In re Smith

• Citation: 323 F. Supp. 1082
• Decision Date: 24 February 1971
• Docket Number: No. 70-B-1138.,70-B-1138.
• Parties: In the Matter of Yvonne Elizabeth SMITH, Bankrupt, Petitioner on Review. UNITED STATES of America, Amicus Curiae.
• Court: U.S. District Court — District of Colorado

323 F. Supp. 1082

In the Matter of Yvonne Elizabeth SMITH, Bankrupt, Petitioner on Review.

UNITED STATES of America, Amicus Curiae.

No. 70-B-1138.

United States District Court, D. Colorado.

February 24, 1971.

James H. Seckinger, Southwest Valley Legal Services, Denver, Colo., for petitioner on review.

James L. Treece, U. S. Atty., and Carolyn J. McNeill, Asst. U. S. Atty., Denver, Colo., for amicus curiae.

MEMORANDUM OPINION AND ORDER

ARRAJ, Chief Judge.

This case raises the question whether an indigent person who files a petition in bankruptcy must pay a filing fee in order to be entitled to a discharge.

On April 6, 1970, petitioner Smith sought leave of the bankruptcy court to proceed in forma pauperis. In an affidavit accompanying her motion, she alleged the facts of her indigence and stated that she could not honestly promise to pay the $50 filing fee in nine months. In a separate motion she sought permission to proceed with bankruptcy pending judgment on the motion to file in forma pauperis. This court denied the latter motion but granted permission for petitioner to pay the fee in installments, without prejudice to her request to proceed in forma pauperis. Petitioner then filed a bankruptcy petition with an application to pay the fee in installments pursuant to Rule 7(b) of the 1967 Bankruptcy Rules of this court, Section 59, sub. g of the Bankruptcy Act and General Order in Bankruptcy 35(4) (b). Administration is proceeding in accordance with the normal routine, except that no order for installment payments was entered at the first meeting of creditors.

In support of her motion to file in forma pauperis, petitioner makes both statutory and constitutional arguments. She urges that the Bankruptcy Act does not prohibit such petitions and that the act should be construed, in keeping with its remedial purpose, to permit application of the federal in forma pauperis statute, 28 U.S.C. § 1915 (1964), or, in the alternative, application of federal common law principles favoring such petitions. She further argues that to condition discharge upon the payment of a filing fee is a violation of the fifth amendment right of due process, more precisely equal protection, and the first amendment right to petition the government for redress of grievances. Because petitioner's memorandum raised questions concerning the proper construction and the constitutionality of the Bankruptcy Act, notice was given to the Attorney General of the United States, in accordance with 28 U.S.C. § 2403 (1964). Thereafter, the United States entered this proceeding as amicus curiae and filed a brief in opposition to petitioner's motion. On June 12, 1970, the referee in bankruptcy issued a memorandum opinion and order denying petitioner's motion to proceed in forma pauperis. Petitioner seeks review of the referee's decision.

I.

We agree with the referee's conclusion that Congress intended to require full payment of filing fees as a condition precedent to a discharge in bankruptcy. This conclusion seems to us, as it did to the referee, inescapable. Prior to 1946, the Bankruptcy Act permitted proceedings in forma pauperis. 30 Stat. 558-559. In that year Congress revised the act with at least two purposes in mind: to abolish the fee method of paying referees and to make the bankruptcy system self-supporting. Shaeffer, Proceedings in Bankruptcy in Forma Pauperis, 1969 Colum.L.Rev. 1203, 1205-08. In furtherance of these purposes, Congress repealed the in forma pauperis statute and provided that referees be paid a salary commensurate with their services. 11 U.S.C. § 68(a) (1964). Apparently in order to insure that voluntary bankrupts would pay their way, Congress specifically provided that payment of a filing fee is a condition precedent to discharge. 11 U.S.C. §§ 32(b), (c) (8), 68(c) (1), 95(g).

Petitioner does not directly dispute this evidence of congressional intent but rather seeks to diminish any importance which might be attributed to it. She argues that nowhere in the act are in forma pauperis petitions specifically prohibited and that this omission, coupled with a liberal construction appropriate in cases of remedial legislation, suggests that such petitions should be permitted in accordance either with the federal in forma pauperis statute or with general principles of federal common law. In support of her view that Congress did not intend to preclude in forma pauperis petitions but merely overlooked the possibility that a person might not have funds sufficient for filing, petitioner quotes the following from a Senate report on the 1946 bill:

It 11 U.S.C. § 68(c) (1964) also abolishes the so-called pauper petitions.

