JAMES CARR, District Judge
This is a suit by Daimler/Chrysler Services North America (DCS), which provided financing to the third-party defendant, Prestige Motors (Prestige/the dealership), a defunct Chrysler automobile dealership. One of the principals in Prestige, defendant David Pearson, falsely endorsed DCS's signature on checks payable to DCS and Prestige. The defendant Provident Bank (Provident) accepted the checks notwithstanding the false endorsements and credited the proceeds to an account maintained by the dealership with Provident.
Judgment has been entered in favor of DCS and against Prestige for monies owed by the dealership to DCS. A motion by DCS for summary judgment against Provident for the funds paid into the dealership's account at Prestige on the basis of Pearson's false endorsement is pending.
Provident has also obtained a judgment against Prestige.
After obtaining its judgment against the dealership, DCS served an order of garnishment on Provident. DCS's garnishment sought to obtain funds in Prestige's account at Provident. Provident claims that it is entitled to have the funds in that account applied as a set off against any liability that Provident may have as to DCS's claim against it. DCS agrees that, if it receives the garnished funds, Provident is entitled to a set off.
At a hearing on DCS's garnishment, this court ordered Provident to pay the funds into the court's escrow account. Provident has done so.
The garnisheed funds were not paid directly to DCS because the U.S. Bank National Association (US Bank) claims that it is entitled to those funds by virtue of a pre-judgment attachment of the dealership's account at Provident. That attachment was entered in a suit brought by US Bank in the Common Pleas Court of Huron County, Ohio. In that suit US Bank claims that checks fraudulently drawn on its accounts were deposited into the dealership's account at Provident.
DCS obtained its judgment against Provident after the US Bank attachment. The DCS garnishment order issued, however, before US Bank had obtained a judgment against Prestige in the Huron County proceedings. US Bank has subsequently obtained a judgment in those proceedings against the dealership.
Pending is DCS's motion for disbursement of the garnisheed funds to it, subject to any right of set off in favor of Provident. Provident does not oppose the motion, provided that its right of set off is preserved.
US Bank has been granted leave to participate in the garnishment proceedings in this court in light of its competing claim to the funds. It has filed a motion for release to it of the garnisheed funds.
In support of its motion for disbursement, DCS contends, inter alia: 1) the US Bank attachment failed to comply with statutory requirements, in that the order of attachment did not give notice to Provident to appear in the Huron County proceedings, and 2) Provident's claim to the funds has priority over the claim of US Bank.
For the reasons that follow, DCS's motion for disbursement of the garnisheed funds to it shall be granted, subject to a right of set off in Provident's favor in the event Provident is found liable to DCS for its acceptance of the checks with the falsely endorsed DCS signature.
Discussion A. The US Bank Attachment was Defective
After US Bank filed its Huron County suit against the dealership, it obtained an order of attachment for the funds held by Provident in the dealership's account. A Hamilton County, Ohio, Deputy Sheriff served that order on Provident's office in Cincinnati.
On receipt of the attachment order, Provident followed its customary business practice of placing a "hold" on the dealership's account. This, in effect froze the account, keeping it in situ without a determination by Provident as to who may have been entitled to the funds. In such circumstances, Provident will not relinquish control of the account without specific approval of a court order. (Doc. 89, ¶ 7).
US Bank contends that the Sheriff of Hamilton County obtained, by virtue of his Deputy's service of the attachment order on Provident, "legal possession of the bank account. . . ." (Doc. 84 at 7-8).
This contention is incorrect. Provident kept the funds — they were not collected by the Deputy Sheriff who had served the attachment order on Provident or otherwise disbursed to or in favor of US Bank. While, at least arguably, either the Sheriff or US Bank could have applied to the Huron County Court of Common Pleas for an order enforcing the command of the attachment order that the Sheriff of Hamilton County "take possession of the account" (Doc. 85, Attachment 2), no such request was made of the state court. At most, US Bank had constructive, not actual possession of the attached funds.
Section 2715.091(A) of the Ohio Revised Code, which regulates pre-judgment attachments, provides, in pertinent part, that where "the levying officer attempts to get possession of such property but cannot do so, he shall leave with the person a copy of the order of attachment, with a written notice that he appear in court and answer. . . ."
By service of the attachment order, the Deputy Sheriff (the "levying officer") had attempted, but could not "get possession of such property" (the funds designated in the attachment order). Pursuant to § 2715.091(A), the Deputy was required to leave a notice with Provident to "appear in court and answer."
