Document: 459 U.S. 70 103 S.Ct. 407 74 L.Ed.2d 235 UNITED STATES, Appellant,v.SECURITY INDUSTRIAL BANK et al. No. 81-184. Argued Oct. 6, 1982. Decided Nov. 30, Syllabus A provision of the Bankruptcy Reform Act 1978, 11 U.S.C. § 522(f)(2) (1976 ed., Supp. V), permits individual debtors in bankruptcy proceedings to avoid nonpossessory, nonpurchase-money liens on certain property, including household furnishings and appliances. Appellees loaned money obtained perfected such debtors' appliances before 1978 was enacted. Subsequently, these instituted separate under Act. Sections 522(b) (d) exempt items from property included within estates. The claimed exemptions, relying liens. Courts refused apply retroactively abrogate Court Appeals consolidated appeals affirmed, holding that, although intended retrospectively thus designed invalidate acquired enactment date, an application violates Takings Clause Fifth Amendment. Held: Section not be applied destroy pre-enactment rights. Pp. 74-82. (a) Where there is substantial doubt whether retroactive destruction appellees' would comport with Amendment, cardinal principle that this will first determine a construction statute fairly possible by which constitutional question may avoided warrants consideration whether, as matter statutory construction, must necessarily retroactively. 74-78. (b) No law shall construed eliminate rights existed enacted absence explicit command Congress. In light principle, clear expression Congress' intent established manner could call upon resolve difficult sensitive questions arising out guarantees Clause. P. 414. 642 F.2d 1193, (10th Cir.) affirmed. Alan I. Horowitz, Washington, D.C., for appellant. Henry F. Field, Chicago, Ill., appellees. Justice REHNQUIST delivered opinion Court. 1 This case concerns effect 522(f)(2), property. seven Districts Kansas Colorado. each debtor who after Pub.L. 95-598, 92 Stat. 2549 ("the Act"), became effective October 1, 1979. one appellees had lien debtor's November 1978. None possessory, none secured purchase-money obligations. 2 Included personal subject were are estates virtue subsections 522.1 exemptions their respective proceedings, That section provides: 3 "Notwithstanding any waiver fixing interest extent impairs exemption have been entitled subsection section, if is— 4 (2) security any— 5 (A) furnishings, goods, wearing apparel, appliances, books, animals, crops, musical instruments, or jewelry held primarily personal, family, use dependent debtor; 6 (B) implements, professional tools, trade 7 (C) professionally prescribed health aids debtor." 8 asserted date violate United States intervened defend constitutionality federal statute,2 but courts date.3 9 cases affirmed judgments courts. 1195 (CA10 1981). It retrospectively, date. also held, however, court stated effects "complete taking creditors' interest," invalid Louisville Joint Stock Land Bank v. Radford, 295 555, 55 854, 79 1593 (1935).4 appealed, we noted probable jurisdiction. --- ----, 102 969, 71 108 (1982). 10 appellees, course, judgment Appeals.5 government argues at some length retrospective contends "rational" exercise power, "bankruptcy purposes" interests all indistinguishable contractual interests, particular "insubstantial" therefore does amount "taking" requiring compensation. We do decide reached Appeals. address it only attack raises enough doubts warrant employment canon referred post, 8-10. readily agreed rational authority Article I, 8, 4, has regularly authorize impairment Hanover National Moyses, 186 181, 188, 22 857, 860, 46 L.Ed. 1113 (1902). Such agreement not, obviate additional difficulty arises when power sought used defeat traditional interests. Amendment's prohibition against private without (1935). Thus, however be, inquiry quite takes 12 apparently (Brief States, 30-32) because Arnett Kennedy, 416 134, 94 1633, 40 15 (1974) Goldberg Kelly, 397 254, 90 1011, 25 287 (1970) defined "property" purposes Due Process sufficiently broadly include common deemed contractual, no greater protection takings clause than contract principles support sharp distinction between unsecured creditors." Brief 31. However principles" speak question, our recognize, did law, right creditor obtain repayment his debt different legal contemplation same collateral. Compare supra, Kaiser-Aetna 444 164, 100 383, 62 332 (1979). 13 Since governmental action here result complete party, fits awkwardly into analytic framework employed Penn Central Transportation Co. New York City, 438 104, 98 2646, 57 631 (1978) PruneYard Shopping Center Robins, 447 74, 2035, 64 741 (1980), where affected "bundle rights" comprise question. party involved "insubstantial," part nonpurchase-money, non-possessory accrues obviously smaller owner fee simple, cites supporting proposition differences relegate party's something less property.6 And decisions Armstrong 364 40, 80 1563, 1554 (1961), militate proposition. 