IN THE SUPREME COURT OF THE STATE OF KANSAS
No. 93,622
LSF FRANCHISE REO I, LLC,
Plaintiff/Appellant,
v.
EMPORIA RESTAURANTS, INC., AND
NORTH STAR HOLDINGS OF MISSOURI, L.L.C.
Defendants,
and
POLARIS RESTAURANTS, INC.,
Defendant/Appellee.
SYLLABUS BY THE COURT
1. The function of an appellate court is to determine whether the trial court's findings of fact are supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law. Substantial evidence is such legal and relevant evidence as a reasonable person might accept as sufficient to support a conclusion. An appellate court's review of conclusions of law is unlimited. The appellate court does not weigh conflicting evidence, pass on credibility of witnesses, or redetermine questions of fact.
2. The interpretation of a statute is a question of law over which this court has unlimited review. An appellate court is not bound by the trial court's interpretation.
3. After judgment has been entered against the judgment debtor in a civil case, K.S.A. 60-731 provides that the creditor may institute garnishment proceedings to attach property owed by the judgment debtor but held by the garnishee. When the garnishment involves funds of a judgment debtor held by a financial institution, the judgment creditor must have a good faith belief that the funds to be garnished belong to the judgment debtor.
4. A judgment against the garnishee must be limited to the actual, and not apparent, property of the judgment debtor in possession or under the control of the garnishee at the time the garnishment order is served upon the garnishee.
5. K.S.A. 60-735(b) provides that a judgment debtor may request a hearing to assert any claim that the accounts in question are exempt from garnishment within 10 days after it receives notice of the service of garnishment. If such a hearing is requested, the judgment debtor bears the burden of proof to show that any of the funds in question are exempt from garnishment.
6. Ownership by the judgment debtor of an account in a financial institution is not necessarily determined by the name put on the account. By placing the burden of proof on the judgment debtor to demonstrate that it does not own the funds in question, K.S.A. 60-735(c) provides sufficient protection for judgment creditors' interests.
7. Testimony of the judgment debtor that funds in a financial institution are to be used for a specific purpose is not enough to establish the ownership of monies in a particular account. A judgment debtor seeking to demonstrate other ownership of disputed funds must provide some additional evidence that would demonstrate that such funds were assigned to another and thus not subject to garnishment.
8. In the absence of statutory provision prescribing the mode of assignment, no particular mode or form is necessary to effect a valid assignment of property, claims, or debts so as to defeat garnishment proceedings by a creditor of the assignor. If the intent of the parties to effect an assignment is clearly established, that is sufficient and the assignment may be in the form of an agreement, an order, or any other instrument which the parties may see fit to use for that purpose.
9. The record is examined and provides no factual support for the trial court's conclusion that the judgment debtor did not own the funds subject to garnishment. Thus, we hold that the accounts in question are subject to garnishment.
Review of the judgment of the Court of Appeals in 35 Kan. App. 2d 189, 130 P.3d 1212 (2006). Appeal from Lyon district court, W. LEE FOWLER, judge. Judgment of the Court of Appeals affirming the district court is reversed. Judgment of the trial court is reversed and remanded. Opinion filed February 2, 2007.
Thomas A. Krueger, of Krueger Law Offices, of Emporia, argued the cause and was on the briefs for appellant.
Cynthia F. Grimes, of Grimes & Rebein, L.C., of Lenexa, argued the cause, and Jeffry J. Larson, of Miller & Larson, Chtd., of Emporia, was with her on the brief for appellee.
The opinion of the court was delivered by
DAVIS, J.: LSF Franchise REO I, LLC (LSF), filed a nonearnings garnishment action attempting to collect on its civil judgment against Polaris Restaurants, Inc. (Polaris). The trial court granted Polaris' motion to quash the garnishment of two bank accounts held in Polaris' name, ruling that the accounts were held in trust for withholding taxes and not subject to garnishment. The Court of Appeals affirmed the trial court's ruling. LSF Franchise Reo I v. Emporia Restaurants, 35 Kan. App. 2d 189, 130 P.3d 1212 (2006). We granted LSF's petition for review and now reverse.
