Fall 2006-01 Collection suit

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Number 65
Fall 2006

Third-party funds in joint bank account not subject to garnishment

Only the defendant debtor's share of funds in a joint bank account is subject to garnishment by a creditor; the portion belonging to another person is not. However, that other person has the burden of proof. This was the ruling of the Puerto Rico Supreme Court in Banco Bilbao Vizcaya v. López, 2006 T.S.P.R. 135.

Collection suit

Banco Bilbao Vizcaya filed court action in collection of money and mortgage foreclosure against its debtors Ángel López Montes, his wife Carmen Sasso Oliver and other defendants. In order to secure a future judgment in its favor, it served Banco Popular de Puerto Rico with a court order garnishing a savings deposit account that existed to the joint names of co-defendant Sasso and her mother, Concepción Oliver Aneiro.

Oliver intervened in the case to claim that her portion of the money could not be garnished by the plaintiff bank. One of her major obstacles was the joint nature of the account and the fact that the account documentation provided that the money belonged to both.

Nature of a bank account

The Puerto Rico Supreme Court first repeated the long-established doctrine that bank deposits are not deposits at all, but loans. Citing its 1953 opinion in the case of Portilla v. Banco Popular, 75 D.P.R. 100, the Court ratified that what actually exists between a "depositary" bank and a "depositor" is a debtor-creditor relationship pursuant to which the bank owes money to its customer. The customer possesses a credit claim against the bank-the likes of an account receivable; and that right to receive payment is subject to garnishment by a creditor of the customer.

How much?

The Supreme Court continued to explain that case law in the United States points to the norm that such garnishment is limited to the interest of the defendant in the account balance. Therefore, if the defendant has an interest of only 25% in a $1,000 account, the garnishing creditor can only attach $250. However, in joint accounts there is presumption that the total amount is subject to garnishment, unless the non-defendant party claiming an interest proves otherwise. The Court quoted as follows from Delta Fertilizer, Inc. v. Morgan, 547 So. 2d 800 (1989):

"In the majority of jurisdictions, the entire account is vulnerable [to garnishment], but evidence is permitted to show the respective ownership of each depositor."

Puerto Rico adopted this stateside rule, adding that the burden of proof lies on the third-party claiming partial ownership, because the join depositors are in a much better position to prove ownership than either the bank or the garnishing creditor.

Account documentation

As to the provision in the account documents to the effect that joint depositors are co-owners, the Court answered that this too is a presumption that may be rebutted by the interested party.


© 2006 Goldman Antonetti & Cordova, LLC