South Dakota's state auditor wants to automate payroll, but garnishment summonses arriving after warrants are printed currently force manual processing. Can the State Auditor set an administrative deadline so a garnishment summons served after a payroll cutoff does not apply to the warrant about to be printed? If not by rule, can the Legislature do it by statute?
Plain-English summary
The State Auditor was building a new automated payroll system in the mid-1990s. The system would print payroll warrants in batches, on an automated schedule, with no manual touches if possible. Garnishment summonses arriving after a batch had been printed forced manual reprocessing of the warrants for the affected employees, because under SDCL 21-18-12 the state became liable to the garnishor at the moment the summons was served, even if the warrant had already been printed but not delivered. Manual reprocessing defeated the point of automation.
Mr. Larson asked AG Mark Barnett whether the auditor could set a regulatory cutoff: garnishment summonses arriving after the cutoff would not catch warrants already in the print pipeline. And if that was not possible by rule, could the Legislature do it by statute?
Barnett's first answer was no on rulemaking. Garnishment is a statutory creature. SDCL 21-18-12 set the time of garnishee liability as the moment of service. The auditor's general rulemaking authority over warrant procedures (SDCL 4-9-1.1) did not extend to contradicting the garnishment statute. Estate of Dahl v. Department of Revenue (S.D. 1979) confirmed that administrative rules cannot rewrite a statute.
The Legislature, however, had broader latitude. Garnishment remedies are legislative creations and the Legislature can suspend, modify, or change them. Granger v. Luther (S.D. 1920) and Lee v. Clark Implement Co. (S.D. 1913) imposed two constitutional limits: existing liens (those in place at the time of enactment) must be protected, and the new rule cannot create equal-protection problems by unfairly favoring one class of debtors over another.
Practical implication: a statute setting a cutoff (e.g., garnishment summonses must be served at least N hours before payroll runs) could survive constitutional review if it grandfathered existing liens and applied evenhandedly. Without legislation, the auditor was stuck with the manual reprocessing the old rule required.
Currency note
This opinion was issued in 1994 during AG Mark Barnett's tenure. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. SDCL ch. 21-18 has been amended several times since 1994; state payroll administration has shifted to the Bureau of Finance and Management; the automation problem the opinion addressed may have been resolved through different operational arrangements.
What the opinion meant at the time
For the State Auditor, the opinion was a definitive no on the regulatory shortcut, but a yes on the legislative path. If the agency wanted a cutoff, it needed legislation, not rulemaking. The agency could draft a proposed statute and work it through the next legislative session.
For garnishment creditors, the opinion reinforced their existing rights. Until the Legislature changed the rule, garnishment summonses served before warrant delivery were effective regardless of when they arrived in the payroll cycle.
For payroll automation vendors, the opinion underscored the structural difficulty of automating around real-world legal constraints. Some pieces of payroll processing simply have to remain manual unless the legal framework is rewritten.
For private employers as garnishees, the opinion was a useful reminder that the same rule applied: liability attaches at service of summons, full stop, regardless of payroll automation pipeline.
Common questions
Q: Does the federal Consumer Credit Protection Act change this analysis?
A: The CCPA (15 U.S.C. §§ 1671-1677) imposes percentage caps on wage garnishment (generally 25% of disposable income) but does not address the timing of when liability attaches. State law controls timing.
Q: What is the difference between an existing lien and a future lien for retroactivity purposes?
A: An existing lien is one that has already attached at the time the new statute takes effect. Under Granger v. Luther, the Legislature cannot extinguish or undermine those rights. A future lien is one that will arise after the new statute. The Legislature has broader latitude to set rules for future liens.
Q: How would equal protection apply if the Legislature set a cutoff favoring state employees?
A: Other debtors whose wages were garnished by private employers would have no equivalent cutoff. They could argue equal protection or privileges-and-immunities, depending on framing. A neutral statute applying the same cutoff to all employers (including private ones) would face fewer constitutional challenges.
Q: Why is the state immune from garnishment judgments but still required to honor garnishment summonses?
A: SDCL 21-18-40 prevents any judgment against the state itself. Instead, service of the summons operates as an assignment of the employee's earnings up to the garnished amount. The state pays out per the assignment. That preserves sovereign immunity while still letting creditors reach state employee wages.
