Poston v. Poston

ENTRY_ORDER.93-283; 161 Vt.591; 657 A.2d 1076

[Filed 17-Dec-1993]

                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 93-283

                             OCTOBER TERM, 1993


 Joanne Poston                     }          APPEALED FROM:
                                   }
                                   }
      v.                           }          Orleans Family Court
                                   }
                                   }
 James G. Poston                   }
                                   }          DOCKET NO. S60-89 OsF


              In the above entitled cause the Clerk will enter:

      Defendant appeals from a family court order adjudging Merrill Lynch,
 Pierce, Fenner & Smith, Inc. trustee of $31,588.68 of defendant's funds, and
 ordering execution therefor.  We affirm.

      Following the parties' divorce, plaintiff obtained judgment against
 defendant for unpaid child support, maintenance, and attorney's fees.
 Thereafter, she initiated trustee process, and when Merrill Lynch filed a
 disclosure indicating that it held funds belonging to defendant, plaintiff
 sought an order that Merrill Lynch be adjudged trustee and ordered to pay
 plaintiff the sum of $31,588.68.  Defendant failed to respond to plaintiff's
 motion for trustee process, but was allowed to present oral argument in
 opposition to the motion when the court scheduled a hearing on its own
 initiative.  See Williams v. Williams, 158 Vt. 574, 576, 613 A.2d 200, 201
 (1992) (court has discretion whether to hold hearing on post-trial motion).
 Plaintiff, citing V.R.C.P. 78(b)(1), contends that because defendant failed
 to file written objections to the motion, he should not have been allowed to
 raise oral objections at the hearing.  The only sanction specified in the
 rule, however, is that if no memorandum in opposition is filed, the court
 may dispose of the motion without argument.  Further, as defendant points
 out, subject matter jurisdiction is an issue that may be raised at any time,
 see V.R.C.P. 12(h)(3), and defendant may not be foreclosed from raising this
 issue.

      Defendant contests the court's subject matter jurisdiction over his
 Merrill Lynch Cash Management Account on two grounds: (1) the securities in
 the account were not physically seized as required by statute,  see 9A
 V.S.A. { 8-317(1) (no attachment of security valid unless actually seized by
 officer making attachment), and (2) the Cash Management account was not
 located in Vermont.  Defendant also argues that the court erred in ruling
 that personal jurisdiction over Merrill Lynch was a sufficient basis to
 sustain its jurisdiction over the assets in defendant's account, and

 

 reiterates his arguments in more general policy terms, asserting that the
 court's action runs counter to current trends in commercial law.

      Defendant contends that 9A V.S.A. { 8-317(1) requires actual physical
 seizure of the securities in his account or there is no subject matter
 jurisdiction over them.  Nothing in the record, however, identifies specific
 securities included in the account.  The disclosure by Merrill Lynch stated
 that the account contained "sufficient funds and/or securities," and that
 "said funds" had been restricted.  The disclosure acknowledges an
 obligation Merrill Lynch owes defendant but does not attempt to identify
 securities belonging to defendant.  The disclosure makes clear that this is
 not a case involving specific certificates of stock.  Cf. Bahre v. Pearl,
 595 A.2d 1027, 1033 (Me. 1991) (corporate shares are subject to attachment
 by actual seizure under { 8-317(1) "as tangible evidence of stock
 ownership").  If such were the case, the instruments themselves would be
 "the vital thing," and possession of the certificates would be essential in
 order to prevent attaching creditors "from securing rights paramount to
 those of purchasers who have actual possession of the security."  Uniform
 Laws Comments 1 & 3 to 9A V.S.A. { 8-317; see Neifeld v. Steinberg, 438 F.2d 423, 432 (3d Cir. 1971) (manual seizure of securities is required by { 8-317
 "to foreclose all possibility of the security finding its way into a
 transferee's hands" after attempted attachment).  Here, there is no reason
 for concern that specific securities in defendant's name might be
 transferred to a subsequent purchaser.  Defendant offered no evidence to
 support his claim that particular, identifiable securities, rather than a
 cash reserve, made up any part of the amount subject to trustee process.
 We conclude that 9A V.S.A. { 8-317(1) does not apply in this case.

