CARL J. BROWN v. COMMONWEALTH OF KENTUCKY, NATURAL RESOURCES AND ENVIRONMENTAL PROTECTION CABINET
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RENDERED: OCTOBER 8, 1999; 10:00 a.m.
TO BE PUBLISHED
C ommonwealth O f K entucky
C ourt O f A ppeals
NO.
NO.
1998-CA-000840-MR (Direct)
1998-CA-000901-MR (Cross)
CARL J. BROWN
v.
APPELLANT/CROSS-APPELLEE
APPEAL AND CROSS-APPEAL FROM FRANKLIN CIRCUIT COURT
HONORABLE ROGER L. CRITTENDEN, JUDGE
ACTION NO. 1995-CI-01796
COMMONWEALTH OF KENTUCKY,
NATURAL RESOURCES AND
ENVIRONMENTAL PROTECTION
CABINET
APPELLEE/CROSS-APPELLANT
OPINION
REVERSING IN PART, VACATING IN PART, AND REMANDING
** ** ** ** **
BEFORE:
BUCKINGHAM, HUDDLESTON, AND KNOPF, JUDGES.
KNOPF, JUDGE:
Introduction
Carl Brown appeals and the Commonwealth’s Natural
Resources and Environmental Protection Cabinet (NREPC or the
Cabinet) cross-appeals from March 12, 1998, and January 22, 1998,
orders of Franklin Circuit Court subjecting portions of two (2)
checking accounts owned by Brown and his wife to garnishment, and
exempting from garnishment other portions of those accounts.
Being persuaded that both Brown’s appeal (1998-CA-000840) and the
Cabinet’s cross-appeal (1998-CA-000901) identify matters that
must be corrected or reconsidered, we reverse in part and vacate
in part the circuit court’s orders and remand for additional
proceedings.
In May 1997, the circuit court, on behalf of NREPC,
found Brown liable for coal-mining violations and upheld
penalties the Cabinet had assessed against him.1
In July 1997,
the circuit court issued orders of garnishment pursuant to the
May judgment, which the Cabinet served on two (2) banks
maintaining joint checking accounts for Brown and his wife.
One
of the banks surrendered the money it held ($322.39) to the
Cabinet, and the other transferred its disputed funds ($1,473.27)
to the court.
Brown asserted (it has since been stipulated) that
the accounts contained no funds except wages paid to Brown or his
wife, and thus that they were protected by two (2) statutory
exemptions: one protecting his wages pursuant to KRS 427.010, and
one protecting his wife’s wages pursuant to KRS 390.310.
The
trial court rejected Brown’s claim with respect to his wife’s
wages, but agreed that KRS 427.010 precluded garnishment of the
accounts to the extent that they could be shown to contain
Brown’s wages.
Brown appeals from the determination that his
1
In January[] 1999, this Court affirmed the liability
determination against Brown, but remanded for reconsideration of
the penalty. Because some penalty, albeit not necessarily the
original one, remains in effect, the issues raised on this appeal
require consideration on the merits. Price v. Commonwealth of
Kentucky, Transportation Cabinet, Ky., 945 S.W.2d 429 (1996).
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wife’s wages are subject to garnishment, the Cabinet from the
determination that Brown’s are not.
Discussion
Standard of Review
The trial court's interpretation of a garnishment or
exemption statute is, of course, a question of law.
This Court
reviews the trial court's legal conclusions de novo.
Louisville
and Nashville Railroad Co. v. Commonwealth, ex rel Kentucky
Railroad Commission, Ky., 314 S.W.2d 940, 943 (1958).
When
interpreting a statute, we look to the statute's express language
and overall purpose.
Democratic Party of Kentucky v. Graham,
Ky., 976 S.W.2d 423 (1998); Kentucky Region Eight v.
Commonwealth, Ky., 507 S.W.2d 489 (1974).
the language of the statute itself.
The task begins with
When a statute's language is
plain, “the sole function of the courts is to enforce it
according to its terms."
Caminetti v. United States, 242 U.S.
470, 485, 37 S. Ct. 192, 194, 61 L. Ed. 442 (1917); Bailey v.
