Legal Document

489 U.S. 235 109 S.Ct. 1026 103 L.Ed.2d 290 UNITED STATES, Petitionerv.RON PAIR ENTERPRISES, INC. No. 87-1043. Argued Oct. 31, 1988. Decided Feb. 22, 1989. Syllabus After respondent filed a petition under Chapter 11 of the Bankruptcy Code 1978 (Code), Government proof prepetition claim for unpaid withholding and social security taxes, penalties, interest. The was perfected through tax lien on property owned by respondent. Respondent's ensuing reorganization plan provided full payment but did not provide postpetition objected, contending that § 506(b) Code—which allows holder an oversecured to recover, in addition amount claim, "interest such any reasonable fees, costs, or charges agreement which arose"—allowed recovery interest, since securing its had value greaterthan principal debt. Court overruled this objection, District reversed. Appeals reversed Court, holding codified pre-Code standard allowed interest only where consensual nature. Held: Section entitles creditor receive nonconsensual bankruptcy proceeding. Pp. 238-249. (a) natural reading phrase "there shall be arose" and, addition, secured pursuant right specified charges. Recovery is unqualified, whereas those if they are arose. Therefore, absence agreement, added available. This also mandated grammatical structure. Since claim" set aside commas, separated from reference conjunctive words "and any," stands independent language follows. 241-242. (b) Allowing liens does contravene intent Code's framers, nor it conflict with other section important state federal legislative history suggest contrary view. P. 1031. (c) There no significant reason why Congress would have intended, policy compel, treated differently allowing 506(b)'s clearly directs paid all claims. Midlantic National Bank v. New Jersey Dept. Environmental Protection, 474 494, 106 755, 88 859, Kelly Robinson, 479 36, 107 353, 93 216, distinguished. 243-246. (d) practice denying holders liens, while exception claims rule running ceased when filed, recognized few courts often depended particular circumstances. fact has never acknowledged relied upon refusal some Courts apply counsels against concluding limitation well recognized. Also arguing considering clear facts cases limited were tax-lien cases, "rule" been extended forms recognized, guide trustee's exercise his powers circumstances case. 246-249. 828 F.2d 367 (CA6 1987), BLACKMUN, J., delivered opinion REHNQUIST, C.J., WHITE, SCALIA, KENNEDY, JJ., joined. O'CONNOR, dissenting opinion, BRENNAN, MARSHALL, STEVENS, joined, post, p. 249. Lawrence G. Wallace, Washington, D.C., petitioner. I. William Cohen, Detroit, Mich., Justice BLACKMUN Court. 1 In case we must decide narrow statutory issue whether 1978, U.S.C. (1982 ed., Supp. IV), We conclude does, therefore reverse judgment Appeals. 2 * Respondent Ron Pair Enterprises, Inc., May 1, 1984, United States Eastern Michigan. timely $52,277.93, comprised assessments Social Security First Amended Plan Reorganization, October 1985, claim. claiming greater than At hearing, parties stipulated oversecured, court subsequently Government's objection. app aled That Court's judgment, plain entitled 3 Sixth Circuit, turn, (1987). While directly ruling ambiguous, reasoned law appropriate "in order better understand context provision drafted itself." Id., at 370. went note general allowable light practice, lack evincing change standard, held pre-existing Because result direct view Fourth see Best Repair Co. States, 789 1080 (1986), views courts,1 granted certiorari, 485 958, 108 1218, 99 420 (1988), resolve conflict. II 4 506,2 enacted as part extensive revision laws, governs definition treatment claims, i.e., creditors estate Subsection 506 provides extent fixed; remainder considered unsecured.3 concerned specifically is, less it. Thus, $50,000 having $75,000, costs preserving disposing $25,000. arose." 