Thomas v. Thomas

• Decision Date: 06 June 1961
• Docket Number: No. 24696,24696
• Citation: 13 Cal.Rptr. 872,192 Cal.App.2d 771
• Court: California Court of Appeals Court of Appeals
• Parties: Freda J. THOMAS, Plaintiff and Respondent, v. Roy T. THOMAS, Defendant. Southern California Edison Company, third Party and Appellant. Civ.

Page 872

13 Cal.Rptr. 872

192 Cal.App.2d 771

Freda J. THOMAS, Plaintiff and Respondent, v. Roy T. THOMAS, Defendant.

Southern California Edison Company, third Party and Appellant.

Civ. No. 24696.

District Court of Appeal, Second District, Division 1, California.

June 6, 1961.

Rollin E. Woodbury, Harry W. Sturges, Jr., and Robert J. Cahall, Los Angeles, for appellant.

W. Blair Gibbens and David M. Durst, Santa Monica, for respondent.

LILLIE, Justice.

Southern California Edison Company, as third party, appeals from an order in a supplementary proceeding (Code of Civil Procedure, § 719) ¹ directing it to pay an employee's pension installment to the employee's former wife in partial satisfaction of support payments due her under a final judgment of divorce. The employee (the judgment debtor) did not appear in the supplementary proceedings; that that time his whereabouts was unknown, and the record is devoid of evidence that he is still alive.

The salient background facts are as follows: Mrs. Thomas secured a final judgment of divorce on March 23, 1945; by the terms of such judgment she was awarded payments of $75 per month for support and maintenance. Late in 1958 an arrearage in payments of $764 had accumulated, and a writ of execution (issued in December of that year) was returned unsatisfied. On January 15, 1959, Freda caused Edison to be served with a writ of attachment or garnishment of all monies, goods, credits, et cetera due or owing to Roy; on January 19, Edison as garnishee furnished its answer denying that it owed Roy any money or held any personal property belonging to him. Subsequently, upon Freda's application and pursuant to the provisions of section 717, Code of Civil Procedure, Edison was ordered to appear and be examined concerning its alleged indebtedness; it was also forbidden to transfer any property belonging to Roy. The matter came on for hearing on April 17, 1959; meantime, on April 1, 1959, pension payments became due and were payable to Roy if he were otherwise qualified; these payments were held by Edison pending further order of the court.

The amount of Roy's pension, which is not in dispute, represents the total of payments under two separate pension plans, due April 1, 1959, reduced by certain sums withheld for federal income tax, insurance and medical dues. Each plan is generally similar and unfounded; thus, no assets, whether through the medium of a trust or a group annuity insurance policy, have been accumulated by or on behalf of Edison to meet its pension obligations thereunder, and the obligation to pay involves merely a promise by Edison to pay its qualifying retired employees sums of money as pensions. The '1938 Plan' provides a pension to employees which is based on their service with Edison prior to July 1, 1934; payments commence on the first day of the month following retirement and continue during the pensioner's lifetime, 'terminating with the last monthly installment prior to the death of employee.' The '1958 Plan' supplements payments from Social Security and other pension plans which are not here involved; payments commence on the first day of the month next following the employee's normal or early retirement date, and the last payment is that 'due as of the first day of the month during which his death occurs.'