Reeves, Ky., 662 S.W.2d 832 (1984).
When the statute’s language
admits of more than one reasonable interpretation, however,
courts attempt to understand the legislative intent by
considering the legislative history, the statutory context, and,
where the statute is plainly based on or intended to coordinate
with legislation from another jurisdiction, the construction of
similar statutes by other courts.
Schmitt Furniture Company,
Inc. v. Commonwealth of Kentucky Revenue Cabinet, Ky., 722 S.W.2d
889 (1987); Burke v. Stephenson, Ky., 305 S.W.2d 926 (1957); City
of Owensboro v. Noffsinger, Ky., 280 S.W.2d 517 (1955); and City
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of Covington v. State Tax Commission, 257 Ky. 84, 77 S.W.2d 386
(1934).
Brown’s Wages
We shall first address the issue concerning Brown’s
wages and KRS 427.010.
KRS Chapter 427 is titled Exemptions, and
section .010 of that chapter provides in pertinent part as
follows:
(2) Except as provided in subsection (3) of
this section and KRS 427.050, the maximum
part of the aggregate disposable earnings of
an individual for any workweek which is
subjected to garnishment may not exceed the
lesser of either:
(a) Twenty-five percent of his disposable
earnings for that week, or
(b) The amount by which his disposable
earnings for that week exceed thirty times
the federal minimum hourly wage prescribed by
Section 6 (a) (1) of the Fair Labor Standards
Act of 1938 in effect at the time the
earnings are payable. In the case of
earnings for any pay period other than a
week, the multiple of the federal minimum
hourly wage equivalent to that set forth in
paragraph (b) of this subsection as
prescribed by regulation by the federal
secretary of labor shall apply.
(3) The restrictions of subsection (2) of
this section do not apply in the case of:
(a) Any order of any court for the support of
any person.
(b) Any order of any court of bankruptcy
under Chapter 13 of The Bankruptcy Code.
(c) Any debt due for any state or federal
tax.
This statute is modeled upon the federal Consumer
Creditor Protection Act (the "CCPA").2
2
That act requires state
Congress enacted Subchapter II of the CCPA (15 U.S.C. §§
1671-1677) in 1968 for the purpose of imposing nationwide
restrictions on garnishments to protect debtors from the
predatory lending practices of some credit institutions. Kokoszka
v. Belford, 417 U.S. 642, at 650-51, 94 S.Ct. at 2435-36. 15
(continued...)
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garnishment exemption statutes to comply with federal limitations
on amounts that may be garnished.
Consequently, most state wage
garnishment exemption statutes, including Kentucky’s, track the
language of the federal act.
The Supreme Court interpreted the
federal act in Kokoszka v. Belford, 417 U.S. 642, 94 S. Ct. 2431,
41 L. Ed. 2d 374 (1974), and determined that a tax refund did not
constitute "disposable earnings" under the CCPA and therefore was
not exempt from administration in Kokoszka's bankruptcy case.
In
reaching this decision, the Supreme Court analyzed the purpose of
the CCPA and stated that
[i]ndeed, Congress' concern [in passing the
act] was not the administration of a
bankrupt's estate but the prevention of a
bankruptcy in the first place by eliminating
“an essential element in the predatory
extension of credit resulting in a disruption
of employment, production, as well as
consumption” and a consequent increase in
personal bankruptcies.
Id. at 650, 94 S. Ct. at 2436 (footnote omitted) (citing H.R.
Rep. No. 1040, 90th Cong., 1st Sess., 20 (1967)).
The Court, making further reference to the legislative
history of the CCPA, went on to explain that
“[t]he limitations on the
garnishment of wages adopted . . .
while permitting the continued
orderly payment of consumer debts,
will relieve countless honest
debtors driven by economic
desperation from plunging into
bankruptcy in order to preserve
their employment and insure a
2
(...continued)
U.S.C. § 1671. The CCPA, which became effective on July 1, 1970,
preempts any less restrictive state garnishment statutes. 15
U.S.C. § 1673(c).
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continued means of support for
themselves and their families.”
