In re Garland, 7476.

• Decision Date: 08 July 1970
• Docket Number: No. 7476.,7476.
• Citation: 428 F.2d 1185
• Parties: In the Matter of Athen Carlton GARLAND et al., Bankrupts, Appellants.
• Court: U.S. Court of Appeals — First Circuit

428 F.2d 1185 (1970)

In the Matter of Athen Carlton GARLAND et al., Bankrupts, Appellants.

No. 7476.

United States Court of Appeals, First Circuit.

July 8, 1970.

Paula W. Gold, Boston, Mass., with whom Richard Seid, Richard A. Glickstein, Boston, Mass., and Henry W. Schaeffer were on brief, for appellants.

Daniel Joseph, Attorney, Department of Justice, with whom William D. Ruckelshaus, Asst. Atty. Gen., Herbert F. Travers, Jr., U. S. Atty., and Alan S. Rosenthal, Attorney, Department of Justice, were on brief, for appellee.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Juges.

ALDRICH, Chief Judge.

Petitioners, husband and wife, appeal from an order of the district court affirming the action of a referee in bankruptcy refusing them discharges because of failure to pay the $50 filing fees. More exactly, the district court declined to review the referee's denial of motions to vacate an order requiring the payment of the fees and, correspondingly, denying petitioners leave to proceed in forma pauperis. Because constitutional questions were raised, the government was notified and allowed to intervene, and in effect is the appellee.

Following petitioners' appeal, the government's first undertaking was to move to dismiss the appeal because less than $500 was involved and no certificate had been obtained pursuant to 11 U.S.C. § 47. This motion was denied. Possibly the government thought itself duty-bound to make the motion, but it was not invited to intervene to cause the disappearance of the issue.

Petitioners, in an extensive brief, make two, possibly three points. They contend that the Bankruptcy Act, 11 U. S.C. § 1 et seq., does not in terms require the payment of fees by indigents, or at least does not require payment with such specificity that, under the rule of construction we adopted in Pasquarella v. Santos, 1 Cir. 1969, 416 F.2d 436, the relief afforded by 28 U.S.C. § 1915(a) is not to be read into it. Alternatively, they contend that if an indigent cannot obtain a discharge without payment of fees, he has been denied due process. Putting this in terms most favorable to petitioners, we will consider this as a claim of lack of equal protection.

We find no merit in either portion of petitioners' first contention. In 1946 the former, or fee, method of compensating referees, by awarding them all fees received, was abolished and there was established the principle of a self-supporting system. The individual referees are paid salaries commensurate with their duties from district to district, 11 U.S.C. § 68(a), rather than by the inequitable contingencies of fees received, and the fees charged are to be regulated so that the system as a whole will produce sufficient revenue to meet all costs. 11 U.S.C. § 68(c) (2).^* At the same time, pauper petitions, requiring no fee from certain voluntary bankrupts, authorized by section 51(2) of the 1898 Act, 30 Stat. 558-559, were abolished. Whether Congress thought that there was no need, or no obligation, to open the bankruptcy court to persons unable to pay the fee, or whether it thought that termination of the referee's personal incentive to collect fees from many reluctant bankrupts who were, in fact, able to pay them, would be so detrimental to the operation of the new system that an occasional suitor truly destitute should be disregarded for the good of the whole, cannot be told. S.Rep.No. 959, 79th Cong., 2d Sess. p. 7. The significant matter is the disappearance of the former pauper provision, and the substitution of a requirement that a bankrupt who asserts contemporaneously with the filing of his petition that he cannot pay the fee, may pay in installments, but must pay ultimately as a condition precedent to discharge. 11 U.S.C. §§ 32(b), (c) (8), 68(c) (1), 95(g); General Order in Bankruptcy 35(4) (c), 331 U.S. 873, 877.

In this positive framework there is no room to apply a broad interpretation of 28 U.S.C. § 1915(a) as we did in Pasquarella v. Santos, ante. That section provides in general terms for the waiver of prepayment of court fees in case of indigency. Where the Bankruptcy Act already has a special provision for postponement of fees in case of indigency, we cannot read into it a different provision of a general statute not made specifically applicable. In Santos we merely filled a void. Of more basic importance, section 1915(a) provides for waiver of prepayment only, not for forgiveness. See section 1915(e). It cannot be read to eliminate a requirement of ultimate payment phrased as a condition precedent.

We turn, accordingly, to petitioners' assertion of lack of due process. Their analysis is over-simplistic, both with respect to the nature of the relief rendered by the bankruptcy court and to the nature of the obligation to pay for it, and, possibly, to the concept of indigency. For reasons that we will deal with in the balance of the opinion, this is not a case like Boddie v. State of Connecticut, D.Conn., 1968, 286 F.Supp. 968, appeal pending, October Term 1970, where a person of little means alleged inability to pay the fee required to seek a divorce, and claimed lack of due process. To begin with the degree of poverty required to be termed indigent in ordinary in forma pauperis situations, petitioners state, "Destitution is not required to file other civil actions in the federal courts in forma pauperis," citing Adkins v. E. I. DuPont de Nemours & Co., 1948, 335 U.S. 331, 339-340, 69 S. Ct. 85, 93 L.Ed. 43. If, by this, petitioners mean there should be as generous an interpretation of indigency in a bankruptcy case as in a civil case, they misunderstand the fundamentals. A bankrupt is legally obligated to surrender his assets and to leave himself precisely "destitute," with the exception of assets specifically exempt. 11 U.S.C. § 24. If the bankrupt has any other assets, no matter how small, they must be given up, as a consideration for a discharge.

An immediate question, not necessarily relevant to petitioners, but important to a general examination of the question they raise, is whether exempt assets are to be looked to in connection with the payment of the fee. This had been the practice from the beginning. In fact it was said that the bankrupt could not qualify as a pauper unless he was not only without assets, but without available credit. In re Collier, W.D.Tenn., 1899, 93 F. 191; In re Bean, D.Vt., 1900, 100 F. 262; In re Hines, S.D.W. Va., 1902, 117 F. 790; In re Medearis, W.D.Tex., 1923, 291 F. 709; In re Stuck, W.D.Mo., 1926, 13 F.2d 266. A contrary dictum was confined to the "humiliation" involved in requiring the bankrupt to borrow. Sellers v. Bell, 5 Cir., 1899, 94 F. 801, 817. All but...