No. 13511
I N THE SUPREME COURT O THE STATE O M N A A
F F OTN
1977
WILLIAM E. WILLIAMS,
Plaintiff
-vs-
GEORGE MATOVICH e t a l . ,
Defendants.
Appeal from: U.S. D i s t r i c t C o u r t
Hon. James B a t t i n , J u d g e p r e s i d i n g .
C o u n s e l o f Record:
For P l a i n t i f f :
S t e v e n L. Bunch a r g u e d , H e l e n a , Montana
For Defendants:
G r a n t and H e a r d , , Columbus, Montana
R i c h a r d W. Heara a r g u e d , Columbus, Montana
B l e n k n e r and Laws, Columbus, Montana
F o r Amicus C u r i a e :
Hon. M i c h a e l G r e e l y , A t t o r n e y G e n e r a l , H e l e n a ,
Montana
Submitted: February 2 3 , 1977
Decided:m/j 3 1(17]
4- -
Clerk
M r . C h i e f J u s t i c e P a u l G. H a t f i e l d d e l i v e r e d t h e Opinion of
t h e Court.
T h i s m a t t e r h a s been p r e s e n t e d by c e r t i f i c a t i o n from
t h e U n i t e d S t a t e s D i s t r i c t C o u r t , D i s t r i c t o f Montana, B i l l i n g s
D i v i s i o n , s e e k i n g a d e c l a r a t o r y judgment p u r s u a n t t o R u l e 1,
M.R.Civ.P.
The s t i p u l a t e d f a c t s , made p a r t o f t h i s c e r t i f i c a t i o n
are:
During J a n u a r y 1 9 7 6 , p l a i n t i f f W i l l i a m s p u r c h a s e d
g r o c e r i e s on c r e d i t from d e f e n d a n t Matovich, p u r s u a n t t o a v e r b a l
agreement. On J a n u a r y 26, 1 9 7 6 , W i l l i a m s ' employment a t S t i l l -
w a t e r P a c k i n g was t e r m i n a t e d .
Matovich t h e n i n i t i a t e d s u i t i n s t a t e c o u r t a g a i n s t
W i l l i a m s f o r t h e a l l e g e d g r o c e r y d e b t i n t h e sum o f $157.34.
P u r s u a n t t o s e c t i o n 93-4301, R.C.M. 1 9 4 7 , Matovich a p p l i e d f o r
a w r i t o f a t t a c h m e n t a t t h e t i m e t h e summons i s s u e d . The w r i t
o f a t t a c h m e n t was i s s u e d by t h e c l e r k o f c o u r t , S t i l l w a t e r County,
which was p r e s e n t e d by t h e s h e r i f f , S t i l l w a t e r County, t o
S t i l l w a t e r Packing. The s h e r i f f was t h e n g i v e n a c h e c k f o r t h e
e n t i r e amount a l l e g e d d u e a n d owing i n t h e c o m p l a i n t , l e a v i n g
W i l l i a m s w i t h a paycheck o f $9.82.
The s h e r i f f h a s r e t u r n e d t o W i l l i a m s t h a t p o r t i o n o f t h e
paycheck exempted from g a r n i s h m e n t by 1 5 U.S.C. 1671, e t s e q .
The nonexempt p o r t i o n h a s been r e t a i n e d , p e n d i n g t h e outcome o f
a c o u n t e r s u i t f i l e d by W i l l i a m s i n f e d e r a l d i s t r i c t c o u r t ,
a l l e g i n g t h e w r i t of attachment w a s a d e n i a l of due process.
The i s s u e c e r t i f i e d i s w h e t h e r t h e Montana w r i t o f a t t a c h -
ment s t a t u t e s , s e c t i o n s 93-4301, e t seq.,R.C.M. 1947, a s a p p l i e d ,
v i o l a t e t h e n o t i c e and o p p o r t u n i t y t o b e h e a r d r e q u i r e m e n t s o f
d u e p r o c e s s a s g u a r a n t e e d by t h e F o u r t e e n t h Amendment t o t h e
United S t a t e s C o n s t i t u t i o n ?
