Source: https://law.justia.com/cases/federal/appellate-courts/F2/644/472/358779/
Timestamp: 2020-01-25 15:10:32
Document Index: 410320666

Matched Legal Cases: ['§ 70', '§ 70', '§ 70', '§ 70', '§ 70', '§ 70', '§ 70', '§ 70', '§ 522']

In the Matter of William R. Turpin.william R. Turpin, et al., Appellants, v. Amos M. Wente, Trustee, Appellee, 644 F.2d 472 (5th Cir. 1977) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Fifth Circuit › 1977 › In the Matter of William R. Turpin.william R. Turpin, et al., Appellants, v. Amos M. Wente, Trustee,...
In the Matter of William R. Turpin.william R. Turpin, et al., Appellants, v. Amos M. Wente, Trustee, Appellee, 644 F.2d 472 (5th Cir. 1977)
US Court of Appeals for the Fifth Circuit - 644 F.2d 472 (5th Cir. 1977)
The bankruptcy court concluded that title to the trust funds credited to Turpin as of the date the petition was filed had passed to the bankruptcy trustee pursuant to § 70(a) (5) of the Bankruptcy Act. The bankruptcy court ordered that the trustee was entitled to receive that portion of the bankrupt's retirement benefits attributable to pre-bankruptcy contributions by the employer, if, as, and when such benefits were ultimately paid to the bankrupt. The judgment of the bankruptcy court was affirmed by the district court.
On appeal, Turpin argues that his interest in the trusts was not property which passed to the trustee under § 70(a) (5) and that the trustee has no present claim or future right to any of the funds. We agree.
Section 70(a) (5) of the Bankruptcy Act1 formerly provided that
This circuit has previously examined the question whether retirement benefits which a bankrupt is entitled to receive in the future fall within the category of property which passes to the trustee under § 70(a) (5). In re Nunnally, 506 F.2d 1024 (5th Cir. 1975). In Nunnally, we concluded that the trustee had no claim upon such benefits, and we adhere to that conclusion today.
Our decision in Nunnally was guided by three Supreme Court opinions which articulated principles for determining whether a particular asset is property transferred to the trustee under § 70(a) (5): Segal v. Rochelle, 382 U.S. 375, 86 S. Ct. 511, 15 L. Ed. 2d 428 (1966); Lines v. Frederick, 400 U.S. 18, 91 S. Ct. 113, 27 L. Ed. 2d 124 (1970); and Kokoszka v. Belford, 417 U.S. 642, 94 S. Ct. 2431, 41 L. Ed. 2d 374 (1974). In these cases the court emphasized that the scope of the term "property" as used in § 70(a) (5) must be determined with reference to the distinctive purposes of the Bankruptcy Act. Although the primary purpose of the Bankruptcy Act may be "to secure for creditors everything of value that the bankrupt may possess in alienable or leviable form," Segal, 382 U.S. at 379, 86 S. Ct. at 515, the Act is also designed to provide the bankrupt with a clean slate "to leave the bankrupt free after the date of his petition to accumulate new wealth in the future" id., and thus to enable the bankrupt to "make an unencumbered fresh start." Segal, 382 U.S. at 380, 86 S. Ct. at 515.
In light of this policy of providing the bankrupt with a clean slate, the Supreme Court has reasoned that the bankrupt's future wages and assets "designed to function as a wage substitute at some future period and during that future period to 'support the basic requirements of life for (the debtors) and their families ....' " Kokoszka, supra 417 U.S. at 648, 94 S. Ct. at 2435 (quoting Lines v. Frederick, supra 400 U.S. at 20, 91 S. Ct. at 114), do not fall within the category of property which passes to the trustee pursuant to § 70(a) (5).
In Nunnally we concluded that retirement benefits were assets designed to provide the bankrupt with a substitute for wages at some point in the future and thus the bankruptcy trustee had no claim to them under § 70(a) (5). We reach the same conclusion with regard to the benefits at issue here.
Our conclusion in Nunnally that the bankruptcy trustee may not claim title to a bankrupt's future retirement benefits under § 70(a) (5) still strikes us as a sound one and, in any event, it controls the outcome of this case. We reaffirm it today, we order that the judgment entered by the bankruptcy court and affirmed by the district court be reversed and we remand for proceedings consistent with this opinion.
This case arose under and is governed by the Bankruptcy Act as it stood prior to the recent enactment of a new bankruptcy code. The new code classifies the debtor's right to receive pension benefits as exempt property "to the extent reasonably necessary for the support of the debtor and any dependents of the debtor." 11 U.S.C. § 522(d) (10) (E)