Property exemption laws vary from state to state. For example, whereas in Texas current wages for personal services are not subject to garnishment except for the enforcement of court-ordered child support payments, other states may have more relaxed property exemption laws. Thus, courts follow the general rule that exemption laws are local in nature and have no extraterritorial force or operation outside their boundaries.

1. Example: A Colorado Court Orders a Texas Employer to Garnish Wages of Its Debtor-Employee Under Colorado law, a court has jurisdiction for garnishment of a debt upon obtaining jurisdiction over the garnishee. Jurisdiction is the power of a court to rule on matters within its geographical region. Jurisdiction over the garnishee can generally be obtained where the garnishee is present within the geographical boundaries of the court. Thus, if the garnishee is the employer of the defendant and is doing business within Colorado (such as by maintaining offices in Colorado), service of the writ of garnishment upon the employer's place of business would properly bring it within the jurisdiction of the court in a garnishment proceeding. This is the case even if the debtor is earning his or her wages in another state (such as in Texas). Conflicts are created in this example because, although Colorado does exempt certain property from garnishment, garnishment of current wages is not exempt or against public policy, as is the case in Texas.

a. Consequences When a Colorado Court Orders a Texas Employer to Garnish Wages of Its Debtor-Employee

The exemption laws of Texas and Colorado differ greatly. The question to answer is whether the exemption laws of Texas or Colorado apply to the execution of the garnishment. The issue becomes even more complicated when the Colorado exemption laws allow for the garnishment of current wages for personal services outside the scope of child support or alimony, while such garnishment orders are against public policy in Texas. Is the employer-garnishee bound by the Colorado-issued writ of garnishment?

Or can it answer the writ by claiming the defense of Texas' exemption laws?

Many states, including Colorado and Texas, follow the general rule giving exemption laws no extraterritorial effect. Thus, once the Colorado court has valid jurisdiction for garnishment, neither the garnishee nor the debtor can take advantage of the Texas exemption laws; rather, the Colorado exemption laws will apply. Although exemption laws represent a balancing of interests, and Texas law favors the debtor, full faith and credit must be given to the judgments of other state courts where appropriate, even if the other state's balancing of interests does not comport with that of Texas.

Applying the Full Faith and Credit Clause of the U.S. Constitution, Texas courts have found a state cannot deny full faith and credit to another state's judgment solely on the ground that it offends the public policy of the state where it is sought to be enforced. Thus, if enforcement of a valid foreign judgment by a garnishment proceeding violates the Texas Constitution, the Texas Constitution must yield to the Full Faith and Credit Clause and recognize that foreign judgment. The Supremacy Clause of the U.S. Constitution mandates this result.

Adding another layer of complexity, Texas courts adhere to the rule that although the state's local laws determine what property of a debtor within the state is exempt from execution, there can be instances where a second state will have the dominant interest in the question of exemption, in which case the other state's laws will be applied. For instance, if a Colorado court issues a valid writ of garnishment ordering the garnishment of the defendant-debtor's wages by the garnishee-employer, the law presumes Colorado?s local exemption laws will apply. Because exemption laws have no extraterritorial effect, a debtor cannot take advantage of the exemption laws of Texas in order to evade the laws of Colorado.

The local-law presumption can be overcome by showing another state has a dominant interest in the application of its laws in a particular situation or if both debtor and creditor have substantial relationships with another state. "Substantial relationships" can be established by showing both creditor and debtor are located in a particular state and the debt was also incurred there. Conversely, the location of the creditor?s residence being the same as where the writ of garnishment was executed has been relied upon to support the conclusion that the exemption laws of the state of residence were controlling. The final result will depend heavily on the facts of each individual case.

b. A Twist in the Road: the Doctrine of Comity

The doctrine of comity involves the recognition of the laws of other states for convenience and necessity when justice demands that such laws of other jurisdictions be given effect. Although the analysis above is firmly rooted on the general rule that exemption laws have no extraterritorial effect, the doctrine of comity can put a twist on this general rule.

i. Two Sample Cases and Results Comity Example

1: A Texas trial court did not abuse its discretion in applying an Illinois exemption law in a Texas proceeding on the basis of comity. In that case, a citizen of Texas, while working in a mine in Illinois, was injured and awarded compensation by the Illinois compensation commission. The individual returned to Texas, where he deposited some of the compensation in a Texas bank account, which was later garnished.

