In re Rivers

Citation19 BR 438
Decision Date14 April 1982
Docket NumberBankruptcy No. 1-81-00682.
CourtUnited States Bankruptcy Courts. Sixth Circuit. U.S. Bankruptcy Court — Eastern District of Tennessee
PartiesIn re Ulysses RIVERS, Jr., Debtor.

Fred T. Hanzelik, Lee & Hanzelik, Chattanooga, Tenn., Henry F. Field and Peter Y. Connor, Friedman & Koven, Chicago, Ill., for Alabama Furniture Co.; Abe Fortas, Fortas & Koven, Washington, D.C., of counsel.

Kyle R. Weems and Richard T. Klingler, Weill, Ellis, Weems & Copeland, Chattanooga, Tenn., for C. Kenneth Still, Trustee.

Jeffrey Lee Hoffman for Southeast Tennessee Legal Services, Chattanooga, Tenn., amicus curiae.


RALPH H. KELLEY, Bankruptcy Judge.

The debtor, Ulysses Rivers, Jr., filed a petition and plan under chapter 13 of the Bankruptcy Code. A creditor, Alabama Furniture Company, filed a motion to dismiss the case.

The motion avers that the court cannot constitutionally exercise jurisdiction in a bankruptcy case because the bankruptcy judge does not have the tenure and salary protections afforded to federal judges by Article III, § 1 of the United States Constitution.

The creditor filed a proof of claim for $782.23. The claim was secured by a perfected, unavoidable, purchase money security interest in household goods. In his chapter 13 plan, the debtor proposed to treat $350.00 of the claim as secured and pay that part in full, but over a longer period of time than allowed by the contract with the creditor. See 11 U.S.C. §§ 506 & 1325(a)(5). The plan proposed to pay 50% on the remainder, $432.23, as a general unsecured claim. See 11 U.S.C. § 1325(a)(5). The court confirmed the plan specifically without prejudice to creditor's motion to dismiss.

Article III, § 1 of the United States Constitution provides:

The judicial power of the United States shall be vested in one Supreme Court, and in such inferior courts as the congress may from time to time ordain and establish. The judges, both of the Supreme Court and the inferior courts, shall hold their offices during good behavior, and shall, at stated times receive for their services, a compensation, which shall not be diminished during their continuance in office.

Tenure during good behavior and a protected salary will hereafter be referred to as "constitutional tenure".

Bankruptcy judges serve for a term of years, rather than during good behavior. Presently, the term is until 1984. Bankruptcy Reform Act § 404(b) & (d).1 In 1984, the term will be increased to fourteen years. Bankruptcy Reform Act § 201 (28 U.S.C. § 152) & § 402(b), (c), & (d). A bankruptcy judge may be removed from office for reasons other than breach of the constitutional standard of good behavior. Bankruptcy Reform Act § 404(d); Bankruptcy Act § 34, 11 U.S.C. § 62 (1976). By statute a bankruptcy judge's salary can be reduced during his term but not below what it was at the beginning. Bankruptcy Reform Act § 404(d); Bankruptcy Act § 40(a) & (b), 11 U.S.C. § 68 (1976). Without the constitutional protection, a change in the statutes can reduce the slight protection they give.

The legislative history of the Bankruptcy Reform Act shows that the major compromise between the Senate and the House of Representatives was deletion from the final bill of any provisions that would make the bankruptcy courts Article III courts or give the bankruptcy judges constitutional tenure. See the following articles in the 1979 Annual Survey of Bankruptcy Law: Klee, Legislative History of the Bankruptcy Reform Act of 1978, reprinted from 28 DePaul L. Rev.(1979); Feidler & Dixon, Reflections on the Legislative History of the Bankruptcy Reform Act of 1978; Wallop, Footnotes to the Bankruptcy Reform Act of 1978; Clarkson, A Brief Overview of the Congressional Debate on the Bankruptcy Court System. See also 1 Collier on Bankruptcy ¶ 2.01c (15th ed. 1981).

It is clear that bankruptcy judges do not have constitutional tenure. The question is whether the Constitution requires that they have it. Before considering the arguments in detail, the court must answer a preliminary question.


The creditor has standing to raise the constitutional issue. The provisions of Article III, § 1 were meant to preserve the independence of federal judges not for their own benefit but for the benefit of litigants in the federal courts. In Glidden v. Zdanok the petitioners contended that they were denied the right to independent judges because judges of the Court of Claims and the Court of Customs and Patent Appeals, sitting by designation, participated in their cases in the federal district court and the circuit court of appeals. 370 U.S. 530, 82 S.Ct. 1459, 8 L.Ed.2d 671 (1962). In an opinion joined in by three justices, the court held that the petitioners could raise the issue.