Id. at 651, 94 S. Ct. at 2436 (quoting H.R. Rep. No. 1040, 90th
Cong., 1st Sess., 21 (1967)).
From this history, the Supreme
Court summarized that "Congress, in an effort to avoid the
necessity of bankruptcy, sought to regulate garnishment in its
usual sense as a levy on periodic payments of compensation needed
to support the wage earner and his family on a week-to-week,
month-to-month basis."
Id.
As noted by the Supreme Court in Kokoszka, the federal
CCPA did not create a true exemption applicable to bankruptcy
proceedings, but sought instead to prevent bankruptcies by
protecting the debtor’s employment.
This protection consisted of
a limitation on the portion of earnings subject to the employer’s
garnishment and a prohibition against discharging employees
because their earnings had been garnisheed for any one
indebtedness.
These provisions were not intended to create a new
fund beyond the reach of creditors, but only to prevent creditors
from unduly burdening the employment relationship.
The act’s reference to wages “payable or paid” has also
required interpretation.
Is it applicable only to wages still
under the employer’s control, or is it meant to apply to wages
even after they have been transferred to the employee?
In light
of the CCPA’s limited purpose, virtually all of the courts to
consider whether that act applies to wages deposited into bank
accounts or otherwise removed from the employer’s control have
found that it does not.
In re Lawrence, 219 B.R. 786 (Bankr.
E.D. Tenn. 1998) (collecting cases); Usery v. First National Bank
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of Arizona, 586 F.2d 107 (1978).
The CCPA, however, establishes
only a floor of debtor protection; states are free under the act
to impose their own more rigorous restrictions on garnishment.
The first question before us, therefore, becomes whether
Kentucky’s adoption of the CCPA evidences an intention to extend
the act’s protection to wages that have passed from the employer
to the employee’s bank account.
In ruling that it does, the trial court relied heavily
upon our Supreme Court’s opinion in Matthews v. Lewis, Ky., 617
S.W.2d 43 (1981).
In that case, workers’ compensation benefits
in the appellant’s checking account had been garnisheed, and the
Court was asked to decide whether KRS 342.180 precluded the
That statute provided3 in part that “[n]o claim for
garnishment.
compensation under this chapter shall be assignable; and all
compensation and claims therefor shall be exempt from all claims
of creditors.”
The Court ruled that this language was intended
to preclude garnishment, and observed that
[o]ur society's contemporary social programs
exhibit a philosophy of relief for the
distressed, the impoverished, and the victims
of personal and financial catastrophes among
us. The Workers' Compensation Act is simply
one aspect of those social programs.
Kentucky's exemption statutes are simply
another necessary instrument in the overall
scheme of social welfare programs. They are
the teeth in the prosecution [sic] given
certain deserving victims from their
creditors.
. . . .
We hold that unless they provide clearly
to the contrary, Kentucky's exemption
3
KRS 342.180 was amended in 1994.
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statutes, including but not limited to KRS
342.180, extend protection to deposits in
bank checking accounts so long as those
deposits can be identified as or traced to
payments of exempt funds.
Id. at 44, 46.
Believing the pertinent portions of KRS 427.010 to be
an exemption statute, and believing the portions of Matthews just
quoted to apply thereto, the trial court concluded that Brown’s
wages traceable to his checking accounts were subject to the
statutory limitations on garnishment.
We disagree.
As discussed above, KRS 427.010(2) and (3) appear to
create what is most accurately called a restriction on
garnishment, not, as did the workers’ compensation statute at
issue in Matthews, a true exemption with bankruptcy
ramifications.
KRS 427.010(2), it will be recalled, provides
only that “the maximum part of the aggregate disposable earnings
of an individual for any workweek which is subjected to
garnishment may not exceed . . . .” (emphasis added).
KRS
342.180, on the other hand, as it did at the time of Matthews,
still provides in part that “all compensation and claims therefor
. . . shall be exempt from all claims of creditors.” (emphasis
added).
Here and elsewhere, the General Assembly has
demonstrated that, when it intends an exemption, it says so.
