This summary was computer-generated without any editorial revision. It is not official, has not been checked for accuracy, and is NOT citable.
Facts
Central Security obtained a judgment against a debtor and sought to enforce it through garnishment. The debtor's spouse had recently opened investment accounts with Dean Witter, depositing $280,000, but withdrew most of the funds before the writ of garnishment was served. Dean Witter issued checks to the debtor's spouse before the writ was served, leaving only $930 in the accounts at the time of service (paras 1, 3-5).
Procedural History
- District Court, January 5, 1996: The trial court granted summary judgment in favor of Dean Witter, rejecting Central Security's argument that Dean Witter had a duty to stop payment on checks issued before the writ of garnishment was served. The court awarded Central Security $930 but denied Dean Witter's motion for attorney fees (paras 6-7).
Parties' Submissions
- Plaintiffs/Appellees/Cross-Appellants (Central Security): Argued that Dean Witter had a duty to stop payment on checks issued to the debtor's spouse before the writ of garnishment was served, as the funds were still under Dean Witter's control. They also claimed that the garnishment statute required Dean Witter to deliver the funds represented by the checks (paras 1, 5, 8-9, 16).
- Garnishee/Appellant/Cross-Appellee (Dean Witter): Contended that it had no duty to stop payment on checks issued and delivered before the writ of garnishment was served. It also argued that it was the prevailing party and entitled to attorney fees under the garnishment statute (paras 1, 4, 7, 10, 22-23).
Legal Issues
- Did Dean Witter, as garnishee, have a duty to stop payment on checks issued and delivered to the debtor's spouse before the writ of garnishment was served?
- Was Dean Witter entitled to attorney fees as the prevailing party under the garnishment statute?
Disposition
- Dean Witter had no duty to stop payment on the checks issued and delivered before the writ of garnishment was served (paras 20, 30).
- Dean Witter was entitled to attorney fees as the prevailing party, and the case was remanded to the trial court to determine the appropriate amount (paras 28-30).
Reasons
Per Wechsler J. (Flores and Bustamante JJ. concurring):
Duty to Stop Payment: The court adopted the majority rule that a garnishee has no duty to stop payment on checks issued and delivered before the writ of garnishment is served. Requiring such a duty would impose an unacceptable risk of double liability on the garnishee, an innocent third party. The court distinguished this case from others involving garnishee banks, as Dean Witter, a securities firm, had already relinquished control of the funds by issuing and delivering the checks (paras 10-13, 20).
Attorney Fees: The garnishment statute treats garnishees as innocent third parties and entitles them to attorney fees if they prevail. Dean Witter successfully defended against Central Security's claim and avoided an adverse judgment. The court held that Dean Witter was the prevailing party and entitled to attorney fees for costs fairly and necessarily incurred during the litigation. The trial court's denial of attorney fees was reversed, and the case was remanded for a determination of the appropriate amount (paras 22-28).
Costs and Fees on Appeal: Dean Witter was awarded $3,000 for its appellate costs and attorney fees, as it succeeded in defending against the cross-appeal and asserting its claim for fees under the garnishment statute (para 29).