Glidden, In re
| Decision Date | 25 June 1981 |
| Docket Number | D,No. 1336,1336 |
| Citation | 653 F.2d 85 |
| Parties | 4 Collier Bankr.Cas.2d 1161, 7 Bankr.Ct.Dec. 1075, Bankr. L. Rep. P 68,081 In re George D. GLIDDEN, Debtor. STATE OF CONNECTICUT, Plaintiff-Appellant, v. George D. GLIDDEN, Defendant-Appellee, United States of America, Intervenor. ocket 81-5005. |
| Court | U.S. Court of Appeals — Second Circuit |
Paul J. Bakulski, Asst. Atty. Gen., State of Conn., Hartford, Conn. (Carl J. Ajello, Atty. Gen., State of Conn., Hartford, Conn., of counsel), for plaintiff-appellant.
Christopher C. Noble, Broadman & Noble, Hartford, Conn., for defendant-appellee.
Michael J. Denton, Trial Atty., Civ. Div., Dept. of Justice, Washington, DC., for intervenor.
Before FEINBERG, Chief Judge, and MANSFIELD and KEARSE, Circuit Judges.
In this proceeding, the State of Connecticut challenges the constitutionality of a provision of the Bankruptcy Reform Act of 1978 (the Act), 11 U.S.C. § 523(a)(5)(A), that permits the discharge of child support obligations that have been assigned to the State. The State argues that this provision impermissibly interferes with its exercise of a traditional state function the collection and enforcement of child support obligations and therefore exceeds the limits on congressional power imposed by the Tenth Amendment. 1 It also claims that the discharge provision violates the Eleventh Amendment 2 by permitting "indirect" suits against the states. We conclude that these arguments are without merit, and accordingly affirm the judgment of the bankruptcy court upholding the provision.
The facts and procedural background may be summarized very briefly. The debtor, George D. Glidden, obtained a divorce decree in October 1973, in connection with which he was ordered to pay $15.00 per week in support of each of his two children. At the time of the divorce, Glidden's wife and children were receiving public assistance under Connecticut's program of Aid to Families with Dependent Children (AFDC). As a condition of their continued eligibility for such assistance, Glidden's wife assigned her rights to the support payments to the State. Glidden subsequently fell behind in these payments until, when he filed his petition in bankruptcy in October 1979, an arrearage of some $2,890 had arisen.
In December 1979, the State filed an objection to the discharge of this debt based on the Tenth and Eleventh Amendments to the Constitution. Acting on cross-motions for summary judgment, Bankruptcy Judge Robert L. Krechevsky of the United States Bankruptcy Court, District of Connecticut, rejected the State's arguments and granted the requested discharge in a careful and thorough opinion, dated January 5, 1981. By agreement with the debtor pursuant to section 405(c)(1)(B) of the Act, 3 the State has appealed directly to this Court. The United States, notified of the State's challenge to the constitutionality of a federal statute, intervened in the appeal in accordance with 28 U.S.C. § 2403(a), filing a brief and participating in the oral argument of the case.
The statutory provision that Connecticut complains of, section 523(a)(5)(A) of the Act, states in relevant part:
(a) A discharge under section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt
(5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree, or property settlement agreement, but not to the extent that
(A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise....
(Emphasis added.) The term "entity" is elsewhere defined to include "governmental unit," see 11 U.S.C. § 101(14), which in turn encompasses "State," id. § 101(21).
Prior law had not permitted the discharge of debts arising out of a child support obligation assigned to a State. See 42 U.S.C. § 656(b) (1976), repealed by section 328 of Title III of the 1978 Reform Act, 92 Stat. 2679. The revised provision served to expand the scope of dischargeable debts, without any compromise of obligations directly serving their intended purpose of providing support to children or the former spouse. See Sen.Rep.No. 95-598, 95th Cong., 2d Sess. 79, reprinted in (1978) U.S.Code Cong. & Ad.News 5787, 5865.