Q: Could the state agency just delay printing warrants to give garnishment summonses more time to arrive?
A: That would be an operational workaround, not a legal solution. The agency would still have to manually process any summons served after the warrant was printed. The structural problem was the warrant printing event itself, not the timing of garnishment service.
Background and statutory framework
South Dakota's garnishment regime in SDCL ch. 21-18 dates back decades. The core mechanic: a creditor with a judgment serves a summons on the garnishee, and at the moment of service the garnishee becomes liable to turn over property or money in its hands belonging to the debtor.
For the state as garnishee, SDCL 21-18-28 and 21-18-40 modify the structure to preserve sovereign immunity. The summons functions as an assignment of the employee's wages already due but unpaid; the state does not become a judgment debtor.
The state auditor's general rulemaking power over warrants (SDCL 4-9-1.1) is procedural authority, not substantive. Estate of Dahl held that rules cannot conflict with statutes. So the auditor cannot use procedural authority to override the SDCL 21-18-12 timing rule.
The constitutional retroactivity doctrine reflected in Granger v. Luther and Lee v. Clark Implement Co. limits the Legislature's ability to abrogate existing rights but allows broad redefinition of remedies for future situations. A garnishment-cutoff statute is the kind of remedial modification that the Legislature can make for future cases, subject to the constitutional protections.
Equal protection analysis would focus on whether the cutoff differentiates between debtors of state employers and debtors of private employers. A cutoff applicable only to the state would be vulnerable to challenge. A neutrally applicable cutoff (e.g., a uniform notice period for all employers) would be more defensible.
Citations and references
Statutes:
- SDCL ch. 21-18 (garnishment)
- SDCL 21-18-12 (garnishee liability from service)
- SDCL 21-18-27.1 (disclosure form)
- SDCL 21-18-28 (state as garnishee)
- SDCL 21-18-40 (no judgment against state)
- SDCL 4-9-1.1 (state auditor rulemaking)
- 15 U.S.C. §§ 1671-1677 (federal CCPA)
Cases:
- Sigler v. St. Paul Fire & Marine Ins. Co., 298 N.W.2d 792 (S.D. 1980)
- Woodbine Savings Bank v. Yager, 58 S.D. 542, 237 N.W. 761 (1931)
- Wasserburger v. Consolidated Mgt. Corp., 502 N.W.2d 256 (S.D. 1993)
- Estate of Dahl v. Department of Revenue, 286 N.W.2d 528 (S.D. 1979)
- Granger v. Luther, 42 S.D. 636, 176 N.W. 1019 (1920)
- Lee v. Clark Implement Co., 31 S.D. 581, 141 N.W. 986 (1913)
Source
Original opinion text
Garnishment of State Wages
Dear Mr. Larson:
You have requested an opinion from this Office concerning the following factual situation:
FACTS:
Part of the responsibility of the State Auditor involves the processing of garnishment of wages of state employees. Procedures for garnishment are established by state and federal laws. In the development of a new payroll system for the State of South Dakota, we are attempting to automate as much of the processes as possible. One of the positive aspects of automation is removing the possibility for human error.
Presently this office has interpreted state law to require us to withhold potential monies due from a properly filed garnishment even though the paycheck has been written but not delivered or mailed to the state employee.
In working with the software company on implementation of a new payroll system, the question has been raised as to whether authority exists for the State to establish a deadline for receipt of garnishment summons. The preferred deadline would be just prior to the automated processing of the payroll warrant. Consequently, this would then permit the State to eliminate any manual processes in regard to payroll garnishments.
Based upon these facts you have posed the following question.
QUESTION:
If the State cannot establish a deadline for the filing of garnishment summons under current statutes, could state law be amended to allow such a deadline?
IN RE QUESTION:
Garnishment is a statutory remedy, existing at the will of the Legislature. State garnishment procedures are found at SDCL Chapter 21-18.
[T]he following prerequisites are necessary before a garnishment action can occur: (1) The garnishee must be indebted to or have property in its possession or under its control belonging to a judgment debtor; or (2) the garnishee's liability to the judgment debtor must be absolute and without dependence on any future contingency.
Sigler v. St. Paul Fire & Marine Ins. Co., 298 N.W.2d 792 (1980). The federal Consumer Credit Protection Act (15 U.S.C.A. §§ 1671-1677) is also implicated when wages are garnished.
