Banks Must Determine if Funds are Exempt From Garnishment

January 18, 2013 in Financial Institutions, Ohio Courts, Post Judgment Execution by Brad Council

On December 7, 2012, the Ohio Sixth District Court of Appeals sustained the judgment of the trial court in the case of Tillimon v. Wheeler, et al., finding that a bank was not in contempt of court for withholding funds which it deemed to be exempt from garnishment.

Duane Tillmon, the Appellant, obtained a judgment against Anthony Wheeler and subsequently filed for a garnishment of any funds Mr. Wheeler held with Fifth Third Bank.   Mr. Wheeler had an account with his wife at Fifth Third Bank. In responding to the garnishment Fifth Third Bank deposited $14.79 with the court, despite the fact that over $900.00 was being held in the account.  Fifth Third refused to secure the remaining funds stating that it had determined the remaining money put into the account was Mrs. Wheelers Social Security, and was not subject to garnishment. The trial court upheld this decision and found that Fifth Third Bank acted properly.

Mr. Tillmon appealed the decision stating “The trial court committed reversible error in not enforcing the nonwage garnishment of the judgment debtor’s joint bank account because the judgment debtor had unrestricted access to the account and therefore the money in the account was not exempt from garnishment.”

Federal law states that certain federal benefit payments, including Social Security benefits, are protected from garnishment. 42 U.S.C. 407(a), Daugherty v.Central Trust Co., 28 Ohio St.3d 441, 443, 504 N.E.2d 1100 (1986). Federal law requires financial institutions that are served with a garnishment order to first examine the order to ascertain whether a notice of right to garnish federal benefits is attached. 31 C.F.R. 212.4.   If a notice is not attached, the financial institution is required to review the prior two months of the account to determine if federal benefit payments were deposited during that time.  31 C.F.R. 212.5(b).  If federal benefit payments have been deposited during that period, the financial institution is directed to calculate the protected amount and ensure that the account holder has full and customary access to those funds.  31 C.F.R. 212.6.  These funds are to be “conclusively considered to be exempt from garnishment under law.” 31 C.F.R. 212.6(c). Any remaining funds are then handled by the standard garnishment procedures.  31 C.F.R. 212.6(d).

The Court of Appeals therefore, upheld the ruling of the District Court and agreed that Fifth Third Bank properly withheld the funds and that the bank account was exempt from garnishment.

 

The Full Text of the Opinion May be Found at:

http://www.supremecourt.ohio.gov/rod/docs/pdf/6/2012/2012-ohio-5804.pdf

 

Many thanks to Erin Richmond for her contributions to this article.  Erin is a paralegal with Slovin & Associates Co., L.P.A.