Legal Document

41 United States Supreme Court Reports Lawyer’s Edition 2d Series KF101.8 U54 374 94 Reporter 2431 417 U.S. 642 Henry Atlantic KOKOSZKA, Petitioner,v.Richard BELFORD, Trustee, etc. Number 73—5265. Argued April 22, 1974. Decided June 19, Rehearing Denied Oct. 15, See 419 886, 95 160. Syllabus 1. An income tax refund is 'property' that passes to the trustee under § 70a(5) of Bankruptcy Act, being 'sufficiently rooted in bankruptcy past,' and not related conceptually or equivalent future wages for purpose giving bankrupt wage earner a 'fresh start.' Lines versus Frederick, 400 18, 91 113, 27 124, distinguished. Pp. 645—648. 2. The provision Consumer Credit Protection Act limiting garnishment no more than 25% person's aggregate 'disposable earnings' any pay period does apply refund, since statutory terms 'earnings' are confined periodic payments compensation do pertain every asset traceable some way such compensation. Hence, limit trustee's right treat as property bankrupt's estate. 648—652. 2 Cir., 479 Federal Reporter, 2nd 990, affirmed. Thomas R. Adams petitioner. Benjamin Civiletti, amicus curiae, support judgment below, by invitation Court. Mr. Chief Justice BURGER delivered opinion 1 We granted certiorari this case, 414 1091, 721, 38 548 (1973), resolve conflict among Courts Appeals on questions whether an Act1 whether, assuming all part which trustee, Act's2 limitation serves exempt 75% from jurisdiction trustee.3 petitioner was employed first three months 1971. He then unemployed 1971 until late December year. re-employed about last week half While employed, claimed two exemptions federal purposes, maximum number deductions he entitled, his employer withheld appropriate portion wages. 26 Code KF62 3402. During year 1971, had gross $2,322. 3 On January 5, 1972, filed voluntary petition bankruptcy. With exception 1962 Corvair automobile abandoned upon payment $25, sole entitlement $250.90. February 3, referee entered ex parte order directing turn over its receipt. moved vacate and, after hearing, denied motion. In mid-February return calendar Several weeks later, received check Internal Revenue Service. Upon receipt, complied with but review referee's decision District Court.4 Court, relief. Petitioner leave appeal.5 May 1973, Appeals, Second Circuit affirmed holding within meaning it therefore vested trustee. 990. court further held limitations contained did situations consequently, entitled entire refund. seeks these here. 4 (1) 5 question petitioner's Act. term has never been given precise universal definition. earlier occasion, Segal Rochelle, 382 375, 86 511, 15 428 (1966), noted "(i)t impossible give categorical definition word nor can we attach certain relations would be attached others." Id., at 379, 515, quoting Fisher Cushman, 103 KF105 F3 860, 864 (CA1 1900). determining term's scope—and limitations—the purposes 'must ultimately govern.' U.S., 515. also 124 (1970); Local Loan company Hunt, 292 234, 54 695, 78 L.Ed. 1230 (1934). 6 applying general considerations present situation, there guidelines. Burlingham Crouse, 228 459, 33 564, 57 920 (1913), example, stated: 7 'It twofold act convert estate into cash distribute creditors fresh start rights statute left untouched.' 473, 568. 8 Wetmore Markoe, 196 68, 77, 25 172, 175, 49 390 (1904); Williams Fidelity Co., 236 549, 554—555, 35 289, 290, 59 713 (1915); Stellwagen Clum, 245 605, 617, 215, 218, 62 507 (1918). rather recent occasions, applied principles section issue supra, said: 9 'The main thrust secure everything value may possess alienable leviable form when files petition. To end construed most generously interest outside reach because novel contingent enjoyment must postponed.' 10 At same time, construction tempered intent Congress 'to free date accumulate new wealth future,' ibid., thus 'make unencumbered start,' id., 380, years were repeated almost identical language. 113. Lines, while construing language, reached contrary results. each found crucial analytical key, abstract articulation statute's purpose, analysis nature involved light those principles. 