5 question before us today arises because there two types claims: (1) voluntary (or consensual) each created between debtor called "security interest" Code, 101(45) Supp.IV), (2) involuntary judicial lien, §§ 101(32) (47) fixed operation do require consent debtor. respondent's latter kind. Prior passage drew distinction purposes determining answer recognizes enforces distinction, intended same way III 6 Initially, worth recalling worked formulation nearly decade. It modernize H.R.Rep. 95-595, (1977) U.S.Code Cong. & Admin.News pp. 5787, 5963, 5964 (Report), made changes both substantive procedural laws bankruptcy. See Northern Pipeline Construction Marathon Pipe Line Co., 458 50, 52-53, 102 2858, 2861-2862, 73 598 (1982) (plurality opinion). particular, "significant current . claims." Report, 180. substantial overhaul system, realistic expect explained particularity step took. Rather, long scheme coherent consistent, generally need inquire beyond statute. A. 7 task resolving dispute over meaning begins inquiries begin: statute itself. Landreth Timber Landreth, 471 681, 685, 105 2297, 2301, 85 692 (1985). inquiry should end, where, here, statute's plain, "the sole function o enforce according terms." Caminetti 242 470, 485, 37 192, 194, 61 L.Ed. 442 (1917). expresses Congress' intent—that available—with sufficient precision so hardly necessary. 8 relevant is: "[T]here "Such refers gives one agreement. unqualified. charges, however, 9 structure any." As result, "[I]nterest list up "fees, charges," joined following clause final "provided agreement" modifies well. F.2d, 1082. punctuation used cannot read way.4 By statute, distinct.5 B 10 legislation conclusive, except "rare [in which] literal application will produce demonstrably odds intentions drafters." Griffin Oceanic Contractors, 564, 571, 3245, 3250, 973 (1982). intention drafters, rather strict language, controls. Ibid. framers Code. interest; suggested history.6 articulated, can discern, C urges purpose entitlement failure repudiate requires view, Appeals, 859 216 require. disagree. 12 554(a) 554(a), trustee may abandon burdensome estate," give authority violate health safety abandoning containing hazardous wastes. U.S., 507, S.Ct., 762. reaching conclusion, noted doctrine dispose could "to protect legitimate interests." 500, 759. But rest solely, even primarily, presumption continuity practice. concluded render abandonment inconsistent provisions itself, embody principle carte blanche ignore nonbankruptcy law." 502, 760. outcome sought departure "an extraordinary exemption law," id., 501, 759, requiring clearer expression congressional intent. repeated emphasis environmental "on 'goal protecting environment toxic pollution.' " 505, 762, quoting Chemical Manufacturers Assn. Natural Resources Defense Council, 470 116, 143, 1102, 1117, 84 90 To put simply, looked interpretive assistance, appeared "demonstrably 3250. 13 A similar presented itself supra, restitution obligation, imposed pa t criminal sentence, dischargeable reached conclusion interpreting 523(a)(7) Code,7 523(a)(7), "preserv[ing] discharge condition imposes sentence." 361. "subject interpretation," ibid., aid interpretation. depart regard, rely pale effect. animated "a deep conviction invalidate results proceedings," 47, 360, source basic our federalism States' administering their justice systems free interference most powerful considerations influence equitable relief." 49, Kelly, Midlantic, reflected great longevity importance.8 14 make that, case, determine expressed interpretation judicially concept enacting limits what constitute Both decisions which, least degree, open Each involved situation law, proposed interpretation, importance. present contrast, Kelly: written aspect Although arguably somewhat tension desirability paying uniformly practicable, expressly chose create alleged tension. suspect mean says. D 15 saw turn little assistance. exception, dependent certainly type assume aware Code; significance taken steps contrary. 