Orange County v. Ware

OPINION ON MOTION FOR REHEARING

HECHT, Justice.

Appellee’s motion for rehearing is denied. The prior opinion of the Court is withdrawn, and this is now the opinion of the Court.

Section 154.025 of the Texas Local Government Code states: "A warrant may not be drawn on a salary fund in favor of a person, or an agent or assignee of a person, who is indebted to the state, the county, or the salary fund.” The issue we address in this direct appeal is whether section 154.025 violates article XVI, section 28 of the Texas Constitution, which provides: “No current wages for personal service shall ever be subject to garnishment, except for the enforcement of court-ordered child support payments.” We hold that the statute is not unconstitutional.

The material facts have been stipulated and may be summarized as follows. Joe Ware, Sr., suffered numerous bail bond forfeiture judgments against him before he was elected County Commissioner of Orange County, Texas. After his election, Orange County demanded payment of the judgments, which it claimed numbered 110 and totaled $26,548. Ware acknowledged that he was indebted to the County but did not agree that the amount claimed was accurate. The County notified Ware that, based upon Tex.Local Gov’t Code § 154.-025, it would withhold payment of his compensation until his debt had been discharged.

Ware initiated this proceeding in the district court to enjoin the County from withholding his compensation, asserting that the County’s action was a garnishment of his current wages in violation of article XVI, section 28 of the Texas Constitution. The district court concluded that the County’s actions in compliance with section 154.-025 were in “direct conflict” with the Constitution, and issued a temporary injunction against the County. We noted probable jurisdiction of the County’s direct appeal. See Tex. Const, art. V, § 3 — b; Tex.Gov’t Code § 22.001(c); Tex.R.App.P. 140.

*474We have held that “[garnishment is a statutory proceeding whereby the property, money, or credits of one person in the possession of, or owing by another are applied to the payment of the debt of a debtor by means of proper statutory process issued against the debtor and the garnishee.” Beggs v. Fite, 130 Tex. 46, 106 S.W.2d 1039, 1042 (1937). Thus defined, garnishment necessarily involves three parties: a creditor, a debtor, and a third person who has some obligation to the debtor. Garnishment is a creditor’s action against his debtor’s debtor to obtain payment of what is owed the creditor. See Trahan v. Trahan, 682 S.W.2d 332, 337 (Tex.App.—Austin 1984, writ ref’d n.r.e.), appeal dism’d, 475 U.S. 1002, 106 S.Ct. 1171, 89 L.Ed.2d 291 (1986).

Two courts of appeals have suggested that this tripartite relationship described in Beggs is not necessary for garnishment, and that a creditor’s offsetting his own obligation to the debtor against the debt- or’s obligation to him may also be a garnishment. In Benton v. Wilmer-Hutchins Indep. School Dist., 662 S.W.2d 696 (Tex.App.—Dallas 1983, writ dism’d w.o.j.), a school district attempted to recover funds it had paid teachers by mistake by deducting the overpayments from their current salaries. The appeals court held “that in the absence of ... an agreement or consent, a debtor, such as the district, has no right to withhold payment of an amount otherwise lawfully due on a contract by offsetting an unrelated claim against his creditor and thus put the creditor to the burden of filing a suit and proving the invalidity of the unrelated claim.” Id. at 698. The court then added, in dicta, that the district’s action, although not technically a garnishment, violated the policy underlying article XVI, section 28 of the Constitution. The court did not cite Beggs. Relying upon Benton, the court of appeals in City of Houston v. Nelius, 693 S.W.2d 567 (Tex.App.—Houston [14th Dist.] 1985, writ dism’d w.o.j.), held that a city could not withhold salary due an employee who was indebted to the city, despite an ordinance requiring it to do so. Like Benton, Nelius did not cite Beggs.