FACTS
In September 2003, LSF filed a "Petition to Foreclose Mortgage and for Other Relief" against defendants Emporia Restaurants, Inc., Polaris Restaurants, Inc., and North Star Holdings of Missouri, LLC. A journal entry of judgment and foreclosure was entered for LSF against the defendants on March 18, 2004, for over $2,600,000. In an effort to collect this judgment, LSF filed on July 23, 2004, a request for a nonearnings garnishment on Commerce Bank (Commerce), with whom LSF believed that Polaris held accounts. On July 28, 2004, Commerce answered the order, stating that "$33,686.73 IS THE AMOUNT GARNISHEE IS HOLDING."
Commerce amended this answer on August 3, 2004, stating that Polaris had two checking accounts with Commerce as of the date of service of the order of garnishment: Account No. 49 and Account No. 50, both titled in Polaris' name. Neither account was "special" or specifically held apart for a particular purpose, although Account No. 50 had the description "'Payroll Account'" in its address line.
Commerce's answers to interrogatories explained that, at the time of service, Account No. 49 had a balance of $24,069.66. However, two items deposited in that account totaling $17,400 were returned for insufficient funds after the service of garnishment, leaving a balance of $6,669.66 in Account No. 49. Similarly, Account No. 50 had a balance of $9,617.07 at the time of service of the garnishment order. Two deposits were also returned from that account, totaling $7,200, leaving a balance of $2,417.07 in Account No. 50 as of August 3, 2004. According to Commerce's amended answer, Polaris' combined balance from the two accounts available to be garnished was $9,086.73.
On August 9, 2004, Polaris filed a "Motion to Quash Garnishment," alleging that at the time of service of the order of garnishment, Account No. 49 consisted of its "operating funds" and Account No. 50 consisted of "earned wages and payroll taxes known as a payroll account." Polaris stated that it had scheduled for payroll taxes in the amount of $8,791.64 to be taken out of its payroll account via electronic funds transfers, and that it was its "intent to transfer the funds from the operating account to the payroll account to cover the electronic funds transfers for payroll tax purposes." The electronic funds transfer was denied after the order of garnishment was served on Commerce.
Polaris alleged that the correct tax amount owed was $8,791.64 ($8,610.28 for 941 [employment] taxes and $181.36 for 940 [unemployment] taxes). LSF apparently understood the total taxes due to be $8,610.28. The trial judge made no finding as to the amount due, and the record contains no documentation or other evidence as to the dollar amount of taxes due.
Polaris expressed no objection to garnishment of its operating bank account (Account No. 49), "exclusive of those funds necessary to satisfy the payroll taxes." Using the figure of $8,791.64, the balance in the operating account, after deduction for taxes, would be $297.11. However, Polaris did object to any garnishment of the payroll account, Account No. 50, because it asserted that "the funds in such account do not constitute the property or assets of Defendant." According to Polaris, the earned wages were the property of its employees, and the payroll taxes were held for the federal and state taxing authorities.
Upon hearing of Polaris' motion to quash, LSF first argued for dismissal because both accounts were titled in Polaris' name and no account was specifically set apart or held in trust as payroll taxes. The trial judge rejected LSF's argument, finding that "the garnishment statutes allow for challenges to garnishments" upon an allegation that the property in question does not belong to the judgment debtor.
Polaris' president, Mary Leonida, whose primary role was overseeing "operations and the accounting," was the only witness called at the hearing. She explained that Account No. 50 was used for "payroll and payroll taxes at certain times" and Account No. 49 was used for "general operations and payroll taxes as well, sometimes." When Polaris' counsel asked her why Polaris would use funds from Account No. 49 for payroll taxes, she replied that
"[s]ometimes it was a matter of which one [account] had the most money for transferring so we would have to transfer a lesser amount from one to another. If the payroll account had more money [in] it, sometimes we would transfer from [the] general [Account No. 49] into payroll [Account No. 50] and sometimes it was visa versa."
The president also explained that an employee had set up an electronic funds transfer through the Electronic Federal Tax Payment System (EFTPS) on Friday, July 23, 2004, before the garnishment action was filed. EFTPS was directed to pull the designated funds out of defendant's Account No. 50 on Tuesday, July 27, 2004. At the time of her testimony, an EFTPS form was shown on an overhead screen, but that form is not admitted into evidence and does not appear in the record. Referring to some business notes taken by the employee who purportedly called in the transfer, Polaris' president testified that Polaris intended to instruct Commerce to transfer funds from Account No. 49 prior to July 27 because Account No. 50 did not contain sufficient funds to cover the EFTPS withdrawal. However, no one made any attempt to actually transfer funds between the accounts because of the garnishment action. EFTPS notified Polaris on July 29 that the scheduled July 27 withdrawal of funds for taxes transfer did not go through.
