In re Antley
| Decision Date | 05 March 1982 |
| Docket Number | Adv. No. 81-4386-COL.,Bankruptcy No. 81-40508-COL |
| Citation | 18 BR 207 |
| Parties | In re John D. ANTLEY, Jacquelyn L. Antley, Debtors, Joe M. FLOURNOY, Chapter 13 Trustee, for the use of John D. Antley and Jacquelyn Antley, Plaintiff, v. Nellie G. PATE, Clerk of Municipal Court of Columbus, Georgia, and The National Bank and Trust Company, Defendants. |
| Court | U.S. Bankruptcy Court — Middle District of Georgia |
Charles C. Carter, Columbus, Ga., for plaintiff.
J. Barrington Vaught, Columbus, Ga., for defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Herein, the Court finds that wage garnishment funds in the hands of the employer on the date of the Order for Relief are not property of the estate, and, accordingly, the funds cannot be claimed as exempt nor are they subject to turnover to the Chapter 13 Trustee. Although filed as a joint case, only John Antley is involved in this proceeding, and he will be referred to as "Debtor."
A Pre-trial Conference was scheduled in the above styled case on January 25, 1982 at which time a Proposed Pre-trial Order was submitted to the Court. Also at said time counsel stated there were no issues of fact and that each would file a motion for summary judgment with supporting briefs. The National Bank and Trust Company (Bank) and the Chapter 13 Trustee (Trustee) have each so filed. The Clerk of the Municipal Court of Columbus, Georgia has not participated in these proceedings other than to state that she will make disbursement pursuant to the order of this Court. The contest is essentially between Trustee and Bank. The stipulated facts are as follows:
1. The Debtor is indebted to the National Bank and Trust Company in the amount of $2,624.68.
2. On April 28, 1981, the National Bank and Trust Company filed a garnishment against Debtor's employer in the Municipal Court of Columbus.
3. The Debtor filed his petition in this Bankruptcy Court on October 1, 1981.
4. Prior to October 6, 1981, John Antley's employer had withheld $1,214.90 from his wages.
5. On or about October 6, 1981, and in any event after the filing of the petition herein, John Antley's employer paid the amount withheld from his wages to the Clerk of the Municipal Court of Columbus in response to the garnishment action.
6. The Defendant Clerk of the Municipal Court presently has in her possession the sum of $1,214.90, as withheld from the wages of John Antley.
The following facts do not appear in the stipulated facts, but there is no dispute as to them.
7. On July 28, 1975, a judgment was entered in favor of Bank against the Debtor in the Municipal Court of Columbus, and it was this judgment which was the basis for the garnishment commenced April 28, 1981.
8. On May 7, 1981, the Debtor's employer was served with the Summons of Garnishment.
9. From May 14, 1981 through September 24, 1981 a total of $1,214.90 was withheld from Debtor's payroll checks.
10. October 29, 1981, Debtors amended their schedules claiming said $1,214.90 as exempt.
Answer: Under the peculiar facts here and the Georgia law, it was not a violation of the automatic stay—see discussion below.
Answer: Under the peculiar facts here and the Georgia law, this is answered in the negative.
Answer: Bank's judgment lien may be avoided insofar as the Bank's judgment lien impairs other claimed exemptions of the Debtor, but it is not avoided insofar as it relates to the garnishment funds now held by the Clerk of Municipal Court.
1. The fund, which was the subject of this garnishment, constituted a chose in action. Citizens and Southern National Bank v. Wray, 144 Ga.App. 769, 242 S.E.2d 365, 366.
2. A judgment the July, 1975 judgment does not create a lien on a chose in action. The lien on a chose in action is created by the service of a summons of garnishment, and the lien dates from the date of the service of the summons and not from the date of the judgment here, the July, 1975 judgment. General Lithographing Co. v. Sight & Sound Proj., Inc., 128 Ga.App. 304, 196 S.E.2d 479, 481 3. Property or money to which the Debtor has only the right of possession rather than the actual possession is a chose in action. No lien is created upon a chose in action by a judgment. The Plaintiff's (Bank, here) lien arises rather by summons and garnishment, and when money due the Defendant (here, the Debtor) as salary is in the hands of the employer, the lien attaches from the date of the summons. McWilliams v. Hemmingway, 80 Ga.App. 843, 57 S.E.2d 623.
4. A summons of garnishment is the process that brings the garnishee into court, and in this respect is like process in an ordinary suit, its purpose being to give notice to the garnishee of the plaintiff's claim upon the defendant's property in a garnishee's possession or upon the garnishee's indebtedness to the defendant. Gainsville Feed and Poultry Company v. Waters, 87 Ga.App. 354, 73 S.E.2d 771, 774. Gowen v. Bell, 113 Ga.App. 324, 148 S.E.2d 52, 53.
5. The service of a summons of garnishment shall in all cases operate as a lien on all the garnishee's indebtedness at the date of the service and also all future indebtedness accruing up to the date of the answer. Gainsville Feed and Poultry Company v. Waters, supra, 73 S.E.2d at 775.
6. "The commencement of a case . . . creates an estate. Such estate is comprised of all the following property wherever located:
(1) . . . all legal or equitable interests of the debtor in property as of the commencement of the case." 11 U.S.C. § 541(a)(1).
This case began by the filing of a Chapter 13 case by Debtor on October 1, 1981. This proceeding was commenced by the filing of a complaint by the Trustee whose attorney herein is also the attorney for the Debtor. The complaint seeks to recover the $1,214.90 and allow the Debtor to exempt said sums. Although not stated in the complaint, it is presumed that the funds will be used by the Chapter 13 Trustee to help fund the plan. The answer of Bank is principally that at the time of the filing of the Chapter 13 case the Debtor had no interest in the $1,214.90. Bank contends that the funds are not property of the estate and that Bank on the date of the filing of the Chapter 13 case was the only entity that had an interest in the funds. Debtor contends that there was a violation of the automatic stay and that the funds on the date of the filing of the Chapter 13 case were property of the estate. Debtor concedes that he did not have complete possession and legal title to the funds but contends he had an equitable interest in the funds which passed to the estate. Debtor fails to show in his brief what this "equitable" interest was. The Court can find no substance for an equitable interest in the facts as presented. If Debtor has an interest, it would be a legal interest.
There are basically two questions. First, was the automatic stay violated? Under the peculiar circumstances here, it was not. It is a close question. If it was violated, the violation was minuscule and of no consequence because herein the funds are found not to be "property of the estate." In the future, entities in garnishment proceedings pending at the time of the order for relief, that is, the time of the filing of the petition in bankruptcy, would be well advised to seek appropriate relief from the Bankruptcy Court before taking any further steps in the garnishment proceedings.
Conceivably, the Debtor could have become a party in the garnishment proceedings in the Municipal Court and asserted limited claims there had he not filed the Chapter 13 case thereby invoking the automatic stay. Under Title 46 of the Georgia Code Debtor could have made himself a party to the garnishment proceedings and asserted limited rights to the funds up to the time of distribution by the Municipal Court. On the date that the Chapter 13 case was filed the funds were still in the hands of his employer, and the critical date is October 1, the date of the filing the Chapter 13 case and not the date that employer in fact delivered the funds to the Municipal Court. Having invoked the automatic stay, Debtor could have requested that the stay be lifted to permit him to become a party in the Municipal Court and there assert his possible limited rights or interest to the funds, or he could have asserted those limited rights in the Bankruptcy Court. The Debtor did neither, and, accordingly, it must be concluded that he had no rights or grounds to assert a claim in the Municipal Court to the funds withheld by his employer.
The second basic question is...
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