Source: https://law.justia.com/cases/federal/appellate-courts/F2/563/1267/31631/
Timestamp: 2019-11-22 23:16:02
Document Index: 436523955

Matched Legal Cases: ['§ 1331', '§ 35', '§ 35', '§ 1', '§ 3288', '§ 32', '§ 1', '§ 1691', '§ 32', '§ 35', '§ 32']

Robert Girardier and Susan L. Luzkow, Appellants, v. Webster College, Appellee, 563 F.2d 1267 (8th Cir. 1977) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eighth Circuit › 1977 › Robert Girardier and Susan L. Luzkow, Appellants, v. Webster College, Appellee
Robert Girardier and Susan L. Luzkow, Appellants, v. Webster College, Appellee, 563 F.2d 1267 (8th Cir. 1977)
U.S. Court of Appeals for the Eighth Circuit - 563 F.2d 1267 (8th Cir. 1977) Submitted March 17, 1977. Decided Aug. 24, 1977
In Bell v. Hood, 327 U.S. 678, 66 S. Ct. 773, 90 L. Ed. 939 (1946), the court interpreted the statute which is now 28 U.S.C. § 1331(a), saying:
Jurisdiction . . . is not defeated . . . by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover. For it is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction. Whether the complaint states a cause of action on which relief could be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy. * * * (A) suit may sometimes be dismissed for want of jurisdiction where the alleged claim under the Constitution or federal statutes clearly appears to be immaterial and made solely for the purpose of obtaining jurisdiction or where such a claim is wholly insubstantial and frivolous. The accuracy of calling these dismissals jurisdictional has been questioned. The Fair v. Kohler Die Co., * * * 228 U.S. (22) at 25, (33 S. Ct. (410) at page 411, 57 L. Ed. 716). But cf. Swafford v. Templeton, * * * (185 U.S. 487, 22 S. Ct. 783, 46 L. Ed. 1005).3
Reitz v. Mealey, 314 U.S. 33, 62 S. Ct. 24, 86 L. Ed. 21 (1941), considered a New York law which provided a suspension of one's driver's license and auto registration by reason of his or her nonpayment of a judgment for injury resulting from the operation of a motor vehicle. The statute provided that a discharge in bankruptcy would not remove this suspension. The court found no conflict between this statute, which it found a valid exercise of the state's police power designed to enforce a public policy that irresponsible drivers shall not with impunity be allowed to injure others, and 11 U.S.C. § 35, the discharge provision of the Bankruptcy Act. Four justices dissented on the ground that the New York statute was in conflict with the purpose of the Bankruptcy Act, as expressed in Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S. Ct. 695, 699, 78 L. Ed. 1230 (1934), of giving the bankrupt "a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt."
In Kesler v. Dept. of Public Safety, 369 U.S. 153, 82 S. Ct. 807, 7 L. Ed. 2d 641 (1962), the court confronted a Utah statute which was similar to New York's in Reitz but which gave the individual creditor greater control over the sanctions to be imposed by the state for the nonpayment of the judgment. Justice Frankfurter, writing for the court, discussed the discharge provisions and their consequences thus:
Section 17 of the Bankruptcy Act, 11 U.S.C. § 35, provides that "A discharge in bankruptcy shall release a bankrupt from all of his provable debts," with exceptions not here material. See also 11 U.S.C. § 1(15). A discharge relieves the bankrupt "from legal liability to pay a debt that was provable," Zavelo v. Reeves, 227 U.S. 625, 629, (33 S. Ct. 365, 367, 57 L. Ed. 676) (1913); it is a valid defense in an action brought in a state court to recover the debt. A State cannot deal with the debtor-creditor relationship as such and circumvent the aim of the Bankruptcy Act in lifting the burden of debt from a worthy debtor and affording him a new start. The limitations imposed upon the States by the Act raise constitutional questions under the Supremacy Clause, Art. VI. Thus, a discharge does not free the bankrupt from all traces of the debt, as though it had never been incurred. This Court has held that a moral obligation to pay the debt survives discharge and is sufficient to permit a State to grant recovery to the creditor on the basis of a promise subsequent to discharge, even though the promise is not supported by new consideration. Zavelo v. Reeves, supra. The theory, the Court declared, is that "the discharge destroys the remedy but not the indebtedness," 227 U.S., at 629, (33 S. Ct. (365) at 367). And in Spalding v. New York ex rel. Backus, 4 How. 21, (11 L. Ed. 858) (1846), under an earlier bankruptcy law, the Court held that a discharge did not prevent the State from collecting a fine for contempt in violation of an injunction issued to aid in the execution of a judgment debt, although the fine was turned over to the creditor. States are not free to impose whatever sanctions they wish, other than an action of debt or assumpsit, to enforce collection of a discharged debt. But the lesson Zavelo and Spalding teach is that the Bankruptcy Act does not forbid a State to attach any consequence whatsoever to a debt which has been discharged." (Emphasis added) 369 U.S. at 169-171, 82 S. Ct. at 817-81.
