Sloan v. Douglass

• Decision Date: 07 August 1986
• Docket Number: No. 2-85-095-CV,2-85-095-CV
• Citation: 713 S.W.2d 436
• Parties: Denise E. SLOAN and Patricia Ruffin, Appellants, v. Lionel DOUGLASS and Mickey Rivers d/b/a Wash Up, Inc., Appellees.
• Court: Texas Court of Appeals

Page 436

713 S.W.2d 436

Denise E. SLOAN and Patricia Ruffin, Appellants, v. Lionel DOUGLASS and Mickey Rivers d/b/a Wash Up, Inc., Appellees.

No. 2-85-095-CV.

Court of Appeals of Texas Fort Worth.

Aug. 7, 1986.

Law Office of George S. Henry and Ernest A. Laun, Dallas, for appellants.

Law Offices of Joe Shannon, Jr., P.C. and Joe Shannon, Jr., Fort Worth, for appellees.

Before JOE SPURLOCK, II, HOPKINS and HUGHES (Retired, Sitting by Assignment), JJ.

OPINION

HOPKINS, Justice.

This is an appeal of a denial of a postjudgment application for turnover under former TEX.REV.CIV.STAT.ANN. art. 3827a. ¹ Sloan and Ruffin filed suit against Douglass and Rivers, individually and d/b/a Wash Up, Inc. A default judgment was entered on June 27, 1983 against Rivers and nonsuit was taken against Douglass inasmuch as he had filed for bankruptcy. There is nothing in the record to indicate what occurred as to Wash Up, Inc., but they are not before the Court as part of this appeal. Accordingly, any mention herein of "appellee" refers only to Rivers. Subsequent to the trial in this case, appellants, Sloan and Ruffin, assigned their entire interest in the judgment to a third party, Willie Ross, and have remained in the lawsuit as nominal appellants. Appellants seek turnover under art. 3827a of appellee's deferred income in payment of their judgment.

We affirm the judgment of the trial court.

Appellee signed a contract with the Texas Rangers, Ltd. (Rangers) on April 3, 1981. The contract called for services to be rendered for the seasons 1981 through 1985. The salary was set out as: $250,000 for 1981, $275,000 for 1982, and $450,000 for 1983, 1984 and 1985. Payments were to be made in semi-monthly installments beginning January 1, 1981 and continuing thereafter until December 31, 1985.

In an addendum to the contract between appellee and the Rangers under Section 4.2 the following appears:

For the years 1983, 1984 and 1985, One Hundred Fifty Thousand Dollars ($150,000.00) of the Player's Salary in each year is to be deferred, with ten percent (10%) interest per annum accruing thereon. It is hereby agreed by the Parties hereto that the deferred portion of the Player's salary under this Contract shall be paid to Player in the following manner: Eighty Thousand Dollars ($80,000.00) a year for ten (10) years beginning in 1986. The ten (10) annual $80,000.00 payments will be made to the Player in twelve (12) equal monthly installments of $6,666.67 for each month of each such year, beginning January 1st each year and continuing throughout until December 1st each year.

According to the contract provision, in 1983, 1984 and 1985 a portion of appellee's annual salary earned in those years was to be deferred and paid in monthly installments beginning in 1986, and continuing over a ten-year period, which is after the contract between appellee and the Rangers expires.

Appellants received a final and valid money judgment against appellee and moved for the trial court to order certain "compensation and benefits" be turned over to the sheriff for execution, pursuant to former art. 3827a, which provided:

(a) A judgment creditor whose judgment debtor is the owner of property, including present or future rights to property, which cannot readily be attached or levied on by ordinary legal process and is not exempt from attachment, execution, and every type of seizure for the satisfaction of liabilities, is entitled to aid from a court of appropriate jurisdiction by injunction or otherwise in reaching the property to satisfy the judgment.

Id. Specifically, appellants sought all the deferred compensation from appellee's employment contract with the Rangers in an amount to satisfy their judgment, and all other "current wages" in excess of $30,000 also in an amount to satisfy their judgment. See TEX.PROP.CODE ANN. secs. 42.001(a), 42.002(8) (Vernon 1984).

The trial court denied this motion for turnover and entered its findings of facts as follows:

6. That the compensation for services which is received by Mickey Rivers is not paid simultaneously with the rendition of his services.

7. All sums due to be paid Mickey Rivers in 1986 are in payment for his rendition of personal services but are not past due.

