In re Wiles
| Decision Date | 16 December 1968 |
| Docket Number | No. 68-BK-52-D.,68-BK-52-D. |
| Citation | 295 F. Supp. 13 |
| Parties | In the Matter of Pauline Brown WILES, Bankrupt. |
| Court | U.S. District Court — Western District of Virginia |
John Carter, Carter & Wilson, Danville Va., for bankrupt Wiles.
Joseph E. Blackburn, Richmond, Va., for Chesapeake and Potomac Telephone Co.
James Goodson, III, Danville, Va., Trustee in Bankruptcy.
William E. Land, Danville, Va., for Trustee.
Philip H. Hickson, Lynchburg, Va., Referee in Bankruptcy.
By his order dated October 18, 1968, the Referee in Bankruptcy directed that the Chesapeake and Potomac Telephone Company, hereinafter referred to as C & P, turn over to the trustee of the bankrupt the separation pay which had accrued to the bankrupt as an employee of C & P. The bankrupt, Pauline Brown Wiles, claims the separation pay as her post-bankruptcy estate, and has petitioned to this court for review of the Referee's order. The order of the Referee is based upon the following facts.
The bankrupt had been employed by C & P for more than fifteen years prior to her dismissal by C & P, during which time there had accrued for her benefit a "termination allowance" in the net amount of $1,819.73. This termination allowance arose under the following quoted provisions of a union contract between C & P and the bankrupt's union, Communications Workers of America:
This termination allowance is computed according to a formula based upon the employee's length of service and job pay scale. Although the employee's dismissal for misconduct disentitles the employee to receive the termination allowance, dismissal of the employee by C & P for unsatisfactory performance, as in this case, does not extinguish the employee's right to the allowance.
The events which culminated in the dismissal of the bankrupt commenced in 1966, when she was given repeated notices that her services were unsatisfactory and warned that if her performance did not improve she would be dismissed. These warnings were unavailing and the bankrupt was suspended from work several times. In October, 1967, procedures for the final dismissal of the bankrupt were initiated by C & P. The bankrupt was placed on sick leave in November, 1967, and received sickness disability benefits until February 12, 1968. On that date the disability benefits were terminated and the bankrupt was placed on a ninety-day leave of absence without pay. Also on February 12, 1968, the bankrupt's work supervisors recommended her dismissal. The bankrupt was notified late in April, 1968, that her leave of absence would expire on May 11, 1968, and would not be extended unless she furnished information which would justify a different conclusion.
On February 26, 1968, the final decision to dismiss the bankrupt was made, and a check of $1,819.73 of termination allowance, payable to the bankrupt, was drawn and placed with the bankrupt's supervisor for delivery to the bankrupt when she was notified of her dismissal. When C & P received notice that the bankrupt had filed on March 11, 1968, a voluntary petition in bankruptcy, the check was recalled by C & P pending a judicial determination of the party entitled to the allowance. At the expiration of her leave of absence in May, 1968, the bankrupt returned to work, whereupon she was notified of her dismissal.
Upon these facts, which find substantial support in the record, the Referee concluded that the termination allowance became an asset of the bankruptcy estate under either or both subparagraphs (5) and (6) of § 70a of the Bankruptcy Act, 11 U.S.C. § 110a.
To the contrary the bankrupt argues that as of the filing date, March 11, 1968, her interest in the termination allowance was contingent, since according to the union contract or C & P procedures, she would not receive the allowance if on or before the expiration of her leave of absence she (1) resigned, (2) constructively resigned by failing to return to work, (3) died, or, (4) was dismissed for cause by C & P. In arguing that such "contingent" rights do not pass to the trustee under § 70a the bankrupt relies on authority which holds, for example, that wages earned after bankruptcy or, under certain circumstances, rights of a beneficiary under an insurance policy do not pass to the trustee. See generally 4A Collier on Bankruptcy ¶ 70.152, at 143-4 (explanation of policy), 70.34 (future wages), 70.237 (insurance) (14th Ed. 1967). We agree with the Referee that the cases cited by the bankrupt are manifestly inapposite to the instant facts, and that the bankrupt's argument is unconvincing.
The pertinent provisions of § 70a are:
The trustee of the estate of a bankrupt * * * shall * * * be vested by operation of law with the title of the bankrupt as of the date of the filing of the petition initiating a proceeding under this Act * * * to all of the following kinds of property wherever located * * * (5) property, including rights of action, which prior to the filing of the petition he could by any means have transferred or which might have been levied upon and sold under judicial process against him, or otherwise seized, impounded, or sequestered * * * (6) rights of action arising upon contracts * * *.
The requirements of § 70a(5) would be met in this case if the bankrupt's interest in the termination allowance at the time the petition was filed was "property" which she could have "transferred."
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Waldschmidt v. CBS, INC.
...royalties — which effectively accrued before his bankruptcy — from being considered property under section 70(a)(5). See In re Wiles, 295 F.Supp. 13 (W.D.Va.1968); In re Durham, 272 F.Supp. 205 (S.D.Ill.1967); In re Dunn, 5 B.R. 156 (Bkrtcy.N.D.Tex.1980). Cf. Matter of Haynes, 9 B.R. 418 (B......