See, for example, KRS 40.550(3) (“no claim for payment shall be
subject to attachment, levy, garnishment or seizure by or under
any legal or equitable process whatever”) and KRS 61.690 (“All
retirement allowances and other benefits . . . are hereby exempt
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from any state, county, or municipal tax, and shall not be
subject to execution, attachment, garnishment, or any other
process, and an assignment thereof shall not be enforceable in
any court.”)
We note that the states whose courts have found in
their wage protection statutes a true exemption are all states
whose legislatures modified the federal statute to make that
intention clear.
They have precluded not just the garnishment of
wages beyond the twenty-five (25) percent limit, but the
“attachment or execution upon” such wages as well.
Lawrence, supra.
In re
This is the sort of language legislatures use
to create exemptions, the General Assembly included.
We are thus
persuaded that KRS 427.010 is not an exemption statute and,
therefore, that Matthews does not bear on our interpretation of
it.
We also note that the Supreme Court’s opinion in Kokoszka
and the Ninth Circuit’s opinion in Usery, supra, are more than
twenty (20) years old now and may be presumed to have come to the
General Assembly’s attention.
That the General Assembly has not
in the interim deviated from the federal version of the law
strongly suggests an intention to adopt the federal
interpretation.
Democratic Party v. Graham, supra.
We conclude
that KRS 427.010(2) and (3) provide only for limited debtor
protection and not for a broader exemption such as that created
by KRS 432.180 and similar statutes.
We conclude further that
the limited protection is the same found to have been provided by
the federal CCPA, that is, a limitation only on the extent to
which an employee’s earnings may be garnisheed at his or her
workplace.
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Brown maintains that this construction cannot be
correct because it renders the statute meaningless.
What relief
is there for the debtor, he wonders, if the creditor need only
replace his garnishment of the employer with a garnishment of the
bank?
We believe, however, that the difference is significant.
Checking accounts are not as necessary as employment to the
financial viability of a household.
Furthermore, the limited
protection afforded by the law encourages debtors and creditors
alike to consider the long-term ramifications of the garnishment.
Thus, both the creditor and the debtor must decide whether they
would not be better off in the long run if the debtor was not
forced into bankruptcy, but was instead encouraged to continue
working and steadily repaying his debts.
We do not agree,
therefore, that KRS 427.010(2) and (3) are meaningless unless
extended to wages deposited in a checking account.
We do agree with Brown, however, that at least the
secondary purposes of the statute are to some extent compromised
by the garnishment at issue here.
For, while the debtor’s plunge
into bankruptcy is made likely if all or most of his wages are
intercepted before he receives them, confiscation of the debtor’s
wages immediately after receipt tends toward the same result.
The question arises, therefore, whether there is not a more
generous interpretation of the statute than the one we have
suggested.
Would it not be possible to do both, to protect more
fully than the CCPA seems to do the debtor’s interest in
maintaining a viable household as he gradually climbs out of
debt, while at the same time avoiding the creation of a new
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exemption?
It is conceivable, for example, that wages in a
checking account could be afforded protection from creditors as
long, but only as long, as the debtor refrained from bankruptcy
and continued to work under a limited wage garnishment.
We are not persuaded, however, that KRS 427.010(2)-(3)
can reasonably be read to afford such protection.
Neither it,
the similar sister-state statutes, nor the CCPA has ever, to our
knowledge, been so read.
Nor is the General Assembly likely to
have intended such protection without having said so more clearly
than KRS 427.010 does.
We conclude, therefore, that, while the
employment protection afforded by KRS 427.010(2)-(3) may provide
only a weak and imperfect bulwark against bankruptcy, that
imperfection does not render the statute meaningless, nor does it
compel the interpretation adopted by the circuit court.
Accordingly, we reverse the portion of the trial court’s judgment
that excluded from the Cabinet’s order of garnishment the
portions of Brown’s checking accounts attributable to his wages.
Brown’s wife’s wages
The parties stipulated that Brown’s wife, Darla,
contributed about forty-four (44) percent of the monies held in
the garnished accounts.
Brown claims that Darla’s contributions
are “exempt” from garnishment, and that the trial court erred by
failing to so rule.
The trial court, relying on Barton v.
