Lepak v. McClain

SIMMS, Justice,

dissenting:

Today the majority reaches out to incorrectly decide a case that is not ripe for adjudication. At the time this original action was filed, a hearing on the application for a contempt citation had not been held. We have no evidence before us that a hearing has occurred, and Lepak, petitioner herein and defendant below, does not allege that one was conducted. Without first *862being afforded a hearing, Lepak cannot be imprisoned for contempt. Okla. Const. Art. 2, § 25; Martin v. Kroeger, 149 Okl. 119, 299 P. 472 (1931); Ex parte Morse, 141 Okl. 75, 284 P. 18 (1930). To date, Lepak has not been adjudged in contempt and is in no threat of being imprisoned.

In Rath v. Maness, 470 P.2d 1011 (Okla.1970), this Court refused to pass upon the constitutionality of the statute at issue, 12 O.S.1981, § 850, because the challenge to it was premature. Therein, the trial court ordered the defendant to pay plaintiff $5.00 each week pursuant to the provisions of § 850. Defendant immediately perfected an appeal to this Court arguing that the portion of § 850 authorizing installment payments on judgment debts and enforcement of the payments by contempt proceedings was violative of the prohibition on imprisonment for debt found in Okla. Const. Art. 2, § 13. In response, this Court unanimously held:

“Under the present circumstances the question of the constitutionality of the law is not one that this court is required to determine at this time. Defendant appealed directly from the order [to pay installments]. He had not been cited for contempt for failure to make the payments and he was not about to be denied some right or privilege to which he was lawfully entitled.
“This court will not pass upon the constitutionality of an act of the Legislature, nor any of its provisions, until there is presented a proper case in which it is made to appear that the person complaining by reason thereof has been or is about to be denied some right or privilege to which he is lawfully entitled or who is about to be subjected to some of its burdens or penalties. Starner v. Oklahoma City, 205 Okl. 170, 236 P.2d 479.” 470 P.2d at 1014.

The original action before us is a premature attempt to have this Court pass upon the constitutionality of § 850 under circumstances which do not require action. Le-pak is in no danger at this time of being subjected to the burdens or penalties of § 850; he has not been cited for contempt. Therefore, this application for a writ of prohibition should be denied.

Additionally, even if it could be argued that the constitutional challenge is properly before this Court, Lepak waived such challenge by agreeing to be bound by the statutory installment payments on the judgment debt. The majority notes at the outset that the parties agreed for the money judgment to be paid in installments. In fact, the order entered in aid of execution reads, in pertinent part, as follows:

“and upon agreement by and between both parties, said defendant agrees to pay the total sum of $12,400.00, as full satisfaction of the judgment rendered herein on June 2, 1988, payable as follows, to wit: the sum of $2,400.00 on or before August 30, 1988, the sum of $200.00 on or before September 12, 1988, and a like sum of $200.00 each succeeding week thereafter, ... until the sum of $12,400.00, is fully paid.”

There is no evidence before this Court that Lepak objected to this order or appealed it. On its face, the order indicates that Lepak was in full agreement with the trial court and the plaintiff to pay for the judgment in installments pursuant to 12 O.S. 1981, § 850. Hence, Lepak has waived any objections to such installment payments and any challenges to the constitutionality of § 850. The majority erroneously addresses an objection which the petitioner himself has allowed to lapse.

The above-stated reasons are sufficient to warrant denial of Lepak’s writ. However, in any event, the majority’s resolution of the issue is erroneous.

First, we are not concerned with “imprisonment for debt” in the sense that Lepak is threatened with incarceration for failing to pay an installment payment on a promissory note or the like. Rather, a judgment was entered against him, and any debt he previously owed was merged, along with the cause of action, into the judgment. Nye v. Prairie Oil & Gas Co., 105 Okl. 104, 238 P. 962 (1924); Cressler v. Brown, 79 Okl. 170, 192 P. 417 (1920); 46 Am.Jur.2d Judgments, § 387 (1969); 50 C.J.S. Judgments, § 599 (1947).