The f o u r l e a d i n g c a s e s i n t h i s a r e a a r e S n i a d a c h v .
1820,
Family Finance Corp., 395 U.S. 337, 89 S.Ct./, 23 L Ed 2d 349;
Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L Ed 2d 556;
Mitchell v. W. T. Grant Co., 416 U.S. 600, 94 S.Ct. 1895, 40
L Ed 2d 406, 412, 417; and North Georgia Finishing, Inc., v.
DiChem, Inc., 419 U.S. 601, 94 S.Ct. 2601, 41 L Ed 2d 210.
Sniadach involved the garnishment of wages under a
Wisconsin statute, whereby the clerk of court issued a summons
at the request of the creditor's attorney, and the latter, by
serving the summons on the garnishee, froze the debtor's wages.
The creditor was allowed 10 days in which to serve the summons
and complaint on the debtor after service on the garnisher,
although in this case the debtor was served the same day as was
his employer. The wages would be unfrozen if the wage earner
eventually won on the merits of the debt action. The Supreme
Court held that this process violated the fundamental principles
of due process as required by the Fourteenth Amendment because
it did not provide notice and an opportunity for a hearing prior
to the garnishment. Furthermore, the court stressed that wages
are a specialized type of property, which when taken can cause
severe hardship to the wage earner.
Fuentes dealt with a prejudgment attachment of personal
property under Florida and Pennsylvania statutes. Both statutes
involved anexparte application made to the clerk, claiming an
interest in the property, and the posting of a bond. Thereafter,
the clerk issued a writ of replevin. Both statutes allowed the
defendant to post a bond to regain possession. Otherwise, the
property would be returned only if the defendant won on the merits
of the litigation. Florida did require the creditor to file a
complaint initiating a later court action, however Pennsylvania
allowed the seizure of property under no more than a security
bond and initiating no court action. Therefore, in the latter
situation, the defendant had to initiate the litigation if he
were to ever be afforded a post-seizure hearing. The Supreme
Court, stating that notice and opportunity to be heard must be
given at a meaningful time and in a meaningful manner, struck
down both statutes, since neither provided for notice or an
opportunity to be heard at any kind of prior hearing. The
court also rejected the argument that only necessities, such
as the wages in Sniadach were afforded such protection, stating
that the Fourteenth Amendment applied to "property" generally.
In Mitchell the court upheld a Louisiana statute allow-
ing the prejudgment sequestration of personal property subject
to a vendor's lien. Emphasis was placed upon the fact that
both the creditor and the debtor had an interest in the property
subject to sequestration, as evidenced by the court's statement:
"With this duality in mind, we are convinced that
the Louisiana sequestration procedure is not in-
valid, either on its face or as applied. * * *"
(Emphasis supplied. )
Both Sniadach and Fuentes were discussed and disting~ished~with
the court finding the following to be the saving characteristics
of the Louisiana statute:
(1) The writ did not issue on a conclusory allegation
of ownership or possessory rights. The petitioner was required to
set forth specific facts, on a verified petition or affidavit,
showing the interest claimed and that it was within the power of
the defendant to conceal, dispose of, or remove the property
during the pendency of the action.
(2) The showing was made before a judge, and it was the
judge who issued the writ.
(3) A bond was required of the petitioner.
(4) The debtor was entitled to seek immediate dissolu-
tion of the writ, which placed the burden of proving the grounds
of the writ upon the creditor.
(5) The debtor, with or without seeking dissolution of
the writ, was able to regain possession of the property by
filing his own bond.