      Defendant also argues that trustee process is an in rem action and the
 court lacked subject matter jurisdiction because the Cash Management Account
 is not located in Vermont.  The argument is without merit.  Defendant's Cash
 Management Account is an intangible asset -- a debt Merrill Lynch owes him -
 - not tangible property, such as certificates of stock.  See Bahre, 595 A.2d 
 at 1034 ("Whereas the common law proscription against attachment was
 premised on the intangible nature of the shares to be attached, the tangible
 nature of stock certificates makes them fully attachable . . . as a
 'chattel' of the debtor.").  A debt is subject to trustee process, Merrimack
 Sheet Metal, Inc. v. Liv-Mar, Inc., 147 Vt. 85, 87, 511 A.2d 992, 994 (1986)
 ("trustee's indebtedness to the judgment debtor is clearly subject to
 attachment"), and a nonresident's debt may be attached so long as the debtor
 has an agent in this state, 12 V.S.A. { 3016 ("[D]ebts due and owing from a
 person resident without the state, . . . having an authorized agent resident
 in the state, may be attached and holden by trustee process."); see Libra
 Bank Ltd. v. Banco Nacional de Costa Rico, 570 F. Supp. 870, 879 n.9
 (S.D.N.Y. 1983) (when court has personal jurisdiction over debtor, debt has
 situs in that jurisdiction); accord Champion Int'l Corp. v. Ayars, 587 F. Supp. 1274, 1275 n.1 (D. Conn. 1984); see also Levi Strauss & Co. v.
 Crockett Motor Sales, 739 S.W.2d 157, 158 (Ark. 1987) (wherever creditor may
 sue to recover debt, that debt may be attached as property, provided laws of
 forum authorize it).  Merrill Lynch, which is registered to do business in
 Vermont, is subject to service of trustee process, see 12 V.S.A. { 3013, and
 has made the required disclosure concerning defendant's Cash Management

 

 Account.  See V.R.C.P. 4.2(f).  We find no error in the court's assertion of
 jurisdiction over the Cash Management Account.

        With respect to defendant's remaining policy arguments, we find them
 to be without merit.  Merrill Lynch has submitted itself to jurisdiction,(FN1)
 and since the court retains personal jurisdiction over both plaintiff and
 defendant, see Gates v. Gates, 122 Vt. 371, 373, 173 A.2d 161, 162 (1961)
 (when personal jurisdiction is acquired over party in divorce action, it
 "persists through all proceedings deriving therefrom"); accord Smith v.
 Lorillard, Inc., 945 F.2d 745, 746 (4th Cir. 1991) (once court has in
 personam jurisdiction over defendant in underlying action, it retains
 jurisdiction for ancillary remedy of garnishment), no jurisdictional
 infirmities exist to invalidate the order adjudging Merrill Lynch as trustee
 of defendant's funds.

      Affirmed.



                                    BY THE COURT:




                                    Ernest W. Gibson III, Associate Justice


                                    John A. Dooley, Associate Justice


                                    James L. Morse, Associate Justice


                                    Denise R. Johnson, Associate Justice


                                    Albert W. Barney, Chief Justice (Ret.),
                                    Specially Assigned

         [x] Publish

         [ ] Do Not Publish

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                               Footnotes


FN1.    As a result of conflicting orders from courts in Texas and Vermont
 regarding the funds it holds in defendant's name, Merrill Lynch has filed an
 interpleader action in the federal District Court of Vermont.




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                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 93-283

                             DECEMBER TERM, 1993


 Joanne Poston                     }          APPEALED FROM:
                                   }
                                   }
      v.                           }          Orleans Family Court
                                   }
                                   }
 James G. Poston                   }
                                   }          DOCKET NO. S60-89 OsF


              In the above entitled cause the Clerk will enter:


      Plaintiff's petition for attorney's fees in the above-captioned matter
 is granted, and it is ordered that defendant shall pay to plaintiff
 attorney's fees and expenses in the amount of $4,257.68.






                                    BY THE COURT:



                                    Ernest W. Gibson III, Associate Justice


                                    John A. Dooley, Associate Justice


                                    James L. Morse, Associate Justice

                                    _______________________________________
                                    Denise R. Johnson, Associate Justice

                                    _______________________________________
                                    Albert W. Barney, Chief Justice (Ret.),
                                    Specially Assigned

         [x] Publish

         [ ] Do Not Publish