*863Once the debt was reduced to a judgment, the judgment acted to “declare the existence of the debt, fix its amount, and secure to the creditor the means of enforcing its payment.” 50 C.J.S. Judgments, § 600 at p. 24 (1947). Thus, the judgment creates a new debt or liability, distinct from the original claim or demand. Id. Indeed, this new liability, or judgment debt, holds a position of priority over general debts and can become liens on real estate of the judgment debtor under 12 O.S.1991, § 706.

This distinction between a debt, created by a promissory note or other general money obligation, and a judgment is important because it highlights the difference between imprisoning one for failing to pay their debts and imprisoning one for disobeying a court order to pay on a judgment. Although the former is constitutionally impermissible, the latter does not violate the constitutional prohibition against imprisonment for debt.

Next, the majority decision overrules 100 years of state constitutional precedent. The ruling renders trial judges of Oklahoma impotent to enforce their orders issued in hearings in aid of execution. Likewise, it delivers a crushing blow to the rights of creditors in their efforts to satisfy valid judgments.

Oklahoma statutes pertaining to hearings in aid of execution had their origin in the state of Kansas. Okla.Rev.Laws 1910, § 5198. See 12 O.S.A. 1991, § 850 and the Historical Notes thereunder. It is very important to note that Kansas, like Oklahoma, has a constitutional provision prohibiting imprisonment for debt. Kan. Const. Bill of Rights, § 16 1; Okla. Const, art. 2, § 13.

The proposition advanced by the majority is hardly new. In 1885, the State of Kansas addressed this exact proposition; that is, whether imprisonment for failure to obey a court order to pay on a valid judgment following a hearing in aid of execution constituted imprisonment for debt. In re Burrows, 33 Kan. 675, 7 P. 148 (1885) (Burrows II). The Supreme Court of the State of Kansas unequivocally said no. That Court has not, to this day, changed its position, for the pronouncement in Burrows II has neither been overruled nor modified.

Burrows II was a follow-up case to State v. Burrows, 33 Kan. 10, 5 P. 449 (1885) (Burrows I) which not only discusses the constitutional prohibition against imprisonment for debt in Kansas but also notes the “in aid of execution” statute from which 12 O.S.1991, § 850 originated.

In Burrows I, the' Kansas Supreme Court addressed the argument before us. There, a judgment was rendered against the defendant, and proceedings were brought in aid of execution of that judgment pursuant to a statute like § 850. The trial court determined that the defendant had nonexempt property which could be applied towards the debt and ordered the defendant to pay the plaintiff from that property. When the defendant failed to comply, contempt proceedings were instituted. After a contempt hearing was had, the defendant was deemed in contempt and ordered to be imprisoned until he complied with the order. The defendant appealed arguing “that to commit him for contempt in failing to obey the order would, in effect, be imprisonment for debt.”

The court then discussed the statute which authorizes the judge to order satisfaction of a judgment through nonexempt property and enforce that order through contempt proceedings, holding:

“In this case the judge found that the appellant had property, which consisted of money in his possession and under his control, not exempt by law, that should be applied towards the satisfaction of the judgment; and ordered that it be so applied. It was not an order to pay a debt, but was a direction to apply certain property, discovered upon the examination to be in the possession of the appellant, to the satisfaction of the judgment against him.
*864“A showing by the judgment debtor that his disobedience of the order was not willful or contumacious, but. was occasioned by a lack of money or property with which to satisfy the judgment, would ordinarily entitle him to a discharge; and a commitment for contempt, based on the refusal to obey an order in such a case, would probably be in violation of our constitution, which forbids imprisonment for debt, except in cases of fraud.” 5 P. at 452.

