In June, 1978 plaintiff Sears recovered a judgment by default against defendant Philip Romano. Plaintiff partially satisfied its judgment by levy on funds of the defendant, judgment-debtor in National Community Bank. Further attempts to satisfy the judgment have failed.
This matter comes before the court on plaintiff's motion to require payment from funds available to the judgment-debtor, in the same previously-levied account, under an Advance Loan Agreement with his bank. N.J.S.A. 17:9A-59.1 et seq. Judgment-debtor, although served with the motion, failed to object. The purported garnishee-bank objects to entry of the order claiming the funds available are not subject to levy or garnishment.*fn1
The motion culminates efforts by plaintiff to satisfy its judgment from what it claims to be a right or credit subject to execution under Article 8 of the Execution Act. N.J.S.A. 2A:17-57 et seq.*fn2 The relevant facts are simple. The account has no positive balance, but remains active. The parties stipulated at hearing of the motion that if the moneys available under the agreement were found subject to payment that an amount sufficient to satisfy the judgment exists on the account. Plaintiff certifies, and the garnishee does not dispute, that in 1979, 1980, 1982, and 1983 it telephoned the bank, inquired whether certain checks in various amounts would clear and was informed they would. The process-server attempted to place a levy on the account based on this knowledge and the bank replied that no funds were in the account.
Neither party raised, either in brief or at oral argument of this motion, whether the garnishee, a non-party, is subject to a summary order for payment on a right or credit under the Execution Act. N.J.S.A. 2A:17-57, 17-63. The question persists. Case law suggests that absent a specific admission of the right or credit a summary order may not be entered by the
court. Beninati v. Hinchliffe, 126 N.J.L. 587, 489-90 (E. & A.1941) (reversing summary entry of order to pay, Beninati v. Hinchliffe, 125 N.J.L. 377 (Sup.Ct.1940); see also National Cash Register Co. v. 6016 Bergenline Ave. Corp., 140 N.J. Super. 454, 457-58 (App.Div.1976) (garnishee categorical denial bars summary turnover); Winchell v. Clayton, 133 N.J.L. 168, 170-71 (Sup.Ct.1945) (summary procedure cannot be invoked to determine existence of debt).*fn3 A narrow statement of the rule established by Beninati is that when a garnishee in opposing the summary order to pay raises a fact question, either documentary or testimonial, a court lacks power to grant the summary order to pay because the jurisdictional sine qua non that the garnishee admit has not been satisfied. 126 N.J.L. 587, 589 (E. & A.1941); N.J.S.A. 2A:17-63.
The question for the court in this motion is distinct. The garnishee objects to entry of the order because the right sought to be levied upon is not subject to seizure under Article 8. Its objection presents a legal question of the scope of the Execution Act as amended by the rights and credits supplement. The court in this narrow context, and without the objection of either plaintiff or the purported garnishee-bank, considers whether an Advance Loan Agreement between the judgment-debtor and the purported garnishee is a right or credit subject to garnishment under the Execution Act. N.J.S.A. 2A:17-57 to 64. The role of the court is distinct from that criticized in Beninati because it requires no factual determinations beyond those stipulated by the parties. The parties admit the underlying contractual relation and only differ on the legal implication that
the contract creates in terms of garnishment of the judgment-debtor's rights. A summary proceeding, so constrained, nevertheless assures the rights of the garnishee to protection which the admission requirement implicitly endorses. N.J.S.A. 2A:17-63; cf. N.J.S.A. 2A:17-62 (allowing separate suit for liquidation by officer).
The right which plaintiff would execute against is the contract right of the judgment-debtor to draw his account to negative balance on the bank's promise to pay drafts on that account. The Advance Loan Agreement formalizes the practice by banks of paying the overdrafts of its customers. This practice, a demand loan, alters the more typical legal relation created by a check drawn on a positive account balance. See Clark and Squillante, The Law of Bank Deposits, Collections and Credit Cards, 37 (1970). In ordinary bank deposits a bank is free to use the sum deposited as its own pursuant to the contractual obligation to repay on the terms established in the depository agreement. See Kronisch v. Howard Savings, 154 N.J. Super. 576, 590 (Ch.1977) rev'd on other grounds, 161 N.J. Super. 592 (App.Div.1978). The deposit creates a debtor-creditor relationship with the depositor as the creditor. The payment by a bank on a check is payment of its own funds in satisfaction of the underlying debt established by the deposit.
Plaintiff's argument in general outline is rhetorical. "What could be more of a 'credit' than defendant's credit line? What could be more of a 'right' than ...