14 Frazier-Lemke Act, June 28, 1934, c. 869, 48 1289, violated clause. bank mortgage Radford's farm. Radford defaulted proceedings. its terms permitted purchase fair market value.7 void effected "taking substantive specific prior to" enactment. U.S., 590, 863. Court, Brandeis stated: "[T]he Amendment commands great Nation's need, taken even wholly public just If requires, permits, mortgagees order relieve necessities mortgagors, resort eminent domain; so through taxation, burden relief afforded borne public." Id., 602, S.Ct., 869. 16 Armstrong, materialmen materials prime contractor constructing navy personnel boats. Under state they vessels.8 obligations took title possession uncompleted hulls unused materials, making impossible enforce constituted taking: 17 "The total compensable value liens, constitute every element 'taking' mere 'consequential incidence' valid regulatory measure." 48, 1568-69. 18 seeks distinguish ground classical sense itself while instant simply imposed general economic regulation transfers debtor. While sort describes, show analysis limited outright acquisitions itself. See Loretto Teleprompter Manhattan CATV Corp., 3164, 73 868 (1982); supra; Pennsylvania Coal Mahon, 260 393, 415, 43 158, 160, 67 322 (1922). 19 finally resale goods generally low, creditors view principal lever negotiate reaffirmation rather vehicle foreclosure, merit contention cannot dismissed hand, seems run counter state's characterization see note 5, reliance other "takings" characterizations, see, e.g., 179, 392, least implications supra. 20 foregoing discussion satisfies us comports now consider manner. " 'cardinal ascertain avoided.' Lorillard Pons, 434 575, 577, 866, 868, (1978), quoting Crowell Benson, 285 22, 62, 52 285, 296, 76 598 (1932). 21 thought retroactively, is, attached "there applicable involving not." F.2d, 1197. came existence then case. exist independently Although general, commenced Congress might provisions previously vested provision, remainder affect enforceability still cases. think adequately dispose 522(f), pursue further. statutes operate prospectively, judicial familiar student. Sands, Sutherland's Statutory Construction 106 Linkletter Walker, 381 618, 622-625, 85 1731, 1733-35, 601 (1965). often pointed 23 rule legislation considered addressed future, past. . expressed varying degrees strength always import, operation given interferes antecedent unless "the unequivocal inflexible import terms, manifest intention legislature." 24 Union Pacific R. Laramie Yards Co., 231 190, 199, 34 101, 102, 58 179 (1913) (citations omitted). See, Fidelity & Guaranty Struthers Wells 209 306, 314, 28 537, 539, 804 (1908) ("The presumption very strong meant act ought never receive susceptible other."); Peggy, (1 Cranch) 103, 110, 49 (1801). repeatedly affecting Holt Henley, 232 637, 459, 767 (1914), new granting trustees position lienholder priority over sellers conditional sales contracts. 25, 1910, 412, 26 838, 840. like read literally divest created 1910 statute, effective.9 Nonetheless, followed lead lower refusing infer retroactivity absent explicitly "expressed Congress." Arctic Ice Machine County Trust 192 114, 116 (CCA 1911). re Schneider, 203 589, 590 (E.D.Pa.1913). unanimous Holmes "that reasonable usual interpretation [bankruptcy] confine effect, far passed." 639, 460. Auffm'ordt Rasin, 620, 622, 262 (1881). nonetheless usually preexisting statement unobjectionable context rights, 860-61, cited extend those here.10 27 Neither cases, nor come attention, casts deducible Auffm'ordt: legislative history suggests 522(f) An early version contained requirement "shall regardless occurrence operative facts determining duties liabilities hereunder." H.R. 31, 94th Cong., 1st Sess., 10-103(a) (1975), reprinted Revision: Hearings 31 32 Subcomm. Civil Constitutional Right House Comm. Judiciary, Sess. n. app., 320-321. deleted directly response comments witness William Plumb invalidation unconstitutional taking. 2066-2067. Congress's elimination evidence intend depart construction. Bradley Richmond School Board, 696, 716, 23, 2006, 2018, 476 ("We reluctant limitation eliminated."). 29 "Accordingly, date,11 "we decline construe turn the" N.L.R.B. Catholic Bishop 440 490, 507, 99 1313, 1322, 59 533 (1979).12 30 Affirmed. BLACKMUN, whom BRENNAN MARSHALL join, concurring judgment. 101 seq. and, particular, 522 Specifically issue small loan companies purported generally, specifically, kind described practicable matter, nothing prevent selling replacing it, he chooses. 