Thompson v. Bank of America

• Decision Date: 01 April 2004
• Docket Number: No. 03-1016.,03-1016.
• Citation: 157 S.W.3d 174,356 Ark. 576
• Parties: Lyle B. THOMPSON v. BANK OF AMERICA and Jefferson Pilot Insurance Company.
• Court: Arkansas Supreme Court

157 S.W.3d 174

356 Ark. 576

Lyle B. THOMPSON v. BANK OF AMERICA and Jefferson Pilot Insurance Company.

No. 03-1016.

Supreme Court of Arkansas.

April 1, 2004.

Law Offices of Peter Miller, by: John M. Hardy, Little Rock, for appellant.

Wright, Lindsey & Jennings, by: Judy Simmons Henry and Stephen R. Lancaster, Little Rock, for appellee.

JIM HANNAH, Justice.

Lyle B. Thompson appeals a decision of the Pulaski County Circuit Court allowing Bank of America to garnish payments Thompson receives from an annuity purchased for his benefit in settlement of a dispute concerning termination of trusts in the estate of N.B. Dalton. Thompson argues first that the trial court erred in allowing Bank of America to garnish $27,750 in annuity back payments held in-trust by Jefferson-Pilot Life Insurance Company. Under an annuity contract, Jefferson-Pilot is required to pay Thompson the sum of $750 per month for life. On September 16, 1999, Bank of America filed a writ of garnishment on the annuity payments. In response to service of the writ of garnishment, Jefferson-Pilot ceased making the monthly payments to Thompson and held the payments in-trust. Thompson filed a motion to quash the September 16, 1999, writ of garnishment on October 6, 1999, but never obtained a hearing on the motion. Almost three years later on October 4, 2002, Bank of America filed an additional writ of garnishment and only then was a hearing set on the issue of the propriety of garnishing the annuity payments. In those three years, a total of $27,750 in back payments accumulated. Thompson argues that the trial court erred in ordering garnishment of the back payments because at the time each monthly annuity payment was due and should have been paid, Bank of America had no valid writ of garnishment. Thompson argues second that the trial court erred in ordering Jefferson-Pilot to forward his future monthly annuity payments to Bank of America under garnishment until the debt was paid or Thompson died. Thompson asserts that his monthly annuity payments do not become subject to garnishment until his right to the payment accrues each month. He argues that Bank of America must seek a writ of garnishment for each monthly payment.

Under the garnishment statutes, a writ of garnishment reaches all assets of the judgment debtor in the hands of the subject of the writ. When the October 4, 2002, writ of garnishment was issued, Jefferson-Pilot held $27,750 in back payments. Any claim that the individual payments owed between September, 1999, and October, 2002, were improperly held by Jefferson-Pilot is waived by a failure to seek a hearing on the motion to quash the September 16, 1999, writ of garnishment. Whether the prior writ of garnishment was valid is not controlling. The October 4, 2002, writ of garnishment reached the $27,750 held by Jefferson-Pilot on October 4, 2002, because that sum was then owed by Jefferson-Pilot to Thompson.

On the issue of garnishment of future monthly annuity payments, each monthly payment is not due under the contract until two conditions exist. The first condition is that the day on which the payment is due must arrive. The second condition is that on that day, Thompson must be alive. There is no presently payable debt that may be subjected to garnishment until the day the payment is due arrives and Thompson is alive. Only then does Jefferson-Pilot owe a debt that may be garnished. Thus, payment is contingent and Bank of America must garnish each annuity payment as it becomes due and owing.

This is the third appeal in this case. See Buchbinder v. Bank of America 342 Ark. 632, 30 S.W.3d 707 (2000); Boatmen's Trust Co. v. Buchbinder, 343 Ark. 1, 32 S.W.3d 466 (2000). We have jurisdiction of this case pursuant to Ark. Sup.Ct. R. 1-2(a)(8) and (b)(6)(2003).

Standard of Review

This case was tried to the court. The standard of review on finding of facts is clearly erroneous. Buchbinder, supra. A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a definite and firm conviction that a mistake has been committed. Id. We review issues of statutory construction de novo, as it is for this court to decide what a statute means. Simmons First Bank v. Bob Callahan Servs., 340 Ark. 692, 13 S.W.3d 570 (2000); Hodges v. Huckabee, 338 Ark. 454, 995 S.W.2d 341 (1999). In this regard, we are not bound by the trial court's decision; however, in the absence of a showing that the trial court erred, its interpretation will be accepted as correct on appeal. Id.; Stephens v. Arkansas School for the Blind, 341 Ark. 939, 20 S.W.3d 397 (2000).