Each pension check, pursuant to administrative procedures adopted by the pension committee, contains the following legend on the reverse thereof: 'Southern California Edison Company requires that this draft be paid only if endorsed personally by the payee. Endorsement by an agent, executor, or administrator of payee will not be accepted.' Additional conditions upon Edison's obligations are found in each of the plans. Thus, the 1938 Plan contains the following provision: '22. If any person while receiving an annuity or pension hereunder engages in any business, occupation, or activity, deemed by the company to be prejudicial to the interests of the company or any of its subsidiaries, such action may, in the discretion of the company, result in the discontinuance of that part of the annuity which shall have been provided by the company through the insurance company, and the retirement income for service prior to July 1, 1934. The company's determination that the employee is engaged in a business, occupation, or activity prejudicial to the interests of the company shall be final and conclusive upon the employee and the insurance company.' And in the 1958 Plan there is this provision: '2.7 Facility of Pension Payment (B) Payment of Pensions to Pensioners Under Legal Disability: Whenever and as often as any person entitled to payments hereunder shall be under a legal disability, or in the sole judgment of the committee, shall otherwise be unable to apply such payments to his own best interests and davantage, the committee, in its discretion, may direct all or any portion of such payments to be made (i) to such person, (ii) to such person's legal guardian or conservator, or (iii) to such person's spouse or to any other person, to be expended for his benefit. The decision of the committee will, in each case, be final and binding upon all persons, and the committee shall not be obliged to see to the proper application or expenditure of any payments so made. Any payment made pursuant to the power herein conferred upon the committee shall operate as a complete discharge of all obligations under the plan in respect thereof of the company and the trustee.' Finally, by each of the plans any interest thereunder is made nonassignable by operation of law or otherwise: '20: The interest of any employee or joint annuitant, in retirement funds * * * shall be nonassignable whether by voluntary or involuntary assignment or by operation of law' (1938 Plan); '4.3 Benefits Not Assignable The benefits provided hereunder are intended for the personal security of persons entitled to payments under the plan, and, to the extent permitted by law, shall not be subject in any manner to the debts or other obligations of the persons to whom they are payable and shall not be sold, transferred, assigned or encumbered in any manner, either voluntarily or involuntarily' (1958 Plan). The existence of the foregoing limitations and conditions was asserted below in the form of a stipulation of facts executed by counsel for the respective parties.

Edison's position on this appeal may be stated as follows: As answering garnishee, having made a good faith denial of any indebtedness to Roy or its possession of any personal property belonging to its former employee, (1) such denial operated to deprive the trial court of jurisdiction to proceed further by way of supplementary proceedings, and it was incumbent on Freda to maintain an independent action against Edison for the recovery of the interest or debt (Code of Civil Procedure, § 720) ² where title to the interest or debt is properly tried and determined (Wulfjen v. Dolton, 24 Cal.2d 878, 890, 151 P.2d 840); and (2) a pension annuity payable under the circumstances at bar is not subject to garnishment in the course of supplementary proceedings or at all.

The statutory procedure in proceedings supplementary to execution (Code of Civil Procedure, §§ 714-723) is not by its terms made exclusive; thus, the necessity of an independent action in a given situation is recognized by section 720, Code of Civil Procedure. "It is the settled law of this state that, since our statutes do provide for a method of reaching such assets by supplementary proceedings, there is no longer, in cases where the statutory method is inadequate, any ground for the interposition of equity (citations) * * * Where, however, the statutory proceedings supplementary to execution do not, for any reason, afford an adequate remedy, relief by creditor's bill may still be had (citations). Proceedings supplementary to execution are wholly inadequate where the grantee or transferee of a judgment debtor asserts title in himself, for the reason that to make an order directing the application of property claimed by a person in his own right would be to deprive him of his property upon a summary proceeding and without due process of law (citation). Where a judgment creditor claims that title under a conveyance or transfer is invalid, an issue as to such ownership and title should be properly made and tried in an appropriate action in which a judgment may be had and the parties conclusively bound (citation)" (Wulfjen v. Dolton, supra, 24 Cal.2d 879, 890, 151 P.2d 840, 846). To the same general effect are Bond v. Bulgheroni, 215 Cal. 7, 8 P.2d 130, cited in the Wulfjen case, Phillips v. Price, 153 Cal. 146, 148-150, 94 P. 617, and Saracco Tank & Welding Co. v. Platz, 65 Cal.App.2d 306, 321-322, 150 P.2d 918.

It further appears that the summary procedure provided by section 179, Code of Civil Procedure, must be abandoned as long as the claim of interest is in good faith (Phillips v. Price, supra, 153 Cal. 149-150, 94 P. 619). Although the trier of fact ordinarily must determince that phase of the matter, the sincerity of Edison's position in the premises was not raised below and is not here challenged; with commendable frankness, appellant's counsel has made mention of decisions (Parker v. Page, 38 Cal. 522, Smith v. Smith, 51 Cal.App.2d 29, 124 P.2d 117, and Finch v. Finch, 12 Cal.App. 274, 107 P. 594, 598) which, on their face, appear at variance with what has just been said; upon examination, however, all three cases are distinguishable on one or more grounds. Fro example, in Parker v. Page, supra, the referee found that the third party denial was so 'meagre and unsatisfactory' as to be 'evasive and made in bad faith.' Here, on the other hand, Edison has asserted the contingent nature of its obligations under the two pension plans together with its denial that conditions precedent to payment were fulfilled; one condition, of course, was Roy's failure to establish in the...