Licursi v. Sweeney

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NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
40 as well as formal revision before publication in the Vermont Reports.
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                           No. 90-546 and 90-547

Jane Licursi                                 Supreme Court

     v.                                      Lamoille Superior Court

David J. Sweeney, William A. Kelk,           June Term, 1991
Esq., and Home Insurance Co., Trustee

Jane Licursi


David J. Sweeney, R. Bruce Nourjian,
William Kelk, Libas Corp. and
Home Insurance Co., Trustee

Shireen Avis Fisher, J.

Harold B. Stevens of Stevens Law Office, Stowe, for plaintiff-appellee

Todd C. Hartsuff of Robert P. Davison, Jr., P.C., Stowe, for defendants-

PRESENT:  Allen, C.J., Gibson, Dooley, Morse and Johnson, JJ.

     GIBSON, J.    Defendant David J. Sweeney appeals from the denial by
Lamoille Superior Court of his motion to dissolve an attachment obtained by
plaintiff in post-judgment trustee process against assets of defendant held
by Home Insurance Company.  We affirm in part, reverse in part, and remand
for further proceedings.
     In 1985, plaintiff obtained a foreclosure decree, granting her title to
property that had been mortgaged to defendant and awarding judgment for
attorney's fees and court costs in the amount of $3,502.59.  In 1990,
plaintiff served a motion for post-judgment trustee process on the Home
Insurance Company (Home), which disclosed that it was in possession of
$3,500 belonging to defendant.  On June 8, 1990, defendant moved to limit
the summons to trustee, arguing that a portion of the amount held by Home in
an escrow account on defendant's behalf was exempt from trustee process
under the provisions of 12 V.S.A. { 2740. (FN1) On August 3, 1990, the Lamoille
Superior Court concluded that the $3,500 held by Home was not exempt from
trustee process.
     In his motion to reconsider and a subsequent motion to dissolve,
modify, or discharge trustee process, defendant again argued his case on the
basis of asserted statutory exemptions to trustee process.  Both motions
were denied.  The court concluded that 12 V.S.A. { 2740(7), relating to the
availability of "unused" exemptions under { 2740(1), (2), (4), (5), and (6),
did not apply to defendant, first, because the $400 exemption set forth in
that provision had been previously claimed in an unrelated litigation in the
Washington Superior Court, and second, because plaintiff had not attached
any of the items specified in the subdivisions listed in subdivision (7).
The court also ruled that the "bank deposits or deposit accounts" exemption
of 12 V.S.A. { 2740(15) did not apply to the $3,500 held by Home.  The
present appeal followed.
     Defendant contends first that the notice of hearing, summons to trustee
and list of exemptions were invalidly served for a number of technical
reasons, including failure to serve defendant's new attorney and failure to
comply with the service requirements of V.R.C.P. 4.2 and 12 V.S.A. { 2732.
These arguments were not raised below, however, and cannot be asserted here
for the first time.  In re Robinson/Keir Partnership, 154 Vt. 50, 57, 573 A.2d 1188, 1192 (1990).
     Defendant next argues that the trial court erred in concluding that the
$400 exemption under { 2740(7), allowable without reference to other sub-
divisions, should be denied because it had been claimed in an unrelated
litigation.  We agree with defendant.  First, the court's statement that
"[d]efendant is not permitted to assert the same exemption from the same
proceeds a second time" is clearly limited to the rule that applies within a
single litigation, where a judgment debtor is limited as to the amount of
any applicable exemption that may be claimed for funds in his or her
possession at any one time.  As the court stated in New Amsterdam Casualty
Co. v. Waller, 196 F. Supp. 780, 785 (M.D.N.C. 1961), rev'd on other
grounds, 301 F.2d 839 (4th Cir. 1962):
          The correct rule is that a judgment debtor may claim his
          exemption as against successive executions but may not
          have exempt funds in his possession at any one time in
          excess of his exemption.  Stated another way, a judgment
          debtor is privileged to make successive claims for his
          exemption, but may not hold free from execution at any
          one time an amount in excess of his exemption.

Thus, a judgment debtor, under this analysis, may claim an exemption more
than once, even against the same creditor, if the debtor does not have funds
in his possession at any one time in excess of the amount of his exemption.
     The trial court's conclusion is also at odds with the plain language
and purpose of { 2740.  Most of the subdivisions of the statute are based on
the Legislature's views of the debtor's minimal needs -- needs that would
not tend to decline as the number of creditors increased.  It would, for
example, be irrational to protect a debtor's wedding ring ({ 2740(3))
against the first creditor, but make it available to the second.  The
purpose of the statute is to afford debtors protection from the loss of
property specified by the Legislature as essential to living and working.
Hooper v. Kennedy, 100 Vt. 314, 316, 137 A. 194, 195 (1927); Webster v.
Orne, 45 Vt. 40, 42 (1872).  It would make little sense to allow specific
exemptions against only the first attaching creditor.  Under such con-
struction, debtors with more than one creditor would be at risk of losing
an exemption, even though such debtors might be the ones most in need of
protection.  The trial court should have allowed the $400 exemption.
     The court also erred in denying defendant the benefit of the additional
exemption in { 2740(7), for "up to $7,000.00 of any unused amount of the
exemptions provided under subdivisions (1), (2), (4), (5) and (6) of this
section."  The court reasoned that since the attachment did not cover any of
the items enumerated, the exemption was unavailable.  But whether the
attachment covers these items is not the question under subdivision (7).
Rather, the issue is whether the several exemptions are "unused."  They can
be "unused" either because the value of the judgment debtor's property with-
in these five subdivisions is lower than the total amount of the attachment,
leaving an "unused" excess, or because he owns no property within the cover-
age of one or more of these subdivisions, leaving all of such exemptions
"unused."  While it is true that the exemptions in other subdivisions logi-
cally require ownership of the property or interest for which an exemption
is claimed, no such requirement applies on its face to subdivision (7).
     Nor is the exemption conditioned upon defendant's supplying an
inventory of his property in Florida, where defendant now resides. (FN2) 
Should plaintiff seek to execute on defendant's property in Florida and if it
appears that defendant has been "double counting" exemptions, to use plain-
tiff's phrase -- i.e., claiming the same exemptions in Vermont and Florida
in a manner inconsistent with Florida law -- that assertion may be made in
the appropriate Florida proceeding.  The important point here is that the
enumerated subdivision exemptions of record in this proceeding are "unused"
and allow defendant's claim for exemption under { 2740(7).
     Finally, the trial court correctly concluded that the $3,500 in the
hands of Home did not constitute "bank deposits" or "deposit accounts"
within the meaning of { 2740(15).  Defendant never deposited any sums with
Home, and Home never undertook any depositary relationship with defendant.
Its obligation arose from an insurance contract with a third party whom
defendant had successfully sued.  Cf. Texas Consumer Finance Corp. v. First
National City Bank, 365 F. Supp. 427, 430 (S.D.N.Y. 1973) (intangible claims
for relief against third parties are not "deposits" within section of
Bankruptcy Act authorizing distribution of "deposit by the debtor").
     The judgment of the trial court is affirmed in part and reversed in
part, and the cause is remanded for further proceedings consistent with this

                                        FOR THE COURT:

                                        Associate Justice

FN1.   12 V.S.A. { 2740 provides, in pertinent part, as follows:
          { 2740.  Goods and chattels; exemptions from attachment
          and execution
               The goods or chattels of a debtor may be taken and
          sold on execution, except the following articles, which
          shall be exempt from attachment and execution, unless
          turned out to the officer to be taken on the attachment
          or execution, by the debtor:
          . . . .
               (7) the debtor's aggregate interest in any
          property, not to exceed $400.00 in value, plus up to
          $7,000.00 of any unused amount of the exemptions
          provided under subdivisions (1), (2), (4), (5) and (6)
          of this section;
          . . . .
               (15) the debtor's interest, not to exceed $700.00
          in value, in bank deposits or deposit accounts of the

FN2.    At the conclusion of her brief, plaintiff refers to defendant's
failure to "schedule his assets" again, in arguing that collateral estoppel
bars the present appeal.  This argument was not raised below and will not be
considered here for the first time.