Garnishing an Account Held by Someone Else

Garnishment reaches property that the defendant owns but does not hold. A bank balance, a receivable owed by a customer, funds sitting in escrow, a commission not yet paid: each is a debt owed to the defendant by somebody else, and the device that captures it operates on the somebody else. That structural fact shapes everything about the procedure, because the person who has to act is a stranger to the dispute.

Obtaining the writ before judgment

Two designs are in use. Florida issues a separate writ of garnishment, and before judgment it may be issued only by the court or by the clerk on the court's order. The plaintiff must file a verified motion alleging by specific facts the nature of the cause of action, the amount of the debt and that it is just, due and unpaid, that the garnishment is not sought to injure the defendant or the garnishee, and that the plaintiff believes the defendant will lack sufficient property in the county to satisfy execution.

New York folds the function into attachment. An order of attachment is levied upon personal property, or upon a debt owed to the defendant, by serving a copy of the order on the garnishee. There is no separate garnishment proceeding at the prejudgment stage; the order is the instrument, and service is the levy. Connecticut takes a third approach and permits garnishment as a prejudgment remedy while excluding earnings from it altogether.

Service, and the duties it creates

Service converts an uninvolved institution into a participant with obligations. Florida's writ requires the garnishee to serve an answer within twenty days stating whether it is indebted to the defendant at the time of the answer or was indebted when the writ was served, in what sum, what tangible or intangible property of the defendant it holds, and whether it knows of any other person indebted to the defendant.

New York states the prohibition side more fully. A levy by service on a person other than the defendant is effective only if that person owes a debt to the defendant or holds property in which the person knows or has reason to believe the defendant has an interest, or where the plaintiff's accompanying notice specifies the debt or property. Once effective, the garnishee is forbidden to sell, assign, transfer or interfere with the property, or to pay the debt to anyone but the sheriff, until payment is made or ninety days pass.

The plaintiff has follow-up duties too. Florida requires the plaintiff, within five days of receiving the garnishee's answer or after the answer period expires, to serve the defendant with a copy of the answer and a notice stating that the recipient must move to dissolve the writ within twenty days if any allegation in the plaintiff's motion is untrue. That notice is the defendant's practical route to the motion to dissolve a writ already issued.

What the levy actually captures

Reach is defined by reference to the debt, not to the account. New York provides that any debt or property against which a money judgment could be enforced is subject to attachment, and the proper garnishee is the person identified by the enforcement provisions. The result is that the analysis borrows from post-judgment practice, and the same questions about situs, control and assignability arise.

Whether later deposits are captured is the practical question. New York's levy extends to property coming into the garnishee's possession after service and to debts thereafter coming due, up to the amount specified, which makes the freeze continuing. Systems that capture only the balance at the instant of service produce a very different outcome for a defendant that runs an operating account, and a plaintiff serving under such a statute may need to serve repeatedly.

Time limits then close the window. Under New York's rule the levy becomes void ninety days after service as to anything the sheriff has not taken into custody, collected or received, unless a proceeding to compel payment has been commenced or the court has extended the period. A plaintiff that serves and then does nothing loses the levy.

Priority among competing claims is settled by order of service in most systems, which turns the exercise into a race. A secured party with a perfected interest in the same receivable generally outranks a garnishing creditor whenever it is served, because the security interest was fixed earlier. Sorting that out is the court's task rather than the garnishee's, and institutions faced with competing demands commonly interplead the funds instead of choosing.

Funds that cannot be taken

Earnings receive the strongest protection. Federal law caps the amount of an individual's disposable earnings that may be subject to garnishment in any workweek, and the cap applies to any legal or equitable procedure through which earnings are held for a debt. State law frequently goes further at the prejudgment stage, and Connecticut removes earnings from the reach of its prejudgment remedies entirely.

Directly deposited federal benefits are protected by a different mechanism. A federal regulation requires a financial institution served with a garnishment order to review the account for federal benefit payments received in a defined lookback period and to keep a protected amount accessible to the account holder without waiting for anyone to claim an exemption. Other exempt categories, and the process for claiming them, are set out in the property a writ cannot reach.

Because a garnishment can freeze the money a business uses to operate, it is the prejudgment remedy most likely to be challenged immediately. The constitutional requirements that shape when it may issue without notice are described in the hearing owed before property is frozen, and the compensation available where the levy was wrongful is covered in the bond and damages for a wrongful writ.