At the conclusion of the hearing, the trial court made several findings of fact and legal conclusions on the record. First, the trial court found that "the funds that were in this account, at least to the extent identified in the documents, were, or most of the funds in these accounts were actually payroll taxes withheld . . . to be paid into the Internal Revenue Service" and "that apparently is not disputed." The Court of Appeals agreed that there was no conflicting evidence offered on this point. However, as indicated in the discussion below, LSF very much disputed this finding. Second, the trial court concluded that these payroll taxes were "held in trust" for the taxing authorities. Finally, the trial court concluded that the failure to transfer funds from Account No. 49 (the general operating account) to Account No. 50 (the payroll account) had no effect on its decision because "once the court determines that those funds are employees funds held in trust by Polaris, it doesn't really matter what account it comes from as long as it goes to the Federal Government."
The trial court noted that holding funds in Polaris' Restaurant accounts instead of a separate trust account made no difference because employers hold employee taxes "'in Trust for the United States.'" According to the trial court, the money was "actually not necessarily Polaris's money but actually money held in trust by Polaris to pay their employees' income and social security taxes because it is their withholding." Because Polaris had arranged the electronic funds transfer before Commerce was served with an order of garnishment, the trial court held that the accounts were not subject to garnishment. The trial court therefore ruled that the money should be returned to Polaris for the purpose of paying its employees' taxes and that the remaining balance after taxes be paid to LSF to be put toward the judgment. The court then stayed its order so that LSF could appeal, on the condition that LSF post a $20,000 bond.
The Court of Appeals affirmed the trial court's decision in LSF Franchise Reo I, 35 Kan. App. 2d 189. Finding no Kansas case "where a debtor claimed the money being garnished from a bank account was being held in trust for someone else," the appellate court drew analogy to joint tenancy cases. 35 Kan. App. 2d at 192. Because the garnishment statutes allow joint tenants to rebut the presumption of equal ownership in joint bank accounts, the court reasoned, so too should a debtor be allowed to prove that money held in its accounts actually belongs to another entity. 35 Kan. App. 2d at 193. In addition, the court did not find the lack of notice to either Commerce or LSF to be determinative because "[i]f the money truly did not belong to Polaris, LSF was not entitled to garnish the funds." 35 Kan. App. 2d at 193.
The Court of Appeals concluded it "was not presented with any conflicting evidence" and the trial court's findings that the money in Polaris' account was held for tax purposes is "supported by substantial competent evidence." 35 Kan. App. 2d at 194.
DISCUSSION
While not designated by the trial court as findings of fact and conclusions of law, the trial court ultimately concluded that the funds in both Account No. 49 and Account No. 50 were held in trust for taxing authorities, did not belong to Polaris, and were not subject to garnishment. We begin our discussion with the standard of review to be applied in reviewing these findings and conclusions.
Standard of Review
The function of an appellate court is to determine whether the trial court's findings of fact are supported by substantial competent evidence and whether the findings are sufficient to support the trial court's conclusions of law. Substantial evidence is such legal and relevant evidence as a reasonable person might accept as sufficient to support a conclusion. U.S.D. No. 233 v. Kansas Ass'n of American Educators, 275 Kan. 313, 318, 64 P.3d 372 (2003). An appellate court's review of conclusions of law is unlimited. Nicholas v. Nicholas, 277 Kan. 171, 177, 83 P.3d 214 (2004). The appellate court does not weigh conflicting evidence, pass on credibility of witnesses, or redetermine questions of fact. State ex rel. Morrison v. Oshman Sporting Goods Co. Kansas, 275 Kan. 763, 775, 69 P.3d 1087 (2003).
The trial court and the Court of Appeals also interpreted and applied Kansas' garnishment statutes, which involve questions of law. The interpretation of a statute is a question of law over which this court has unlimited review. An appellate court is not bound by the trial court's interpretation. See Foster v. Kansas Dept. of Revenue, 281 Kan. 368, 374, 130 P.3d 560 (2006).
