Document: 382 U.S. 375 86 S.Ct. 511 15 L.Ed.2d 428 Gerald SEGAL, Individually and d/b/a Segal Cotton Products, et al., Petitioners,v.William J. ROCHELLE, Jr., Trustee. No. 44. Argued Nov. 17, 1965. Decided Jan. 18, 1966. Henry Klepak, Dallas, Tex., for petitioners. William Rochelle, respondent. Mr. Justice HARLAN delivered the opinion of Court. 1 This case, presenting a difficult question bankruptcy law on which circuits have differed, arises out following facts. On September 27, 1961, voluntary petitions were filed in federal court Texas by Segal, Sam their business partnership, Products. A single trustee, was designated to serve all three proceedings. After close that calendar year, loss-carryback tax refunds sought obtained from United States behalf under Internal Revenue Code § 172. The losses underlying had been suffered partnership during 1961 prior filing petitions; carried back years 1959 1960 offset net income Segals both paid taxes. By agreement, Rochelle deposited special account, applied referee award them ground not passed refund claims trustee. 2 Concluding indeed 70a(5) Bankruptcy Act1 as 'property * petition (the bankrupt) could any means transferred,' denied Segals' application. District Court affirmed denial, appealed Appeals Fifth Circuit.2 That too rejected contention. 3 As here recognized, First Circuit Fournier v. Rosenblum, 318 F.2d 525, Third In re Sussman, 289 76, ruled squarely bankrupt's based year do pass trustee but instead bankrupt is entitled when they are ultimately paid. Concededly, must acquire 'property' date property subsequently acquired belongs bankrupt. See note 1, supra; 4 Collier, 70.09 (14th ed. 1962). Since laws allow claim be made only has closed, see I.R.C. §§ 172(a), (c), 6411, Circuits reasoned year's end tenuous classed would 70a(5). Alternatively, stated because anti-assignment statute,3 inchoate event 'which also requires. Both felt result unfortunate, least very generating often help precipitate injury creditors, believed statutory language left no option. detailed discussion problems, this case resolved 'transferable' at time hence 336 298. We granted certiorari conflict significance issue administration.4 380 931, 85 939, 13 819. Conceding close, we persuaded reasoning affirm its decision. I. 5 turn first whether filed, potential constituted employs term. Admittedly, interpreting section '(i)t impossible give categorical definition word 'property,' nor can attach it certain relations limitations attached others.' Fisher Cushman, Cir., 103 F. 860, 864, 51 L.R.A. 292. Whether an item Amendment's Just-Compensation Clause or purposes state taxing statute cannot decide hard cases Act, whose own govern. 6 main thrust secure creditors everything value may possess alienable leviable form he files his petition. To term construed most generously interest outside reach novel contingent enjoyment postponed. E.g., Horton Moore, 110 189 (contingent, postponed trust); Kleinschmidt Schroeter, 9 94 707 (limited future profits joint venture); Remington, 1177 1269 (Henderson 1957). However, grow other Act; one purpose highly prominent relevant leave free after accumulate new wealth future. Accordingly, wages constitute nor, analogously, does intended bequest him promised gift—even though might permit these alienated advance. Coleman, 87 753; 70.09, 70.27 Turning believe sufficiently rooted pre-bankruptcy past so little entangled with bankrupts' ability make unencumbered fresh start should regarded 7 Temporally, two key elements pointing toward realization existed filed: taxes within years, point exhibited operating loss. stress scheme claimed Government until already cited indicate, disqualify 'property.' earnings diminish eliminate further qualify interest, noted contingency abstract bar actual risk erased quite far certainty.5 Unlike promise gift bequest, passing title unlikely will effected. Nor hinder starting clean slate, administrative inconvenience prolonged, U.Pa.L.Rev., 279—280, without preserve more reason earn rather than less. 8 told if label loss-carryovers, is, application years. forward five some even seven ten 172(b)(1)(B)—(D), great hardship estate foreseen petitioners keeping open length time. While fact obviate detriment estate—by selling instances simply forgoing it—inconvenience hindrance caused individual. Without ruling way before us, enough say carryover into post-bankruptcy distinguished conceptually well practically. bankrupts loss apparently deserved immediate terminated date; contrast, supposed loss-carryover still need matched earnings, never eventuate all. II. Having concluded petitions, remains us addition transferred *.'6 prime obstacle affirmative answer 31 U.S.C. 203, renders 'absolutely null void' transfers against unless among conditions allowed amount ascertained. n. 3, supra. Plainly since calculate full experience present instance ascertained filed. 