11 Segal, business-generated loss carryback refund—which based prebankruptcy losses bankruptcy—should pass property. Balancing dual see concluded past so little entangled ability make should regarded 70a(5),' 'the very generating refunds often help precipitate injury creditors,' 378, 514, passing claim impede contrary, 'without preserve reason earn less.' 12 other hand, vacation pay, accrued prior filing collectible either during plant's annual shutdown final termination employment, As analyzed It closely tied opportunity have "clear field effort, unhampered pressure discouragement preexisting debt." 20, 114, 244, S.Ct., 699. 13 case relate refunded here earnings filing. Relying however, contends necessary start' solely derived described "a specialized type presenting distinct problems our economic system"6 they provide basic means 'economic survival debtor.' 114. 14 correct arguing both share common characteristic 'wage based.' true, only designed function substitute period, 'support requirements life (the debtors) their families . ..' Ibid. This distinction crucial. noted, 'tax weekly required support, deprive him will hinder debt,' F.2d, 995. 'Just source special protection, owned many bankrupts, savings accounts automobiles origin wages.' conclude, therefore, correctly past'7 defined 70a(5). 16 (2) 17 Our disposition requires next contention provisions provides disposable earnings8 workweek subject garnishment. A takes title 'except insofar 70a, 110(a). Another 'shall affect allowance bankrupts prescribed laws 6, 24. argues Act's restrictions garnishment, 1671 et seq., exemption. essence, position having completely available taxpayer without deduction, statute. 1672(b). taking custody 'garnishment' proceeding 'legal equitable procedure through individual debt.' 1672(c). 18 enact vacuum. drafters well aware legislation coexist. Indeed, explicitly rests commerce powers Congress, 1671(b). take consideration language assessing validity argument. When 'interpreting statute, look merely particular clause words used, connection whole (or statutes subject) objects policy law, indicated various provisions, carry execution Legislature Brown Duchesne, 19 How. 183, 194, 595 (1857). examination legislative history makes clear that, enacted against background intended alter latter assemble, once filed, debtor's assets benefit creditors. See, e.g., (1966). Congress' concern administration prevention place eliminating 'an essential element predatory extension credit resulting disruption production, consumption'9 consequent increase personal bankruptcies. Noting evidence before Committee 'clearly established causal between harsh high levels bankruptcies,'10 House Report concluded: 20 adopted your committee, permitting continued orderly consumer debts, relieve countless honest debtors driven desperation plunging employment insure themselves families.' H.R.Rep.No.1040, 90th Cong., 1st Sess., 21 (1967). 7. short, sought prevent consumers entering place. However, if, despite occur, protection remedy remained 22 earnings,' used §§ 1672, 1673, include limited 'periodic (do) compensation.' 997. view fully supported history. There indication effort avoid necessity bankruptcy, regulate usual sense levy needed family week-to-week, month-to-month basis. indication, drastically delicate balance protections obligations procedure.11 agree restrict Accordingly, 23 ordered. 24 Judgment pertinent parts 110(a) (5), read follows: '(a) shall operation law initiating following kinds wherever located (5) property, including action, could transferred might levied sold judicial process him, otherwise seized, impounded, sequestered undisputed Connecticut time petition, cf. 381—385, 82 Statutes-at-Large 146, 1601 seq. Title 1673 reads, part: Maximum allowable 'Except provided subsection (b) 1675 title, subjected exceed '(1) per centum week, '(2) amount thirty times minimum hourly 206(a)(1) 29 effect payable, 'whichever less. Secretary Labor regulation prescribe multiple set forth paragraph (2). '(b) Exceptions. (a) person. chapter XIII '(3) debt due State tax. '(c) Execution enforcement prohibited. 'No make, execute, enforce violation section.' 67(c). 47(a).give Sniadach Family Finance Corp., 395 337, 340, 89 1820, 1822, 349 (1969). 'Definitions,' states: 'For subchapter: conpensation paid payable services, denominated wages, salary, commission, bonus, otherwise, includes pursuant pension retirement program. remaining deduction amounts withheld. legal 20—21. Chapter excluded scope (see 1673(b)), portions permits satisfy out supervised plan. resembles normal situation CCPA directed reason, felt ensure enforced expense procedures.

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