights and the suspension of a driver's license;

2. It is most illogical to say that the Due Process Clause of the Fourteenth Amendment requires notice and an opportunity to be heard only when dealing with wages, welfare rights and drivers licenses but that no such notice and an opportunity to be heard are prerequisites to depriving a citizen of any other property or rights that he may possess;

3. The statute in question is admittedly void as to wages and is not necessarily severable so as to remain valid to other assets; and

4. The General Assembly, following the Fuentes case, has by Act 144 of 1973, enacted a rather practical procedure for giving of notice to defendants against whom a writ of replevin is sought--inferentially it would not be impossible to make a similar provision with respect to garnishment proceedings.

Finally appellant argues that the appellees, Jaynes Enterprises Inc., d/b/a, Jaynes Mobile Homes, Bill Jaynes and Violet Jaynes, waived any right to a prejudgment hearing by signing a guaranty giving the appellant, in case of default, the right to take possession of contract rights and/or accounts or proceeds of the sale thereof wherever found and giving it the right to enter for such purposes without legal process. We find no merit to this contention. (1) The waiver contention under a somewhat similar contract was held not to preclude a preseizure hearing in the Fuentes case, supra. (2) This issue was not raised in the trial court and cannot be raised for the first time on appeal. (3) Furthermore, appellant did not rely upon the provision of its contract but invoked the aid of the court under the garnishment statute.

Affirmed.

GEORGE ROSE SMITH, BROWN and FOGLEMAN, JJ., concur.

FOGLEMAN, Justice (concurring).

I fully concur in the result reached by the majority, but for a totally different reason, which would avoid the necessity of ruling upon the constitutionality of Ark.Stat.Ann. § 31--501 (Repl.1962) insofar as it provides for prejudgment garnishment. I shall first state my reasons for concurring in the result after which I will state may reasons for feeling it is extraordinarily important for this court to follow its usual rule in respect to considering constitutionality of statutes.

The writ of garnishment in this case was issued and served on March 13, 1973, the date of the filing of the complaint. The bond required by Ark.Stat.Ann. § 31--501 in cases of prejudgment garnishment was executed and filed on April 11, 1973, one day prior to a hearing in the Chancery Court of Boone County, in which the suit was originally filed. That hearing was on appellees' demurrer, which was then treated as a motion to transfer the action to the circuit court, and, as such, granted. On April 16, appellees filed their demurrer and their motion to quash the writ of garnishment, both based, in part, upon the contention that the writ was void because the bond was not filed until after the writ was issued and because its penalty was not double the amount for which the garnishment was issued.

We have never directly ruled that the failure to post a bond will require a writ of garnishment to be dissolved. We have, however, said the failure to give bond, standing alone, is not a ground of demurrer to the complaint in the principal action, but is sufficient cause for quashing an attachment upon motion to quash or set aside the order of attachment. Alexander v. Pardue, 30 Ark. 359. While the defect may be waived by the defendant in the action in which an attachment is issued, this court has clearly taken the position that an attachment issued without a bond having been made should be dissolved upon motion of the defendant, even though the court found it unnecessary to determine whether the failure to file the attachment bond was a mere irregularity or a jurisdictional error rendering a judgment in attachment void. Austin v. Goodbar Shoe Company, 60 Ark. 444, 30 S.W. 888. There we said:

Now, from what has been said, we are of the opinion that the want of a bond was such an error--'jurisdictional error,' if that is a better expression of it--as that, upon motion of the defendant during the pendency of the proceeding, and before judgment, the attachment would necessarily be dissolved; * * *.

The analogy between prejudgment attachment and prejudgment garnishment is great. See Comment, Garnishment Before Judgment in Arkansas, George B. Collins and J. W. Steinsiek, 8 Ark.L.Rev. 121; Case note, Constitutional Law-Prejudgment Garnishment of Wages, 23 Ark.L.Rev. 660, James E. Darr; Foster v. Pollack Company, 173 Ark. 48, 291 S.W. 989. We have denominated garnishment as a species of attachment. Lawrence v. Ford Motor Credit Company, 247 Ark. 1125, 449 S.W.2d 695; Allen v. Stracener, 214 Ark. 688, 217 S.W.2d 620. In Foster, we held garnishment to be a provisional remedy in the sense of the statute fixing the jurisdiction of such remedies by a justice of the peace upon the authority of our holdings that attachment was a provisional remedy, saying that the two remedies are so nearly alike that it would seem that there would be no reason for holding attachment to be a provisional remedy and garnishment of the sort resorted to in that case not a provisional remedy. In Lawrence, we found no difficulty in holding that the statute governing a dispute about the validity of an attachment and assertions of claims against attached property to be applicable to garnishment proceedings because the service of a writ of garnishment upon a debtor is an attachment of the debt or a form of levy thereon. Clearly, what we have said with reference to the failure to file any bond in an attachment action would govern prejudgment garnishment proceedings.

We have frequently, and without exception, held that garnishment is a statutory procedure and that strict compliance with garnishment statutes is essential to the validity of the proceeding. Hervey v. The Farms, Inc., 252 Ark. 881, 481 S.W.2d 348; Roach v. Henry, 186 Ark. 884, 56 S.W.2d 577; Missouri Pacific R. Co. v. McLendon, 185 Ark. 204, 46 S.W.2d 626; Schiele v. Dillard, 94 Ark. 277, 126 S.W. 835; First National Bank of Huttig v. Rhode Island Insurance Company, 184 Ark. 812, 43 S.W.2d 535. While the McLendon and First National Bank of Hutting cases turned upon the issuance of the writ of garnishment before the issuance of process for the defendant in the case, both stand for the proposition that a plaintiff has no right to have a writ of garnishment issued without complying with the statutory procedure. In the McLendon case, this court, citing First National Bank of Huttig v. Rhode Island Insurance Company, supra, said:

There is no claim in this case that the statute was complied with before the writ of garnishment was issued and served. The proceedings therefore were void.

Inasmuch as there is ample authority in our own cases for quashing this garnishment, it is not necessary to resort to authorities from other jurisdictions. I would add, however, that so holding would place us in line with the general rule supported by the vast weight of authority that, when a garnishment statute requires the posting of a bond, this action is a condition procedent to the issuance of the writ, and, if the bond is not filed, the writ is void and should be dissolved. See Van Moorhem v. Roche Harber Lime & Cement Co., 169 Wash. 354, 13 P.2d 496 (1932); Citizens National Bank v. Pollard, 31 S.W.2d 508 (Tex.Civ.App.1930); 6 Am.Jur.2d 928, Attachments, § 518; 38 C.J.S. Garnishment § 145, p. 361. ¹

Even though this issue, raised in the trial court, was not argued on appeal, it is the long-standing rule of this court that, irrespective of the reasons...