What Are Wages for Personal Service?

Introduction

In my book, How to Collect Your Own Judgment in Texas, I discuss seizing your judgment debtor’s property as an effective means to enforce your Texas judgment. Along with the discussion, I cover the categories of property that are exempt from seizure. Specifically, I mention that you can’t garnish a judgment debtor’s current wages for personal service and apply the wages to your judgment. The only exception to this rule is for court-ordered child support. It’s in the Texas Constitution. You just can’t do it.

But, before you give up on the idea of following the money path to your judgment debtor’s apparent place of employment, you need to ask a few more questions. As is usually the situation with legal matters, it all comes down to definitions. So, you have to make sure you know what the definition of “wages for personal service” is.

The case of Campbell v Stucki, 220 S.W.3d 562 (Tex. App. — Tyler, 2007, no pet.) explains what I mean.

Facts

Gina and Paul Stucki divorced. Paul was an insurance agent. On August 27, 2004, the trial court reformed its decree of divorce to award Gina child support and 50% of Paul’s insurance renewal commissions payable on policies written before May 26, 2004. Campbell was Gina’s attorney. The court awarded his attorney’s fees. It’s probably no big surprise to know that Paul didn’t readily pay the commissions to Gina. He ignored payment of the attorney’s fees too.

On December 9, 2004 and January 4, 2005, writs of garnishment were filed against Paul’s employer, Bankers Life and Casualty Company. One writ was from Gina and one was from her attorney, Campbell. Bankers Life filed an answer admitting that it was indebted to Paul. On January 20, 2005, Paul filed a motion to dissolve the writs of garnishment. He stated that Bankers Life was his employer and the funds it held were entirely his wages, less child support. He argued that the funds were exempt from garnishment pursuant to Section 63.004 of the Texas Civil Practices and Remedies Code and Article XVI, Section 28 of the Texas Constitution.

Campbell and Gina conducted discovery prior to filing the writs of garnishment. In that discovery Paul admits he was an independent contractor with Bankers Life, not an employee. He also admits he was paid commissions, not wages and salary. Campbell and Gina, therefore, argue that the funds held by Bankers Life were subject to garnishment because they were not “wages for personal service.”

On January 21, 2005 the trial court dissolved the writs. In other words, the court didn’t allow Campbell and Gina to garnish the funds held by Bankers Life. The trial court did find that Paul was an independent contractor. That’s really a “no-brainer” ruling because he admitted being an independent contractor in post-judgment discovery. But, the court went on to conclude that his commissions were actually compensation for personal service. As compensation for personal service the commissions were exempt from garnishment. That’s the part of the ruling that makes no sense. So, Campbell and Gina appealed.
The appeal presents six different points of error. I didn’t deal with all the procedural issues that generated most the error points. For our purposes, the only issue is the one dealing with the trial court’s conclusion that Paul’s insurance commissions were exempt as compensation for personal service.

Legal Reasoning

The appellate court’s opinion points out that Article XVI, Section 28 of the Texas Constitution states that “[n]o current wages for personal service shall ever be subject to garnishment, except for the enforcement of court-ordered child support payments.” The court then shows that Texas courts apply this constitutional provision liberally. That means the language is interpreted favorably to the wage earner. But, the court points out that the phrase “wages for personal service” clearly implies an employer and employee relationship. As such, it excludes compensation to an independent contractor.

Since Paul admitted he was an independent contractor with Bankers Life, the trial court correctly concluded he was an independent contractor. But, the trial court was incorrect in concluding that Paul’s commissions are wages. Obviously, if he is an independent contractor, his commissions are not wages. And, since his commissions are not wages, his commissions aren’t exempt from garnishment.

Campbell and Gina were entitled to garnish Paul’s Bankers Life commissions.

Application

This case highlights the need for thoroughness in your post-judgment discovery. You can’t summarily conclude that just because your judgment debtor has a “job” his earnings are exempt from garnishment to satisfy your judgment. You have to be thorough. Ask lots of questions. You’ll eventually uncover the truth. And, if your judgment debtor’s “job” happens to be one where he’s an independent contractor rather than an employee … you’ve just found an avenue to pursue for collecting what he owes you.

To learn more Texas judgment collection techniques, get a copy of How to Collect Your Own Judgment in Texas. You can purchase today and receive a 10% discount for reading this article. To claim your discount, enter the code “wages” in the checkout cart.

To your success,
Harvey L. Cox
Texas Judgment Collection Center