State ex rel. Dept. of Revenue v. Control Data Corp.

• Court: Supreme Court of Oregon
• Writing for the Court: LINDE
• Citation: 300 Or. 471,713 P.2d 30
• Parties: STATE of Oregon ex rel. DEPARTMENT OF REVENUE, Respondent. v. CONTROL DATA CORPORATION, Appellant. OTC 2182; SC S31596.
• Decision Date: 14 January 1986

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713 P.2d 30 300 Or. 471 STATE of Oregon ex rel. DEPARTMENT OF REVENUE, Respondent.
v.
CONTROL DATA CORPORATION, Appellant. OTC 2182; SC S31596. Supreme Court of Oregon,
In Banc. Argued and Submitted Oct. 1, 1985.
Decided Jan. 14, 1986.

Scott G. Seidman, Portland, argued the cause and filed the brief for appellant. With him on the brief were Tonkon, Torp, Galen, Marmaduke & Booth.

Marilyn Harbur, Asst. Atty. Gen., Salem, argued the cause for respondent. With her on the brief was Dave Frohnmayer, Atty. Gen., Salem.

[300 Or. 473] LINDE, Justice.

Control Data Corporation appeals from a judgment of the Oregon Tax Court on the Department of Revenue's garnishment of wages payable to one of Control Data's Minnesota employees, a former Oregon resident against whom the Department has a judgment for a tax deficiency incurred during his former residency in Oregon. ¹ Control Data resists enforcement of the garnishment on the grounds that the exercise of jurisdiction by Oregon courts would deprive the employee of property without due process of law, contrary to the 14th Amendment. The tax court rejected the jurisdictional challenge and entered judgment for the Department. We affirm.

We take the undisputed facts from the tax court's opinion:

"The defendant has its principal place of business in Minnesota but is authorized to do business in the State of Oregon. During the calendar year 1978 William K. Brest (Brest) lived in Oregon and earned income in Oregon subject to the state's income tax laws. In November 1978 Brest terminated his employment in Oregon and was rehired by defendant in Minnesota and has been an employee of defendant in Minnesota since July 18, 1979. Brest did not pay a state income tax deficiency assessed against him for the year 1978 and on November 12, 1980, the Department of Revenue issued a distraint warrant against Brest for the collection of $2,137.50 taxes plus interest.

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The distraint warrant was docketed in Multnomah County and has the force and effect of a judgment against Brest under ORS 314.430.

"On March 13, 1984, a garnishment was served on defendant at its office in Portland and the defendant answered the writ stating that Oregon courts do not have jurisdiction to enforce garnishment proceedings because Brest, the debtor, 'does not currently reside and receive wages in the State of Oregon.'

"Thereafter and on August 21, 1984, plaintiff filed this suit against defendant Control Data Corporation seeking a judgment for the taxes due. Both parties have moved for a summary judgment."

[300 Or. 474] Control Data does not contest that its activities in Oregon give Oregon courts jurisdiction over itself. It also does not dispute the validity of the judgment against its employee, Brest, for the unpaid Oregon income tax deficiency arising from Brest's prior residence and employment in Oregon. Control Data contests the garnishment of wages it owes Brest in Minnesota, because it fears liability to Brest if he can successfully assert that Oregon courts had no jurisdiction to reach his wages in the hands of his employer. What Control Data seeks in this appeal is our determination of the effect that the United States Supreme Court's decision in Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980), has on wage garnishments by the courts of a state other than the state of the employee's residence.

In Rush, Savchuk had moved from Indiana to Minnesota after having been injured in Indiana in an accident involving an automobile driven by an Indiana resident and...