Garnishment Statutory Law
Before discussing the merits of this appeal, it is helpful to set forth a general overview of garnishment law in Kansas. The current statutory scheme for garnishment, adopted by the Kansas Legislature in 2002, sets forth a detailed procedure by which a debtor's funds or other property may be attached. See K.S.A. 60-719 et seq. Under the Kansas garnishment statutes, earnings or wages of a debtor are treated differently than the funds that we consider in this case. See K.S.A. 60-733(c). We deal here with the garnishment of funds held by a financial institution. See K.S.A. 60-731 and 60-733(g). In this situation, there are three key persons involved: A judgment creditor (garnishor), in this case LSF, which is owed money by the judgment debtor; the judgment debtor, in this case Polaris, which owes money to the judgment creditor; and the garnishee, in this case Commerce, which holds money of the judgment debtor.
Order of Garnishment
After judgment has been entered against the judgment debtor in a civil case, K.S.A. 60-731 provides that the creditor may institute garnishment proceedings to attach property owed by the debtor but held by the garnishee. When the garnishment involves funds held by a financial institution, like Polaris' bank accounts with Commerce, the judgment creditor must have a good faith belief that the funds to be garnished belong to the judgment debtor. K.S.A. 60-733(g). In such cases, the order of garnishment must include the following statement: "'If you hold any funds, credits or indebtedness belonging to or owing the judgment debtor, the amount to be withheld by you pursuant to this order of garnishment is not to exceed [the amount owed by the judgment debtor].'" (Emphasis added.) K.S.A. 60-733(c). After service of the order of garnishment, the judgment creditor must give the judgment debtor notice that the order has been served and must inform the debtor that the debtor has the right to demonstrate that the subject property is exempt from garnishment. K.S.A. 60-735.
Answer of Garnishee
The garnishee bank's answer must contain a statement that "'[t]he amount of the funds, credits or indebtedness belonging to or owing the judgment debtor which I shall hold shall not exceed [the amount held by the bank subject to garnishment].'" (Emphasis added.) K.S.A. 60-733(d)(1). The garnishee must also state in its answer whether the judgment debtor owns the account(s) in questions in joint tenancy with the persons not subject to garnishment. K.S.A. 60-733(d)(2). Once the garnishee answers the order of garnishment, any interested party may file a response. In addition, the parties may conduct limited discovery regarding the garnishee's statements.
Hearing
K.S.A. 60-735(b) provides that a judgment debtor may request a hearing to assert any claim that the accounts in question are exempt from garnishment within 10 days after it receives notice of the service of garnishment. If such a hearing is requested, the judgment debtor bears the burden of proof to show that any of the funds in question are exempt from garnishment. K.S.A. 60-735(c). In addition, if a party files a reply to the garnishee's answer, that party has the burden of proof to demonstrate the validity of its reply. K.S.A. 60-738. K.S.A. 60-733(f), not involved in this case, authorizes any joint tenant to prove that any of the funds in question do not belong to the judgment debtor.
Judgment
After hearing the parties' arguments, the court shall "enter an order determining the exemption [of the subject property] and such other order or orders as is appropriate." K.S.A. 60-735(c). If the court determines that the property in question is owned by the judgment debtor and held by the garnishee, it may enter judgment by (1) ordering payment into court, impoundment, foreclosure sale, etc., or (2) rendering judgment against the garnishee in the amount of the garnishee's indebtedness to the judgment debtor or for the value of the judgment debtor's property that the garnishee holds. K.S.A. 60-721(a)(3), (4). If a garnishee bank holds funds in two or more accounts owed to the judgment debtor, the bank may pay the garnishment judgment from any one or more of these accounts. K.S.A. 60-733(e).
Kansas Case Law
As the discussion above illustrates, garnishment proceedings affect only property owned by a judgment debtor. See K.S.A. 60-729. This ownership requirement that runs throughout the garnishment statutes codified early Kansas case law–which remains good law to this day–that "a judgment against the garnishee must be limited to the actual, and not apparent, property of the defendant in the possession or under the control of the garnishee at the time the garnishee summons is served upon him." (Emphasis added.) Septer v. Boyles, 149 Kan. 240, Syl. ¶, 86 P.2d 505 (1939). This requirement of actual ownership necessarily means that a judgment creditor may not attach property that does not legally belong to the judgment debtor. As this court has explained,
"in garnishment proceedings the creditor takes the place and stands in the shoes of his debtor, taking only what the latter could enforce. [Citation omitted.] In Investment Co. v. Jones, 2 Kan. App. 638, the rule is stated as follows:
"'Proceedings in garnishment do not change the legal relations and rights existing between the defendant and the garnishee, nor place the plaintiff in a more favorable position for the enforcement of a claim against the garnishee than would be the defendant in an action brought by him for the same cause; nor can any one be held in such proceedings to the payment of a liability which the defendant could not himself enforce because of existing equities and set-offs.'" Harpster v. Reynolds, 215 Kan. 327, 330, 524 P.2d 212 (1974).
