It is well established that after a judgment of default, a creditor may serve a writ of garnishment upon the debtor’s employer to collect the unpaid principal and interest of the underlying loan from the employee’s monthly wages. In a recent case out of Florida’s Third District Court of Appeal, the court was faced with a unique twist — the debtor claimed that her wages actually were the property of a religious order to which she belonged under a vow of poverty.

The debtor had defaulted on a loan to finance the purchase of an automobile. Subsequently, the lender obtained a judgment, and a writ of garnishment was issued to the debtor’s employer. The debtor moved to have the writ dissolved, arguing that the wages paid to her did not belong to her, but instead belonged to the religious order where her income was ultimately delivered.

Although the specific factual circumstances of this case are unique, the issue of agency in garnishment procedures is not. The law puts the burden on the agent-debtor to clearly establish the existence of a valid agency relationship. The defendant’s first burden is to establish that agency exists. To establish an agency-principal relationship, a party must show (1) acknowledgement by principal that the agent will act for him, (2) the agent’s acceptance of the undertaking, and (3) control by the principal over actions of the agent.

If agency is established, federal taxation cases provide Florida courts guidance with respect to actions involving garnishing the agent’s wages. In such cases, it is generally accepted that where an agent earns income on behalf of the principal within the scope of the agency and remits the income to the principal according to the agency relationship, the income is the principal’s and not the agent’s. Thus, in the garnishment context, if the income to be garnished belongs to the principal and not the agent-debtor, a creditor may not garnish such wages.

The agent-debtor in the Third District’s case failed to establish the requisite agency relationship, and so the court denied the debtor’s motion to dissolve the writ of garnishment.

From a practical perspective, the average creditor or attorney involved in banking law may never encounter a debtor who, due to a vow of poverty, attempts to dissolve a writ of garnishment. Nevertheless, creditors should understand that claims of agency in the garnishment context are ripe for fraud, and because of this potential, courts require proof of an actual agency relationship.

The case is Merriman Investments, LLC, etc. v. Therese Ujowundu, et al., No. 3D12-0996 (Fla. 3rd DCA, October 30, 2013).