Facts

In May 1999, the trial court ordered Bank of America, as trustee of the estate of N.B. Dalton, to purchase an annuity that was to pay estate beneficiary Thompson $750 per month for life as final settlement of Thompson's claims to assets from the N.B. Dalton estate. An annuity was purchased by Bank of America from Jefferson-Pilot.

Bank of America later prevailed on a motion seeking an award of attorney's fees from Thompson in the litigation of the N.B. Dalton estate. On June 17, 1999, a judgment was entered in favor of Bank of America and against Thompson in the amount of $206,952.05. On September 16, 1999, Bank of America obtained issuance of a writ of garnishment, which was served on Thompson's counsel Charles Lincoln. Upon receipt of this first writ of garnishment, Jefferson-Pilot ceased making payments under the annuity to Thompson and held them pending a decision on whom should receive the payments. On October 6, 1999, Lincoln filed a motion on Thompson's behalf to quash the writ of garnishment alleging that Thompson was not subject to personal jurisdiction for purposes of a writ of garnishment. On October 12, 1999, Bank of America supplemented its certificate of service on the writ of garnishment to show that Thompson was then served in Florida at his home address by regular United States Mail and by certified mail, return receipt requested. Bank of America responded to the motion to quash by asserting that the case was still ongoing, that a motion for reconsideration was still pending, and that Lincoln continued to represent Thompson in the subject litigation as evidenced by his involvement as counsel in the motion for reconsideration and his filing of the motion to quash the writ of garnishment. Thompson responded by a motion to quash the supplemental certificate of service filed by Lincoln, in which Thompson alleged that the only way to cure the defective notice would be to issue the writ of garnishment anew showing same day service of the writ of garnishment on Thompson.

No further action was taken on the writ of garnishment against Thompson until September 4, 2002, when Mr. Lincoln filed a "renewed motion to quash the writ of garnishment and cross-claim," on behalf of Thompson. On October 4, 2002, Bank of America had an additional writ of garnishment issued. Thompson agrees that this writ of garnishment was properly served. On January 22, 2003, Bank of America had yet another writ of garnishment issued. On February 7, 2003, Thompson filed a motion to quash the October 4, 2002, writ of garnishment asserting that the payments from the annuity were not subject to garnishment.

The first issue presented is whether a lack of proper service of the first writ requires that the $27,750 held by Jefferson-Pilot be paid to Thompson. The second issue presented is whether the trial court erred in ordering Jefferson-Pilot to forward the future monthly payments to Bank of America under garnishment until the debt was paid or Thompson died.

Amounts Due Under the Annuity From September 16, 1999 until October 4, 2002

In the April 18, 2003, order at issue on this appeal, Bank of America was awarded the entire amount due and payable as back payments under the annuity contract with Jefferson-Pilot. This issue involves the dispute over the total of $27,750 in back payments being held by Jefferson-Pilot as set out in the April 18, 2003, order. Thompson argues that the trial court erred in awarding Bank of America the back payments being held because there was never a valid writ of garnishment until the October 4, 2002, writ issued. Thus, Thompson argues that because the earlier September 16, 1999, writ was invalid, the payments were wrongfully held by Jefferson-Pilot and must be paid to Thompson. Thompson filed the motion to quash the September 16, 1999, writ of garnishment but failed to ever obtain a judicial determination of the merits of the motion before Bank of America filed the writ of garnishment on October 4, 2002, which Thompson agrees was valid.

A writ of garnishment is a suit directed to a third party to determine whether the third party possesses property of the judgment debtor. Moory v. Quadras, Inc., 333 Ark. 624, 970 S.W.2d 275 (1998); New York Life Ins. Co. v. Cherry, 185 Ark. 984, 50 S.W.2d 584 (1932). The facts show that at the time the October 4, 2002 writ of garnishment issued, Jefferson-Pilot held $27,750 in annuity payments due Thompson that had accrued since the first writ of garnishment was issued on September 16, 1999. Thompson argues that Bank of America should not be allowed to obtain the $27,750, because Bank of America failed to obtain a valid writ of garnishment until after the amount was accrued and owed to Thompson.

The effect of the service of a writ of garnishment is to impound all property in the hands of the third-party garnishee that belongs to the judgment debtor at the time of the service, or that may thereafter come into his or her possession up until the filing of a true and correct answer. Harris v. Harris, 201 Ark. 684, 146 S.W.2d 539 (1941). A writ of garnishment reaches all property of the judgment debtor in the hands of the third-party garnishee. Arkansas Code Annotated Section 16-110-401 (Supp.2003) provides in pertinent part:

(a)(1) In all cases where any plaintiff may begin an action...