Court: Court of Appeals of Oregon; May 15, 1991; Oregon; State Appellate Court
Plaintiff, a judgment creditor, initiated a writ of garnishment against Schwartz. Cutting, P.C. to collect a debt owed to Roy Bardon Maginnis, P.C., a professional corporation owned by defendant Roy Maginnis. Nancy Maginnis, Roy's former wife and a beneficiary of a trust, claimed entitlement to the garnished proceeds based on an alleged prior assignment of rights from the contract between Schwartz. Cutting, P.C. and Roy Bardon Maginnis, P.C.
In response to the conflicting claims, Schwartz. Cutting, P.C. deposited the proceeds with the court, and Nancy intervened in the proceeding. After a hearing, the court ruled in favor of the trust, granting Nancy the proceeds. Plaintiff appealed, resulting in a reversal of the court's decision.
The court had previously modified the dissolution judgment to create a trust for Nancy to secure spousal support payments from Roy. However, it incorrectly ordered Roy's professional corporation to pay the contract proceeds to Nancy, as the corporation was not a party to the dissolution proceedings. The appellate court found that the professional corporation was Roy's alter ego and instructed the trial court to have Roy assign the rights to the proceeds to Nancy’s attorney or a financial institution as trustee.
Upon remand, Roy did not comply with the order, and the court later ruled that the assignment was effective despite Roy's noncompliance, asserting the professional corporation had no interest in the contract at the time of the garnishment. The appellate court disagreed, reiterating that the trial court lacked the authority to order the assignment since the professional corporation was not a party to the dissolution proceedings.
The appellate court clarified that no assignment was made, and therefore Nancy or her trustee had no rights as assignees to the proceeds. Plaintiff's claim to the proceeds was upheld due to their status as the judgment creditor of Roy Bardon Maginnis, P.C. The court ordered the trustee to return the proceeds, plus interest, to the court and directed that a judgment be entered in favor of the plaintiff in the garnishment proceeding.
In conclusion, the court erred in awarding the contract proceeds to Nancy's trustee and reversed the decision, remanding for further proceedings consistent with the ruling that recognized the plaintiff's entitlement as the judgment creditor.
