Arizona Court of Appeals Division One Holds That Annuity Payments Are Debt Subject to Garnishment and That a Court May Issue the Writ of Garnishment So Long As It Has Personal Jurisdiction Over the Garnishee.

Ellsworth obtained a money judgment against Bush.  Bush was receiving annuity payments from Canada Life Assurance Company, and Ellsworth attempted to garnish the payments.  Bush moved to quash the Writ of Garnishment, arguing that the court lacked jurisdiction to grant the writ because Canada Life did not possess any property owed to Bush within the State of Arizona.  The trial court rejected Bush’s jurisdictional arguments and issued a judgment and order of continuing lien against Canada Life, causing future annuity payments to go to Ellsworth.  Bush appealed.

The Court of Appeals affirmed unanimously.  Citing the Restatement (Second) of Conflict of Laws § 67(b), Bush argued that the trial court lacked jurisdiction because a state only has power to issue a writ of garnishment on a “person in possession of chattel” if the chattel is “within the state.”  Ellsworth contended that the obligation to make annuity payments was not “chattel,” but instead represented a “debt,” and that therefore Section 68 of the Restatement controlled.  That section allows a debt to be “garnished wherever personal jurisdiction may be exercised over the garnishee.” 

The Court agreed with Ellsworth.  Looking to definitions of “annuity,” “debt,” and “chattel” found in Black’s Law Dictionary, the Court concluded that an annuity was a “debt” for garnishment purposes and adopted Section 68 of the Restatement as the proper analysis.  Applying Section 68, the Court held that the garnishment was proper because the trial court obtained personal jurisdiction over Canada Life when Ellsworth served the writ of garnishment on Canada Life’s authorized agent in Arizona.

Judge Orozco authored the opinion; Judges Barker and Winthrop concurred.