United States v. Kras

• Decision Date: 10 January 1973
• Docket Number: No. 71-749,71-749
• Citation: 93 S.Ct. 631,34 L.Ed.2d 626,409 U.S. 434
• Parties: UNITED STATES, Appellant, v. Robert William KRAS
• Court: U.S. Supreme Court

409 U.S. 434

93 S.Ct. 631

34 L.Ed.2d 626

UNITED STATES, Appellant,

v Robert William KRAS.

No. 71-749.

Argued Oct. 18, 1972.

Decided Jan. 10, 1973.

Syllabus

Appellee, an indigent who filed a voluntary petition in bankruptcy, sought discharge without payment of the fees, aggregating no more than $50, that are a precondition to discharge in such a proceeding. The District Court, relying primarily on Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (where the Court held that a State could not consistently with due process and equal protection requirements, deny access to divorce courts to indigents unable to pay filing and other fees), held the bankruptcy fee provisions, as applied to appellee, an unconstitutional denial of Fifth Amendment rights of due process, including equal protection. Held: This case is not controlled by Boddie, supra, For here access to courts is not the only conceivable relief available to bankrupts; the filing-fee requyirement does not deny an indigent the equal protection of the laws, since there is no constitutional right to obtain a discharge of one's debts in bankruptcy; the right to a discharge in bankruptcy is not a 'fundamental' right demanding a compelling governmental interest as a precondition to regulation; and there is a rational basis for the fee requirement. Pp. 443—450.

331 F.Supp. 1207, reversed.

Edward R. Korman, New York City, for appellant.

Kalman Finkel, New York City, for appellee.

Mr. Justice BLACKMUN delivered the opinion of the Court.

The Bankruptcy Act and one of this Court's complementary Orders in Bankruptcy impose fees and make the payment of those fees a condition to a discharge in voluntary bankruptcy.

Appellee Kras, an indigent petitioner in bankruptcy, challenged the fees on Fifth Amendment grounds. Upon receiving notice of the constitutional issue in the District Court, the Government moved to intervene as of right under 28 U.S.C. § 2403 and Rule 24(a) of the Federal Rules of Civil Procedure. Leave to intervene was granted. The District Court held the fee provisions to be unconstitutional as applied to Kras. 331 F.Supp. 1207 (EDNY 1971). It reached this conclusion in the face of an earlier contrary holding by a unanimous First Circuit. In re Garland, 428 F.2d 1185 (1 Cir. 1970), cert. denied, 402 U.S. 966, 91 S.Ct. 1624, 29 L.Ed.2d 130 (1971). Pursuant to 28 U.S.C. § 1252, the Government appealed. We noted probable jurisdiction. 405 U.S. 915, 92 S.Ct. 955, 30 L.Ed.2d 784 (1972).

I

Section 14(b)(2) of the Bankruptcy Act, 11 U.S.C. § 32(b)(2), provides that, upon the expiration of the time fixed by the court for filing of objections, 'the court shall discharge the bankrupt if no objection has been filed and if the filing fees required to be paid by this title have been paid in full.' Section 14(c), 11 U.S.C. § 32(c), similarly provides that the court 'shall grant the discharge unless satisfied that the bankrupt . . . (8) has failed to pay the filing fees required to be paid by this title in full.' Section 59(g), 11 U.S.C. § 95(g), relates to the dismissal of a petition in bankruptcy and states that 'in the case of a dismissal for failure to pay the costs,' notice to creditors shall not be required. Three separate sections of the Act thus contemplate the imposition of fees and condition a discharge upon payment of those fees.

Three charges are imposed: $37 for the referee's salary and expense fund, $10 for compensation of the trustee,¹ and $3 for the clerk's services. §§ 40(c) (1), 48(c), and 52(a), 11 U.S.C. §§ 68(c)(1), 76(c), and 80(a). These total $50.² The fees are payable upon the filing of the petition. Section 40(c) (1), however, contains a proviso that in cases of voluntary bankruptcy, all the fees 'may be paid in installments, if so authorized by General Order of the Supreme Court of the United States.'

The Court's General Order in Bankruptcy No. 35(4), as amended June 23, 1947, 331 U.S. 873, 876—877, 11 U.S.C.App., p. 2210, complements § 40(c)(1) and provides that, upon a proper showing by the bankrupt, the fees may be paid in installments within a six-month period, which may be extended not to exceed three months.³

II

Robert William Kras presented his voluntary petition in bankruptcy to the United States District Court for the Eastern District of New York on May 28, 1971. The petition was accompanied by Kras' motion for leave to file and proceed in bankruptcy without payment of any of the filing fees as a condition precedent to discharge. The motion was supported by Kras' affidavit containing the following allegations that have not been controverted by the Government:

1. Kras resides in a 2 1/2-room apartment with his wife, two children, ages 5 years and 8 months, his mother, and his mother's 6-year-old dauthter. His younger child suffers from cystic fibrosis and is undergoing treatment in a medical center.