No such notice was given to Provident. US Bank contends that no notice to appear and answer was required, despite the statutory command, because attachment statutes are to be construed liberally. Rice v. Wheeling Dollar Savings Trust Co., 155 Ohio St.39l, 396 (1951) ("statutes pertaining to the attachment of property are of a remedial nature and require both a liberal construction and a liberal application to the facts of a particular case.").
In support of its contention that no notice to appear and answer was required, US Bank cites Holly v. Dayton View Terrace Imp. Corp., 25 Ohio Misc. 57 (Ohio Com.Pl. 1970). The court noted in that case that O.R.C. § 2715.11
specifically states that the affidavit in attachment must describe the property of the Defendant that the purported garnishee has in its possession. The Section further provides that if the officer cannot get possession of such property, he must leave with such garnishee a copy of the order of
attachment with a written notice that he appear in Court and answer as provided in Section 2715.29 Revised Code. The Section further provides, if the garnishee is a corporation, a copy of the order and notice shall be left with the president or other principal officer of the corporation or with its secretary, cashier or managing agent.
Id. at 60.
The court stated further
that compliance with the garnishment section of the Code was not had. No specific property was described, no notice to appear in Court and answer was served, the only thing that was done was that the order of attachment was served upon the statutory agent of the garnishee. This, then, presents the question as to whether or not there has been substantial compliance with Chapter 2715 of the Code in order to give effect to Section 2715.19 O.R.C., and thereby conclude that there has been a valid attachment.
Id.
The court in Holly stated, with regard to the duty to give notice to appear and answer, that such failure would not have affected the effectiveness of the attachment. Id. at 61. That holding was, however, dictum, because the court concluded that the garnishee owed nothing to the defendant whose property the garnishment sought to attach. Id. at 65. Thus, any defect in the attachment could not have affected the substantial rights of the party on whom it was served.
Even if the ruling regarding the effect, or lack thereof, of a failure to provide notice to appear and answer were not dictum, the decision in Holly would not control this court's decision. The Supreme Court has held that federal courts are not bound by decisions of state trial courts, although such decisions should be attributed some weight. King v. United Comm. Travelers, 333 U.S. 153, 160-161 (1948); Bradley v. General Motors Corp., 512 F.2d 602, 605 (6th Cir. 1975)
Although Provident filed a motion in the state court to modify the court's order of attachment, and sought to advance many of the contentions it makes in this proceeding, US Bank opposed the motion, on the basis that the court had no jurisdiction over Provident. The state court held that, as a nonparty, Provident could not assert its claim to the proceeds. Instead, the court held, Provident had to file an independent attachment proceeding. (Doc. 88, Attachment 2).
US Bank, having first failed to satisfy the statute and then having successfully urged the state court to deny the due process benefits that the statute protects, should not profit from its actions.
I conclude, accordingly, that the attachment was defective, and does not bar disbursement of the funds to DCS.
B. Provident Can Set Off the Funds on Account Against its Judgment
Provident contends, and its contention is well-taken, that US Bank, even if its attachment had been perfected, had no greater claim to the funds held by Provident than the debtor/account holder, the dealership. Holly, supra, 25 Ohio Misc.2d at 67 ("The attaching or garnishing creditor stands in the shoes of the defendant and is in no better position with regard to the attached or garnished property or debt than the defendant.").
At the time of the attachment, neither US Bank nor Provident was a judgment creditor, though each claimed to have been the victim of similarly fraudulent acts. In the meantime, Provident became a judgment creditor, and did so prior to any judgment by the state court in the Huron County proceedings. As such, it could set off the funds in the dealership account against its judgment against the dealership. See Walter v. National City Bank of Cleveland, 42 Ohio St.2d 524, 525 (1975) ("As a general rule, the courts have held that a bank may set off a bank account against the matured indebtedness of its depositor, although the bank has been garnisheed at the instance of a creditor of the depositor.").
Provident's claim to funds in the dealership account accordingly takes priority over the claim asserted by US Bank via its attachment.
Conclusion
In light of the foregoing, it is not necessary to address the parties' other contentions before granting the motion of DCS for release of the funds presently in this court's escrow account, subject to an set off in favor of Provident in the event that Provident is found liable to DCS during the course of further proceedings in this action.
It is, therefore,
ORDERED THAT the motion of Daimler/Chrysler Services North America for an order directing disbursement of garnisheed funds (Doc. 82) be, and the same hereby is granted, with the right of Provident Bank to a prospective set off preserved, and the motion of U.S. Bank National Association for release of garnisheed funds (Doc. 84) be, and the same hereby is denied.
So ordered.