APPEAL from the Circuit Court of Will County; the Hon. EDWIN
B. GRABIEC, Judge, presiding.
MR. JUSTICE BARRY DELIVERED THE OPINION OF THE COURT:
Following a hearing, the Circuit Court of Will County, on the motion of judgment-creditor plaintiffs Dale Zucker and Lawrence Bain to traverse the answers of garnishee defendant First National Bank of Western Springs submitted in response to garnishment interrogatories, entered judgment in favor of the garnishee-appellee defendant. This case is an appeal from that judgment.
The facts of this case are as follows. Plaintiffs Zucker and Bain were judgment creditors of defendant United States Computer Corporation. On November 7, 1978, the defendant (which is not a party to this appeal) deposited a $22,480 check drawn on a New York City bank (payor bank) with the First National Bank of Western Springs (hereinafter referred to as First National or the bank). This check was deposited in one of four checking accounts the judgment debtor maintained at the bank.
On November 14, 1978, First National closed each of the defendant's four accounts. This action was taken because, in the words of vice president Jeffery Walan, "we deemed ourselves to be insecure at that point." The $16,574.94 balance then remaining in the defendant's accounts was converted into cashier's checks payable to the bank with the defendant as remitter. These checks were placed in the defendant's file that Walan maintained on his desk. At the time the defendant's accounts were closed, the bank did not know the status of the $22,480 check.
At approximately 1:30 p.m. on November 16, 1978, Walan contacted the payor bank in New York City by telephone in an effort to ascertain the status of the $22,480 check. The payor bank, however, could not definitely state whether or not the check had been honored. Later in the day, at approximately 3:45 p.m., the judgment creditor plaintiffs served garnishment summons and interrogatories on the bank. In its answers to the garnishment interrogatories, the bank stated that it had no property belonging to the judgment debtor, nor was it indebted to the judgment debtor. These answers were mailed to the clerk of the court of Will County the same afternoon, and they were filed November 21, 1978.
On November 20, 1978, the garnishee defendant bank, having no notice that the check had been dishonored, presumed final payment occurred and issued and delivered the judgment debtor a cashier's check in the amount of $16,574.94. Subsequently, the judgment creditor plaintiffs moved to traverse the bank's answers to the garnishment interrogatories.
The question before the trial court was whether at the time the garnishment summons was served upon the bank it was indebted to the defendant. The pertinent statutory provision is section 7(b) of the garnishment act, which provides:
"(b) The garnishee shall file, on or before the return date, or within the further time that the court for cause may allow, a written answer under oath to the interrogatories, setting forth as of the date of service of the garnishment summons (1) any indebtedness due or to become due to the judgment debtor and (2) any other property in his possession, custody or control (a) belonging to the judgment debtor or (b) in which the judgment debtor has an interest." (Ill. Rev. Stat. 1977, ch. 62, par. 39(b).)
Relying on Marengo State Bank v. West (1971), 132 Ill. App.2d 106, 108, 267 N.E.2d 527, and Larson v. McCormack (1936), 286 Ill. App. 206, 208, 2 N.E.2d 947, the trial court stated that "[a] fund is not subject to garnishment if the judgment debtor could not maintain an action therefor against the garnishee." The court proceeded to find that under the provisions of section 4-213(4)(a) of the Uniform Commercial Code (Ill. Rev. Stat. 1977, ch. 26, par. 4-213(4)(a)) no action could be maintained by the judgment debtor against the garnishee at the trial of the garnishment summons. Section 4-213(4)(a) provides:
"(4) Subject to any right of the bank to apply the credit to an obligation of the customer, credit given by a bank for an item in an account with its customer becomes available for withdrawal as of right
(a) in any case where the bank has received a provisional settlement for the item, — when such settlement becomes final and the bank has had a reasonable time to learn that the settlement is final."
Under the terms of this section, the judgment debtor was entitled to withdraw credit given by the bank for a deposited item only "when such settlement becomes final and the bank has had a reasonable time to learn that the settlement is final." Prior to final settlement, provisional credit given may be withdrawn by the customer but not "as of right." Consequently, the banker's liability for refusal to honor a customer's withdrawal request is dependent upon final settlement. In the instant case, the garnishment summons was served upon the garnishee on November 14, before there had been final settlement of the $22,480 check. Because at that time the bank's indebtedness was not fixed or certain but of a contingent nature, the judgment debtor could not withdraw the credit given for that check as of right and consequently could not maintain a cause of action against the bank for a wrongful refusal to honor its withdrawal request. Accordingly, under Marengo and Larson, the bank held no fund that could be subject to garnishment by the judgment creditors of the defendant customer.
There are two issues raised on appeal from the judgment of the circuit court for our consideration: First, did the trial court err in finding that the garnishee was not indebted to the judgment debtor within the meaning of section 7 of the garnishment act; and secondly, did the trial court err in not finding that at the time the garnishment summons was served, the garnishee had property either belonging to the judgment debtor or in which the judgment debtor had an interest under section 7 of the garnishment act.
In taking the position that the bank was indeed indebted to the judgment debtor when the garnishment summons was served, the judgment-creditor plaintiffs argue alternatively that the test applied by the trial court to determine the contingency or a noncontingency of the indebtedness (i.e., no garnishment action can lie unless the judgment debtor can maintain an action against the garnishee) was not the exclusive test, and that the indebtedness of the garnishee) was not contingent but in fact fixed and certain. With regard to the first contention, the plaintiffs rely primarily upon Zimek v. Illinois National Casualty Co. (1939), 370 Ill. 572, 19 N.E.2d 620. However, that case does not stand for the proposition that the determination of whether an action could be maintained by the judgment debtor against the garnishee is but a convenient test used to ascertain whether the garnishee's indebted to the judgment debtor for purposes of the garnishment act. Because Zimek is an integral part of the plaintiff's argument, it merits some detailed analysis.
• 1, 2 In Zimek, the judgment creditor, Fieldcamp, recovered a $5,000 judgment against Theodore Zimek for injuries sustained in an automobile accident. Fieldcamp subsequently brought garnishment proceedings against Zimek's liability insurer, Illinois National Casualty Company. Illinois National, however, refused to pay Fieldcamp on the grounds that the liability insurance policy did not provide coverage under the facts. *fn1 On appeal from a judgment in the garnishment proceeding against the insurer, the insurance company contended, inter alia, that the claim against it was not subject to garnishment because it was contingent. After reciting the rule that the indebtedness sought to be garnished must be a liquidated sum due without contingency at the date when the answer to the garnishment suit is filed, *fn2 the court ...