Arizona Department of Economic Security v. Arizona Bank

Citations: 133 Ariz. 133; 650 P.2d 435; 1982 Ariz. LEXIS 238Docket: No. 15837

Court: Arizona Supreme Court; June 28, 1982; Arizona; State Supreme Court

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An appeal has been filed by the Department of Economic Security (DES) regarding a trial court order that permitted Arizona Bank, the garnishee, to deduct its answering fee from the funds garnished. The court has jurisdiction under Rule 19(e) of the Arizona Rules of Civil Appellate Procedure. The central issue for appeal is whether a garnishee can recover costs from the garnishment fund it holds. 

The facts include DES obtaining a $3,370 judgment against Robert J. Jaye Plumbing Company for unpaid unemployment contributions, renewed in 1978. DES initiated a writ of garnishment against Arizona Bank, which acknowledged a debt of $214.20 to Jaye Plumbing and sought a $50 answering fee. Following this, Jaye Plumbing claimed a $100 exemption from garnishment. DES secured a judgment for $114.20 against the bank, excluding the answering fee. The Superior Court later ruled that the bank was entitled to deduct its fee from the garnished funds, which DES is appealing, asserting the bank should not receive this fee.

The garnishment statute, A.R.S. § 12-1591, outlines that if the garnishee is discharged upon its answer, the costs are generally to be covered by the plaintiff. If the garnishee's answer is not contested, costs are charged to the defendant. The intent of the statute is to provide protection and compensation to garnishees involved in litigation primarily between other parties. DES contends that the garnishee must seek cost recovery from the judgment-debtor in a separate proceeding, as supported by A.R.S. § 12-1585, which dictates that judgments against garnishees should reflect amounts owed to the judgment-debtor.

The interpretation of the garnishment statutes is complex, but the historical context, including their origin from Texas statutes, provides persuasive guidance for understanding the legislative intent.

The Texas Court of Civil Appeals concluded that a garnishee’s costs, including reasonable attorney’s fees, can be deducted from the garnishment fund before distributing the remaining balance to the plaintiff. In the case at hand, the defendant had $1,547.48 held by the garnishee when the writ of garnishment was served. The court agreed with the Texas court's interpretation, stating that requiring the garnishee to seek reimbursement from the defendant would lead to unnecessary litigation and unfairness, especially if the defendant was unavailable. The trial court's decision to allow the Arizona Bank to deduct its answer fee from the garnishment fund before the remainder was released to the Department of Economic Security (DES) was upheld.

The DES argued based on the Weir v. Galbraith case that the garnishee should be required to pay all funds to the plaintiff and seek reimbursement from the defendant. However, this argument was dismissed because the specific issue of deducting answering costs was not directly addressed in Weir, and the context of the garnishee’s answer was different from the current case. The court commented on the broader implications of the DES's position, suggesting that it could impose additional costs on the state, particularly when the state acts as a garnishee. The ruling noted that the case, being a minor lawsuit, should not burden the appellate court system, which faces more pressing matters. Ultimately, the order was affirmed, with concurrence from justices Holohan and Hays.