United States District Court, W.D. Missouri, St. Joseph Division
FINDINGS OF FACT AND CONCLUSIONS OF LAW
garnishment action arises from a $1.6 million-dollar jury
verdict against Hanzada for Import & Export Company, Ltd.
for breach of contract. Plaintiff Hassanin Aly seeks to
partially satisfy this judgment through a writ of garnishment
filed against National Beef Packing Company, LLC. The pending
dispute centers on whether National Beef possessed any of
Hanzada's property while subject to the writ.
Specifically, Aly contends that National Beef should have
remitted two payments it received from Hanzada totaling $680,
000. National Beef, on the other hand, claims that even
though Hanzada paid the money, it belonged to another
parties waived a bench trial and submitted the matter for
resolution based on their closing briefs, joint statement of
uncontroverted facts, and previously proffered evidence.
Pursuant to Federal Rule of Civil Procedure 52(a), the Court
now issues its findings of fact and conclusions of law.
Because Hanzada's payments fell within the ambit of the
garnishment order, the Court finds in favor of Aly in the
amount of $680, 046.50-comprising the two payments and a
leftover account credit of approximately $47-plus prejudgment
interest and costs.
Beef is a meat packer and processor headquartered in Kansas
City, Missouri. Hanzada is an Egyptian company that imports
and exports beef. National Beef sold beef products directly
to Hanzada from August 2008 until October 2015, when it
switched to selling to ESCO International Trading LLC in
Hanzada's stead. ESCO is a third-party distributor that
resells and exports National Beef's wares to other
purchasers, including Hanzada. However, due to the time
required to develop new customer shipping labels, National
Beef did not fully transition away from selling to Hanzada
until April 2016.
same month, the Court entered a $1, 591, 286.60 judgment in
favor of Aly and against Hanzada. To enforce the judgment,
Aly served National Beef with a writ of garnishment on August
10, 2016, along with interrogatories inquiring whether the
company possessed any “goods, chattels, monies,
credits, advances, effects, or other property belonging to
Hanzada.” The writ's return date was October 17.
National Beef denied holding any garnishable property
“at the time of service and thereafter, ” and Aly
took exception to this answer based on two payments
Hanzada wired directly to National Beef the same month it was
served with the writ. The first payment, in the amount of
$310, 000, arrived on August 5, and the second, in the amount
of $370, 000, arrived on August 11.
receiving the funds, National Beef credited them to
Hanzada's standing but inactive account, bringing its
balance to $680, 046.50. Since National Beef no longer sold
directly to Hanzada, it was not expecting the payments and
was unsure why Hanzada made them. National Beef speculated
that ESCO had difficulty obtaining a line of credit for its
orders and that Hanzada, as the ultimate customer, paid for
the beef product to avoid a belated delivery to Egypt. Hence,
on August 12, two days after receiving Aly's writ,
National Beef debited the $680, 046.50 from Hanzada's
account and credited it to ESCO's. National Beef then
applied the August payments to ESCO's orders and shipped
product to ESCO later that month. At the time, National
Beef's international credit manager and its employee in
charge of account deposits were unaware of the writ and
National Beef's obligations thereunder.
Court holds that the August 2016 payments and leftover credit
belonged to Hanzada and therefore were subject to
garnishment. Garnishment “enables a judgment
creditor (the garnishor) to collect the amount of the
judgment by seizing the judgment debtor's property when
it is in the hands of a third party (the garnishee).”
Baisch & Skinner, Inc. v. Bair, 507 S.W.3d 627,
629 (Mo.Ct.App. 2016) (citing State ex rel. Eagle Bank
& Trust v. Corcoran, 659 S.W.2d 775, 777 (Mo.
1983)). A writ of garnishment broadly attaches all money,
rights, credits, and other effects of the judgment debtor
that the garnishee possesses or controls between service of
the writ and its return date. Mo. Rev. Stat. § 525.040;
Mo. S.Ct. R. 90.01(d), 90.04. Put differently, garnishment
“freezes the mutual debts and credits of the garnishee
and the judgment debtor at a point in time.”
Wenneker v. Phys. Multispecialty Grp., Inc., 814
S.W.2d 294, 296 (Mo. 1991) (quoting Firebaugh v.
Stone, 36 Mo. 111, 115 (1865)).
Aly served National Beef with a garnishment writ on August
10, the company was still holding the $310, 000 that it
unexpectedly received from Hanzada five days prior. It
received an additional $370, 000 from Hanzada the following
day. National Beef concedes that Hanzada paid the money, but
it argues that the funds were ESCO's, since they were
paid on ESCO's behalf for ESCO's orders. In National
Beef's view, the payments constituted ungarnishable loan
proceeds to ESCO. See In re Sw. Glass Co., 332 F.3d
513, 518 (8th Cir. 2003) (“[The loan proceeds] became
money or credits belonging to [the lendee]”).
arguments fail to overcome the fact that the payments
originated from Hanzada. National Beef offers no direct
evidence of a loan and admits that it lacks any first-hand
knowledge of the relationship between Hanzada and ESCO. And
although National Beef eventually applied Hanzada's funds
to ESCO's account and orders, seemingly without
objection, this neither establishes a loan nor shows that the
money was otherwise committed through pre-existing
contractual obligations. See Murphy v. Carron, 536
S.W.2d 30, 32 (Mo. 1976) (defining a loan as “the
delivery of a sum of money to another under a contract to
return at some future time an equivalent amount. . . .”
(internal quotations and citation omitted)). Moreover,
Hanzada in all likelihood benefited from its payments as the
ultimate recipient of the purchased product. Consequently,
the Court is convinced that Hanzada simply wired its own
funds to National Beef.
Beef protests that it would be unjust to hold it accountable
for the money, since it already shipped $680, 000 worth of
product to ESCO. It did so at its own peril. To protect
itself, it should have held the funds “‘in
readiness to abide by the decision of the court.'”
Bd. of Regents for Sw. Mo. State Univ. v. Harriman,
857 S.W.2d 445, 451 (Mo.Ct.App. 1993) (quoting Potter v.
Whitten, 155 S.W. 80, 88 (Mo.Ct.App. 1913)). As the
Missouri Court of Appeals has explained,
[a]fter the service of the garnishment writ the debt or
property in the hands of the garnishee is regarded as in
custodia legis, and he becomes custodian of the property
for the purpose of the garnishment. His duty is to retain the
fund or property even against the true owner, to be disposed
of in accordance with the order of the court. The garnishee
is a mere stakeholder and must not do any voluntary act to
the prejudice of either plaintiff or defendant.
McEwen v. Sterling State Bank, 5 S.W.2d 702, 706
(Mo.Ct.App. 1928) (citation omitted); seealso
Rubin v. Bassakin, 130 S.W.2d 224, 228 (Mo.Ct.App. 1939)
(describing the proper approachfor a garnishee unsure of the
ownership of claimed funds as disclosing available facts,
informing interested parties, and ...