First Central Coast Bank v. Cuesta Title Guarantee Co.

[14]

Opinion

GILBERT, J.

This action arises out of an attempt by a judgment creditor to garnish funds in an escrow which were to be paid to the judgment debtor, a real estate broker, as his commission at the close of escrow.

We conclude that such funds are not subject to levy by way of garnishment by a judgment creditor prior to the close of escrow when not all conditions of escrow have been performed.

Facts

Plaintiff bank is a judgment creditor of Edward Rodgers, a real estate broker. On June 2, 1975, it obtained a judgment against Rodgers for $8,946.91. On September 16, 1975, plaintiff obtained a writ of execution. On May 25, 1976, while the writ was outstanding, an escrow was opened with defendant escrow company in connection with a transaction involving the exchange of real property between a Mr. and Mrs. Corea, and a Mr. and Mrs. Ellenson. The escrow instructions provided that Rodgers was to receive a broker’s commission of $8,280 at the close of escrow from funds received on behalf of the Coreas. The parcels of property to be exchanged between the Coreas and the Ellen-sons were not of equal value. The Ellensons thus agreed to pay cash from their own funds into escrow and to obtain additional funds from a lender.

Plaintiff learned of the transaction and attempted to garnish Rodgers’ commission by a series of levies. With the exception of the last garnishment on July 12, 1976, defendant answered each garnishment by stating, “We hold no properties or monies owing Edward M. Rodgers.”

It is solely the garnishment of July 7, 1976, which is relevant. On that day, the Coreas had complied with all conditions of escrow required of them. The Ellensons had signed all the necessary documents and had deposited into escrow a portion of the funds called for in the escrow instructions. Further conditions, however, had not been performed. The lender had to deposit into escrow its funds, and there was to be an update of the title report and recordation of documents.

On July 7, 1976, the date of the levy, defendant sent the signed loan documents to the lender and requested the funds to close the escrow. On July 8, 1976, the lender furnished the funds of $180,746.27 to defendant. The escrow closed on that date and defendant disbursed the funds according to its instructions. It did not honor plaintiff’s garnishment of July 7, 1976, but rather