10 respondent argues transferability requirement met relying long-established rule 203 apply prevent 'operation law.' Aetna Cas. & Surety Co., 338 366, 373—374, 70 207, 211—212, L.Ed. 171; Goodman Niblack, 102 556, 560, 26 229.7 phrasing 70a(5), however, suggests contemplates transfer satisfied operation law, such death, bankruptcy, judicial process. Not there practically transferable broader reading, reading makes redundant alternative route complying through showing 'might levied upon sold process *.'8 Act defines 'transfer' general definitional include 'involuntary,'9 legislative history indicates introduction latter 40 framing aimed H.R.Rep. 1409, 75th Cong., 1st Sess., p. 5; Analysis H.R. 12889, 74th 2d House Judiciary (Comm. Print). 11 Difficulty defining enhanced absence explanation Congress' having condition place. Acts enacted 1898 like limitation trustee's succession property, 1867, 14, 14 Stat. 522; 1841, 442; 1800, 5, 13, 23, 25, predecessor impediment See, e.g., Erwin States, 97 392, 24 1065. chance respect policies alienating remainder spendthrift trust fund argue flatly ignoring instance. Stan.L.Rev., 383—386. Nevertheless, shown point, uncertain guess intent provides dubious disregarding plain language. event, prepared accept argument, just now go beyond narrow 'transfer,' points thoroughly briefed parties. 12 determined despite sufficient satisfy balance share view. Martin National 300 588, 596, 57 531, 534—535, 81 822, unanimous held spite broad language, 'must interpreted light protection Government' between parties effect given assignment failed comply statute. collected assignor, requiring compliance invalid recovery assignee presented danger become 'embroiled conflicting claims, delay embarrassment multiple liability.' U.S., 594, 534. circumstances encouraged uphold faced problem head-on time, find retreat basic holding anticipated followed number courts, federal. California Bank Fid. Guar. 129 751; Royal Indem. Co. 93 F.Supp. 891, 117 Ct.Cl. 736; Leonard Whaley, 91 Hun 304, 36 N.Y.S. 147; Ann., A.L.R.2d 460, 468—475 (1950). Among Texas, precedents doubt enforced equity normal case. Trinity Univ. Ins. State Bank, 143 Tex. 164, 183 S.W.2d 422; Hay Ford, 124 213, 76 480 (dictum). It pretended contemplated fullest sense permits. For example, invalidly assigned sue join assignor well. Shannon, 342 288, 72 281, 286, 96 321. Yet true compel received, try reluctant collect over valid became possible. This, believe, suffices meaning Cf. 70.37, 1293, Affirmed. 30 565, amended, 110(a)(5) (1964 ed.). part provides: '(a) shall vested initiating proceeding title, except insofar exempt, kinds wherever located (5) including rights action, him, otherwise seized, impounded, sequestered *.' wife deceased unsuccessfully urged half refunds, review sought. Rev.Stat. 3477, section, relevant, states: 'All assignments thereof, therein, absolute conditional, whatever consideration therefor absolutely void, freely executed presence attesting witnesses, allowance claim, ascertainment due, issuing warrant payment thereof.' Considerable commentary directed problem. Practically writers agree desirable receive although minority contend existing result. Herzog, Law—Modern Trends, Ref.J. 18 (1962); 60 Nw.U.L.Rev. 122 (1965); Notre Dame Law 118 (1964); Stan.L.Rev. Tex.L.Rev. 569 42 542 17 U.Fla.L.Rev. 241 16 U.Miami L.Rev. 345 (1961); U.Pa.L.Rev. 275 (1961). So increase refund—a situation case—the suggested proration ratio indicated F.2d, 302, 5. 'choice law' rules dispute. What matter law. 70.15, 1035—1036 25 generally save rare occasions overriding control determination bear it. Id., 1034—1035 22. residents, there; State's relevant. exception simplest why interfere vesting coming 70a explicitly law,' course argued subject process, claims' status render argument doubtful. Tex.Jur.2d, Garnishment (1961), cited. 1(30), amended Chandler 52 842, 1(30) ed.), pertinently reads: "Transfer' sale every different mode, direct indirect, disposing parting therein possession thereof fixing lien conditionally, voluntarily involuntarily, proceedings, conveyance, sale, assignment, payment, pledge, mortgage, lien, encumbrance, gift, security

Category: 7