2. Kras has been unemployed since May 1969 except for odd jobs producing about $300 in 1969 and a like amount in 1970. His last steady job was as an insurance agent with Metropolitan Life Insurance Company. He was discharged by Metropolitan in 1969 when premiums he had collected were stolen from his home and he was unable to make up the amount to his employer. Metropolitan's claim against him has increased to over $1,000 and is one of the debts listed in his bankruptcy petition. He has diligently sought steady employment in New York City, but, because of unfavorable references from Metropolitan, he has been unsuccessful. Mrs. Kras was employed until March 1970, when she was forced to stop because of pregnancy. All her attention now will be devoted to caring for the younger child who is coming out of the hospital soon.

3. The Kras household subsists entirely on $210 per month public assistance received for Kras' own family and $156 per month public assistance received for his mother and her daughter. These benefis are all expended for rent and day-to-day necessities. The rent is $102 per month. Kras owns no automobile and no asset that is non-exempt under the bankruptcy law. He receives no unemployment or disability benefit. His sole assets are wearing apparel and $50 worth of essential houselhold goods that are exempt under § 6 of the Act, 11 U.S.C. § 24, and under New York Civil Practice Laws and Rules § 5205 (1963). He has a couch of negligible value in storage on which a $6 payment is due monthly.

4. Because of his poverty, Kras is wholly unable to pay or promise to pay the bankruptcy fees, even in small installments. He has been unable to borrow money. The New York City Department of Social Services refuses to allot money for payment of the fees. He has no prospect of immediate employment.

5. Kras seeks a discharge in bankruptcy of $6,428.69 in total indebtedness in order to relieve himself and his family of the distress of financial insolvency and creditor harassment and in order to make a new start in life. It is especially important that he obtain a discharge of his debt to Metropolitan soon 'because until that is cleared up Metropolitan will continue to falsely charge me with fraud and give me bad references which prevent my getting employment.'

The District Court's opinion contains an order, 331 F.Supp., at 1215, granting Kras' motion for leave to file his petition in bankruptcy without prepayment of fees. He was adjudged a bankrupt on September 13 1971. Later, the referee, upon consent of the parties, entered an order allowing Kras to conduct all necessary proceedings in bankruptcy up to but not including discharge. The referee stayed the discharge pending disposition of this appeal.

III

In the District Court Kras first presented a statutory argument—and, alternatively, one based in common law—that he was entitled to relief from payment of the bankruptcy charges because of the provisions of 28 U.S.C. § 1915(a).⁴ This is the in forma pauperis statute that has its origin in the Act of July 20, 1892, c. 209, 27 Stat. 252. See also 28 U.S.C. §§ 832—836 (1940 ed.).

The District Court rejected the argument despite the seeming facial application of § 1915(a) to a bankruptcy proceeding as well as to any other. It reached this result by noting that § 51(2) of the Bankruptcy Act, as originally adopted in 1898, 30 Stat. 558, had provided for a waiver of fees upon the filing of an affidavit of inability to pay; that by the passage of the Referees' Salary Bill in 1946, 60 Stat. 326, bankruptcy petitions in forma pauperis were abolished, H.R.Rep. No. 1037, 79th Cong., 1st Sess., 6 (1945); S.Rep. No. 959, 79th Cong., 2d Sess., 7 (1946); and that the 1946 statute, being later and having a positive and specific provision for postponement of fees in cases of indigency, overrode the earlier general provisions of § 1915(a). 331 F.Supp., at 1209 s1210. To the same effect are In re Garland, 428 F.2d, at 1186—1187, and In re Smith, 323 F.Supp. 1082, 1084—1085 (Colo.1971), the reasoning of which the District Court adopted. So also is In re Smith, 341 F.Supp. 1297, 1298 (ND Ill.1972).

The appellee may well have abandoned the argument on this appeal. Tr. of Oral Arg. 44—45. In any event, we agree, for the reasons stated by the District Court and by the courts in Garland and in the two Smith cases, supra, that § 1915(a) is not now available in bankruptcy. See 2 W. Collier, Bankruptcy 51.01, pp. 1873—1874 (14th ed. 1971). Neither do we perceive any common-law right to proceed without payment of fees. Congress, of course, sometime might conclude that § 1915(a) should be made applicable to bankruptcy and legislate accordingly.

The District Court went on to hold, however, 331 F.Supp., at 1210—1215, that the prescribed fees, payment of which was required as a condition precedent to discharge, served to deny Kras 'his Fifth Amendment right of due process, including equal protection.' Id., at 1212. It held that a discharge in bankruptcy was a 'fundamental interest' that could be denied only when a 'compelling government...