North Georgia Finishing involved the garnishment of a
bank account of a corporation. The statutory procedure required
an affidavit by plaintiff or his attorney to be presented to the
clerk of court or any officer authorized to issue attachment,
stating the amount due and that he had reason to apprehend the
loss of the same unless garnishment issued. A bond of double
the amount was also required of plaintiff. Defendant could
dissolve garnishment by posting a bond of his own. The court
stated that the statute was vulnerable for the same reasons as
Fuentes, that the bank account was impounded and absent a bond
by defendant, put totally beyond use pending litigation on the
debt, all by writ of garnishment by a court clerk without notice
and opportunity for an early hearing, and without participation
by a judicial officer. Furthermore, the court stated that the
statute was not saved by Mitchell since the safeguards present
in Mitchell were lacking in the Georgia statute.
As applied to the facts of this case, we find that the
Montana writ of attachment statutes, sections 93-4301 et seq.,
R.C.M. 1947, violate the notice and opportunity to be heard re-
quirements of due process as set forth in the Fourteenth Amend-
ment to the United States Constitution. We so find for two
reasons.
First, Sniadach is the controlling authority for the
factual situation at hand, which is very similar if not identi-
cal, to Sniadach. Here, wages have been attached pursuant to a
writ issued by a clerk of court, at the request of a creditor,
without notice or an opportunity for a hearing prior to the
attachment. We are cognizant of the emphasis placed upon the
specialized type of property involved, wages. The court citing
Sniadach reaffirmed this in Mitchell:
" * * * 'a specialized type of property present-
ing distinct problems in our economic system'
* * * 'prejudgment garnishment of the Wisconsin
type may as a practical matter drive a wage-earning
family to the wall1* * *."
Furthermore, the suing creditor here, as in - -
Sniadach, claimed
no prior interest in the wages seized. There exists no duality
of interest, which was present in Fuentes and Mitchell.
Second, even if Mitchell governed as contended by Matovich,
the Montana statute, as applied, failed. North Georgia Finishing
also lacked the duality of interest, however the court did men-
tion that none of the saving characteristics of Mitchell were
present. Such is the case here. Though we find Sniadach con-
trolling, the saving characteristics of Mitchell are absent in
the Montana prejudgment attachment procedure.
Matovich contends that Montana provides three procedures
whereby the defendant can apply to the court for relief either
prior or subsequent to the levy, and also requires a bond of the
plaintiff. Pursuant to sections 93-4327 and 4328, R.C.M. 1947,
defendant can move to discharge the attachment upon the condition
that he file a bond of his own. Second, pursuant to sections
93-4329 and 4330, R.C.M. 1947, defendant, either before or after
the release of attached property or before the actual attachment,
can move the court to discharge the attachment on the grounds
that it was improperly or irregularly issued. If from the appli-
cation it satisfactorily appears the writ was so issued, it must
be discharged. Finally, sections 93-4332 and 93-4333, R.C.M.
1947, allow the debtor to seek discharge of the writ any time
before the actual application of the attached property to the
payment of the judgment.
The only Montana safeguards equal to any of those in
Mitchell are that the plaintiff must file a bond to obtain the
writ and defendant may file a bond to release his property.
The Montana procedures for defendant to question the attach-
ment do not equal those of Mitchell. In Mitchell the defend-
ant could merely file his motion to dismiss, which placed the
burden on plaintiff to prove the facts substantiating the writ.
However, sections 93-4331 and 93-4333, R.C.M. 1947, place the
burden upon defendant to prove that the writ was improperly or
irregularly issued. Additionally, the opportunity for a pre-
seizure hearing under section 93-4329 ie illusory. More likely
than not, as in this case, the defendant is unaware that the
writ has issued until the property is seized.
Furthermore, the writ issued upon an affidavit presenting
a conclusory allegation that a debt was owed to plaintiff. Sec-
tion 93-4302, R.C.M. 1947, requires no showing by way of specific
facts, as did the statute considered in Mitchell. The applica-
tion under section 93-4302 was made to the clerk of court who
issued the writ. This also falls short of Mitchell wherein this
determination was made by the judge.
Therefore, we find that, as applied, sections 93-4301 et
seq., R.C.M. 1947, violate the fundamental principles of due
process guaranteed by the Fourteenth Amendment to the United
States Constitution.
Chief Justice A