As Benton acknowledges, offsetting mutual obligations between two parties is not garnishment. That fact alone renders article XVI, section 28 inapplicable. The language of article XVI, section 28 of the Constitution quite specifically restricts the use of garnishments and not things like garnishments or all debt collection efforts generally. The distinctions are important. For example, it is one thing for an employer to loan an employee money with the employee’s agreement and consent that repayments will be deducted from future wages; it is quite another for a third party to seize wages owed an employee to satisfy some other obligation. To outlaw the former transaction would discourage employers from assisting employees by extending them credit, to the detriment of both willing parties. To restrict a third party’s seizure of current wages, however, prevents the employee from having to work for an employer who must pay the wages earned to another, an arrangement that is not likely to benefit either the employer or the employee. We need not decide whether it would be good policy to treat these two situations the same or differently; we point out only that the Constitution expressly addresses one and not the other. The law may restrict the right of offset, as Benton notes, but the Constitution does not. To the extent Benton and Nelius suggest the contrary, they are disapproved.

The bond forfeiture judgments against Ware are not in the record before the Court. By statute, however, we know that all such judgments must be taken in the name of the State. Tex.Code Crim.PROC. art. 22.02.1 This does not mean that the *475debt is owed to the State. The money owed is collected by county officers, Tex. Code CRIM.Peoc. art. 103.003,2 and deposited in the county treasury, TexCode CRiM. Proc. art. 103.004(a).3 The State is involved in the bond forfeitures here in name only. Orange County claims that it is entitled to all amounts adjudged against Ware, and Ward has repeatedly acknowledged in these proceedings that he is indebted to Orange County for at least some of them.4 As an elected commissioner of Orange County, Ware’s compensation is paid by the County. Tex.Loc.Gov’t Code § 152.001.

Thus, Orange County’s threatened withholding of Ware’s salary involves only those two parties and not a third party necessary for a garnishment. Even if Ware were correct, and his bond forfeitures were owed to the State rather than the County, his argument must be that the County’s withholding of funds because of a debt Ware owes the State is a garnishment. Not only would such arrangement not be a garnishment, it would also not make sense: Ware would not receive his salary, the State would not receive payment of the bond forfeiture judgments, and the County would receive a windfall. In any event, section 154.025, and the County’s compliance with it, do not violate article XVI, section 28 of the Constitution.

We therefore conclude that there is no legal basis for the district court’s issuance of a temporary injunction against Orange County. Accordingly, the order of the district court is reversed, and the case is remanded to that court for further proceedings.

. “Bail bonds and personal bonds are forfeited in the following manner: The name of the defendant shall be called distinctly at the courthouse door, and if the defendant does not appear within a reasonable time sifter such call is made, judgment shall be entered that the State of Texas recover of the defendant the amount of money in which he is bound, and of his sureties, if any, the amount of money in which they are respectively bound, which judgment shall state that the same will be made final, unless good *475cause be shown why the defendant did not appear.”

. "District and county attorneys, clerks of the district and county courts, sheriffs, constables, and justices of the peace may collect money payable under this title.”

. "An officer who collects recognizances, bail bonds, fines, forfeitures, judgments, jury fees, and other obligations recovered in the name of the state under any provision of this title shall immediately pay the money to the county treasurer of the county for which the money was collected."

. Ware agreed to the following written stipulation filed in the trial court:

Mr. Ware acknowledged that some amount of money was owed to the County but did not agree that the amount was accurate.

(Emphasis added.) At the hearing on Ware’s application for temporary injunction, the following colloquy occurred:

The Court: As I understand it, then, by stipulation, the parties agree that Mr. Ware is indebted to Orange County?
[Ware’s Attorney]: Yes, sir.

(Emphasis added.) In its brief in this Court, Orange County states that "Joe Ware, Sr. is undisputedly indebted to Orange County-” (Emphasis added.) In reply, Ware in his brief expresses agreement with this statement and adds that his "bond forfeitures resulted in [my] becoming a judgment debtor to Orange County." (Emphasis added.) At oral argument Ware’s counsel acknowledged that some or all of the money owed by Ware belongs to Orange County. In a post-argument brief, Orange County asserts that "the monies owed under a bond forfeiture judgment are owed 100 percent to the county, not to the state.” Ware responded to this brief but did not challenge Orange County’s assertion.