Furthermore, prior to 1970 there was nothing in the Bankruptcy Act to prohibit a wide variety of acts by private parties (including the bringing of actions on the debt in state court) aimed at inducing debtors to make payments on their discharged obligations or to make promises which would revive the debt. Although not specifically dealt with in the Bankruptcy Act, the courts have long permitted such revival upon the making of a new promise to pay the debt. The theory is that a moral obligation sufficient to support a new promise to pay the debt remains even after the discharge. Zavelo v. Reeves, 227 U.S. 625, 33 S. Ct. 365, 57 L. Ed. 676 (1913). The criteria for revival depend upon local law. See 8 Remington on Bankruptcy, §§ 3288-3298. A full discussion of the scope of acts that can be taken by a creditor in order to induce payments or promises sufficient to constitute revival of the debt would be beyond the scope of this opinion.
Along with provisions giving the bankruptcy court greater powers to determine the effect of discharge, Congress in 1970 passed 11 U.S.C. § 32(f) (2), which states:
We find no Congressional intent that the language be so broad. See 2 U.S. Code Congressional & Administrative News, pp. 4156-4157 (1970); Note, "Bankruptcy 1970 Amendments to the Bankruptcy Act An Attempt to Remedy Discharge Abuses," 69 Mich. L. Rev. 1347 (1971). In Wood v. Fiedler, 548 F.2d 216 (8th Cir. 1977), this court said:
Furthermore, the word "process" itself implies court action. It is generally defined as the means by which a court compels the appearance of a defendant before it or by which the court compels a compliance with its demands. Black's Law Dictionary (Revised Fourth Edition 1968), p. 1370; United States v. Kinney, 264 F. 542 (E.D. Pa. 1920); United States v. Fore, 38 F. Supp. 142 (S.D. Cal. 1941); 72 C.J.S. Process § 1; State v. Sullivan, 245 Wis. 180, 13 N.W.2d 550 (1944). See 28 U.S.C. §§ 1691-1696.
Accord, Matter of Thompson, 416 F. Supp. 991 (S.D. Tex. 1976).
In 1971 the Supreme Court of the United States decided Perez v. Campbell, 402 U.S. 637, 91 S. Ct. 1704, 29 L. Ed. 2d 233 (1971), centering upon the Arizona version of the motorists' financial responsibility laws. The statute specifically provided that a discharge in bankruptcy of a judgment against a motorist for injuries from an accident would not relieve the debtor of any of the requirements of the statute, including suspension of the driver's license and automobile registration.
It is important to note what the court did not decide in Perez. The majority states at 402 U.S. 642, 91 S. Ct. 1707-1708:
The dissent states at 402 U.S. 668, 91 S. Ct. 1720:
All rulings which have struck down adverse consequences inflicted on the bankrupt have involved state or local laws. Rutledge v. City of Shreveport, 387 F. Supp. 1277 (W.D. La. 1975) (municipal civil service board rule resulting in a police officer's suspension for taking bankruptcy held unconstitutional under the Supremacy Clause); Matter of Loftin, 327 So. 2d 543 (La.App.1976) (Shreveport Fire Department policy resulting in suspension of bankrupt firemen held unconstitutional under the Supremacy Clause); Grimes v. Hoschler, 12 Cal. 3d 305, 115 Cal. Rptr. 625, 525 P.2d 65 (1974) (California statute which resulted in suspension of a bankrupt contractor's license held unconstitutional under the Supremacy Clause).
It is true that the first purpose has been variously stated as giving the debtor a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. Local Loan Co. v. Hunt, supra; Lines v. Frederick, 400 U.S. 18, 91 S. Ct. 113, 27 L. Ed. 2d 124 (1970); Perez v. Campbell, supra. The court in Lines said:
But that does not necessarily mean that every conceivable mechanism for furthering this goal has been written into the Act so as to become law. Historically, the Congress has rested on the discharge provisions of the Act to effectuate this goal; as of 1970, the Congress has further implemented this goal by the injunctive provisions of 11 U.S.C. § 32(f) (2). The Supreme Court of the United States has extended this protection by striking down state laws which create "a powerful weapon for collection of a debt (that has) been released by (operation of) federal law." Perez, supra. But this is as far as the Congress or the courts have gone. The plaintiffs urge that they are entitled to be treated in a nondiscriminatory manner by reason of their bankruptcy, unless the disparity in treatment is rationally supported. This may be a proper legislative end for the Congress to consider, but it is not the present law.
