Walker v. Carolina Mills Lumber Co., Inc.

• Decision Date: 16 March 1983
• Parties: Elizabeth W. WALKER v. CAROLINA MILLS LUMBER COMPANY, INC. Civ. 3431-X.
• Court: Alabama Court of Civil Appeals

Page 1065

429 So.2d 1065

Elizabeth W. WALKER v. CAROLINA MILLS LUMBER COMPANY, INC.

Civ. 3431-X.

Court of Civil Appeals of Alabama.

March 16, 1983.

Irvin Grodsky of Grodsky & Wilson, Mobile, for appellant.

Wade B. Perry, Jr. and K.W. Michael Chambers of Johnstone, Adams, May, Howard & Hill, Mobile, for appellee.

BRADLEY, Judge.

This is an appeal in a garnishment case.

On September 1, 1960 Elizabeth W. Walker and Richard D. Walker, Jr. were divorced in the Circuit Court of Mobile County by a decree which ordered Walker to pay alimony and child support. Mrs. Walker, on February 12, 1980, filed a petition for a rule nisi in the Mobile County Circuit Court in which she claimed that her former husband was $41,200 in arrears in alimony and child support. The court entered a judgment against Walker in the amount of $43,061, which represented past-due alimony and child support payments and interest thereon. Subsequent to that judgment, Mrs. Walker filed a writ of garnishment against Carolina Mills Lumber Company, Inc., for which her former husband had been employed as a lumber brokerage agent working on a commission basis. The writ was served on Walker on July 18, 1980 and on Carolina Mills Lumber Company on July 21, 1980. Carolina Mills responded to the writ by answering that it was not indebted to Walker and that he owed the company $7,406.09 as of the date of service. Following a hearing at which the evidence was taken ore tenus, the trial court entered an order which found that Carolina Mills was indebted to Walker in the amount of $8,376.09 and that the writ of garnishment should attach to that amount.

The controversy in the instant appeal centers around the attachment of the writ of garnishment to Walker's commission account with Carolina Mills Lumber Company and for this reason we shall discuss in some detail the operation of the account and the trial court's conclusions in regard to it. Under his arrangement with Carolina Mills, Walker worked on a commission basis. His account was set up with the company in such a manner that a commission was credited to him when a sale was made. After a sales representative established a history of producing commissions, the company allowed him to make draws against amounts which had been credited to his account even though the balance had not been fully paid by the buyer. However, should any buyer's balance become uncollectible, an amount representing fifty percent of the gross sale, which was the amount of the commission on a sale, would be segregated into a reserve account and charged back against the salesman's commission account. Certain expenses incurred by the salesman and paid by the company were also charged back against the commission account. This charge-back procedure for uncollectible accounts could be made at any time that the company determined that the account was uncollectible and in any event was normally made by the end of the company's accounting year on August 31.

Evidence on the record indicates that the above-described arrangement existed between Walker and Carolina Mills Lumber Company from the time he began working for the company in 1978 until February or March of 1980. At that time he approached company officials about changing his commission account into his present wife's name, stating as his reasons the fact that he had suffered a mild heart attack and a desire to involve her in the business. Walker received payments in his name exclusively until July 28, 1980, at which time the company began to split payments between Walker and his present wife by his request. On July 28, 1980, August 4, 1980, and August 11, 1980, payments were made in dual names. Thereafter, at the end of the company's accounting year on August 31, 1980, payments were made exclusively to the present Mrs. Walker. During a period of eleven or twelve months prior to July 31, 1980, a balance of $23,156.95 was held in Walker's reserve account and represented an unpaid balance from a buyer. The company charged back this figure to Walker's commission account on July 31, 1980, one month before the close of its accounting year on August 31, 1980.

From the facts before it, the trial court found that as of July 21, 1980, the date of the service of the writ of garnishment, Carolina Mills owed Walker $7,365.09 plus commissions earned from July 1, 1980 through July 21, 1980. It also found that this amount--i.e. $7,365.09 plus accrued commissions--was owed to Walker absolutely since no charge-backs from the reserve account had been made as of the date of service of the writ. During July and August of 1980, Walker was found to have received draws totaling $1,134, and the court further concluded that his present wife also received draws from the commission account during that time period. The court also found that commissions in the amount of $7,972.10 were credited to the account at the end of July and that $23,156.95 was deducted because of the unpaid balance from a previous sale which had become uncollectible. Based on these facts, the trial court concluded that the writ of garnishment should attach to $7,365.09, which Carolina Mills owed Walker on July 21, 1980, the date of service. The writ also attached to twenty-five percent of the amounts paid by the company to Walker after that date, which figure totaled $284. In regard to the charge-back of $23,156.95 from the reserve account, the court concluded that the debt was contingent until the offset was actually made on July 31, 1980. Finally, the trial court found that Mrs. Walker failed to prove fraud in connection with the transfer of the commission account to Walker's present wife and that any sums paid out under this arrangement were not subject to the writ of garnishment. However, after issuing its findings of fact and conclusions of law, the trial court, acting on a motion from Mrs. Walker, altered its findings to read that the transfer of the account into the present Mrs. Walker's name was motivated by a fraudulent intent on the part of Walker but failed to find that Carolina Mills had acted collusively. The court left standing its conclusion of law which prevented the writ from attaching to sums paid to the present Mrs. Walker under the new arrangement. Mrs. Walker has appealed to this court from the trial court's judgment, and Carolina Mills has cross-appealed.

The first issue raised by Mrs. Walker for our consideration concerns the transfer of the account with Carolina Mills Lumber Company from Walker's name into the name of his present wife. Mrs. Walker claims that this transfer was fraudulent and that the writ of garnishment should attach to twenty-five percent of all sums paid under it until her judgment for arrearages in alimony and child support is satisfied. She stresses that the assignment was made after the service of the writ of garnishment and that this fact shows that the transaction was infected with fraud. Carolina Mills, on the other hand, argues that the assignment of the commission account to the present Mrs. Walker was made in the normal course of business and for business reasons. The company indicates that Walker had discussed the possibilities of such a transfer as early as February or March of 1980 before the writ was served and that the transfer process was not completed until near the end of its accounting year on August 31 for reasons of convenience. The company further contends that it was not acting fraudulently in connection with the transfer but was merely complying with Walker's request that he be relieved of some responsibility for health reasons and so that his present wife could become more involved in the business. It is the company's position that any sums paid to the present Mrs. Walker are shielded from the writ of garnishment.

The garnishment process provides a method through which a creditor can recover amounts owed by a third person to the debtor. Under Alabama law the garnisheeing creditor assumes those rights which could be asserted by the debtor against a third person in an action for debt or...