33 522, time, set debtors. Concededly, similar statutes, protect essential needs enable him fresh start economically. "avoid fixing" otherwise 522(d). items, jewelry, tools trade, aids. naturally struggles notes concern problems greets obvious possibility construing being prospective operation. quickly pursues latter route issue. 35 I understand can sympathize Court's desire much easier And, announced feasible, preferred method. (1978). 36 Were writing "clean slate," pursue, case, construction-preference, deserve depth. concerned speaks hints applicability, compels find necessary reach favor company creditor. kinds values; little relationship property; close contracts adhesion; repossessions situation rare; purpose salutary give minimum necessities; abuse; merely adjusted priorities, Government's use; remedy debt; direct weight own appears useful mainly convenient tool threaten reaffirm underlying obligation; essentially insubstantial that; precedent favorable found Transp. (1980). 37 But clean slate. me precisely point chooses overrule control present There, eventual bankrupt signed 1909 installation automatic sprinkler system bankrupt. specified remain Holt's until paid enter remove failure pay agreed. Thereafter, 1909, deed executed covering plant what "acquired placed said premises during continuance trust." 459. ch. 840, amended 47a(2) trustee bankruptcy, coming custody court, lien. Upon system. 38 Holmes, observed amendment "Holt better got" should impair it." He went on: 39 "We need how event limited. passed. natural mode interpretation. [Holt's title] later sale. opposite impute take away lawfully retained, unimpeachable moment start." 639-640, ruled claim made advance faith purchasers Holt, removal "would integrity structure advanced." 641, 41 Henley pre-existing agreement, subsequent change preservation right. way one, affirm compelling Henley. prefer dicta enunciates respect "takings." permit retain able enjoy "fresh start" bankruptcy. Subsections provide pertinent part: [A]n estate (1) section. following exempted (b)(1) section: (3) interest, exceed $200 item, family (4) aggregate $500 value, (6) $750 (9) Professionally 2403(a). Schulte Beneficial Finance Kansas, Inc., Hunter B.R. 12, District creates prospectively. Jackson Security Industrial Bank, Stevens Liberty Loan 293, Rodrock Knezel 629, Colorado concluded Hoops Freedom Finance, 635, "substantive due process." Gifford, 688 447, (CA7 1982) (en banc), holds constitutionally applies Webber, 674 796 (CA9 1982), Ashe, 669 105 (CA3 522(f)(1), avoidance cognovit Appellee Inc. asserts III Constitution non-Article judges. Northern Pipeline Marathon Pipe Line 2858, (1982) (plurality Brennan, J.); id., 2882 (Rehnquist, J., judgment). Because decision only, 288, stayed issuance mandate December 24, 1982, 99, At oral argument conceded treated law. Tr. Oral Arg., 21. Both adopted Uniform Commercial Code. Code among parties possessory character 9-312, characterizations nature interest. §§ 9-107 (defining "purchase interest"), 9-305 (providing perfection possession). 101(28) defines "charge secure payment performance obligation." make distinctions based farmer, mortgagee assented, appraised deferred plan. assent, required stay years, time farmer paying rent. After years reappraised, free 557-558, 855. Given rate 1%, payments 591-593, 864-65. definition, transition 14, 842, are, substance, Title IV, 402, 403(a), 2682, 2683. Claridge Apartments Commissioner, 323 141, 65 172, 89 139 (1944), tax benefits, Dickinson Site, Cowan, 309 382, 60 595, 596, 84 819 (1940), dealt procedural rules proceeding pending Allowing appeal Circuit Carpenter Wabash Ry., 416, 558 giving injury status operating expenses mortgages ongoing railroad reorganizations. disadvantaged reducing cash available notes, collateral securing mortgages. McFaddin Evans-Snider-Buel 185 505, 758, 1012 (1902), curative providing methods Indian Territory. Legal Tender Cases, (12 Wall.) 457, 549-550, (1870), decided debts tender impairing obligation occasion passed effective. "When aid meaning words, available, certainly 'rule law' forbids use, words appear 'superficial examination.' Obviously danger courts' conclusion unconsciously influenced judges' views factors enacting body. lively appreciation best assurance escape threat hardly justifies acceptance literal dogma withholds information reaching correct conclusion. few connotation appearing text wide meaning, contrary settled policy, 'excepting plainly shown.' American Trucking Association, 310 534, 543-544, 1059, 1063-64, 1345 (1940) (footnotes

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