The case again came before the Kansas Supreme Court that same year in a habeas corpus proceeding. In re Burrows, supra (Burrows II). In explaining the operation of the “in aid of execution” statute, the court stated:

“The proceeding in aid of execution, though created by statute, is a proceeding in the action in which the judgment was recovered, after the judgment debt- or has had a hearing and trial, and is a substitute for the creditors’ bill formerly used in chancery. The proceeding is a simple regulation of well-established and well-defined jurisdiction, which courts of equity were accustomed to employ. After the decree in a court of equity for the delivery of the property or effects, the debtor, upon disobeying the decree, was adjudged for his contumacy guilty of contempt of the authority of the court. He, therefore, could be imprisoned so long as he remained in contempt. Obedience, however, to the decree, — that is, the delivery of the property, — would terminate the imprisonment at any time. The purpose of the statute is to require the delivery of the property of the judgment debtor for the payment of his debts; and if it is made, the debtor cannot be imprisoned. It is only when the debtor has property which he unjustly refuses to apply towards the satisfaction of a judgment, after being afforded the opportunity so to do, that he can be imprisoned. ‘The imprisonment is not for debt, but for the neglect and refusal to perform a moral and legal duty, the performance resting in his ability. ’ BRiCKELL, C.J., in Ex parte Hardy, 68 Ala. 339.” (Emphasis added) 7 P. at 150.

Ultimately concluding that the statute did not violate the prohibition against imprisonment for debt in the Kansas Constitution, the court further held:

“In this case, Burrows is imprisoned simply and wholly because he will not deliver up money in his possession and under his control in payment of the judgment. He can terminate the imprisonment at any time by the mere exercise of his own will; that is, by satisfying the original judgment and costs, and the costs of the supplementary proceedings, — all of which, under the findings of the district judge, he has the ability to do.” 7 P. at 152.

In attempting to distinguish the Burrows cases, the majority places much emphasis upon the “future” character of the installment payments. The majority suggests that because the installment payments which Lepak agreed to were to come from earnings he would receive in the future, the payment upon the judgment debt was from property which was not identified at the hearing. The majority misses the point in allowing installment payments.

First, the Legislature provided for the payment of judgments by installments in § 850 both to assist judgment creditors in satisfaction of their judgments and to aid judgment debtors in making payment of the judgment easier. Installment payments on judgments ease the burden on the judgment debtor from having to pay a lump sum payment from his then available property by spreading out the payments over a period of time. Moreover, an installment plan facilitates the payment of the judgment without requiring the judgment debtor to come before the court every sixty days to answer as to what property he has to apply towards the judgment. Installment payments have been authorized since statehood because the statute which preceded § 850, R.L.1910, § 5198, provided for the judgment debtor’s earnings to be applied to pay the judgment.

Secondly, and more importantly, a finding of contempt against Lepak under § 850, if ever made, would be for install*865ment payments which are already due and owing, and hence, future earnings are not the basis of the contempt citation. In the order directing Lepak to pay, the court ordered payments of $2,400.00 in August, 1988, $200.00 in the second week of September, 1988, and $200.00 each week thereafter until the entire $12,400.00 was paid. If Lepak had adhered to this schedule, the judgment would have been paid in its entirety in late August or earlier September of 1989. The application for a contempt citation was filed on August 30, 1991, exactly two years after the final payment was due and owing under the order. Therefore, the contempt citation sought is not for future earnings, but for wilful failure to make the court ordered payments which are now all due and owing. Lepak has already disobeyed the court’s order, and the majority’s distinction on the grounds of “orders directing delivery of future earnings” has no foundation.

Moreover, Burrows II, was followed and cited by Oklahoma, in the case of Ryland v. Arkansas City Milling Co., 19 Okl. 435, 92 P. 160 (1907). Therein, this Court held that failure to obey an order of the district judge issued in aid of execution was grounds for contempt proceedings which may lead to imprisonment.

Finally, closer analysis of the question discloses that imprisonment is not for debt, but rather, for failure to obey an order of the court. Article 2, § 13 of the Oklahoma Constitution prohibits the imprisonment of a debtor for nonpayment of that debt but does not prohibit imprisonment for contempt of court.

