Opinion
No. C4-99-1150.
Filed February 29, 2000.
Appeal from the District Court, Anoka County, File No. F3946431.
John C. Sanders, (for respondent)
Timothy S. Choal, (for appellant)
Considered and decided by Halbrooks, Presiding Judge, Lansing, Judge, and Shumaker, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant challenges the district court's denial of her motion for an award of costs and damages under a cash bond posted for attachment of appellant's property. Because the attachment was proper and was vacated because the parties settled the underlying dispute, no liability arose on the cash bond, and we affirm.
FACTS
On April 29, 1997, the district court granted respondent Robert Carroll's motion for a preliminary attachment order to secure the payment of child support arrearages allegedly owed by his former spouse, appellant Pauline Carroll. The order directed the sheriff to seize and retain appellant's boat, motor, and trailer, and required respondent to post a $500 penal bond as provided in Minn. Stat. § 570.041, subd. 1 (1998). In lieu of the bond, respondent deposited cash. This satisfied the bonding requirement. Minn. Stat. § 570.041, subd. 3 (1998).
Appellant's boat, motor and trailer were being stored on respondent's father's property. The sheriff decided to leave the goods there pending the court's final order. Appellant objected and requested the court to order the sheriff to take possession of the goods and to store them elsewhere. The court granted the request. The sheriff complied and incurred storage charges.
The court issued a final attachment order on July 17, 1997. In doing so, the court noted that appellant had removed property in the past in violation of a court order and had been incarcerated for that violation. The court also noted that appellant had refused to pay income taxes or file returns for several years and had stated her willingness to go to jail to uphold her beliefs. As its first basis for attachment, the court cited Minn. Stat. § 570.02, subd. 1(1) (1998), allowing attachment when a party has secreted or disposed of, or is about to secrete or dispose of, nonexempt property to delay or defraud creditors. The court cited Minn. Stat. § 570.02, subd. 1(3) (1998) as its second basis for attachment. Under that subdivision, attachment is appropriate if a party has removed or is about to remove nonexempt property to delay or defraud creditors. Relevant to the second basis was respondent's allegation that appellant's boyfriend lived in North Dakota, implying that appellant had a place beyond the court's jurisdiction to which to take the goods.
Appellant appealed the attachment order to this court, and we affirmed, holding that there was sufficient evidence to support both grounds for the attachment. Carroll v. Carroll , No. C8-97-1566 (Minn.App. Mar. 17, 1998).
In an earlier appeal in the dissolution proceeding, we remanded to the district court for further findings as to the alleged child support arrearages. Carroll v. Carroll , No. C8-97-725 (Minn.App. Oct. 14, 1997). While the district court had the remanded issue under advisement, the parties jointly submitted a proposed order that provided in part:
[A]lthough it appears [appellant] may be due some repayment from the [respondent] after these credits are applied, the parties have stipulated to simply "zero out" any remaining arrears * * * .
(Emphasis added.) The court adopted the order and entered it on January 27, 1999.
Because the issue of arrearages had been resolved, in April 1999 appellant moved for an order vacating the attachment and modifying the cash bond to cover storage costs and other damages that appellant allegedly incurred as a result of the attachment. In its order dated June 10, 1999, the district court vacated the attachment, discharged the cash bond, and denied appellant's motion for costs and damages. The court denied the motion because it found that the attachment was not wrongful and that, on the authority of Downs v. American Sur. Co. , 132 Minn. 201, 204, 156 N.W. 6 (1915), there is no liability on an attachment bond when the parties settle the underlying dispute.
On appeal, appellant contends that the court erred because she never compromised her position on arrearages and that respondent in fact conceded appellant was entitled to offsets.
DECISION
A reviewing court is not bound by and need not give deference to a district court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n , 358 N.W.2d 639, 642 (Minn. 1984). Because the district court's denial of appellant's motion for costs and damages was based on an interpretation and application of law, we review that decision de novo. In re Senty-Haugen , 583 N.W.2d 266, 268 (Minn. 1998).
Minn. Stat. § 570.041, subd. 1 (1998), requires a claimant to post a penal bond of at least $500 before the court may order an attachment. The bond provides security for the payment of costs or damages caused by the attachment if judgment is awarded to the owner of the attached property or if the attachment is vacated. Minn. Stat. § 570.041, subd. 1. Minn. Stat. § 570.131, subd. 2 (1998), also provides for an award of charges and expenses if the bond is vacated.
