Opinion ID: 1993867
Heading Depth: 1
Heading Rank: 3

Heading: Has a valid lien been created?

Text: Petitioner has qualified for benefits under the statute, subject only to survival of the successive dates of payment and the condition subsequent established in Section 23. He is obligated to render no further service. His right to the payments is fixed. The early common law proscription against the assignment of such rights, based upon the theory that a transfer of such rights was champerty or maintenance, has long since disappeared and Maine has for many years recognized that the assignment of that which is in existence, actual or potential is valid at law and courts of equity have supported assignments of contingent interests and expectations Edwards v. Peterson, 80 Me. 367, 371, 14 A. 936; and Harlow v. City of Bangor, 96 Me. 294, 297, 52 A. 638, subject only to statutory prohibition or contravention of public policy. A chattel mortgage may be given on future crops, Corinna Seed Potato Farms, Inc. v. Corinna Trust Company, 125 Me. 131, 134, 131 A. 307; and after acquired property, Williams v. Noyes & Nutter Manufacturing Company, 112 Me. 408, 412, 92 A. 482, 484. The statute providing for this pension has no prohibition on its assignability. [2] One text makes the flat statement: Except where prohibited by statute, a pension granted for past service may be assigned. 70 C.J.S. Pensions § 9. See also Passaic Nat. Bank & Trust Co. v. Eelman et al., 116 N.J.L. 279, 183 A. 677 (1936). What of public policy? The public policy considerations involved are expressed in Local Loan Company v. Hunt, 292 U.S. 234, 54 S.Ct. 695, 78 L.Ed. 1230 (1934), where, in holding an assignment of future wages as not constituting a lien within the meaning of § 67(d) of the Bankruptcy Act, [3] the court said that such an assignment is a pledge of future earning power, that to preserve its free exercise is of utmost importance, and a matter of great public concern, and held (page 245, 54 S.Ct. page 699): (A)n assignment of wages earned after bankruptcy as being destructive of the purpose and spirit of the Bankruptcy Act. No case has been called to our attention, nor have we found any, which applies this expression of public policy to the facts at hand. A somewhat analogous problem arises where the debtor has executed a mortgage on future crops or an assignment of an expectancy. In states which hold that a mortgage of future crops or an assignment of an expectancy does not create any lien or charge until the crops or the expectancy actually come into existence, it is held that the discharge of the underlying debt prevents a lien from attaching at the time the crops come into existence or the expectancy vests, since there is no debt to support a lien. On the other hand, in states where it is held that such a mortgage or assignment does create a lien on after-acquired property as of the original date of the mortgage or assignment, despite the fact that the underlying debt has been discharged, the question is then presented whether such a doctrine conflicts with the policy of the Bankruptcy Act and should be overridden. The Supreme Court has not yet decided this question, but by the present weight of authority among the states there is no conflict of policy and the state law will control. Collier On Bankruptcy 14th Edition ¶ 17.30, at page 1740 et seq. See also Annot. 73 A.L.R. 1063. The public policy announced in Hunt reflected the thinking of the Court in 1934 and implies that permitting a wage earner to assign future earnings would seem to reduce him to a state of peonage and be contrary to public policy. The reverse side of the coin is that by means of such assignment he may obtain new credit which may enable him to create new income and new economic power. Denial of that power however, is a denial of credit in a world of credit. Corbin on Contracts, Vol. 4 § 908, at page 641. In the instant case there is no commitment of future earnings. The pension benefits have been already earned and their assignment cannot be equated with the assignor's subsequent earning power. We find no contravention of public policy in this assignment. See also Eelman, supra [7] 183 A. at page 680. Corbin on Contracts, Vol. 6A § 1427 confirms, by negative expression, assignability of a pension under the facts of this case by pointing out that some claims cannot be assigned, including claims to a public pension if it is one for which some public service may still be required. [4] The rationale of this exception is that public service would be prejudiced if the pension benefits payable for past and present service were burdened with assignments. See Eelman, supra, [7] at page 680. Plaintiff has a lien under Maine law on the pension benefits. See In re Kobiela, D.C., 152 F.Supp. 489, [4] 491, and Shiro v. Drew, D.C., 174 F.Supp. 495, [1, 2] 497.