§ 5231.Income execution.

Subd (a) of this section is new.

Subd (b) of this section is new. Cf. CPA § 684(1). The 10% garnishee execution has been continued pursuant to numerous suggestions from the public. The subd eliminates the former requirement of a court order.

Subd (c) of this section is new and replaces the former requirement of an unsatisfied general execution contained in CPA § 684. The provision was suggested by the New York State Sheriffs’ Association.

Subd (d) of this section is new. Cf. CPA, § 684(1).

Subd (e) of this section is derived from CPA §§ 684(2), 684(3) and 684(6). Cf. CPA § 684(1). The amount of the levy has been changed to 10 per cent of the amounts that the judgment debtor receives, rather than the amount of installments specified in the execution, in order to cover over-time, commissions and other irregular payments received by the judgment debtor.

Subd (f) of this section is based upon CPA §§ 684(4), 684(6) and 684(8). The last sentence has been added to make it clear that it is not necessary for an execution against a state employee to be delivered to the Albany sheriff.

Subd (g) of this section is based upon CPA § 684(4).

Subd (h) of this section is new. Cf. CPA § 684(1). It protects the judgment creditor who is receiving payment directly from a judgment debtor against another judgment creditor’s obtaining payment from the judgment debtor’s employer. It was suggested by the Sheriffs’ Association. The priority scheme in this provision accords with the general priority based on delivery between two executions delivered to the same enforcement officer. The last two sentences are needed in cases where the debtor resides in a county different from the one in which he works.

1990 Recommendations of the Law Revision Commission:

I. Introduction .

CPLR 5231(b) requires that when a judgment debtor’s “earnings” exceed a prescribed minimum, deductions may be made therefrom by way of an income execution (hereinafter referred to alternatively as “garnishment”). 1 1 Before its amendment in 1987 (L 1987, c. 829), this subsection applied when a judgment debtor received a certain minimum of dollars per week, rather than earnings, as it is now worded. The consequence of this substitution of words was that a judgment debtor’s unearned income is no longer subject to garnishment under CPLR 5231. 2 2 It seems clear, however, from the legislative history of the 1987 amendment, that the exclusion of unearned income was unintentional. The Commission, therefore, recommends that § 5231 be amended to restore its applicability to unearned income.

II. The 1987 Amendment of CPLR § 5231 .

Prior to 1987, CPLR § 5231(b) authorized garnishment of a judgment debtor’s income whenever it exceeded a weekly rate of $85.00, whether the income was earned or unearned.33 However, under the controlling provisions of the Federal Consumer Credit Protection Act (15 USC § 1673 [1982]) earnings up to $100.50 per week are exempt from garnishment.44 To eliminate this conflict between § 5231 and the Federal provision, and also to assure that no conflict would develop in the future, the New York Legislature, in 1987, amended CPLR § 5231(b), adopting the Federal formula as a matter of State law.55 Apparently not contemplated by the 1987 amendment, however, was that the Federal statute imposes limitations upon garnishment only of a judgment debtor’s earnings. Unearned income is not protected under the federal provision.66 Nevertheless, in amending CPLR 5231(b), the New York Legislature substituted for the introductory clause — Where a judgment debtor is receiving or will receive more than eighty-five dollars per week from any person, an income execution . . . may be issued . . . “ the following clause — Where a judgment debtor is receiving or will receive earnings from any person, an income execution . . . may be issued . . . ”(CPLR 523 [b] [McKinney 1987]) (emphasis added). The consequence of this change in wording was, and is, that CPLR 5231(b) no longer authorizes income executions against unearned income, such as interest, dividends or income from trusts.