The district court relied on Downs v. American Sur. Co. , 132 Minn. 201, 156 N.W. 5 (1915), as authority for denying appellant's motion for costs and damages incurred as a result of the attachment. Neither party has cited or discussed any other authority on the issue.
In Downs , Enterprise sued Downs and attached the latter's property. Enterprise obtained a bond from a surety conditioned on the payment of damages if Downs obtained judgment or if the attachment was vacated or set aside.
While the attachment was still in place, Enterprise and Downs settled their dispute, and agreed to a dismissal and to a return of the attached property to Downs. Judgment of dismissal was entered in favor of Downs and the sheriff returned the property.
Downs later brought an action against the surety on the bond, claiming that the property was damaged while under attachment and that Downs was entitled to bond coverage because it had recovered judgment in its favor. Downs prevailed in a jury trial and the surety appealed.
On appeal, the supreme court held that the surety was entitled to judgment as a matter of law. The court held:
The purpose of the requirement of the statute for an attachment bond is to protect the defendant against wrongful attachment. Liability is accordingly made to arise if the attachment is set aside or vacated, or if judgment is given for the defendant * * * .
Id. at 203, 156 N.W. at 6. The supreme court also said that
it would be unthinkable that in a case where suit is brought on a just debt, and attachment is procured based on just grounds, the defendant could, after suit brought, by payment of the claim and procurement of a judgment of dismissal in that manner, create a liability on the bond.
Id.
Finally, the court held that when judgment is entered on stipulation resulting from an amicable settlement of the case, there is no liability on the bond. Id. Downs is reasonably analogous to this case. The attachment here was proper. The parties settled the dispute. Because of the settlement, the court vacated the attachment, there being no further need for it. Appellant characterizes the parties' stipulation to the order of January 27, 1999, as a concession by respondent rather than a negotiated settlement. The record does not support that characterization. Appellant and respondent jointly submitted an order that reflected a stipulated settlement of a contested issue. The court adopted that order. Under the authority of Downs , there could be no liability on the cash bond.
The dissent emphasizes the fact that the court vacated the attachment. That vacation, according to the dissent, triggered the statutory liability for costs and damages. But Downs holds that the purpose of the bonding statute is to protect against wrongful attachment, which can result in the court setting the attachment aside or vacating it, or awarding judgment to the property owner. Downs , 131 Minn. at 203, 156 N.W.2d at 6. The bond is a penal bond, intended to penalize for wrongful conduct. Minn. Stat. § 570.041, subd. 1. Where the attachment is rightful and is designed to secure a just debt, bond liability cannot be triggered, for the statute does not penalize rightful conduct. We do not read the statute as providing bond liability merely because the attachment is vacated. Rather the vacation must occur because the attachment is wrongful. Thus, a vacation resulting from a settlement of a just debt does not trigger bond coverage.
Affirmed.
I respectfully dissent because the disposition does not comply with the statutory provision governing bonds posted for orders of attachment. Minnesota Statutes section 570.041, subdivision 1 (1998), specifically provides that a claimant must post a bond "that if judgment be given for the respondent or if the order is vacated, the claimant will pay all costs * * * and all damages caused by the attachment." This provision is consistent with Minnesota Statutes section 570.131 (1998), which reiterates that "[i]f the order of attachment is vacated, the claimant shall be responsible for payment of any charges and expenses incurred by the sheriff."
The district court vacated the attachment order "pursuant to petitioner's stipulation." The order to vacate triggers the operation of the statute and determines that the claimant, in this case Robert Carroll, is liable for costs and damages. I find nothing in Downs v. American Sur. Co., 132 Minn. 201, 156 N.W. 5 (1916), to support a contrary holding. Downs is an action against a surety company and addresses liability arising on a bond itself. Id. at 203-04, 156 N.W. at 5-6. Additionally, Downs involves a dismissal of an action, but does not involve an order to vacate and thus does not trigger the statutory language that is dispositive in this case. Id. at 202, 156 N.W. at 5; see also Minn. Stat. § 645.16 (1998) ("the letter of the law shall not be disregarded under the pretext of pursuing the spirit").