Zidell Marine Corp. v. West Painting, Inc.

894 P.2d 481, 133 Or. App. 726
CourtCourt of Appeals of Oregon
DecidedJune 20, 1995
Docket9307-04357 Ca A81893
StatusPublished
Cited by8 cases

This text of 894 P.2d 481 (Zidell Marine Corp. v. West Painting, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Oregon primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zidell Marine Corp. v. West Painting, Inc., 894 P.2d 481, 133 Or. App. 726 (Or. Ct. App. 1995).

Opinions

[729]*729De MUNIZ, J.

Plaintiff Zidell Marine Corporation (Zidell) brought this interpleader action under ORCP 31 to determine priority among competing claims to money Zidell owes under a contract with defendant West Painting, Inc. (West). On cross-motions for summary judgment, the trial court entered an ORCP 67 B judgment finding that defendant Capital Resource Finance Corp. (Capital) had a perfected security interest in the funds and that that interest was superior to the claims of all the other defendants. Defendant Miller Paint Co., Inc., (Miller) appeals. We affirm.

Defendants Terry and Holly Gaya (Gaya) are the owners of West. West was incorporated in Washington in March 1985, but was administratively dissolved on June 16, 1986. Gaya was not aware that West’s corporate status had lapsed, and West continued to operate as a corporation, filing corporate tax returns, and paying creditors, including Miller, from a corporate account.

In December 1984, West applied for credit from Miller, which granted the application and opened an account in the name of West Painting, Inc. There was no individual guaranty of the credit obligation. Pursuant to the line of credit, Miller sold paint to West. In 1991, Gaya, as President of West, signed a “Security Agreement” with Capital in which West assigned and sold its accounts receivable to Capital as a factor in order to finance West. Capital filed a financing statement in Oregon in 1991 under the name West Painting, Inc. On April 6,1992, West and Zidell entered into a contract for West to paint and do other work on a barge owned by Zidell.

In late 1991, Miller sued West for unpaid purchases of paint made between August 1990 and July 1991. On March 18,1992, Miller obtained a judgment against West. In June 1992, Miller discovered that West had been dissolved. Miller then sued the Gayas individually and obtained a judgment against them in July 1992. On June 14, 1993, Miller served two continuing writs of garnishment on Zidell, one for the West judgment and one for the judgment against the Gayas. Zidell responded to the garnishment in the West case, stating that Zidell might owe West as much as $78,860 in the [730]*730future, subject to offsets, but that it would not release the funds until all offsets were determined and applied. In the Gayas’ case, Zidell responded that it did not owe money to or hold personal property of either Terry Gaya or Holly Gaya.

In this interpleader action, Miller filed a cross-claim against all the other defendants, alleging that, by its writs of garnishment, it became a lien creditor whose claim was superior to those of the other defendants. Miller assigns error to the trial court’s dismissal of that cross-claim, the denial of its motion for summary judgment, and the grant of summary judgment in favor of defendants West, the Gayas, Capital and John Maring (respondents).1 In its combined arguments on those errors, Miller argues that its writ of continuing garnishment was proper and that, by virtue of that writ, Miller is a lien creditor with priority over unperfected security interests. ORS 79.3010.2

Respondents concede that ¿/"Miller’s continuing writ of garnishment was effective to reach sums owed by Zidell, the writ would make Miller a lien creditor and that Miller would then have priority over an unperfected security interest. They argue, however, that Miller’s use of a continuing writ of garnishment here was ineffective, because it sought to garnish an entity that was not the debtor’s employer and it sought to garnislx property that was not wages. Respondents also argue that Capital was the owner of the account receivable or had a perfected security interest in the funds, and, thus, that the trial court correctly held that Capital was entitled to receive the funds.

Whether Miller is a judgment lien creditor depends on whether the writ of continuing garnishment that Miller served on Zidell is effective. Either the clerk of the court or the attorney for the creditor can issue two types of garnishments. The standard writ garnishes personal property of the debtor or debts owed to the debtor by the garnishee on the [731]*731date of service of the writ or within 45 days. ORS 29.145 to ORS 29.375. The writ of continuing garnishment was created by statute in 1989. It applies expressly to “employers” of the debtor and garnishes the “wages” or “earnings” owed at the time of service of the writ or accrued within 90 days. ORS 29.401 to ORS 29.415.

Miller’s argument that Zidell can be a garnishee under the continuing writ is based on language in the section of the statutory form entitled “EARNINGS EXEMPTION COMPUTATION SCHEDULE.”3 That schedule is used to determine the earnings subject to garnishment. The directions on the form state:

“The Garnishee must complete the following form and fill in the correct amounts only if the Garnishee is an employer of the Debtor under ORS 23.175.”

In turn, ORS 23.175(3) provides:

“ ‘Employer’ means an entity or individual who engages a person to perform work or services for which compensation is given in periodic payments or otherwise, even though the relationship of the person so engaged to the employer may be as an independent contractor for other purposes.”

Relying on the definition in ORS 23.175(3), Miller contends that the statutory scheme shows that the legislature did not intend a distinction between an employee and independent contractor for use of a continuing garnishment. It argues that the legislature did not intend a garnishee to have to determine whether the debtor is an “employee” or an “independent contractor,” but only “whether money is due to the judgment debtor for services performed to the garnishee.” Thus, Miller argues, the continuing garnishment was proper here where West or the Gayas were independent contractors.

We conclude, however, that the continuing writ does not garnish all assets owed by a garnishee to a debtor. In so concluding, we part company at the outset with the dissent, which determines that the continuing writ “may be used to garnish more than just earnings owed by an employer to an [732]*732employee.” 133 Or App at 744. The dissent arrives at that determination by relying on the following emphasized language in the first sentence of ORS 29.401, which sets out the parameters of a writ of continuing garnishment:4

‘In addition to garnishment proceedings otherwise available under

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Zidell Marine Corp. v. West Painting, Inc.
894 P.2d 481 (Court of Appeals of Oregon, 1995)

Cite This Page — Counsel Stack

Bluebook (online)
894 P.2d 481, 133 Or. App. 726, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zidell-marine-corp-v-west-painting-inc-orctapp-1995.