Under the current state statutory scheme, the date on which a garnishment summons is served establishes the time at which a garnishee becomes liable to a plaintiff in garnishment. Woodbine Savings Bank v. Yager, 58 S.D. 542, 237 N.W. 761 (1931). SDCL 21-18-12 provides as follows:
From the time of the service of the summons upon the garnishee he shall stand liable to the plaintiff to the amount of the property, money, credits, and effects in his possession or under his control belonging to the defendant, or in which he shall be interested, to the extent of his right or interest therein, and of all debts due or to become due to the defendant, except such as may be by law exempt from execution.
Under this statute wages owed to a debtor/employee which are in the possession of the garnishee at the time the summons in garnishment is served are subject to garnishment. See Wasserburger v. Consolidated Mgt. Corp., 502 N.W.2d 256 (1993). In fact, the disclosure form to be completed by the garnishee as found in SDCL 21-18-27.1 provides: "If the garnishee summons was served upon you at a time when earnings from a prior completed pay period were owing but not paid, complete the following disclosure for earnings from both the past pay period and the current pay period." These statutes also apply when the State is the garnishee. SDCL 21-18-28.
Wages due to a state employee which are still in the possession of the State at the time of the service of the summons in garnishment on the State are subject to garnishment. SDCL 21-18-40 provides:
No judgment shall be entered against the state of South Dakota, nor shall any actual liability be incurred by the state in any garnishment proceeding. Any judgment entered against the principal defendant when the state is garnishee shall be paid only out of moneys due such principal defendant at the time of the service of the summons in garnishment and service of such summons on the state shall be of the same force and effect only as an assignment of the sum claimed or as much thereof as may be due the defendant from the state.
Clearly the Legislature has established the time of the service of the summons in garnishment as the point at which garnishee liability attaches. That is the point at which the State becomes liable to turn over to the garnishor funds which are owed to the state employee, but still in the State's possession. There is nothing in the current statutory scheme that would allow the State Auditor to create a different point in time for the attaching of that liability. Although the State Auditor does have rule making authority over the procedure for issuing state warrants, SDCL 4-9-1.1, that authority does not include the power to adopt rules that are inconsistent with state law. Estate of Dahl v. Department of Revenue, 286 N.W.2d 528 (S.D. 1979).
The question then becomes whether the Legislature may establish a different time at which garnishee liability attaches. Your goal is to have a deadline which is before the automated printing of a salary warrant so that changes, like garnishment, do not have to be made once a warrant is printed. You want to avoid disruption of the proposed automated payroll system.
What you are seeking is tantamount to a legislative determination that a warrant is beyond garnishment after it is printed, even though it is still in the possession of the State. For example, if the Legislature imposed a deadline for the service of a summons in garnishment against the State, and the summons was served after that deadline, the garnishment proceeding would not apply to that warrant. This would eliminate the need for hand processed changes to warrants already printed, but still in the possession of the State.
As pointed out, garnishment is a statutory creation. The Legislature may limit garnishment proceedings as it sees fit, as long as it does so consistent with constitutional requirements.
Remedies are the creatures of legislation and the power that creates may suspend, modify, or change the remedy . . . .
The power to suspend, modify, or change a remedy does not authorize the enactment of a law which would so modify or change an existing remedy or suspend a remedy for such length of time as to, in effect, deny a remedy to one seeking to enforce a right or redeem a wrong growing out of a contract existing at the time of the enactment of such law.
Granger v. Luther, 42 S.D. 636, 176 N.W. 1019 (1920). The same reasoning applies to existing liens. The "Legislature may not enact a law rendering more difficult or uncertain the enforcement of a right under an existing lien." Lee v. Clark Implement Co., 31 S.D. 581, 141 N.W. 986 (1913).
As to future liens, however, the Legislature may modify remedies. Thus if the Legislature decides to establish a deadline for when a garnishment summons must be filed in actions seeking to garnish wages where the State is the garnishee, there should not be a constitutional due process impediment as long as liens existing at that time are protected. That is not, however, the only constitutional concern to be considered. Whatever approach is taken would have to be carefully crafted to avoid creating equal protection claims or privilege and immunity arguments for discriminating in favor of state employees.
Respectfully submitted,
MARK BARNETT
ATTORNEY GENERAL
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