Raborn v. Davis—Paycheck in Employee’s Possession: A Limitation of the Current Wage Exemption in Texas

Extensions of credit generally help both the debtor and creditor. However, a result of our credit-based economy is that individuals are free to make poor economic decisions, and that they should suffer the consequences of these poor decisions. Although legal rules have had a role in ensuring that debtors are protected from overzealous creditors, commercial transactions can only exist if obligations of debtors are legally enforceable. The role of government, therefore, is to set parameters for procedures to enforce these obligations, while also setting a floor of protected or exempt assets so that debtors will not become wards of the state. Following a judgment for $22,761.35 in unpaid attorney’s fees, Burta Rhoads Raborn sought relief under the Texas turnover statute to satisfy the unpaid judgment. After an evidentiary hearing, the district court ordered the judgment debtor to relinquish to a court-appointed receiver any current or future income he received from his employer. The receiver was then to distribute a portion of the debtor’s income to the creditor and return enough to the debtor to cover his subsistence, and this turnover was to continue until the judgment was satisfied. Following appeal, the Texas Supreme Court upheld the trial court’s judgment, holding that an order directing a judgment debtor to turn over his future paychecks does not violate the Texas constitutional garnishment prohibition. The court stated that a trial court therefore has the authority to order a judgment debtor to turnover future paychecks upon receipt by the debtor. However, this cursory opinion of the Texas Supreme Court fails to interpret properly the term “current wages” found in the Texas Constitution’s wage garnishment prohibition. For this reason, the development of the present interpretation of “current wages” requires critical analysis, following which a meaningful alternative to that interpretation can be suggested