Tullahoma Industries, LLC v. Navajo Air, LLC, M2019-02036-COA-R3-CV

Navajo Air obtained a money judgment against Tullahoma Industries, LLC (Tullahoma Tennessee) and served a garnishment on U.S. Bank to collect funds belonging to Tullahoma Tennessee.
U.S. Bank initially froze two deposit accounts that matched the business name and address, but those accounts were tied to a different entity (same name/address) with a Puerto Rico tax identification number (Tullahoma Puerto Rico).
Navajo instructed the bank the garnishment applied only to Tullahoma Tennessee, and the bank later released the holds after confirming the accounts bore Tullahoma Puerto Rico’s TIN and amended its answer to "No Accounts Found."
Discovery showed the funds in the Puerto Rico accounts were payable under government contracts for which Tullahoma Tennessee was the beneficiary, and the common owner had directed funds into the Puerto Rico accounts.
U.S. Bank also maintained an escrow account showing Tullahoma Tennessee’s TIN, but the escrow agreement made the bank escrow agent/trustee requiring joint letters of direction for disbursement.
The trial court ruled U.S. Bank properly answered the garnishment; on appeal the Court of Appeals affirmed, holding Navajo failed to prove U.S. Bank was indebted to Tullahoma Tennessee.

Issue	Plaintiff's Argument	Defendant's Argument	Held
1. Was Navajo's Motion to Show Cause procedurally improper after the bank answered?	Motion proper to compel further examination despite bank answer.	Motion improper because conditional judgment only when garnishee fails to answer.	Court treated motion as permissible request to examine the garnishee; procedural defect not fatal.
2. Are the two deposit accounts (same name/address but Puerto Rico TIN) garnishable for judgment against Tullahoma Tennessee?	Funds really belonged to Tullahoma Tennessee and thus subject to garnishment.	Accounts were customer accounts of Tullahoma Puerto Rico (different TIN); bank was debtor to that depositor, not to Tullahoma Tennessee.	Not garnishable; Navajo failed to prove bank was indebted to Tullahoma Tennessee.
3. Is the escrow account (showing Tullahoma Tennessee TIN) subject to garnishment?	Escrow funds benefitted Tullahoma Tennessee and should be reachable.	Escrow was trust account; bank as escrow agent/trustee held legal title and could disburse only by joint direction.	Not garnishable; Tullahoma Tennessee had no enforceable right to compel payment, so no debt existed for garnishment.
4. Who bears the burden to show the garnishee is indebted to the judgment debtor?	Navajo: bank had control and should produce funds.	U.S. Bank: burden is on judgment creditor to prove indebtedness; garnishee’s answer is not conclusive.	Burden on judgment creditor; Navajo failed to meet it.

Smith v. Smith, 165 S.W.3d 285 (Tenn. Ct. App. 2004) (garnishment statute interpretation; garnishee answer not conclusive).
Dexter Ridge Shopping Ctr., LLC v. Little, 358 S.W.3d 597 (Tenn. Ct. App. 2010) (trial court may receive evidence on disputed indebtedness of garnishee).
J.C. Mahan Motor Co. v. Lyle, 67 S.W.2d 745 (Tenn. 1934) (garnishee judgment requires an existing indebtedness the debtor could recover by suit).
Rowland v. Quarles, 100 S.W.2d 991 (Tenn. Ct. App. 1936) (garnishment reaches debts "absolutely existing" and creditor stands in no better position than debtor).
In re Rice's Appeal, 219 S.W.2d 177 (Tenn. 1949) (burden on judgment creditor to prove garnishee indebtedness).
In re Jefferson's Appeal, 219 S.W.2d 181 (Tenn. 1949) (discussing burden and garnishee proof principles).
Kopsombut-Myint Buddhist Ctr. v. State Bd. of Equalization, 728 S.W.2d 327 (Tenn. Ct. App. 1986) (elements and recognition of an express trust).
In re Cannon, 277 F.3d 838 (6th Cir. 2002) (trustee holds legal title to trust property).