|402 U.S. 637 (1971)
|Jun 1, 1971
|Longer case name:
|Perez et ux. v. Campbell, Superintendent, Motor Vehicle Division, Arizona Highway Department, et al.
|State of origin:
|Bankruptcy and Supremacy clause
|Anthony B. Ching (Legal Aid Society of Pima County) argued the cause and filed a brief for petitioners.
|Briefs of amici curiae were filed by David A. Binder, Raine Eisler, and Paul L. McKaskle for the Western Center on Law and Poverty et al., and by William D. Browning for the National Organization for Women.
Case ImportanceABI Journal, June 2003: “Section 525(a) of the Code, which was enacted to codify and expand the Supreme Court’s 1971 decision in Perez v. Campbell,5 prevents any governmental unit, as defined in the Code,6 from revoking, suspending, denying or refusing to renew, or discriminating in any way with respect to, a government license, permit, employment or “other similar grant” to a debtor or former debtor or its affiliate “solely because” the debtor is or was in bankruptcy, was insolvent before it was adjudged a bankrupt, or did not pay a debt dischargeable in the bankruptcy case. The statute furthers the “fresh-start” policy underlying the Code.”
Case Details(The syllabus is not part of the opinion, but is a summary prepared by the court reporter as a convenience.)
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
The provision that “discharge in bankruptcy following the rendering of any such judgment [as a result of an automobile accident] shall not relieve the judgment debtor from any of the requirements of this article,” contained in Ariz. Rev. Stat. 28-1163 (B), part of the Motor Vehicle Safety Responsibility Act, which the Arizona courts have construed as having as “its principal purpose the protection of the public using the highways from financial hardship which may result from the use of automobiles by financially irresponsible persons,” directly conflicts with 17 of the Bankruptcy Act, which states that a discharge in bankruptcy fully discharges all but certain specified judgments, and is thus unconstitutional as violative of the Supremacy Clause. Kesler v. Department of Public Safety, 369 U.S. 153 , and Reitz v. Mealey, 314 U.S. 33 , have no authoritative effect to the extent they are inconsistent with the controlling principle that state legislation that frustrates the full effectiveness of federal law is invalidated by the Supremacy Clause. Pp. 644-656.
421 F.2d 619, reversed and remanded.
From the opinion
MR. JUSTICE WHITE delivered the opinion of the Court.
This case raises an important issue concerning the construction of the Supremacy Clause of the Constitution – whether Ariz. Rev. Stat. Ann. 28-1163 (B) (1956), which is part of Arizona’s Motor Vehicle Safety Responsibility Act, is invalid under that clause as being in conflict with the mandate of 17 of the Bankruptcy Act, 11 U.S.C. 35, providing that receipt of a discharge in bankruptcy fully discharges all but certain specified judgments. The courts below, concluding that this case was controlled by Kesler v. Department of Public Safety, 369 U.S. 153 (1962), and Reitz v. Mealey, 314 U.S. 33 (1941), two earlier opinions of this Court dealing with alleged conflicts between the Bankruptcy Act and state financial responsibility laws, ruled against the claim of conflict and upheld the Arizona statute.
On July 8, 1965, petitioner Adolfo Perez, driving a car registered in his name, was involved in an automobile accident in Tucson, Arizona. The Perez automobile was not covered by liability insurance at the time of the collision. The driver of the second car was the minor daughter of Leonard Pinkerton, and in September 1966 the Pinkertons sued Mr. and Mrs. Perez in state court for personal injuries and property damage sustained in the accident. On October 31, 1967, the petitioners confessed judgment in this suit, and a judgment order was entered against them on November 8, 1967, for $2,425.98 plus court costs.
Mr. and Mrs. Perez each filed a voluntary petition in bankruptcy in Federal District Court on November 6, 1967….
During the pendency of the bankruptcy proceedings, the provisions of the Arizona Motor Vehicle Safety Responsibility Act came into play….
The substantive provisions begin in Art. 3, which requires the posting of financial security by those involved in accidents. Section 28-1141 of that article requires suspension of licenses for unlawful failure to report accidents, and 28-1142 (Supp. 1970-1971) provides that within 60 days of the receipt of an accident report the Superintendent of the Motor Vehicle Division of the Highway Department shall suspend the driver’s license of the operator and the registration of the owner of a car involved in an accident “unless such operator or owner or both shall deposit security in a sum which is sufficient in the judgment of the superintendent to satisfy any judgment or judgments for damages resulting from the accident as may be recovered against the operator or owner.”
INTERNAL USE ONLY:
Last modified: 2022-12-27 12:56
Case internal grade: A | Case internal status: OK |
Case internal status notes: