Tuesday, December 3, 2013

In re Nance case brief

In re Nance case brief summary
556 F.2d 602 (1977)


CASE SYNOPSIS
A bankruptcy judge determined that appellee bankrupt had converted property of appellant bank and that the debt was non-dischargeable under § 17(a)(2) of the Bankruptcy Act, codified at 11 U.S.C.S. § 35(a)(2). The United States District Court for the District of Massachusetts held that the debt was dischargeable because the assignment of deferred income was invalid under Mass. Gen. Laws Ann. ch. 154, § 3. The bank filed an appeal.

CASE FACTS
The bank argued that the district court erred in ruling that the bankrupt's assignment of his claim to deferred income was invalid for failing to comply with the conditions set forth inMass. Gen. Laws Ann. ch. 154, § 3. The bankrupt alleged that the debt was dischargeable because the bank never received an assignment from him, and that, even if it had, his actions did not amount to a willful and malicious conversion.

DISCUSSION

  • The court found that the assignment of contract was plainly invalid as an assignment for future wages and that the trust instrument, standing alone, could not be construed as an assignment. 
  • However, the court held that the demand note, which consolidated all prior indebtedness into one instrument, expressly listed the trust instrument as collateral security. 
  • The court found that the exemption from assignment in § 3 of wages to be earned in the future did not apply to income the bankrupt had already earned but the receipt of which has been postponed past the usual payment cycle. 
  • The court also held that the bankrupt's retention of the funds unreasonable and done deliberately and intentionally in knowing disregard of the rights of the bank.

CONCLUSION
The court reversed the district court's decision.

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