Dr. Robert W. Paige v. Dudley R. Stanley and Flagship Financial Corporation, a Texas Corporation

NO. 07-04-0458-CV IN THE COURT OF APPEALS FOR THE SEVENTH DISTRICT OF TEXAS AT AMARILLO PANEL C FEBRUARY 3, 2005 ______________________________ ROBERT W. PAIGE, M.D., APPELLANT V. DUDLEY R. STANLEY AND FLAGSHIP FINANCIAL, APPELLEES _________________________________ FROM THE 47TH DISTRICT COURT OF RANDALL COUNTY; NO. 47,937-A; HONORABLE RICHARD DAMBOLD, JUDGE _______________________________ Before JOHNSON, C.J., and QUINN and REAVIS, JJ. ORDER OF ABATEMENT PURSUANT TO RULE 8.2 OF THE TEXAS RULES OF APPELLATE PROCEDURE Attorney Kent Ries, as Chapter 7 Trustee for appellant Robert W. Paige, M.D., filed a notice of appeal in the trial court challenging the trial court's judgment in favor of appellees Dudley R. Stanley and Flagship Financial. Pending before this Court is Paige's notice of bankruptcy and motion for extension of time in which to file the notice of appeal. According to the limited documents on file, Paige filed chapter 7 bankruptcy on February 6, 2004. On March 15, 2004, the United States Bankruptcy Court for the Northern District of Texas signed an agreed order lifting the automatic stay for the "express purpose of allowing the Trial Court to enter a judgment . . . ." The order further recites: [t]he Stay is not lifted with respect to any appeal or appellate timetable. The Stay will remain in effect as to any appeal, as described in Texas Rule of Appellate Procedure 8. Pursuant to Rule 8.2 of the Texas Rules of Appellate Procedure, the appeal is suspended. For administrative purposes, the appeal is removed from the docket and abated. It appearing to the Court that the notice of appeal and motion for extension of time in which to file the notice were filed out of an abundance of caution, they will not be considered ineffective because they were filed while the proceeding was stayed. See Tex. R. App. P. 82. Any documents filed subsequent to the bankruptcy proceeding will remain pending until the appeal is reinstated. The appeal will be reinstated upon proper showing from the United States Bankruptcy Court for the Northern District of Texas that the stay has been lifted for purposes of appeal and a party's request for specific action by this Court. See Tex. R. App. P. 8.3(a). Accordingly, the appeal is abated. Per Curiam support payments directly to Vikki. Ralph also bought Vikki a vehicle for which she gave him credit against his future support payments. The State subsequently filed a motion for enforcement of the child support order and sought collection of the amounts Ralph failed to pay to the State. Ralph's employer was also administratively ordered to withhold payments, and the State intercepted his federal tax refund. The trial court held a hearing and found there was no arrearage in Ralph's child support obligation and that he was entitled to reimbursement of $5,463 from the State for monies which were wrongfully withheld or garnished. The State appealed. Issue One - Discharge of Obligation to the State In the first issue, it is argued that because Ralph received notice of the assignment of Vikki's child support payments to the State, he could not legally discharge his obligation by making payments directly to her. Thus, the trial court erred in declaring that he owed the State nothing. We agree and sustain the issue. As authorized by federal law, the approval of an application for financial assistance constitutes an assignment to the Office of the Attorney General of any right the applicant or his child has to child support from any other person. Tex. Fam. Code Ann. §231.104(a) (Vernon 2002). Thus, once Vikki applied for and began receiving AFDC benefits, the State was entitled to receive (via assignment) Ralph's child support payments as reimbursement for the financial assistance being given to Vikki. In the Interest of A.M.E., 71 S.W.3d 401, 403 (Tex. App.--San Antonio 2001, no pet.) (holding to that effect). Moreover, Ralph did not argue that he failed to receive notice of the assignment of Vikki's right to child support or of the court's order directing payment to the State. Indeed, after those documents were executed, he communicated to the State and explained that he was making the payments directly to Vikki because when she received child support from the district clerk the money took too long to reach her and she did not receive the full $200 per month. Thus, it is clear that he knew of the assignment in question. Parties to a divorce decree do not have the authority to modify a child support obligation without court approval. State v. Borchers, 805 S.W.2d 880, 882 (Tex. App.--San Antonio 1991, writ denied). Nor may they opt to disregard federal and state law effectuating assignments. Thus, by law, Ralph's support payments belonged to the State, and sending them directly to Vikki did not somehow negate the State's right to them. And, though Ralph delivered the payments to someone other than the assignee, he remains liable for their payment to the State. See Buffalo Pipeline Co. v. Bell, 694 S.W.2d 592, 596 (Tex. App.--Corpus Christi 1985, writ ref'd n.r.e.); (holding that after the debtor receives notice of a valid assignment, payment made by the debtor to the assignor or to any person other than the assignee does not discharge the debtor from liability to the assignee); Manes Const. Co., Inc. v. Wallboard Coatings Co., Inc., 497 S.W.2d 334, 337 (Tex. Civ. App.--Houston [14th Dist.] 1973, no writ) (holding that where the account debtor paid money directly to the assignor of accounts receivable at a time when he had actual notice of the assignment, the debtor subjected himself to double liability). Therefore, the trial court erred in finding that Ralph was not indebted to the State and in rendering judgment in favor of Ralph for the monies or tax refunds withheld from his pay and intercepted, respectively. Our disposition of this issue relieves us from having to address the State's remaining issues. Accordingly, we reverse the judgment of the trial court and remand the cause for a new trial. Brian Quinn Justice Do not publish. 1. John T. Boyd, Chief Justice (Ret.), Seventh Court of Appeals, sitting by assignment. tex. gov't code ann. §75.002(a)(1) (Vernon Supp. 2002).