Official Summary Text
SUMMONS OF GARNISHEE
Present law requi
res a summons to a garnishee to notify the garnishee that, although the garnishee has a longer time in which to answer the court concerning the garnishment, the garnishee must do the following on the same day the garnishment is received or on the next wor
k
ing day:
Determine if the garnishee possesses or controls money or property of the judgment debtor.
If so, within that same time period, furnish a copy of the garnishment summons and notice to judgment debtor by mailing them first class, postage prepaid, to the judgment debtor, or by actual delivery to the judgment debtor.
This bill revises such notice to, instead, provide that the garnishee has within five business days after receiving the garnishment to perform such actions.
TRANSFER WARRANTIES
–
NEG
OTIABLE INSTRUMENTS / BANK DEPOSITS AND COLLECTIONS
Present law describes several ways that warranties are made to persons. A person to whom such warranties are made and who took the instrument in good faith may recover from the warrantor as damages for
breach of warranty an amount equal to the loss suffered as a result of the breach but not more than the amount of the instrument plus expenses and loss of interest incurred as a result of the breach.
This bill adds that if the person to whom the warran
ties are made sends written notice by certified or registered mail or commercial courier to the warrantor of its claim for breach of warranty and the warrantor fails to pay the claim within 30 days after receiving the notice, then the expenses of the pers
o
n to whom the warranties are made must include reasonable attorney fees.
PRESENTMENT WARRANTIES
–
NEGOTIABLE INSTRUMENTS / BANK DEPOSITS AND COLLECTIONS
Present law authorizes a drawee making payment to recover from any warrantor damages for breach of w
arranty equal to the amount paid by the drawee less the amount the drawee received or is entitled to receive from the drawer because of the payment. In addition, the drawee is entitled to compensation for expenses and loss of interest resulting from the
b
reach. However, the right of the drawee to recover such damages is not affected by any failure of the drawee to exercise ordinary care in making payment.
This bill adds that if the drawee making payment sends written notice by certified or registered
mail or commercial courier to the warrantor of its claim for breach of warranty and the warrantor fails to pay the claim within 30 days after receiving the notice, then the expenses of the drawee to whom the warranties are made must include reasonable att
o
rney fees.
ON MARCH 10, 2025, THE SENATE ADOPTED AMENDMENT #1 AND PASSED SENATE BILL 765, AS AMENDED.
AMENDMENT #1 makes the following revisions:
Requires a garnishee
to
,
within two business days instead of five, after the day the garnishee receives a garnishment, determine if the garnishee possesses or controls money or property of the judgment debtor and furnish a copy of the garnishment summons and notice to judgment debtor
, but in
no event must the garnishee furnish the copy and
notice
prior to placing a hold on all available funds in
the garnishee's
possession or control.
Revises the summons to garnishee to reflect the provisions above.
Revises the requirement that a sheriff or other officer who
summons a garnishee provide the garnishee with
three copies of the garnishment to, instead, only require "copies" without specifying a specific number.
Revises the present law provisions relative to the copy of execution furnished to a judgment debtor by a sheriff or other officer to, instead, require
a garnishee
to
be the only party to furnish a copy of the garnishment summons and notice to judgment debtor to the judgment debtor
.
Removes the provisions concerning the inclusion of reasonable attorney fees in the expenses of the person to whom warranties are made when there has been a breach and failure to pay for 30 days as applied in the bill to presentment warranties and transfer warranties for bank deposits and collections. Instead, this amendment provides that (i) in the case of transfer warranties for bank deposits and collections, if
the person to whom the warranties are made sends written notice by certified or registered mail or commercial courier to the warrantor of the person's claim for breach of warranty and the warrantor fails to pay the claim within 30 days after receiving the notice, then the expenses of the person to whom the warranties are made must include reasonable attorney fees
, and (ii) in the case of presentment warranties for bank deposits and collections, i
f the drawee making payment sends written notice by certified or registered mail or commercial courier to the warrantor of the drawee's claim for breach of warranty and the warrantor fails to pay the claim within 30 days after receiving the notice, then the expenses of the drawee to whom the warranties are made must include reasonable attorney fees.
Current Bill Text
Read the full stored bill text
HOUSE BILL 745
By Stevens
SENATE BILL 765
By Bailey
SB0765
002742
- 1 -
AN ACT to amend Tennessee Code Annotated, Title 26;
Title 45 and Title 47, relative to banking.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
SECTION 1. Tennessee Code Annotated, Section 26-2-203(b), is amended by deleting
the subsection and substituting:
(b) The summons to the garnishee must notify the garnishee as follows:
NOTICE — Although you have a longer time in which to answer the court
concerning this garnishment, you must, within five (5) business days after you receive
the garnishment, determine if you possess or control money or property of the judgment
debtor and place a hold on any available funds. Within that same time period of five (5)
business days, you must furnish a copy of the garnishment summons and Notice to
Judgment Debtor by mailing them first class, postage prepaid, to the judgment debtor's
last known address as shown by your records, or by actual delivery to the judgment
debtor. If the address shown by your records differs from that shown on this execution
form, you must also mail a copy of the garnishment and notice to the latter address.
SECTION 2. Tennessee Code Annotated, Section 26-2-203, is amended by inserting
the following as a new subsection (b) and redesignating the existing subsection (b) and
remaining subsections accordingly:
(b) Notwithstanding another law or rule to the contrary, a garnishee must, within
five (5) business days after receiving a garnishment, determine if the garnishee
possesses or controls money or property of the judgment debtor, and furnish a copy of
the garnishment summons and notice to judgment debtor as provided in subsection (c).
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SECTION 3. Tennessee Code Annotated, Section 47-3-416(b), is amended by adding
the following at the end of the subsection:
If the person to whom the warranties are made sends written notice by certified or
registered mail or commercial courier to the warrantor of its claim for breach of warranty
and the warrantor fails to pay the claim within thirty (30) days after receiving the notice,
then the expenses of the person to whom the warranties are made must include
reasonable attorney fees.
SECTION 4. Tennessee Code Annotated, Section 47-3-417(b), is amended by inserting
the following between the second and third sentences:
If the drawee making payment sends written notice by certified or registered mail or
commercial courier to the warrantor of its claim for breach of warranty and the warrantor
fails to pay the claim within thirty (30) days after receiving the notice, then the expenses
of the drawee to whom the warranties are made must include reasonable attorney fees.
SECTION 5. Tennessee Code Annotated, Section 47-4-207(c), is amended by adding
the following at the end of the subsection:
If the person to whom the warranties are made sends written notice by certified or
registered mail or commercial courier to the warrantor of its claim for breach of warranty
and the warrantor fails to pay the claim within thirty (30) days after receiving the notice,
then the expenses of the person to whom the warranties are made must include
reasonable attorney fees.
SECTION 6. Tennessee Code Annotated, Section 47-4-208(b), is amended by inserting
the following between the second and third sentences:
If the drawee making payment sends written notice by certified or registered mail or
commercial courier to the warrantor of its claim for breach of warranty and the warrantor
- 3 - 002742
fails to pay the claim within thirty (30) days after receiving the notice, then the expenses
of the drawee to whom the warranties are made must include reasonable attorney fees.
SECTION 7. This act takes effect upon becoming a law, the public welfare requiring it,
and applies to acts occurring on or after the effective date of this act.