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IN RE JACKSON

October 18, 1968

IN THE MATTER OF HARVEY L. JACKSON, DEBTOR.


The opinion of the court was delivered by: Robert D. Morgan, District Judge.

DECISION AND ORDER ON CERTIFICATE OF REVIEW

This matter is before the Court on a Certificate of Review of an order entered by the Referee in Bankruptcy on June 27, 1968, permanently enjoining International Harvester Company, Farmall Works, from terminating the Debtor's employment because of a wage deduction order entered by the Referee on January 24, 1968, under Chapter XIII of the Bankruptcy Act, 11 U.S.C. § 1001-1086.

The relevant, undisputed facts are as follows. Harvey L. Jackson (herein Debtor), an employee of Farmall Works of International Harvester (herein International), filed a petition for relief under Chapter XIII of the Bankruptcy Act. Included in his debts was one to the Farmall Employees Credit Union (herein Credit Union) for $3,400, secured by a 1966 automobile.

Debtor is married and supports one child. His take-home pay at International was $105 a week at the time of the first meeting of creditors. The Wage Earner Plan provided for payments of $216 per month, with secured debts to be paid first, and contained a provision allocating a minimum of $100 per month to the Credit Union.

On April 14, 1967, the Referee entered an order confirming the Plan and appointing a trustee who was to disburse the funds to the creditors according to the Plan. Sixteen creditors, with total obligations of $8,469.89, filed claims. Included in the claims was one by the Credit Union, which accepted the Plan, for the amount of $3,624.10. Thereafter, the Credit Union filed a reclamation petition for the automobile. On July 28, 1967, the Referee entered an order allowing the reclamation petition and ordered that the car be reclaimed in full payment of the debt.

Debtor failed to make regular payments to the trustee; and on January 24, 1968, at the request of the trustee, the Referee entered an order requiring International to deduct $30 each week from the wages of Debtor and to pay the same to the trustee. International complied with the order, but thereafter notified Debtor that his employment would be suspended, and eventually terminated, unless the wage deduction order was released under the terms of a provision concerning demands against wages in International's collective bargaining agreement, which provision has been in the contract since 1955.

On February 12, 1968, Debtor filed a petition with the Referee requesting that International be enjoined from suspending or terminating his employment. On that day the Referee temporarily enjoined International from terminating or suspending Debtor by reason of the wage deduction order.

By agreement with the Credit Union, upon request of an employee in writing, International does make deductions from an employee's wages or salary and disburse it to the Credit Union; and at the time of the hearing almost 3200 employees were having weekly deductions made for the Credit Union, either for member savings or loan repayments. The Company also makes many deductions, upon request of the employee, to purchase U.S. Bonds, as well as tax deductions required by law. Total employment at the Farmall Works is about 3650.

On June 27, 1968, the Referee permanently enjoined International from terminating the employment of Debtor because of the wage deduction order. Petition for Review was filed with the Referee by International on July 2, 1968. The Certificate was filed in this Court on July 26, 1968. Oral arguments were heard by this Court on September 11, 1968, and International filed an additional written brief and argument at that time.

The ultimate and only real question here is: Does the Referee have legal authority under these circumstances to enjoin International from terminating the Debtor's employment because of the wage deduction order? The Court concludes that he does.

  This authority is believed to exist quite clearly under Section
658 and Section 2(a) (15) of the Bankruptcy Act (11 U.S.C. § 1058
 and 11(a) (15)).

Section 658 of the Act provides with respect to Wage ...


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