16 was, indeed, filed. Sexton Dreyfus, 219 339, 344, 31 256, 257, 55 244 (1911). Two exceptions ractice. first ultimately proved solvent; second dividends earned securities collateral applied City York Saper, 336 328, 330, n. 7, 69 554, 555, 710 (1949). Neither these third more doubtful provenance: refused Harrington, 269 719, 722 (CA4 1959), uncertainty among recognize ever done so. Bass, 271 129, 131, (CA9 1959); Vanston Bondholders Protective Committee Green, 329 156, 159, 67 237, 238, 91 162 (1946). 17 What per se, exception. Several 722-723 (holding liens); 132; re Kerber Packing 276 245, 247-248 (CA7 1960); Boston Maine Corp., 719 493, 496 (CA1 1983) (municipal claim), cert. denied sub nom. Cambridge Meserve, 466 938, 104 1913, 80 461 (1984). Parchem, 166 F.Supp. 724, 730 (D.C.Minn.) (allowing appeal dism'd stipulation, 261 839 (CA8 1958); Ross Nursing Home, B.R. 496, 499-500 (Bkrtcy.EDNY 1980) (same). thought constituted well-established rule. 18 oversecured-claim cases. gave weight ruled available unsecured broad 721-722; RE kerbER packinG co., 247.9 articulated liens. Obviously, based taxes. For reason, wrote simply subject harmonize supposed 19 Mor importantly, "rule," touchstone decision allowance balance equities debtor." 165, 241. All denial "are rigid doctrinal categories. flexible guidelines developed insolvency proceedings." 496. None cited states anything guidance powers. such, think Congress, felt adopt today, consistent stated intent, "codif[y] creditors' rights [b]y defin[ing] protections entitled, means grant protection." 4-5 (emphasis added). Whether took notice acted clarity 20 21 ordered. 22 whom STEVENS join, dissenting. 23 distinct lines argument. First, concludes 506(b), unambiguous. Second, takes very progeny. I disagree aspects lead. 24 portion [an oversecured] "unqualified." Ante, Frankfurter remarked time ago, however: "The notion merely pernicious oversimplification." Monia, 317 424, 431, 63 409, 412, 87 376 (1943) (dissenting 25 use comma exceedingly arbitrary indefinite," Palmer, Wheat. 610, 638, (1818) (separate Johnson, J.), able claim." Without "capricious" bit punctuation, Newbury Cafe, 841 20, 1988), pending, 87-1784, follows: qualified arose," accrue Porto Rico Railway, Light Power Mor, 253 345, 348, 40 516, 518, 64 944 (1920) ("When several followed applicable much last, construction demands all"). altered any" follow Those indicate accrues charges" happen incurred creditor. 26 reliance misplaced. "[P]unctuation decisive statute." Costanzo Tillinghast, 287 341, 53 152, 153, 77 350 (1932). Barrett Van Pelt, 268 85, 91, 45 437, 439, 857 (1925) (" 'Punctuation minor, controlling, element disregard re-punctuate it, be, effect otherwise appears true meaning' "); Ewing Burnet, Pet. 41, 53-54, 624 (1837) ("Punctuation fallible interpret writing; resorted fail; take instrument four corners, ascertain meaning: apparent, inspecting whole, suffered it"). Under construction, hesitated past effectuate See, e.g., Simpson 435 6, 11-12, 98 909, 912-913, 70 (1978) (ignoring conjunction qualifying modify antecedent word "or"); Stephens Cherokee Nation, 174 445, 479-480, 722, 734-735, 43 1041 (1899) restrict off commas "and"). 27 useful confirmation conclusions drawn Naftalin, 441 768, 774, 5, 2077, 2082, 60 (1979). attempts buttress suggesting remaining portions 506, "make liens." 242, 5. regardless how read, distinguish qualify preceding language. Even "reasonable awarded lien. limiting reinforces already exists 506(b). find unavailing assertion, wanted limit 28 believed inferring law. "[a]fter inconsequential estate." Despite unequivocal authorize contravention regulation reasonably designed public safety. Relying three (one deal another icta), restrictions power property. 500-501, 759-760. "normal intends concept, makes specific," "followed care construing scope codifications." 