See also B. & M.R. Rld. Co. v. Thompson, 31 Kan. 180, 196, 1 Pac. 622 (1884) ("Garnishee proceedings mean this: the creditor takes the place of the debtor. 'Only this and nothing more.' The former takes only that which the latter could enforce.").
As one illustration of this rule, this court held in an early case that "if the money deposited [in a bank account] belongs to a third person, and is held by the depositor in a fiduciary capacity," that money may not be reached through garnishment. Morrill v. Raymond, 28 Kan. *415, Syl. ¶ 1. In Morrill, Orth, a judgment debtor, deposited money in a bank account in his own name, but that money was specifically advanced to him by Speer & Co., an agricultural firm, so he could act as its agent for the purchase of grain. This court found that the debtor "had the right to deposit [the money from Speer & Co.] in his own name, but not to use it, or any part of it, to satisfy his prior creditors." 28 Kan. at *418. Thus, the money in the account "belonged in equity to Speer & Co., and Orth held it in a fiduciary capacity." 28 Kan. at *418. "Orth had no right to apply this fund, in whole or in part, to pay or reduce the judgment . . . against him," and "the judgment creditor stood in no better position than the depositor." 28 Kan. at *419. Thus, this court held that the money in the account was not subject to garnishment. 28 Kan. at *419.
Inherent in these decisions is the underlying conclusion that a judgment creditor may only reach property actually owned by the debtor–that the creditor has "no greater rights against the garnishee than the defendant" has, and thus the creditor is "not entitled to any more than the garnishee owe[s] to the defendant when process [is] served upon him. [Citations omitted.]" Jewell v. Ellis, 103 Kan. 604, 606-07, 175 Pac. 970 (1918).
As the earlier discussion of the Kansas garnishment statutes demonstrates, this ownership requirement has been incorporated into the present statutory scheme. K.S.A. 60-732(c) delineates the property that may be attached by an order of garnishment. Subsection (c)(1) explicitly states that a creditor may attach "[a]ll intangible property, funds, credits or other indebtedness belonging to or owing the judgment debtor, other than earnings, which is in the possession or under the control of the garnishee." (Emphasis added.) Implicit in the statute's language is a requirement that, in order for property to be garnished, it must first be actually owned by or owed to the judgment debtor.
Because ownership is a requirement for garnishment, it necessarily follows that parties to a garnishment proceeding should be allowed to offer evidence to demonstrate who actually owns disputed property. This corollary was recognized by this court's early decision in Morrill, where the court explained that, regardless of the fact that the account containing the money in question was titled in Orth's name (the judgment debtor), "it was the duty of the court to decide to whom in equity the deposit beneficially belonged." 28 Kan. at *418.
Instead of citing this precedent, the Court of Appeals panel below relied heavily on the law relating to joint tenancy in garnishment cases. While this analogy is not necessary given the underlying principle in garnishment proceedings that the property garnished must actually belong to the debtor, it is helpful in that it provides yet another example of courts holding that actual ownership is a prerequisite to garnishment.
Even prior to the current statutory scheme for garnishment, Kansas courts recognized that "in the garnishment of a joint bank account, only the interest actually owned by the garnishment debtor is subject to seizure." Miller v. Clayco State Bank, 10 Kan. App. 2d 659, 664, 708 P.2d 997, rev. denied 238 Kan. 878 (1985). When the legislature revised the garnishment code, this holding was integrated into K.S.A. 60-733, which governs the garnishment of funds held by financial institutions. The statute states in relevant part:
"If an order of garnishment attaches funds, credits or indebtedness held by a bank, . . . and the garnishee holds funds or credits or is indebted to the judgment debtor in an account which judgment debtor owns in joint tenancy with one or more individuals who are not subject to the garnishment, the garnishee shall withhold the entire amount sought by the garnishment. Neither the garnishor nor the garnishee shall be liable to the joint owners if the ownership of the funds is later proven not to be the judgment debtor's." (Emphasis added.) K.S.A. 60-733(f).