Result: The compensation award would have been exempt from garnishment under Illinois exemption laws, and if awarded in Texas, it too would have been exempt under Texas exemption laws. In applying the doctrine of comity, the appellate court recognized that to deny application of an exemption law because of a technicality in the Texas statute, while simultaneously giving the law of Illinois no extraterritorial effect, ?would be arbitrary and unjust, and sacrifice the spirit of the law to its letter.? Simply stated, the fact that the miner was not awarded compensation in Texas, and therefore Texas exemptions did not protect him, and the fact that the miner could not take advantage of the exemption laws of Illinois because they had no extraterritorial effect, would be unfair to the miner and contrary to the spirit of the law. In this regard, ?Texas exemption laws are based upon the policy that a debtor should ?not be forced into a condition of abject dependence and want.?? Thus, to not allow the miner the protection of any exemption law would be contrary to this policy.

The court recognized comity between the several states is a sound principle and bears particular application in the administration of exemption laws. The court further emphasized that in applying the doctrine of comity, the exemption laws of the states in question need not resemble each other in all details. ?It is sufficient that the policy of the legislation of the two states upon the subject of the right is the same.?

Comity Example 2: In another case, a defendant negotiated in Texas a loan from the plaintiff, a Texas corporation doing business in Texas. The plaintiff obtained a judgment in a Texas court against the defendant in connection with the loan transaction. The plaintiff then registered the Texas judgment in a Missouri court. A Missouri court then executed a writ of execution and ordered the defendant?s property in the hands of the garnishee, an Indiana corporation doing business in Texas and Missouri, be levied. The garnishee filed answers to the writ attacking the jurisdiction of the Missouri court over the wages of the defendant and raised the exemption laws of Texas. The defendant was employed by the garnishee in Texas, and his wages were earned and payable in Texas. The defendant had never worked in Missouri.

Result: The plaintiff strategically chose to not execute the Texas judgment in Texas since doing so would have allowed the defendant to take advantage of the Texas exemption laws. Thus, since the exemption laws of Texas would have no extraterritorial effect, the defendant would not be able to claim the Texas exemption laws in a Missouri court. Similarly, as a non-resident of Missouri, the defendant would not also be able to take advantage of the exemption laws of Missouri.

In applying the doctrine of comity, the Missouri court stated that although the exemption laws of either Missouri or Texas differ as to the amount of exemption, both laws appear to be based on the same policy, such as protecting the family "from absolute want." Considering the possible unjust result to the defendant, the Missouri court held the doctrine of comity should have applied, thus giving effect to the respective Texas exemption laws and thereby finding no wages of the defendant would be subject to garnishment.

2. Conclusion

A debtor will usually not be able to take advantage of the exemption laws of a state when a garnishment order is executed by another state. Although Texas' exemption laws favor debtors, these laws are local in nature and have no effect outside of Texas. If such was not the case, a debtor could easily escape an unfavorable garnishment order by leaving the state that issued such an order. Public policy favors giving the garnishment order of another state full faith and credit in the state where the debtor is located.

Additionally, a garnishment order that directs a non-resident garnishee to withhold wages earned outside of the state that issued the order does not preclude garnishment. Once the garnishee is found to be doing business in a state where the order is issued and was personally served with the garnishment order, the court has valid jurisdiction over the garnishee. As a result, the court will have valid jurisdiction to order garnishment of a debt.

However, the doctrine of comity can intervene where justice so requires and may give results where garnishment and exemption laws are heavily dependent on not only the local laws of the state, but also the Full Faith and Credit Clause, the doctrine of comity, each states? policy for enacting exemption laws, the interest of each state in the matter, and what is at stake for each defendant. All of these factors play a part in determining the outcome of each individual case.

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