People v. Biscailuz

California Court of Appeal Oct 24, 1951 No. Civ. 18464Published

Before: McCOMB

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Holding. The court held that an assignment of funds by a debtor prior to the state's issuance of a warrant for collection takes priority over the state's claim, as the state had not perfected a lien and the debtor no longer held the funds at the time of the levy.

Issues

Did the assignment of funds by the debtor prior to the state's issuance of process take priority over the state's claim?
Did the Unemployment Insurance Act create a lien or preference for the state prior to the commencement of enforcement proceedings?
Do the Civil Code provisions regarding the assignment of accounts receivable apply to the state?

Disposition. Affirmed

Quotations verified verbatim against the opinion

“It is the general rule that garnishees will only be held for debts owing at the time of the service of the writ, and credits which have been transferred or assigned by the creditor cannot subsequently be subject to garnishment”

“Priorities given by the act to the state’s claim for delinquent contributions do not give the department any priority or preference in the absence of compliance with the steps outlined by the act for the perfection of a lien”

McCOMB, J.

From a judgment denying petitioner’s application for a writ of mandate to compel respondent sheriff of Los Angeles County to pay to the Department of Employment (hereinafter referred to as the department) $449.59 held by the sheriff pursuant to the levy of a warrant issued by the department for the collection of contributions owed by one Martin Topper to the department under the provisions of the California Unemployment Insurance Act, petitioner appeals.

Facts: Martin Topper, an employer within the meaning of the term in section 9 of the California Unemployment Act (hereinafter referred to as the act), became delinquent in payments to the department in sums totaling in excess of $3,000. Certificates of delinquency evidencing the indebtedness of Martin Topper were filed with the county recorder of the County of Los Angeles in accordance with section 45.10(a) of the act.

On October 7, 1949, the department served by registered mail a notice to withhold on McDonald Brothers, who, at the time, owed Martin Topper $449.49.

Thereafter the notice was duly and regularly renewed and on December 20, 1949, a warrant was issued to the sheriff by the department pursuant to the provisions of section 45.10(b) of the act directing the sheriff to levy execution on the sum of money held by McDonald Brothers. This he did.

Subsequently, Produce Clearings, a corporation, served notice on the sheriff that the money which he had received from McDonald Brothers belonged to it pursuant to an assignment of such sum to it by Mr. Topper in November of 1949, and that it had served notice in August, 1949, on McDonald Brothers that their obligation to Mr. Topper had been sold and assigned to it.

[73]

The trial court held the Produce Clearing was entitled tó the money in the sheriff’s possession and not the department.

Questions:

First:

Did the assignment by Mr. Topper of the funds, which McDonald Brothers owed him, to Produce Clearings prior to the time the department (a state agency) issued process against such funds take priority over the claim of petitioner agamst Mr. Topper as a debtor of the state?

People v. Biscailuz

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