Collecting a Writ of Execution

Disclaimer: The following case background and solution are meant for educational purposes only. I am not a lawyer and this is not legal advice.

New Maine National Bank v. Nemon, Supreme Judicial Course of Main 588 A.2d 1191 (1991).

Case Background

“Nemon borrowed $125,000 from New Main National Bank. He signed a promissory note that stated that, in case he did not pay, he (Nemon) would pay all costs associated with collecting this debt, including attorneys' fees. Nemon defaulted on his loan. The bank demanded that Nemon pay the balance due. Nemon did not pay, and the bank sued for breach of con­tract. The bank moved for a summary judgment against Nemon. The trial court granted the motion, stating that the bank was entitled to the balance due on the loan, accu­mulated interest, and attorneys' fees, plus $3,000 extra to cover the anticipated costs of collecting the money from Nemon. After the court entered its judgment, the bank sought and obtained a writ of execution against Nemon.

Nemon did not comply with the writ and repeatedly failed to produce documents that the court ordered him to produce concerning his debt to the bank. Nemon also repeat­edly failed to appear at scheduled court dates. The court charged Nemon with contempt and authorized a civil order of arrest but stayed the sentence so that Nemon could absolve himself of the contempt charge. Nemon failed to appear at court to absolve himself. Thereafter, the court issued an arrest warrant. The next day, Nemon paid the outstanding balance due on his judgment. Four months later, the bank moved to collect additional sums from Nemon to cover the costs of its numerous post-writ-of execution expenses. The court granted the motion. Nemon appealed" (Meiners, Ringleb, and Edwards, 2000, p. 91-92).

Writ of Execution

Collecting a monetary damage award from a defendant is the responsibility of the plaintiff. When the defendant is unable or unwilling to pay, the plaintiff can seek a writ of execution, which instructs a local official, such as the sheriff to seize and sell property to satisfy the judgment. Alternatively, the courts may order garnishment of the defendant’s property, which could involve an order for regular deductions from the defendant’s property until the judgment is satisfied (e.g., child support).

The bank was unable to collect the judgment based on the writ of execution, but there are ways to prevent this situation. In this instance, the writ of execution is an order to pay. Preventing this type of collection problem with an unsecured promissory note can be difficult, because the plaintiff had virtually no tangible leverage over Nemon, which would have helped them collect the amounts awarded. Ultimately, Nemon had to be threatened with arrest to comply with the judgment of the court. Borrowers like Nemon are exactly why banks typically do not lend money via unsecured promissory notes. Furthermore, other than the loan transaction, it seems that Nemon was not a customer of the New Maine National Bank, so there was no way to restrict any other account balances to recover the funds awarded. Either New Maine’s legal counsel did not specify property that could be seized or perhaps the sheriff did not seize bank accounts, real estate or attach Nemon’s wages, if possible. Clearly, Nemon had an account at some institution with which to pay the $125,000 plus the judgment. Alternatively, perhaps he had other assets that could be sold. Why other property was not pursued in the writ of execution is not clear. The bank could have required some collateral on the loan to use as leverage to collect the loan balance.

The Supreme Court’s rationale for awarding treble damages (i.e., $24,000 instead of $8,000) may be understood from the fact that the Superior court held Nemon in contempt and that the Supreme Court issued a unanimous (i.e., per curiam) opinion in favor of the damage award. By ignoring the repeated actions of the court, some of which were intended to assist him, Nemon behaved like a scofflaw and the Supreme Court sought to make an impression on him. The message is that if you ignore the court you will not only pay what you should but you must pay part of the damages that you have caused.

Reference

Meiners, R.E., Ringleb, A.H., & Edwards, F.L. (2000). The legal environment of business (7th Ed.). New York: West Legal Studies in Business.