The final sentence of § 850 states that “[a] failure or neglect to comply with an order of direction of the court, shall be punished as for contempt.” This provision is not an authorization to attach the body of a debtor for failing to pay his debt as the majority holds. Rather, the clause is an effort to put teeth into the trial court’s order regarding a judgment. Article 2, § 25 of the Oklahoma Constitution grants to the legislature the power to “pass laws defining contempt and regulating the proceedings and punishment in matters of contempt.” The provision in § 850 authorizing the district court to enforce its order via contempt proceedings is in keeping with that authority.

Article 2, § 25 further prohibits the imposition of contempt without first being given a hearing on the charge of contempt. The trial court in the case at bar has docketed a hearing on the application for a contempt citation, and Lepak will have an opportunity to explain why he has failed to comply with the court-ordered installment payments. If the court finds that Lepak is capable of paying the installments but is wilfully refusing, then contempt would lie against him. Ryland, supra; Burrows II, supra. However, if the court determines that Lepak does not have sufficient nonexempt property to meet his other obligations and also pay the ordered installments, then imprisonment for contempt of court would not be appropriate. Id. Thus, the statute on its face does not imprison for debt but only for willful and contumacious disregard of the court’s order.

Another important safeguard placed within § 850 is the reference to the judgment debtor’s rights under exemption statutes. By authorizing the trial court to “order the judgment debtor to pay to the judgment creditor or apply on the judgment in installments, such portion of his nonexempt income,” 12 O.S.1981, § 850 (emphasis added), the Legislature specifically indicated that some, if not all, of the judgment creditor’s income would be exempt. Title 31 O.S.1991, § 1, lists the types of property which are exempt from attachment, execution or other forced sale. Subsection 18 of 31 O.S.1991, § 1 exempts:

“Seventy-five percent (75%) of all current wages and earnings for personal or professional services earned during the last ninety (90) days, except as provided in Title 12 of the Oklahoma Statutes in garnishment proceedings for collection of child support;”

Therefore, no more than twenty-five percent (25%) of Lepak’s wages may be applied to the judgment. However, the exemption statutes give even more protection. Under 31 O.S.1991, § 1.1, a judgment *866debtor may apply to have all his wages and earnings declared exempt upon showing the court that the wages and earnings are necessary for the maintenance of a family supported wholly or partially by the labor of the judgment debtor.

Hence, Lepak could have applied for all his wages and earnings to be made exempt from execution. There is nothing in the record to indicate that Lepak resorted to the protection afforded him under § 1.1, but I note these exemption statutes to show that the Legislature has gone to great lengths to provide protection to judgment debtors. Section 850 explicitly includes such protection.

Additionally, the majority’s ruling fulfills the prophetic warning given by Justice Hargrave in his dissent to Potter v. Wilson, 609 P.2d 1278 (Okla.1980). In Potter, the terms of a divorce decree gave title to a jointly-owned enterprise to the wife along with the outstanding indebtedness of the business thereby holding the husband harmless for that debt. When the wife defaulted on the debt, the husband brought a citation for contempt against the wife requesting the district court to use her contempt powers to enforce the divorce decree. The wife applied for a writ of prohibition, and a bare majority of this Court held that Okla. Const, art. 2, § 13, barred the district court from coercing “payment of a civilly adjudicated claim for money” by imprisonment.

In a dissent joined by Justices Barnes, Doolin and this writer, Justice Hargrave pointed out that the district court had the inherent power to use contempt to enforce its orders. He further stated:

“I feel the majority’s rationale is as applicable to 12 O.S.1971 § 850 as it is to the instant proceeding, which fact is an indicia of the error promulgated here ...” 609 P.2d at 1282.

Thus, in Potter, this Court took a large step toward erasing unquestioned inherent power of a court to enforce its orders by contempt. The majority in the instant case is taking another step in stripping the courts of their power.