Connecticut relies principally on the Supreme Court's decision in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), which held that the Tenth Amendment bars Congress from enacting legislation under the Commerce Clause, U.S.Const., art. 1, § 8, cl. 3, that "directly displace(s) the States' freedom to structure integral operations in areas of traditional governmental functions." Id. at 852. Reasoning that the same analysis should apply to congressional enactments under the bankruptcy power, U.S.Const., art. 1, § 8, cl. 4, the State claims that the discharge provision in question interferes with the State's "intimate involvement" with the enforcement of child support obligations, an involvement that it traces as far back as a colonial statute of 1699. Though conceding that the federal government has come to play a major role in this as in many other areas of public welfare, the State insists that the collection and enforcement of child support obligations nonetheless remains a matter of traditional state responsibility in Connecticut. It points out, in this connection, that (Footnote omitted.)
At a more concrete level, Connecticut argues that section 523(a)(5)(A), if allowed to stand, will impose a significant economic burden on the State. In the unlikely event that all child support debtors were to file petitions in bankruptcy, the State envisages a possible loss of as much as $1.25 million in annual payments to the State, as well as a loss of $47.1 million in accumulated past child support arrearages. Beyond these financial losses, the State speculates that the discharge provision, acting as "a green light to parents to avoid their duty to support their children," will prejudice the State's efforts to enforce current obligations: "(w)hile no figures are presently available, logic dictates that knowledge by an absent parent that unpaid child support may later be discharged can only discourage, not encourage, continuing payment of those support payments."
We note at the outset that the reasoning of the National League of Cities decision, which dealt only with the Commerce Clause power, see 426 U.S. at 852 n.17, 96 S.Ct. at 2474 n.17, has not so far, at least been generalized to strike down federal statutes based upon other sources of congressional power. See, e. g., Massachusetts v. United States, 435 U.S. 444, 454-60, 98 S.Ct. 1153, 1160-63, 55 L.Ed.2d 403 (1978) (taxing power); Fitzpatrick v. Bitzer, 427 U.S. 445, 455-56, 96 S.Ct. 2666, 2671, 49 L.Ed.2d 614 (1976) (section 5 of the Fourteenth Amendment). We also note the uncertain status of the decision on which the State primarily relies in maintaining that the bankruptcy power is subject to Tenth Amendment limitations, Ashton v. Cameron County Water Improvement District, 298 U.S. 513, 530-32, 56 S.Ct. 892, 896-97, 80 L.Ed. 1309 (1936). We share the doubts so well expressed by Judge Krechevsky that Ashton remains a sound basis for a Tenth Amendment analysis of bankruptcy laws, in light of United States v. Bekins, 304 U.S. 27, 49-54, 58 S.Ct. 811, 814-16, 82 L.Ed. 1137 (1938), and Prudential Insurance Co. v. Benjamin, 328 U.S. 408, 433 n.42, 66 S.Ct. 1142, 1157 n.42, 90 L.Ed. 1342 (1945). See also 1 Collier on Bankruptcy P 0.02, at 5-6 (14th ed. 1974).
In this case, however, we need not definitively resolve this problem. We are satisfied, with the bankruptcy judge, that even if National League of Cities does apply to Congress's power "(t)o establish ... uniform Laws on the subject of Bankruptcies throughout the United States," under the circumstances presented in this case the challenged provision does not transgress the limits announced in that decision.
In the first place, we cannot accept Connecticut's contention that the discharge provision burdens a "traditional (state) governmental function," as the federal wage and hour laws at issue in National League of Cities were found to impinge on "the States' abilities to structure employer-employee relationships in such areas as fire prevention, police protection, sanitation, public health, and parks and recreation" all "functions ... which governments are created to provide, services ... which the States have traditionally afforded their citizens." 426 U.S. at 851, 96 S.Ct. at 2474. Here, the federal act does not, as the State claims, affect its freedom to structure services for the promotion of the welfare of its children; rather, it affects the State's ability to recoup indirectly some of its costs in administering its public assistance program. This system of recoupment is itself, moreover, the product of federal mandate. As Judge Krechevsky observed, the statutory provision requiring the assignment of child support obligations to the State as a condition of eligibility for AFDC assistance, Conn.Gen.Stat. § 17-82b, 4 was enacted expressly to meet the condition imposed under Title IV-A of the Social Security Act, 42 U.S.C. § 602(a)(26)(A), making such assignments a precondition to receipt of federal funds for the State's AFDC program. 5 Payments made to the State under these assignments do not even go into Connecticut's AFDC budget: 35 percent of the total is credited to the United States as a reduction in federal contributions to the AFDC program, while the rest is allocated to the State's General Fund for unrestricted use.
It thus can hardly be...
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