1 The text of CPLR 5231(b) is as follows: (b) Issuance. Where a judgment debtor is receiving or will receive earnings from any person, an income execution for installments therefrom of not more than ten percent thereof may be issued and delivered to the sheriff of the county in which the judgment debtor resides or, where the judgment debtor is a non-resident, the county in which he is employed, provided, however, that (i) no amount shall be withheld pursuant to an income execution for any week unless the disposable earnings of the judgment debtor for that week exceed thirty times the federal minimum hourly wage prescribed in the Fair Labor Standards Act of 1938 as in effect at the time the earnings are payable. (ii) the amount withheld pursuant to an income execution for any week shall not exceed twenty-five percent of the disposable earnings of the judgment debtor for that week, or, the amount by which the disposable earnings of the judgment debtor for that week exceed thirty times the federal minimum hourly wage prescribed by the Fair Labor Standards Act of 1938 as in effect as the time the earnings are payable, whichever is less; (iii) if the earnings of the judgment debtor are also subject to deductions for alimony, support or maintenance for family members or former spouses pursuant to section five thousand two hundred forty-one or section five thousand two hundred forty-two of this article, the amount withheld pursuant to this section shall not exceed the amount by which twenty-five percent of the disposable earnings of the judgment debtor for that week exceeds the amount deducted in accordance with section five thousand two hundred forty-one or section five thousand two hundred forty-two of this article. 2 Earnings, as defined in CPLR 5231(c), is “compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise . . . ” 3 Prior to the 1967 amendment, there was never any question that income executions could be utilized to reach unearned income. In the Practice Commentaries accompanying CPLR 5231, Professor Siegel, discussing what types of income could be levied upon, states, “’ income’ refers not only to wages and earnings, but any regular income the judgment debtor gets, including trust income.” (NY CPLR § 5231 [McKinney 1978] Practice Commentary, p 351). Section 684 of the Civil Practice Act, the former counterpart to CPLR 5231, specifically included the phrase “income from trust funds or profits” in describing the money against which a judgment creditor could levy. (6 Weinstein-Korn-Miller, New York Civil Practice ¶5231.13 [1988]; NY Law Rev. Comm’n Rep 355,376 [1952]. See also Sarner v. Towne, 288 NY 264 [1942].Sand v. Beach, 270 NY 281 [1936]; In re Irving Trust Co. 267 NY 102 [1935]; Pray v. Boissevain, 27 Misc 2d 703 (Sup Ct. NYCo 1961).) 4 The $100.50 amount is determined as follows: 15 USC § 1673 exempts from garnishment aggregate disposable earnings up to thirty times the current federal minimum hourly wage. The current federal minimum hourly wage is $3.35. (30 x $3.35 is $100.50.) This figure will rise on April 1, 1990 to $114.00 and on April 1, 1991 to $127.50 as the result of Congressional increases in the federal minimum wage (see Pub Law 101–157, § 2). 5 (L 1987, c 829) See New York State Assembly, Memorandum in Support of Legislation, A7727 (Appendix A, attached). See also Memorandum of Office of Court Administration, 1987 McKinney’s Session Laws of New York 2844. 6 15 USC 1673 only addresses garnishment of a judgment debtor’s earnings. For purposes of 15 USC 1673, earnings is defined as “compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program (15 USCA § 1672[a] [West 1982]). Thus unearned income is not within the statute’s scope.

There is nothing in the legislative history of the amendment to suggest a purposeful legislative intent to restrict CPLR 5231 income executions to earned income. The stated reason for the amendment was to “. . . conform this section [CPLR 5231] to the controlling provisions of the Federal Consumer Credit Protection Act, 15 USC § 1673 . . . ” (Memorandum in Support of Legislation, A-7727, see Appendix A, attached). Furthermore, in a July 9th 1987 letter from the bill’s Assembly sponsor to the Counsel to the Governor, it was stated:

The above bill simply codifies the [Federal] law applicable to income executions in the State of New York. It makes no change of substance.

(Emphasis added.).

III. CPLR 5231(g)— Notice to Judgment Debtor .

In Follette v. Vitanza (648 F Supp 492 [NDNY 1987]), the Court declared CPLR § 5231 unconstitutional as a deprivation of due process, since it failed to require that, incident to service of income executions, judgment debtors be provided with notice of the Federal exemptions from garnishment contained in 15 USC § 1673, and of the procedures for challenging income executions provided by CPLR 5231 and 5240.

In Folletze v. Cooper (658 F Supp 514 [NDNY 1987]), Judge Munson (author of the Follette v. Vitanza opinion) issued an order, amending the order in Vitanza, to provide the form of notice which judgment debtors must be given in order to satisfy due process. Such language was codified, without substantial change, in CPLR 5231(g), newly enacted when the statute was amended in 1987.

CPLR § 5231(g) presently provides, in pertinent part, as follows:

(g) Statement on income execution. Any income execution delivered to the sheriff on or after the effective date of this act, shall contain the following statement:

THIS INCOME EXECUTION DIRECTS THE WITHHOLDING OF UP TO TEN PERCENT OF THE JUDGMENT DEBTOR’S GROSS INCOME. IN CERTAIN CASES, HOWEVER, STATE AND FEDERAL LAW DOES NOT PERMIT THE WITHHOLDING OF THAT MUCH OF THE JUDGMENT DEBTOR’S GROSS INCOME. THE JUDGMENT DEBTOR IS REFERRED TO NEW YORK CIVIL PRACTICE LAW AND RULES § 5231 AND 15 UNITED STATES CODE § 1671 ET SEQ.