LSF's Preliminary Argument
With the above as background, we first consider LSF's argument that this court should adopt a rule that bank accounts can avoid garnishment only when they are designated as "special" or expressly "held in trust." According to LSF, such a designation would give notice to creditors that the accounts are not subject to garnishment. Moreover, LSF asserts that, if such a rule were adopted in Kansas, no additional evidence regarding ownership of the bank accounts would be admissible. Thus, under the asserted reasoning, the accounts here, which are held in the sole name of Polaris, would be subject to garnishment because such accounts were not designated as "special" or "held in trust" for some specified purpose.
LSF relies upon Capital Serv., Inc. v. Dahlinger Pontiac-Cadillac, Inc., 10 Kan. App. 2d 328, 330, 699 P.2d 549, rev. denied 237 Kan. 886 (1985), to support its position. In addressing special circumstances that may prevent funds held by a bank from being garnished, Capital Serv. stated that one such "circumstance" arises where an account is designated as "'special'" or is "'held in trust' by the bank for [an] expressed purpose." 10 Kan. App. 2d at 330. The Court of Appeals there explained that an account was "special" where an agreement existed between the bank and the depositor that the account would only be used for a particular use, such as payroll in Capital Serv., and where the depositor could not use the funds in the account for any other purpose. 10 Kan. App. 2d at 329, 332. Because the debtor there "could not have paid [the judgment creditor] by drawing a check on the payroll account," the account was special and not subject to garnishment. 10 Kan. App. 2d at 332.
However, the Court of Appeals below correctly and expressly rejected the position advocated by LSF that a designation of "special" was required in order to prevent the funds from being garnished. LSF Franchise Reo I, 35 Kan. App. 2d at 192. We agree with the Court of Appeals for two reasons. First, garnishment depends upon whether the judgment debtor owns the property in question, and as the prior opinions of Kansas courts demonstrate, ownership is not necessarily determined by the name put on the account. See Morrill, 28 Kan. at *419; Miller, 10 Kan. App. 2d at 664. Second, Kansas law expressly provides for a hearing when there is a dispute about ownership of the property in question. In some instances, accounts of the judgment debtor may not be designated "special," yet the law acknowledges that if the property does not belong to the judgment debtor it may not be garnished.
Elaborating upon the latter point, K.S.A. 60-735 anticipates a hearing in garnishment actions where the judgment debtor may claim that the funds on deposit are exempt from garnishment together with the resolution of other claims made by the parties to the garnishment. By placing the burden of proof on the judgment debtor to demonstrate that it does not own the funds in question, K.S.A. 60-735(c) provides sufficient protection for judgment creditors' interests. The position advocated by LSF is contrary to the law of Kansas and is rejected as a matter of law.
The Trial Court's Conclusion that Polaris' Accounts Are Exempt from Garnishment
The trial court held that the monies in Polaris' Commerce accounts were not subject to garnishment. Specifically, after hearing evidence from Polaris and argument by both parties, the trial court found that "the funds that were in this account, at least to the extent identified in the documents, were, or most of the funds in these accounts were actually payroll taxes withheld . . . to be paid into the Internal Revenue Service." In addition, the trial court found that these payroll moneys were "held in trust" for the taxing authorities and thus, did not belong to Polaris. According to the trial court, the failure of Polaris to request any transfer of funds from its general operating account to the payroll account was inconsequential because "once the court determines that those funds are employees funds held in trust by Polaris, it doesn't really matter what account it comes from as long as it goes to the Federal Government." Because Polaris had arranged for the electronic funds transfer before Commerce was served with the order of garnishment, the trial court held that the accounts were not subject to garnishment.
The trial court's findings and conclusions may be divided into three points which, when considered according to our standard of review, resolve the issues in this appeal: (1) The money in Polaris' two accounts actually consisted of payroll taxes; (2) because the money in Polaris' accounts was "held in trust" for the taxing authorities, no separate account was necessary to preserve the money from garnishment; and (3) the money did not belong to Polaris. It is important to note that Polaris bore the burden of proof to establish that it did not own the funds in its two Commerce accounts at the time of service of garnishment.
(1) The money in Polaris' two accounts actually consisted of payroll taxes.
The trial court stated that this con