759 (citations omitted). Given goal environment, "unwilling enactment implicitly overturned longstanding common power." 29 characterizes involving importance." 245. Though agree characterization, laws. Contrary intimation, "concer[n] interpretation." "absolute terms," 509, 763 (REHNQUIST, dissenting), attempt argue otherwise. Nonetheless, insufficient demonstrate specific statutes deemed changed unless indication effecting change. 50-51, 361-362, (1986) ("Nowhere House Senate Reports intrusively. If [of Code] provision, sentences, 'we certain hearings, testimony, debate concerning consequences wasteful, inimical previously important, likely arouse outrage' ") (quoting TVA Hill, 437 209, 2279, 2309, 57 117 (Powell, dissenting)). 30 established easily answered here. every address question, allow 329-341, 555-561, (1949); 246-248 Mighell, 273 682, 684 (CA10 130-132 723 1959). 495-498 (post-Code municipal lien), deflect line "of liens," exception." 246. Regardless labeled, cf. Henneford Silas Mason 300 577, 586, 524, 528, 81 814 (1937) ("Catchwords labels dangers lurk metaphors symbols, d watched circumspection lest guard"), widespread "[would been] Code." considerations. Unlike voluntarily agree, depend existence fiat. justification liens—"that credit, he given secure debt until pay him, contract ought abrogated bankruptcy," 724—has akin penalty nonpayment taxes monetary obligations Permitting drains pool assets detriment lower priority who responsible debtor's inability avoid imposition post-petition 497. Indeed, acknowledges practicable." 245-246. 32 look indicia knew changing 502-505, 760-762. said last Term, "[I]t improbable [a existing rules] without mention history." Savings Ass'n. Texas Timbers Inwood Forest Associates, Ltd., 484 365, 380, 626, 635, 740 (1988). "wholly inconclusive," Inc. 1080, 1082 1986), statement acknowledging work major evidence whatsoever meant assumed "silently abrogated" 359. 33 reasons forth above, respectfully dissent. Most permitted recover These see, Brandenburg, 71 (SD 1987); Busone, 201 (ED NY Gilliland, 410 (ND Tex.1986); Hoffman, 503 (Md.1983), private mechanic's Charter 568 (MD Fla.1986); Romano, 51 813 Fla.1985); Morrissey, 571 Va.1984). One leading commentator position codifies distinguishes 87-1784; Collier ¶ 506.05, 506-41, 5b (15th ed. 1988). amended, reads: "(a) An setoff 553 title, creditor's estate's property, setoff, f Such determined valuation disposition hearing affecting "(b) after subsection section, "(c) reasonable, necessary expenses preserving, of, benefit "(d) secures void, unless— "(1) disallowed 502(b)(5) 502(e) title; "(2) due entity file 501 title." Supp.IV). $100,000 $60,000, $40,000. 506.04, 506-15 1988) ("[S]ection 506(a) bifurcation 'partially secured' 'undersecured' into separate components"). Circuit pointed out said: arose, charges." 1082, 2. stating this, closer actual be: seems adopted unnatural way, terminology throughout Adopting Appeals' operative regard arising recovery. Moreover, clarified using phrase, interest," employs refer When term interest." 362(b)(12) (13), 363(a), 547(c)(3)-(5), 552, 752(c), 1110(a), 1168(a), 1322(b)(2) H.R. 95th Cong., 1st Sess. (1977); 8200, S. 2266, (1977). version contained initially introduced, during process shed 506.03, 506-7 506-12. statements managers discuss all. 356; S.Rep. 95-989, 68 (1978); 124 Cong.Rec. 32398 (statement Rep. Edwards); 33997 Sen. DeConcini). affect "is fine, penalty, forfeiture payable governmental unit, compensation pecuniary loss. ." preventing fines promptly Act 1898 passed, Moore, 111 F. 145, 148-149 (WD Ky.1901), accepted 45-46, 358-359. Some distinguished entirety usually item Whatever merit modern commercial lending practices changed, unusual lenders obtain almost 127, blanket household goods, 522(f)(2). On hand, attach broadly typical improvement made. T. Crandall, R. Hagedorn, Smith, Jr., Debtor-Creditor Law Manual 9.02[2]

Classification Label: 11