Freedom Finance Co. v. Fleckenstein

• Decision Date: 12 October 1971
• Citation: 282 A.2d 458,116 N.J.Super. 428
• Parties: FREEDOM FINANCE CO., Inc., a corporation of the State of New York, Plaintiff, v. Alex FLECKENSTEIN and Marion M. Fleckenstein, Defendants.
• Court: New Jersey District Court

Page 428

116 N.J.Super. 428

282 A.2d 458

FREEDOM FINANCE CO., Inc., a corporation of the State of New York, Plaintiff, v. Alex FLECKENSTEIN and Marion M. Fleckenstein, Defendants.

District Court, Union County New Jersey.

Decided Oct. 12, 1971.

John S. Giava, Newark, attorney for plaintiff.

Robert Brotman, Elizabeth, attorney for defendants (Union County Legal Services Corp.).

McKENZIE, J.D.C.

Plaintiff recovered judgment against defendants in the total sum of $1,162.32 on March 11, 1971. The judgment not having been paid, plaintiff applies for an order directing defendants to pay out 10% Thereof of their income.

It appears that defendant's only substantial source of income is a monthly pension in the sum of $247.85, received by defendant husband under the Railroad Retirement Act (45 U.S.C., § 228a et seq.), and a $42.51 monthly pension from the Pennsylvania Railroad Co. Although plaintiff disputes this, its allegations of additional income are based on suspicion rather than facts and are therefore rejected.

The Railroad Retirement Act of 1937, under which the defendant husband receives his pension, provides in part as follows:

Notwithstanding any other law of the United States, or of any State, Territory, or the District of Columbia, no annuity or pension payment shall be assignable or be subject to any tax or to garnishment, attachment, or other legal process under any circumstances whatsoever, nor shall the payment thereof be anticipated. (45 U.S.C., § 228l).

The question presented to the court is whether the section cited prohibits the relief sought by plaintiff, who takes the position that a court order directed to the pensioner to make payments from income to the judgment creditor is not include in the exemption.

It has been said there is a division of authority as to whether exemptions continue to apply to pension payments once they have reached the hands of the pensioner. 35 C.J.S. Exemptions, § 43. However, an analysis of the cases indicates that each case necessarily turns on the construction of the specific exemption statute involved. Thus where the former federal statute (U.S.Rev.Stat., § 4747) governing all pensions for government employees provided for an exemption which by its terms was limited to payments still in the pension office or in the course of transmission to the employee, it was held that the exemption status was lost when it reached the pensioner. McIntosh v. Aubrey, 185 U.S. 122, 22 S.Ct. 561, 46 L.Ed. 834 (1902). See also Asbury Park and Ocean Grove Bank v. Dam, 16 N.J.Misc. 285, 199 A. 418 (Dist.Ct.1935).

Similarly, where the exemption applied to 'payments due' under the Workmen Compensation Act, N.J.S. 34:15--29, it was held not to protect such payments after receipt by the claimant. Beierlein v. Faulkner, 15 N.J.Misc. 313, 190 A. 853 (Dist.Ct.1937). On the other hand, a contrary result was indicated where the statute concerning veterans' pensions provided for exemption 'either before or after receipt by the beneficiary.,' State v. Monaco, 81 N.J.Super. 448, 195 A.2d 910 (Law Div.1963).

Plaintiff relies on Boylan v. Joyce, 123 N.J.L. 130, 8 A.2d 108 (1939), construing the exemption in our act for police and fire department pension funds, N.J.S. 43:13--9, and holding that the exemption does not apply once the monies have reached the pensioner. While that case might be distinguished because of the difference in the language employed in the respective statutes, suffice it to say that Boylan has not been followed or cited by any subsequent case and must be considered as having withered on the vine. Thus, in Fischer v. Fischer, 13 N.J. 162, 98 A.2d 568 (1953), our Supreme Court, interpreting the same exemption, permitted the garnishment of the pension by the wife under an alimony order, but made it clear that this was due to the favored suitor class of the pensioner's wife. Justice Heher, writing for the majority, said:

* * * it is abundantly clear that the policy of the immunity provision is to shield the pensioner against the coercive remedial and executorial processes available to creditors, and thus to secure the pensioner and his family against improvidence and want. (at 167, 98 A.2d at 570)

Plaintiff also relies on the Pennsylvania Case of Commonwealth v. Berfield, 160 Pa.Super. 438, 51 A.2d 523 (Super.Ct.1947), the only case brought to the attention of the court interpreting the specific provision in question in the present case, and allowing legal process against the pension funds. However, there again the party seeking the funds was the wife of the pensioner, attempting to enforce an order for support. The Pennsylvania court also was specific that the relief was granted to her only because the support obligation of the pensioner arises from the marital status and the legal unity of husband and wife, rather than from a debt founded on contract, concluding:

* * * a wife may look to a fund payable to her husband However safeguarded by law, or by the language of its creation, from attachment by others. (Emphasis added)

The portion of that opinion holding that the purpose of the exemption is 'solely' to relieve the government agency of the burden in the handling of funds which would result if legal process attached is not in accord with the philosophy concerning such ...