In re Ryder, Bankruptcy No. 86-00028-BKC-SMW

• Decision Date: 21 April 1986
• Docket Number: Bankruptcy No. 86-00028-BKC-SMW,Adv. No. 86-0109-BKC-SMW-A.
• Citation: 59 BR 868
• Parties: In re James A. RYDER, Sr., Debtor. James A. RYDER, Sr., Plaintiff, v. LANDMARK FIRST NATIONAL BANK OF FORT LAUDERDALE, Defendant.
• Court: U.S. Bankruptcy Court — Southern District of Florida

59 B.R. 868 (1986)

In re James A. RYDER, Sr., Debtor.

James A. RYDER, Sr., Plaintiff, v. LANDMARK FIRST NATIONAL BANK OF FORT LAUDERDALE, Defendant.

Bankruptcy No. 86-00028-BKC-SMW, Adv. No. 86-0109-BKC-SMW-A.

United States Bankruptcy Court, S.D. Florida.

April 21, 1986.

Patrick A. Barry, English, McCaughan & O'Bryan, Fort Lauderdale, Fla., for Landmark First Nat. Bank of Fort Lauderdale.

Robert E. Venney, Shutts & Bowen, Miami, Fla., for James Ryder, Sr.

FINAL JUDGMENT

SIDNEY M. WEAVER, Bankruptcy Judge.

THIS CAUSE having come before the Court for trial on the adversary complaint to avoid a preference and the Court having received a stipulated set of facts, having reviewed the documentary evidence and the post trial memorandum of law submitted by the parties, the Court does hereby set forth the relevant stipulated facts and documentary evidence and does thereupon enter the following conclusions of law and final judgment:

FACTS

1. On December 31, 1981 James A. Ryder, (the Plaintiff/Debtor herein) entered into a "CONSULTING AGREEMENT" with Jartran, Inc. and Frank B. Hall Co., Inc. The agreement sets out various terms of employment as a consultant including certain duties not to compete. As set forth in the agreement at Page 4:

"In consideration of Employees agreement not to compete described in this Section 2, companies shall pay Employee for the period of ten (10) years commencing March 31, 1982, a quarterly payment of $25,000 ("Non-Competition Compensation") such sum to be payable at the end of each calendar quarter.

2. On October 17, 1984 Landmark First National Bank of Fort Lauderdale ("Landmark Bank") obtained a final judgment against James A. Ryder in the United States District Court for the Southern District of Florida, Case No. 84-0645 CIV LCN. Pursuant to the judgment Landmark Bank proceeded with post-judgment collection remedies and caused certain writs of garnishment to be issued by the District Court as follows:

a) On May 15, 1985 the Clerk of the United States District Court issued a writ of garnishment against Jartran Inc. The writ was served on Jartran Inc. on May 21, 1985. Jartran Inc. answered the writ of garnishment on June 10, 1985. As set forth in the Answer, Jartran answered as follows:

Under a consulting contract between the garnishee and James A. Ryder, Jartran is indebted to James A. Ryder in the sum of $3,846.16 gross consulting fees, payable every two weeks. In addition, the garnishee is indebted to James A. Ryder in the sum of $25,000 payable each quarter (March 31, June 30, September 30, and December 31). The above obligations continue until 1991.

b) On June 21, 1985 the Clerk of the United States District Court issued a second writ of garnishment against Jartran. This writ was served on Jartran on June 27, 1985. Jartran filed its answer to said writ of garnishment on July 8, 1985 wherein Jartran admitted that the sum of approximately $36,000.00 was due the Debtor.

c) On August 24, 1985 the United States District Court issued a third writ of garnishment against Jartran Inc. This writ of garnishment was served on Jartran on July 30, 1985. An answer was filed by Jartran on August 5, 1985 admitting an additional approximate $5,700.00 due the Debtor.

d) On September 16, 1985 the United States District Court issued a fourth writ of garnishment on Jartran which writ was served on September 24, 1985. No answer was filed as the parties entered into a stipulation of settlement on September 7, 1985.

3. Ninety-one days before the Debtor filed its voluntary Chapter 11 petition, all counsel for the parties before the United States District Court under the garnishment proceedings, i.e., Landmark Bank, James A. Ryder, Sr. and Jartran Inc. entered into a written STIPULATION FOR PAYMENT OF JUDGMENT AND DISSOLUTION OF WRITS OF GARNISHMENT. This Stipulation was approved by the United States District Court on October 9, 1985 by an order directing the parties to perform pursuant to the terms of the Stipulation and reserving jurisdiction to enforce the same. The order approving the Stipulation and dismissal of the writs of garnishment was entered on the eighty-ninth day before Debtor filed his petition.

4. The Debtor filed his Chapter 11 proceeding on January 6, 1986.

5. Pursuant to the Stipulation and subsequent Order, Landmark Bank received the sum of $35,000.00 from the garnishee Jartran, Inc. The $35,000.00 was received within the 90 day preference period.

CONCLUSIONS OF LAW

In Florida East Coast Railway Co., Inc. v. Consolidated Engineering Co., et al., 95 Fla. 99, 116 So. 19 (1928), the Florida Supreme Court held that where the garnishment was begun and the answer filed admitting indebtedness over four months before the filing of a Petition of Bankruptcy, a Trustee in Bankruptcy is not entitled to recover the funds covered by the garnishment as a preferential transfer although the judgment on the garnishment was rendered within four months prior to the filing of the Petition in Bankruptcy. The Court held that the service of the Writ of Garnishment made the Garnishee liable to the Creditor for the amount admitted by the Garnishee to be due by and to the Debtor and the judgment obtained by the Creditor against the Garnishee related back to the service of the Writ of Garnishment which was more than four months prior to the filing...