In re Talbert, Bankruptcy No. 581-00567-S.

• Decision Date: 23 November 1981
• Docket Number: Bankruptcy No. 581-00567-S.
• Citation: 15 BR 536
• Parties: In re James R. TALBERT, Joye T. Talbert, Debtors.
• Court: U.S. Bankruptcy Court — Western District of Louisiana

15 B.R. 536 (1981)

In re James R. TALBERT, Joye T. Talbert, Debtors.

Bankruptcy No. 581-00567-S.

United States Bankruptcy Court, W.D. Louisiana.

November 23, 1981.

Chatham H. Reed, Shreveport, La., for trustee.

James M. Johnson, Minden, La., for debtors.

LeROY SMALLENBERGER, Bankruptcy Judge.

STATEMENT OF THE CASE

A hearing was held on the trustee's objection to the debtors claimed exemptions on July 6, 1981. Gene Howard, trustee was represented by Chatham H. Reed, and the debtors were represented by James M. Johnson.

FINDINGS OF FACT

In December, 1975, James R. Talbert, debtor herein, established an Individual Retirement Account pursuant to 26 U.S.C. Section 401, et seq. Deposits were made by Mr. Talbert for that year and subsequent years to qualify for a deduction from gross income on his income tax returns. On May 13, 1981, Mr. Talbert and his wife filed a voluntary petition in bankruptcy. The debtors have claimed that the funds set aside in their Individual Retirement Account are exempt under the provisions of Louisiana Revised Statute 20:33.

CONCLUSIONS OF LAW

The commencement of a bankruptcy case creates an estate, which under 11 U.S.C. Section 541(a)(1), is comprised of all legal or equitable interest of the debtor in property wherever located. Section 542(a) requires anyone holding property of the estate on the date of filing the petition to deliver it to the trustee, unless such entity is holding property that the debtor may exempt under Section 522. Louisiana has elected to have its own exemptions apply in bankruptcy cases rather than those exemptions contained in Section 522. Therefore, Mr. Talbert's claim of exemption can only be granted if it falls under the protection of some state provision. The state exemption claimed by Mr. Talbert is found in L.R.S. 20:33, which provides:

Section 33. Pension, annuity, and gratuity payment by employers.

The following shall be exempt from all liability for any debt except alimony and child support:

(1) All pensions and all proceeds of any payments under annuity policies and plans.

(2) All gratuitous payments made by employers to their employees or former employees, or to the widow, or heirs, or beneficiaries of their employees or former employees, whether such payments are made in consideration of the length of service rendered by the employee, his age, death, or otherwise.

The issue to be decided in this case is whether the funds collected in the I.R.A. constitute "pension" or "proceeds of and payments under annuity policies or plans." There are no Louisiana decisions regarding the issue, and there is no legislative history indicating their intent in passing this exemption, but this Court finds the standard definitions of "pensions" and "annuities" to be enlightening.

"A pension is a periodical allowance of money granted by the government in consideration or recognition of meritorious past services, or of loss or injury sustained in the public service . . . the term `pension\' is frequently, particularly in recent years used in the broad sense of retirement pay or compensation in which it may partake of the nature of a contractual right rather than of a gratuity . . ." 70 C.J.S. Pensions, Section 1.

"An annuity is frequently defined as a yearly payment of a certain sum of money granted to another in fee for life or for years, and chargeable only on the person of the grantor; or more briefly, as an agreement to pay a specified sum annually during the life of the annuitant . . . In its broader sense it designates a fixed sum, granted or bequeathed, payable periodically, at aliquot parts of a year, at stated intervals, and not necessarily annually." 3A C.J.S. Annuities Section 2.

Louisiana jurisprudence has cited this definition of annuity with approval in at least one case. In Succession of Rabouin, 9 So.2d 529, at 531, 201 La. 227, the Court stated that an annuity is "an agreement to pay specified sum to the annuitant annually during his life."

In light of these definitions several distinctions can be seen between what was presumably intended to be exempt and the Individual Retirement Account set up by the Talberts.

First, the I.R.A. can be distinguished because of its designation as an account, rather than a plan or policy. There is no question but that an ordinary passbook savings account is not exempt under Louisiana law....