Under the existing statutory provisions a bankrupt is permitted to file a petition without the payment of any filing fees when he accompanies it with an affidavit indicating his inability to pay them. In such instances, however, many of the referees have later collected the filing fees in installments from the bankrupts. It is deemed desirable, in lieu of the present widespread practice of demanding payment ultimately, to abolish pauper petitions. It seems more advisable to provide for installment payments in meritorious cases and to leave the exact procedures for incorporation in the general orders of the Supreme Court. This has the additional merit of permitting future modifications as experience develops in a relatively simple and direct fashion. S.R. 959, 79th Cong., 2d Sess. (1946), U.S. Code Cong.Serv.1946, p. 1236.

While we agree that this language is unclear and may indicate that Congress overlooked the plight of indigents, we do not agree that the statement, standing alone, can be said to prove much. Against this single indication that Congress had forgotten the poor is the considerably stronger evidence that Congress knew perfectly well what it was doing. As previously mentioned, Congress repealed the in forma pauperis provision in the prior version of the act and required that discharge be granted only after payment of a filing fee. Petitioner's suggestion that we construe the act in light of its remedial purpose ignores not only this evidence but also the importance of another congressional purpose—to make the bankruptcy system self-supporting. The abolition of in forma pauperis proceedings is clearly one method for resolving the conflict between these two purposes, and we conclude that it is the method which Congress chose. This conclusion agrees with that reached in In re Garland, 428 F.2d 1185 (1st Cir. 1970), the only other case we have discovered which fully discusses this question. See also In re Barlean, 279 F.Supp. 260 (D.Mont. 1968).

Since we have decided that Congress intended to abolish in forma pauperis proceedings in bankruptcy, we must reject petitioner's claim that she is entitled to file under the in forma pauperis statute or should be granted a federal common law right to file. It would be unreasonable to conclude that Congress intended to grant through the earlier in forma pauperis statute what it specifically denied in a later version of the Bankruptcy Act or that Congress intended to leave room for the judiciary to create a common law right. The statutory guide to construction that the specific governs the general seems to us most likely to reflect what Congress intended.

II.

The referee also ruled that the filing fee requirement does not violate the fifth amendment right of due process, which includes equal protection, or the first amendment right to petition the government for redress of grievances. We will not consider the first amendment claim, since we have concluded, for reasons set forth below, that the Bankruptcy Act's filing requirement does deny to indigents the equal protection of the laws.

We should state at the outset that we find equal protection difficult to discuss intelligently. One traditional branch of equal protection doctrine, articulated most often in economic regulation cases, is based upon strict, even rigid, rules and upon deference to legislative judgment and expertise. See Tussman & tenBroek, The Equal Protection of the Laws, 37 Calif.L.Rev. 341, 346 (1949). However, in more recent Supreme Court cases involving what are judged to be "suspect classifications," "fundamental interests" and other special considerations, equal protection theory has been altered so dramatically that it is now inaccurate to state that the doctrine is concerned with but one kind of equality. See generally Developments in the Law— Equal Protection, 82 Harv.L.Rev. 1067 (1969). A difficulty with these latter cases, some of which will be discussed below, is that stirring language has replaced the sort of analysis which provides a guide to decision-making. Perhaps this is because equal protection, like due process, is now conceived of less as a rule than as the expression of an ideal.

If all that concerned us here were traditional equal protection theory, we would have no difficulty concluding that the Bankruptcy Act's filing requirement is constitutional. The main purpose of the bankruptcy system is to enable persons in debt to obtain a judicially-sanctioned discharge of their obligations. Since every person who wishes to avail himself of this service must pay a filing fee, the act treats in an equal manner all those similarly situated with respect to the purpose of the law. Tussman & tenBroek, supra, at 346. One way to characterize traditional equal protection theory is that government must abide by the principle of numerical equality, i. e., every person, no matter what his individual circumstance, must be treated in exactly the same manner as all other persons similarly situated with respect to the purpose of the law in question. Recent Developments, supra, at 1163-66. It is ironic, of course, that those with the fewest assets may be unable to afford bankruptcy, but this does not render the act arbitrary or capricious in light of Congress' intent to make the system...