It is an axiom of statutory construction that respect should be paid to the limits to which Congress was prepared to go to enact a particular policy, especially when the boundaries of a statute were drawn in compromise from countervailing pressures of other policies. United States v. Sisson, 399 U.S. 267, 297, 90 S. Ct. 2117, 26 L. Ed. 2d 608 (1970); Moragne v. States Marine Lines, Inc., 398 U.S. 375, 392, 90 S. Ct. 1772, 26 L. Ed. 2d 339 (1970).
(a) (1) (A) No funds shall be made available under any applicable program to any educational agency or institution which has a policy of denying, or which effectively prevents, the parents of students who are or have been in attendance at a school of such agency or at such institution, as the case may be, the right to inspect and review the education records of their children. If any material or document in the education record of a student includes information on more than one student, the parents of one of such students shall have the right to inspect and review only such part of such material or document as relates to such student or to be informed of the specific information contained in such part of such material. Each educational agency or institution shall establish appropriate procedures for the granting of a request by parents for access to the education records of their children within a reasonable period of time, but in no case more than forty-five days after the request has been made.
The statute does not say that a private remedy is given. Enforcement is solely in the hands of the Secretary of Health, Education and Welfare under subsection (f).9 Under such circumstances, no private cause of action arises by inference. See Cort v. Ash, 422 U.S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975); National Railroad Passenger Corp. v. National Association of Railroad Passengers, 414 U.S. 453, 94 S. Ct. 690, 38 L. Ed. 2d 646 (1974).
While I am satisfied to concur in the result of the case, I do not agree with the rationale offered by the court. Given the facts of this case, the private action versus state action distinction is not warranted by Perez v. Campbell, 402 U.S. 637, 91 S. Ct. 1704, 29 L. Ed. 2d 233 (1971), and its use may lead to inconsistent results, depending upon whether the creditor college is a public or private institution.
Under the court's analysis, Webster College may validly refuse to issue transcripts to former students who have discharged loan obligations through bankruptcy for the sole reason that it is a private college. Because it is a private rather than public institution, its refusal to issue transcripts is a "nonlegal, informal means of inducing the debtor to make payments," at 1272, and not state action standing " 'as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,' " which are embodied in the Bankruptcy Act. Perez v. Campbell, 402 U.S. at 649, 91 S. Ct. (1704) at 1711, quoting Hines v. Davidowitz, 312 U.S. 52, 67, 61 S. Ct. 399, 85 L. Ed. 581 (1941).
The Perez holding does not require such antithetical results. Perez presented the issue of whether an Arizona statute that took away a bankrupt's privilege, namely the license to drive, conflicted with the debtor discharge provisions of section 17 of the Bankruptcy Act, 11 U.S.C. § 35 (1970). As the court today observes, at 1273, the effect of the Arizona statute was to give judgment creditors a powerful weapon with which to force bankrupts to pay their debts despite their discharge. The statute acted to deny the "fresh start" contemplated by the bankruptcy laws, see, e. g., Perez v. Campbell, 402 U.S. 637, 648, 91 S. Ct. 1704, 29 L. Ed. 2d 233 (1971); Williams v. United States Fidelity and Guaranty Co., 236 U.S. 549, 35 S. Ct. 289, 59 L. Ed. 713 (1915), and, accordingly, it was struck down by the Supreme Court.
Section 14 of the Bankruptcy Act speaks in terms of barring a creditor's affirmative action. The discharge bars ("enjoins") creditors whose debts are discharged from "instituting or continuing any action or employing any process to collect such debts as personal liabilities of the bankrupt." 11 U.S.C. § 32(f) (1970). Additionally, Local Loan Co. v. Hunt, 292 U.S. 234, 244, 54 S. Ct. 695, 699, 78 L. Ed. 1230 (1934), emphasizes the underlying primary purposes of the Bankruptcy Act to give debtors a fresh start, "a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt."10
That section had previously been proposed as Section 4-506(a) (8) of the draft revisions to the Bankruptcy Act that drafted by the Commission on the Bankruptcy Laws of the United States (H.R. 31, 94th Cong. 2nd Sess. 1976) and that by the National Conference of Bankruptcy Judges (H.R. 32, 94th Cong. 2nd Sess. 1976) as one of the exceptions from discharge.
See also, Gully v. First National Bank, 299 U.S. 109, 57 S. Ct. 96, 81 L. Ed. 70 (1936)