B-20950, OCT 24, 1941

B-20950: Oct 24, 1941

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THE ATTORNEY GENERAL: I HAVE YOUR LETTER OF OCTOBER 2. AS FOLLOWS: "THERE IS ENCLOSED A COPY OF A LETTER DATED SEPTEMBER 24. THE PETITION OF THE TRUSTEE UPON WHICH THIS ORDER WAS ENTERED CONTEMPLATES PAYMENTS OF $30 PER MONTH TO THE TRUSTEE DURING THE COURSE OF THE PROCEEDINGS AND UNTIL THE TERMS OF THE 'PLAN' HAVE BEEN FULLY COMPLIED WITH. "THE PETITIONS WERE FILED BY EMPLOYEES OF THE POST OFFICE AT KANSAS CITY UNDER CHAPTER 13 OF THE BANKRUPTCY ACT. IT IS BELIEVED THAT THE BANKRUPTCY COURT HAS NO JURISDICTION TO ENTER AN ORDER OR ORDERS OF THE NATURE CONTEMPLATED IN THE ORDER TO SHOW CAUSE. WHETHER IF AN APPROPRIATE ORDER WERE MADE TO THIS EFFECT. "I SHOULD BE GLAD TO HAVE YOUR VIEWS.

B-20950, OCT 24, 1941

PRECIS-UNAVAILABLE

THE HONORABLE, THE ATTORNEY GENERAL:

I HAVE YOUR LETTER OF OCTOBER 2, 1941, WITH REFERENCE TO THE ABOVE ENTITLED MATTER, AS FOLLOWS:

"THERE IS ENCLOSED A COPY OF A LETTER DATED SEPTEMBER 24, 1941, FROM THE UNITED STATES ATTORNEY AT KANSAS CITY, MISSOURI, WITH COPIES OF THE ENCLOSURES REFERRED TO THEREIN, RELATING TO THE ABOVE-ENTITLED PROCEEDING; ALSO A COPY OF MY REPLY TO THE UNITED STATES ATTORNEY UNDER DATE OF SEPTEMBER 30, 1941.

"THE LETTER OF THE UNITED STATES ATTORNEY RELATES TO AN ORDER ISSUED BY THE REFEREE ON SEPTEMBER 22, 1941, ON THE SECRETARY OF THE TREASURY AND THE POSTMASTER AT KANSAS CITY TO SHOW CAUSE ON OCTOBER 15, 1941, WHY AN ORDER SHOULD NOT BE ENTERED DIRECTING THE POSTMASTER AND THE SECRETARY OF THE TREASURY TO PAY TO THE TRUSTEE THE SUM OF $30 OUT OF THE WAGES DUE THE DEBTORS FROM THE UNITED STATES. THE PETITION OF THE TRUSTEE UPON WHICH THIS ORDER WAS ENTERED CONTEMPLATES PAYMENTS OF $30 PER MONTH TO THE TRUSTEE DURING THE COURSE OF THE PROCEEDINGS AND UNTIL THE TERMS OF THE 'PLAN' HAVE BEEN FULLY COMPLIED WITH.

"THE PETITIONS WERE FILED BY EMPLOYEES OF THE POST OFFICE AT KANSAS CITY UNDER CHAPTER 13 OF THE BANKRUPTCY ACT, 'WAGE EARNERS' PLANS', ACT OF JUNE 22, 1938, U.S.C. TITLE 11, SECS. 1061 ET SEQ.

"AS INDICATED BY MY LETTER TO THE UNITED STATES ATTORNEY AND FOR THE REASONS THEREIN STATED, IT IS BELIEVED THAT THE BANKRUPTCY COURT HAS NO JURISDICTION TO ENTER AN ORDER OR ORDERS OF THE NATURE CONTEMPLATED IN THE ORDER TO SHOW CAUSE.

"HOWEVER, THERE MAY BE SOME QUESTION WHETHER THE COURT MAY NOT VALIDLY VEST IN THE TRUSTEE A CLAIM AGAINST THE UNITED STATES FOR THE AMOUNT OF THE SALARY OF THE EMPLOYEE AS STATED IN THE ORDER, AND WHETHER IF AN APPROPRIATE ORDER WERE MADE TO THIS EFFECT, PAYMENT OF THE ENTIRE SALARY TO THE EMPLOYEE WOULD CONSTITUTE AN ACQUITTANCE TO THE UNITED STATES. CF. UNITED STATES V. DORCHERLING, 185 U.S. 223; PRICE V. FORREST, 173 U.S. 410; ERWIN V. UNITED STATES, 96 U.S. 392.