Hudson, Ky. App., 560 S.W.2d 20 (1977), held that, because Brown
was authorized by the terms of the accounts to withdraw all the
money in them, they should be deemed his separate property for
garnishment purposes.
Again, we must disagree.
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We are
persuaded that the trial court has read Barton too broadly and in
so doing has run afoul of statutory provisions for the joint
ownership of checking accounts.
It is well at the outset of our discussion of this
issue to address a point of terminology.
The garnishment
statute, KRS 425.501(5), provides in part that a challenged order
of garnishment may not be upheld unless “the court finds that the
garnishee was, at the time of service of the order upon him,
possessed of any property of the judgment debtor, or was indebted
to him, and the property or debt is not exempt from execution . .
. .” (emphasis added).
The question raised by Darla’s
contribution to the checking accounts does not concern an
exemption, as the parties seem to have presumed, but rather the
other prong of KRS 425.501(5), that is, whether and to what
extent the garnishee banks are “possessed of any property of the
judgment debtor . . . .”
Because the judgment creditor can
acquire an interest in garnished property no greater than the
judgment debtor’s, proof of the debtor’s non-interest will defeat
the garnishment.
Bank One, Pikeville, Kentucky v. Commonwealth
of Kentucky, Natural Resources and Environmental Protection
Cabinet, Ky. App., 901 S.W.2d 52 (1995).
In Barton v. Hudson, this Court was asked to decide
whether a joint checking account between husband and wife with
right of survivorship was subject to garnishment by a creditor of
the husband, or whether, like similarly owned realty, the
checking account was immune from such execution.
The Court
distinguished the two (2) forms of property, in part on the
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ground that either the husband or the wife alone could alienate
the funds in the account, and upheld the garnishment.
As the
Court noted, although a few states regard spouses’ jointly held
checking accounts as tenancies by the entirety in which neither
spouse has a separate interest, the majority rule is otherwise.
560 S.W.2d at 22 (citing Annot. “Joint Bank Account as Subject to
Attachment, Garnishment, or Execution by Creditor of one of the
Joint Depositors” 11 A.L.R.3d 1465, II, § 3).
It thus having been determined that joint accounts are
not immune from garnishment, the next question is to what extent
is the account vulnerable?
In Barton, the Court upheld the
garnishment to the full extent of the husband’s debt, but the
question of the husband’s ownership does not seem to have been an
issue in that case, inasmuch as the Court did not discuss the
wife’s countervailing interest or the rule that the judgment
creditor acquires an interest in the garnished property no
greater than the debtor’s.
Courts that have addressed this question have divided
on the extent to which the debtor’s access to the full account
should be deemed proof of his or her ownership thereof.
The
Supreme Court of Minnesota, for example, has ruled that a joint
owner of a checking account may, at least with respect to
creditors, be conclusively presumed to own the entire balance,
the other owners, whether contributors or not, having assumed the
risk that any one of them might compromise it.
v. Trach, 47 N.W.2d 194 (Minn. 1951).
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Park Enterprises
Most courts, however, more sensitive than the Minnesota
Court to the due process concerns involved and to the fact that
people use such accounts for myriad purposes, have adopted a less
categorical approach.
Nebraska’s courts, for instance, presume
initially that joint-account holders own the account in equal
proportions, but the presumption may be rebutted by evidence of
the owners’ different contributions, different degrees of
control, and/or different intentions.
The burden of proof is on
the party attacking the presumption.
In re Overton, 169 B.R. 196
(Bankr. D. Neb. 1994).
Hawaii’s courts, on the other hand,
presume that a joint-account holder owns the entire account, but
allows her, or any other joint tenant, to rebut the presumption
by suitable proof.
Traders Travel International, Inc. v. Howser,
753 P.2d 244 (Haw. 1998).
See also Maloy v. Stuttgart Memorial
Hospital, 872 S.W.2d 401 (Ark. 1994).
According to the A.L.R.
annotation cited in the Barton opinion, Hawaii’s approach is that
of the majority.
This rule is favored in large part because it
puts the burden of proving the nature of the account on those in
the best position to do so.
Traders Travel International, Inc.
v. Howser, supra; 11 A.L.R.3d 1476 (1967, supp. 1999).