I. LIMITATIONS ON THE AMOUNT THAT CAN BE WITHHELD.

A. AN INCOME EXECUTION FOR INSTALLMENTS FROM A JUDGMENT DEBTOR’S GROSS INCOME CANNOT EXCEED TEN PERCENT (10%) OF THE JUDGMENT DEBTOR’S GROSS INCOME.

B. IF A JUDGMENT DEBTOR’S WEEKLY DISPOSABLE EARNINGS ARE LESS THAN THIRTY (30) TIMES THE CURRENT FEDERAL MINIMUM WAGE ( ,PER HOUR), OR ( ), NO DEDUCTION CAN BE MADE UNDER THIS INCOME EXECUTION.

C. A JUDGMENT DEBTOR’S WEEKLY DISPOSABLE EARNINGS CANNOT BE REDUCED BELOW THE AMOUNT ARRIVED AT BY MULTIPLYING THIRTY (30) TIMES THE CURRENT FEDERAL MINIMUM WAGE ( , PER HOUR, OR ), ( ), UNDER THIS INCOME EXECUTION.

D. IF DEDUCTIONS ARE BEING MADE FROM A JUDGMENT DEBTOR’S GROSS INCOME UNDER ANY ORDERS FOR ALIMONY, SUPPORT OR MAINTENANCE FOR FAMILY MEMBERS OR FORMER SPOUSES, AND THOSE DEDUCTIONS EQUAL OR EXCEED TWENTY-FIVE PERCENT (25%) OF THE JUDGMENT DEBTOR’S DISPOSABLE EARNINGS, NO DEDUCTION CAN BE MADE UNDER THIS INCOME EXECUTION.

E. IF DEDUCTIONS ARE BEING MADE FROM A JUDGMENT DEBTOR’S GROSS INCOME UNDER ANY ORDERS FOR ALIMONY, SUPPORT OR MAINTENANCE FOR FAMILY MEMBERS OR FORMER SPOUSES, AND THOSE DEDUCTIONS ARE LESS THAN TWENTY-FIVE PERCENT (25%) OF THE JUDGMENT DEBTOR’S DISPOSABLE EARNINGS, DEDUCTIONS MAY BE MADE UNDER THE INCOME EXECUTION. HOWEVER, THE AMOUNT ARRIVED AT BY ADDING THE DEDUCTIONS MADE UNDER THIS EXECUTION TO THE DEDUCTIONS MADE UNDER ANY ORDERS FOR ALIMONY, SUPPORT OR MAINTENANCE FOR FAMILY MEMBERS OR FORMER SPOUSES CANNOT EXCEED TWENTY-FIVE PERCENT (25%) OF THE JUDGMENT DEBTOR’S DISPOSABLE EARNINGS.

II. EXPLANATION OF LIMITATIONS.

DEFINITIONS:

DISPOSABLE EARNINGS.

As can be seen, there are several references in the notice to “gross income” without any limitation to earned income. Indeed the notice provisions defining “gross income” specifically include “income from trusts”. There is thus a present conflict within § 5231 itself, i.e., between § 5231(b) which restricts garnishment to earned income, and 5231(g) whose notice provisions imply that § 5231 applies to unearned income as well as earned income.

IV. Proposal .

The Commission recommends that CPLR § 5231 be amended to restore the applicability of that section to unearned income. As a practical matter, bringing unearned income once again within § 5231 would primarily affect income from trusts. Unearned income from other sources. e.g., rent, dividends, and interest, can usually be reached by executing against the sources themselves, i.e., the land, the stock, or the debt instruments. Income interests in trusts, however, can not be reached in the same way because such interests are generally non-assignable under § 7-1.5 of the Estates Powers and Trusts Law, and the execution provisions of the CPLR § 5201(a) allow judgments to be executed only against property which can be “assigned or transferred”. 77 Editor's Notes Laws 2021, ch 831, § 7, eff April 30, 2022, provides: § 7. This act shall take effect on the one hundred twentieth day after it shall have become a law.

Formerly § 5230, add, L 1962, ch 308; renumbered § 5231, L 1962, ch 315, § 5, eff Sept 1, 1963; amd, L 1963, ch 532, § 33, eff Sept 1, 1963; L 1970, ch 298, § 1; L 1975, ch 88, § 1; L 1986, ch 241 § 1; L 1987, ch 829, §§ 1–4, eff Aug 7, 1987; L 1990, ch 178, § 1, eff May 24, 1990; L 1990, ch 183, § 1, eff May 24, 1990; L 2008, ch 575, § 6, eff Jan 1, 2009; L 2015, ch 550, § 1, effective December 11, 2015; L 2021, ch 831, § 5, effective April 30, 2022; L 2022, ch 648, § 2, effective November 23, 2022.