"WITHOUT REGARD TO THIS CONSIDERATION, HOWEVER, IT WOULD SEEM DESIRABLE TO COOPERATE WITH THE COURT IN CASES OF THIS KIND, SO FAR AS MAY BE POSSIBLE AND CONSISTENT WITH THE INTERESTS OF THE GOVERNMENT, AND THUS ENABLE THE FEDERAL EMPLOYEES TO TAKE ADVANTAGE OF THIS REMEDIAL LEGISLATION, IN FURTHERANCE OF THE POLICY OF CONGRESS.

"I SHOULD BE GLAD TO HAVE YOUR VIEWS, THEREFORE, WHETHER SOME METHOD OF PAYMENT CAN BE ARRANGED TO THIS END. AN APPROPRIATE ORDER OF COURT COULD DOUBTLESS BE SECURED TO GIVE EFFECT TO ANY PLAN SUGGESTED BY YOU.

"SIMILAR LETTERS TO THIS HAVE BEEN WRITTEN TO THE TREASURY DEPARTMENT AND TO THE POST OFFICE DEPARTMENT."

IN THE ABSENCE OF ANY SPECIFIC REFERENCE TO THE UNITED STATES IN 11 U.S.C. 1058, IT WOULD APPEAR THAT THE COURT IS WITHOUT JURISDICTION TO ENTER OR ENFORCE A JUDGMENT REQUIRING THE UNITED STATES TO MAKE DEDUCTIONS FROM THE WAGES OF THE DEBTORS FOR REMISSION TO THE TRUSTEE IN BANKRUPTCY. SEE APPLEGATE V. APPLEGATE ET AL., 39 FED.SUPP. 887. MOREOVER, THE PROCEDURE CONTEMPLATED IN THE ORDER TO SHOW CAUSE IS IN CONTRAVENTION OF THE PROVISIONS OF 31 U.S.C. 429, WHICH READ IN PART AS FOLLOWS:

"DUTY OF DISBURSING OFFICERS. EXCEPT AS OTHERWISE PROVIDED BY LAW IT SHALL BE THE DUTY OF EVERY DISBURSING OFFICER HAVING ANY PUBLIC MONEY INTRUSTED TO HIM FOR DISBURSEMENT, TO DEPOSIT THE SAME WITH THE TREASURER OR WITH ONE OF THE DEPOSITARIES OF THE UNITED STATES MENTIONED IN SECTION 476 OF THIS TITLE, AND TO DRAW FOR THE SAME ONLY AS IT MAY BE REQUIRED FOR PAYMENTS TO BE MADE BY HIM IN PURSUANCE OF LAW AND DRAW FOR THE SAME ONLY IN FAVOR OF THE PERSONS TO WHOM PAYMENT IS MADE; ***"

HOWEVER, SINCE THE PROCEEDINGS UNDER CHAPTER 13 OF THE BANKRUPTCY ACT MAY BE INSTITUTED ONLY UPON THE VOLUNTARY PETITION OF THE DEBTOR, IT WOULD SEEM THAT UPON THE ACCEPTANCE AND APPROVAL OF THE WAGE EARNER'S PLAN, THE DEBTOR WOULD BE WILLING TO EXECUTE A GENERAL POWER OF ATTORNEY SPECIFICALLY AUTHORIZING THE TRUSTEE IN BANKRUPTCY TO RECEIVE AND INDORSE CHECKS IN THE DEBTOR'S NAME FOR WAGES. SUCH CHECKS COULD THEN BE ISSUED IN FAVOR OF THE DEBTOR AND MAILED IN CARE OF THE TRUSTEE AND COULD BE INDORSED UNDER THE GENERAL POWER OF ATTORNEY AND CASHED BY THE TRUSTEE, WHO COULD THEN MAKE DISPOSITION OF THE PROCEEDS UPON THE BASIS PROVIDED FOR IN THE PLAN. IN VIEW OF THE FACT THAT NO ADDITIONAL ACCOUNTING BURDEN WOULD BE INVOLVED, AND SINCE THERE IS INDICATED THE DESIRABILITY OF PERMITTING CIVIL EMPLOYEES OF THE UNITED STATES TO AVAIL THEMSELVES OF THE ADVANTAGES OF THIS LEGISLATION, THIS OFFICE WOULD NOT BE REQUIRED TO OBJECT TO THE ADOPTION OF SUCH A PROCEDURE IN CASES OF THIS NATURE. SUCH POWER OF ATTORNEY SHOULD BE FILED IN THE OFFICE OF THE TREASURER OF THE UNITED STATES, WHICH OFFICIAL SHOULD NOTIFY THE DISBURSING AUTHORITY OF THE RECEIPT THEREOF.