8. No funds are presently in existence to pay Mickey Rivers in 1986.

9. The funds due to be paid Mickey Rivers in 1986 are not presently in his possession or under his control.

Conclusions of law were also entered and held as follows:

1. That the funds due to be paid to Mickey Rivers in 1986 constitute current wages for personal service.

2. That the funds due to be paid Mickey Rivers in 1986 are exempt from execution.

3. That an order requiring Mickey Rivers to turn over funds when received by him in 1986 would be tantamount to garnishment of current wages in violation of Art. 16, Sec. 28, Texas Constitution.

Appellants' first point of error complains that the trial court erred in refusing to order turnover of the interest income appellee is to receive in the future on his deferred income. In points two and three, appellants argue that the court erred in holding the funds due appellee in 1986 are current wages and to order a turnover would be tantamount to garnishment of current wages, which is unconstitutional. Points of error four, five and six contend the trial court erred in concluding the compensation to be paid in 1986 should not be turned over to the sheriff, the funds due in 1986 are not presently in appellee's possession or under his control and that the sums to be paid appellee in 1986 are payment for rendition of personal services but are not past due. Appellants' final two points of error, seven and eight, contend the trial court erred in not turning over to the sheriff appellee's present salary in excess of $30,000 as provided by TEX.PROP.CODE ANN. sec. 42.001. Appellants' first six points of error are governed by the determination of whether the compensation to be paid appellee in 1986 through 1996, for services rendered in 1983, 1984 and 1985, is current wages for the years 1983 through 1985 and therefore subject to the turnover statute, or for the years 1986 through 1996 and exempt from turnover.

The issue before us is: when an employee contracts with his employer, in advance of wages being earned for personal services, that a portion of the employee's salary will not be paid to him during the year in which it is earned, but at a specified later date with accumulated interest at a set amount, are the deferred payments "current wages" for the year in which earned or received? This appears to be a case of first impression in Texas.

"Current" is defined as " 'running; now passing or present in its progress.' " Dempsey v. McKennell, 2 Tex. 284, 23 S.W. 525, 525 (1893). "Wages" means a " 'compensation given to a hired person for his services.' " Id. "Current wages" are "such compensation for personal services as are to be paid periodically, or from time to time, as the services are rendered." Id. Appellants argue that the deferred income to be paid appellee three to thirteen years after it is earned does not fall under the current wage exemption for that ten-year period, but is current when earned in 1983 through 1985. See TEX. CONST. art. XVI, sec. 28 and TEX.PROP.CODE ANN. secs. 42.001(a), 42.002(8). Appellants further argue that appellee voluntarily and knowingly left his income with his employer causing the income to lose its current wage exemption.

In a case relied on by appellants, Bell v. Indian Live-Stock Co., 11 S.W. 344 (Tex.1889) an employee was receiving $200 a month for his services. The employee only drew on the money when he needed it, thereby creating a credit with his employer of $624.50. The wages were voluntarily left with the employer until needed. There was no contract between the employer and employee to pay the wages in the future and the employee could draw the wages or demand payment at any time. The $624.50 was past due, and the court held the income had lost its current wage exemption. Id. at 346.

In our case, appellee did not have a credit with the Rangers in the same sense as the above employee. A contract was signed and appellee was only entitled to receive the deferred income at a certain time, in certain amounts. Appellee could not draw the deferred income or demand its payments at any time he might choose. The income was to be received according to the terms of the contract.

Appellants attach great emphasis to the fact that appellee voluntarily left his wages with the Rangers. Voluntarily leaving wages with one's employer is only one element to be considered in deciding if wages qualify for the current wage exemption of the Constitution as other cases discuss control over the wages as being an additional element to be considered. ² Sutherland v. Young, 292 S.W. 581, 583 (Tex.Civ.App.--Waco 1927, no writ) held that wages cease to be current as contemplated by the exemption laws immediately on their being paid to and received by the wage earner. Appellee herein had not received the money nor had it been paid to him.

The Beaumont Court of Appeals in Gaddy v. First Nat. Bank, 283 S.W. 277 (Tex.Civ.App.--Beaumont 1923, no writ), a review of exemption cases (see Bell v. Indian Live-Stock Co., 11 S.W. 344 (Tex.1889) and Davidson v. F.H. Logeman Chair Co., 41 S.W. 824, 825 (Tex.Civ.App.1897)), stated that the exemption continues only until: (1) the wages are due and in the possession of the debtor; or (2) upon the debtor's demand, could be in his possession, and are no longer. The exemption does not apply after the wages become subject to the control of the employee and he voluntarily leaves them with his employer. Davidson, 41 S.W. at 825.

Appellee did voluntarily sign a contract with the deferred income addendum. However, this contract was signed before appellee had any right to or any control over the money. After executing this contract, appellee had no control over that deferred income...