The trial court here apparently understood Barton to
imply a rule similar to Minnesota’s.
Brown’s access to the
entire balances of the joint accounts, the court ruled, passed to
the Cabinet.
Its transfer of the accounts to itself, therefore,
would injure Darla no more than would Brown’s unilateral emptying
of them.
As noted, however, we are not persuaded that Barton
even addressed this issue, much less decided it in this manner.
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On the contrary, we believe that provisions of KRS Chapter 391
require a different result.
KRS 391.310 provides in pertinent part as follows:
(1) A joint account belongs, during the
lifetime of all parties, to the parties in
proportion to the net contributions by each
to the sums on deposit, unless there is clear
and convincing evidence of a different
intent.
A party’s “net contribution” to the account is defined
at KRS 391.300(6) as
the sum of all deposits thereto made by or
for him, less all withdrawals made by or for
him which have not been paid to or applied to
the use of any other party, plus a pro rata
share of any interest or dividends included
in the current balance. The term includes,
in addition, any proceeds of deposit life
insurance added to the account by reason of
the death of the party whose net contribution
is in question[.]
Finally, KRS 391.305 provides that
The provisions of KRS 391.310 to 391.320
concerning beneficial ownership as between
parties, or as between parties and P.O.D.
payees or beneficiaries of multiple-party
accounts, are relevant only to controversies
between these persons and their creditors and
other successors, and have no bearing on the
power of withdrawal of these persons as
determined by the terms of account contracts.
The provisions of KRS 391.335 to 391.360
govern the liability of financial
institutions who make payments pursuant
thereto, and their set-off rights.
The Browns maintain that these statutes limit Brown’s
(and hence the Cabinet’s) interest in the accounts to his net
contributions thereto unless it can be shown that he and Darla
intended something different.
The trial court, on the other
hand, ruled that these statutory provisions do not apply in this
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case because the chapter in which they appear, which is entitled
Descent and Distribution, applies only to situations involving a
death.
With a significant proviso, we agree with the Browns.
While it is true that courts interpreting statutes need
be sensitive to their context, the more fundamental rule is that
courts give effect to the statute’s plain meaning.
Reeves, supra.
Bailey v.
The codification of statutes, moreover, by means
of titles and chapter headings does not alter that plain meaning.
KRS 446.140.
Property interests in particular, which arise in so
many different legal contexts, defy neat statutory
compartmentalization.
That property interests in addition to
those pertaining to decedents and their estates should be
addressed in KRS Chapter 391 is no less to be expected than that
provisions regarding decedents will be addressed in Chapters
other than 391.4
similar to ours).
Cf. In re Overton, supra (construing a statute
The trial court thus erred, by failing to
apply to this case the above-quoted joint-account provisions.
Those provisions expressly distinguish between the
customers’ agreement with the bank concerning each joint tenant’s
authority to draw on the joint account, and the ability of
creditors to reach account funds contributed by a non-debtor
joint tenant.
distinction.
Courts are obliged, therefore, to consider that
Contrary to Brown, however, who naturally favors, a
presumption that he held no interest in Darla’s wages, we agree
with those courts, such as the Hawaii court cited above, that
4
See for example KRS 381.120.
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have held that a party to a joint account may, for attachment and
execution purposes, initially be presumed to own the entire joint
account.
Upon notice and objection, however, the debtor or any
third-party account tenant may rebut that presumption by proof of
separate net contributions to the account and an intention that
the non-contributor’s use of the other’s contributions be
limited.
11 A.L.R.3d 1476 § 8 (1967, supp. 1999).
The parties
in this case stipulated that the Browns contributed to their
joint checking accounts in particular net amounts.
If Brown can
further show that Darla was sufficiently removed from Brown’s
indebtedness or that Brown and Darla mutually understood that
Brown would not subject her portion of the account to such a
risk, then garnishment of Darla’s share of the accounts would be
inappropriate.
Accordingly, we must vacate this portion of the
trial court’s judgment and remand for additional findings on the
extent of Brown’s ownership of the joint accounts and the extent
otherwise to which the joint accounts are vulnerable to the order
of garnishment.