Furthermore, I am disturbed with the majority’s distinction of McCrary v. McCrary, 723 P.2d 268 (Okla.1986), in which the Court addressed a statute similar in operation to § 850. The statute, 12 O.S.Supp.1985, § 1276.2, provides:

“Any order for the payment of money as part of a division of spousal property pursuant to a divorce or separate maintenance action, if willfully disobeyed, may be enforced as an indirect contempt of court.”

In discussing the effect of the statute, the majority, using the same pen, wrote:

“We find the contempt power above conferred does not contravene the constitutional interdiction of imprisonment for debt in that contempt lies not for debts incurred, but is limited to enforcement against the offending party who has willfully disobeyed an order of the court.” 723 P.2d at 271. (Emphasis in original)

Section 850, like § 1276.2, does not authorize imprisonment for debts, but rather, is limited to enforcement of an order disobeyed by the contemnor.

Likewise, § 850 does not constitute a resurrection of the common law capias as Chief Justice Opala implies in his concurring opinion. As the Black’s Law Dictionary definition indicates, the capias ad sa-tisfaciendum was a writ which authorized the sheriff to arrest and jail the judgment debtor in a civil action until he satisfied the damages or debt. It is obviously distinguishable from § 850, however. Capias authorized immediate imprisonment, whereas § 850 first requires a hearing in aid of execution to determine how much non-exempt property the judgment debtor has to apply toward the judgment. It then requires that before imprisonment may occur, the judgment debtor must be given a hearing on contempt for failure to obey, and be found in contempt by the trial court.

In addition, the majority overlooks the logic of Freeman v. Heiman, 426 F.2d 1050 (10th Cir.1970), in which the Tenth Circuit Court correctly concluded that § 850 did not violate the Okla. Const, art. 2, § 13 prohibition against imprisonment for *867debt. The majority in the case at bar sidesteps Freeman on the grounds that the Tenth Circuit relied on decisions from jurisdictions having only statutory prohibitions against imprisonment for debts rather than state constitutional prohibitions like art. 2, § 13. However, Freeman relies on Burrows I as authority, and, as noted above, the Kansas Constitution contains a prohibition against imprisonment for debt.

The conclusion the Tenth Circuit reached about § 850 mirrors the determination of the Kansas Supreme Court concerning its “in aid of execution” statute, holding that the statutes were constitutional because they did not authorize imprisonment for debt but for contempt of court. This congruency is bolstered by the fact that the genesis of § 850 was the statute construed by the Kansas court in the Burrows cases.

The courts in Freeman and Burrows understood the purpose and procedure of statutes like § 850. Those decisions correctly interpreted the legislative intent for such “in aid of execution” statutes as assisting judgment creditors in discovering nonexempt property of judgment debtors in order to get satisfaction of judgments. Both courts further held that any imprisonment imposed was for contempt and not for failure to pay a debt. Hence, § 850 and Kansas’ corresponding statute were held not violative of constitutional provisions.

My reading and understanding of the legislative intent of § 850 comports with that of the court in Freeman. Section 850, when properly construed, not only upholds the legislative intent which is clear in the language used, but also passes constitutional muster.

“In deciding the constitutionality of statutes, a legislative act is presumed to be constitutional and will be upheld unless it is clearly, palpably and plainly inconsistent with the Constitution. Whenever possible, statutes should be construed to uphold their constitutionality.” Reherman v. Oklahoma Water Resources Bd., 679 P.2d 1296, 1300 (Okla.1984).

This presumption of constitutional validity is strong, Black v. Ball Janitorial Serv., Inc., 730 P.2d 510 (Okla.1986), and the majority has failed to demonstrate how the statute is “clearly, palpably and plainly inconsistent” with art. 2, § 13. When read properly and applied correctly, the statute does not violate the constitutional provision.

I would deny Petitioner’s application to assume original jurisdiction because it is premature, and allow the district court to proceed with its hearing on the citation for contempt.

I am authorized to state that Justice LAVENDER and Justice HARGRAVE join with me in the views expressed herein.

. Section 16 of the Bill of Rights, Constitution of the State of Kansas, reads:

"No person shall be imprisoned for debt, except in cases of fraud.”