No contention is made that either judge displayed a lack of appropriate judicial independence, or that either sought by his rulings to curry favor with Congress or the Executive. Both indeed enjoy statutory assurance of tenure and compensation, and were it not for the explicit provisions of Article III we should be quite unable to say that either judge\'s participation even colorably denied the petitioners independent judicial hearings.
Article III, § 1, however, is explicit and gives petitioners a basis for complaint without requiring them to point to particular instances of mistreatment in the record. . . .

82 S.Ct. at 1464. Cf. Palmore v. United States, 411 U.S. 389, 93 S.Ct. 1670, 36 L.Ed.2d 342 (1973); Crowell v. Benson, 285 U.S. 22, 52 S.Ct. 285, 76 L.Ed. 598 (1931).

It cannot rightfully be said that the creditor was not a litigant. Its contract rights were affected by the chapter 13 case at least as much as they could have been affected in a suit involving the creditor and the debtor as plaintiff and defendant. Furthermore, the question was not lost as a result of confirmation of the chapter 13 plan. Confirmation did not require and was not obtained by creditor's consent. The creditor may argue after confirmation that it was denied the constitutional protection of an independent judge.

The importance of the independent judiciary requirement supported the Supreme Court's invocation of the Rule of Necessity in United States v. Will. 449 U.S. 200, 101 S.Ct. 471, 66 L.Ed.2d 393 (1980). In that case, federal district judges challenged the application to them of a statute that would deny compensation to which they arguably had become entitled. The statute also applied to the justices of the Supreme Court. The Supreme Court held that the Rule of Necessity required them to decide even though another statute would disqualify them because of their personal interest in the outcome. Writing for himself and the seven other justices who took part, Chief Justice Burger said:

As this court has observed elsewhere, the Compensation Clause is designed to benefit, not the judges as individuals, but the public interest in a competent and independent judiciary. Evans v. Gore, 253 U.S. 245, 253, 40 S.Ct. 550, 553, 64 L.Ed. 887 (1920). The public might be denied resolution of this crucial matter if first the District Judge, and now all the Justices of this Court, were to ignore the mandate of the Rule of Necessity and decline to answer the question presented.

101 S.Ct. at 481-482.

It must be said that the independent judiciary provisions are more than a due process protection of the rights of litigants. As the court will explain later, an independent judiciary is a crucial element in the constitutional structure of the federal government. The structure of the federal government as required by specific constitutional provisions implementing "separation of powers" is the first line of defense of rights secured by the Constitution. This is essentially the point made in Glidden v. Zdanok, quoted above.

The writings of the philosopher Montesquieu were familiar to some of the drafters of the Constitution. Montesquieu conceded that "constitutional liberty", by which he meant a government structured to secure individual liberty, would not necessarily secure it.2 Nevertheless, the drafters of the Constitution intended to create a federal government whose structure would be effective toward securing the political rights of the people.3 To that end, federal courts are bound by self-interest to decide cases in which the question is whether a tribunal created by Congress is established contrary to particular constitutional limits respecting the structure of the federal government; at least, the courts are bound to decide in cases where there are satisfactory criteria for judicial application of the constitutional limits.4 As will be evident, there are satisfactory criteria for decision in this case.

The creditor should not be denied the right to raise this important issue because it has shown no particular harm resulting to it from the fact that the judge who decided the issues lacked constitutional tenure. Such a requirement of proof would write the tenure provisions out of the Constitution as a protection of the rights of litigants. It is important to all citizens that the federal government be structured as required by the Constitution, but it is particularly important to persons compelled to participate in federal court proceedings that the court be established in accordance with specific constitutional provisions intended to secure protection of their rights.


The creditor's motion was opposed by C. Kenneth Still, the chapter 13 trustee, and by Southeast Tennessee Legal Services, which was allowed to participate as amicus curiae. The Attorney General of the United States declined to intervene.

There are basically two arguments made in opposition to creditor's motion. The first argument is that bankruptcy cases need not be heard by an Article III court. The trustee's argument on this point is divided generally according to the several points it includes but often in the confusing terms of "the judicial power". Amicus took a different approach. Amicus argued that Congress has the power to...

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