Procedural Questions
We need, finally, to address some procedural matters.
First, Darla participated before the trial court and has
attempted to join this appeal even though she has never formally
become a party.
but assured.
Her right to intervene in the appeal is anything
Pearman v. Schlaak, Ky., 575 S.W.2d 462 (1978).
To
be sure, Darla’s claimed interest in the garnisheed accounts
makes her intervention in the proceedings appropriate.
CR 19.01.
The better practice, however, is for her formally to intervene
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before the trial court.
CR 24.01.
Our remand of this case will
give her an opportunity to do so.
Next, the Cabinet maintains that Brown waived his right
to object to the garnishment by failing to abide by the terms of
the garnishment order.
Pursuant to KRS 425.501 and CR 69.02,
that order instructed the garnishee banks to forward a copy of
the order to Brown.
It also, apparently for the sake of
administrative efficiency, advised Brown that he might request a
hearing to challenge the order provided he file his request
“within ten (10) days of the Garnishee’s Date of Receipt . . . .”
The date of receipt was July 25, 1997, and Brown’s notice of
exceptions to the order was not filed until August 6, 1997.
The
Cabinet complains that Brown’s notice was untimely and was also
defective in that it did not expressly request a hearing.
The
Cabinet’s complaints merit only brief comment.
As the trial court noted, neither of these particular
requirements is contained in CR 69.02.5
5
They are incorporated in
CR 69.02 provides in part as follows:
Except for child support arrearages, where
wages are garnisheed, the attorney for the
party in whose behalf the order of wage
garnishment was issued, or the clerk of the
court if such party has no attorney of
record, shall safely hold the garnisheed
funds in escrow for a period of fifteen (15)
days from the issuance date of the employer’s
garnishment check. If the debtor files an
objection within that period, the funds shall
continue to be held until the court rules
upon the objection. If an exemption is
asserted and a hearing held, the attorney or
clerk of the court shall disburse the
garnisheed funds as ordered by the court. If
no exemption is asserted the attorney or
(continued...)
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the standard garnishment order to facilitate processing.
Because
these requirements exist only for the convenience of the trial
court, the trial court is precluded from enforcing them in so
strict a manner as to be inconsistent with CR 69.02, and, of
course, is afforded broad discretion to enforce them leniently.
West v. West, Ky., 830 S.W.2d 379 (1992); Ready v. Jamison, Ky.,
705 S.W.2d 479 (1986).
That is what it chose to do here.
Because the debtor’s notice from the garnishee was by mail, the
court read the ten-day requirement as including a three-day
notice period, (CR 6.05), by virtue of which Brown’s exceptions
were timely.
The court construed the order’s “request a hearing”
provision to require only that the debtor’s exceptions include
reasons therefore sufficient to raise a genuine issue.
exceptions clearly did.
Brown’s
These rulings in no way exceeded the
trial court’s broad discretion to manage its own docket.
Conclusion
In sum, we are persuaded that KRS 427.010(2) does not
create a true exemption and thus does not shield Brown’s wages
from garnishment after they have passed from his employer’s
control.
We are also persuaded that KRS 391.310 limits, at least
potentially, Brown’s ownership of the checking account he shares
with his wife and thus limits, potentially, the extent to which
the account may be garnished.
5
Brown and his wife (after proper
(...continued)
clerk of the court shall after the fifteen
(15) day period disburse the funds to the
party in whose behalf the order of
garnishment was issued.
-19-
intervention) must therefore be afforded an opportunity to prove
that such a limitation exists.
For these reasons, we reverse in part and vacate in
part the March 12, 1998, and January 22, 1998, orders of Franklin
Circuit Court, and remand for additional proceedings consistent
herewith.
ALL CONCUR.
BRIEFS FOR APPELLANT/CROSSAPPELLEE:
BRIEFS FOR APPELLEE/CROSSAPPELLANT:
Steve P. Robey
Valerie L. Bock
Law Office of Steve P. Robey
Providence, Kentucky
Michael P. Wood
Natural Resources and
Environmental Protection
Cabinet
Frankfort, Kentucky
-20-
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