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Wednesday, August 31, 2011

Ind. Decisions - Two today from Supreme Court

In Quincy Branham & Shannon Branham v. Rodney Varble & Norman Chastain, an 8-page, 5-0 opinion, Chief Justice Shepard writes:

After conducting proceedings supplemental in a case on the small claims docket, the trial court ordered two self-represented judgment debtors to pay on the judgment despite their lack of non-exempt income. We reverse, holding that entitlement to the very ordinary statutory exemptions at issue here is not forfeited by failure of an unrepresented litigant to plead them as an affirmative defense in the course of purposefully informal small claims processes. * * *

I. Courts Cannot Order Debtors to Pay Out of Exempt Income. The Branhams first argue that the trial court should not have ordered payment because there was no evidence that the Branhams had any non-exempt income.

The principle that debtors should have a certain amount of property or income exempted from collection finds its origin in our constitution, which says:

The privilege of the debtor to enjoy the necessary comforts of life, shall be recognized by wholesome laws, exempting a reasonable amount of property from seizure or sale, for the payment of any debt or liability hereafter contracted: and there shall be no imprisonment for debt, except in case of fraud.
Ind. Const. Art. 1, § 22. To enforce Article 1, Section 22, our General Assembly has enacted multiple exemption statutes sheltering certain property and income from attachment. The general rule of civil litigation is that these exemptions must be asserted by the debtor. Mims v. Commercial Credit Corp., 261 Ind. 591, 307 N.E.2d 867 (1974). [ILB: The Branhams were not represented by counsel at trial.] Because the statutory exemptions exist to give life to a constitutional right, we have held that there should be exceptions and modifications to this general rule "consistent with fairness and practical realities." * * *

[T]his record contains no evidence that the Branhams have any property or income that is not covered by an exemption. Therefore, we reverse the trial court‘s order requiring them to pay $50 per month on the judgment.

We finish by emphasizing that a judicial officer hearing small claims is not charged with identifying and applying the entire gamut of exemptions. The two involved here—the general wage exemption and the SSI exemption—are the stuff of everyday life in collections work. We cannot say on appeal that they are lost through failure of formal pleading. * * *

III. It Was Improper to Order Mr. Branham to Apply for Jobs. The Branhams argue that the trial judge did not have the authority to order Mr. Branham to conduct a job search. The Court of Appeals agreed, and so do we. Indiana Trial Rule 69(E) allows a judgment debtor to be called to court "to answer as to his non-exempt property subject to execution or proceedings supplemental to execution or to apply any such specified or unspecified property towards satisfaction of the judgment." Ind. Trial Rule 69(E)(3). Rule 69(E) also requires garnishees to answer as to the judgment debtor‘s property. T.R. 69(E)(4). The rule does not confer upon the trial court the authority to force the judgment debtor to find a job or otherwise acquire non-exempt property. See State ex rel. Wilson v. Monroe Superior Court IV, 444 N.E.2d 1178, 1180 (Ind. 1983). This contrasts dramatically, of course, with the processes applicable to child support, where the obligor has an affirmative duty to generate support

Conclusion. Except for the court‘s directive that the Branhams return for a further hearing on the proceeding supplemental, we reverse.

In Quincy Branham & Shannon Branham v. Rodney Varble & Carol Varble, a 2-page, 5-0 opinion, CJ Shepard writes:
In this case heard on the small claims docket, the trial court conducted proceedings supplemental to execution. It ordered two unrepresented judgment debtors to pay on the judgment despite their lack of non-exempt income, and it required the husband to submit five job applications per week. * * *

The trial court heard jointly the present case and another involving most of the same parties. We decide that case today as well. Branham v. Varble & Chastain, ___ N.E.2d ____ (Ind. 2011). [ILB - see above summary] There, we make three rulings. First, for unrepresented parties in small claims court, resort to the generic exemption statute and the Social Security exemptions are not forfeited even if the litigants do not know enough to plead them. Second, a court does not err when it orders a party to return for status checks some limited number of times, even if an information of contempt has not been filed. Third, orders to seek employment or to seek better employment are not a proper part of a proceeding supplemental.

Applying those rules to the facts in this case leads to the same result. The orders to pay $50 per week and the order to make application for new work are reversed. The order to return for a status check is affirmed.

Posted by Marcia Oddi on August 31, 2011 11:44 AM
Posted to Ind. Sup.Ct. Decisions