People v. Goebel

• Court: California Court of Appeals
• Writing for the Court: CAPACCIOLI; AGLIANO, P.J., and BRAUER
• Citation: 238 Cal.Rptr. 242,195 Cal.App.3d 418
• Parties: The PEOPLE, Plaintiff and Respondent, v. Dale Randall GOEBEL, Defendant and Appellant. H001703, H002270.
• Decision Date: 01 July 1987

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238 Cal.Rptr. 242 195 Cal.App.3d 418 The PEOPLE, Plaintiff and Respondent,
v.
Dale Randall GOEBEL, Defendant and Appellant. H001703, H002270. Court of Appeal, Sixth District, California. July 1, 1987.
Certified for Partial Publication ^*
Review Denied Oct. 14, 1987.

[195 Cal.App.3d 420]

Page 243

John P. Hannon, II, Carmel, for defendant and appellant.

John K. Van de Kamp, Atty. Gen., Ronald E. Niver, Deputy Atty. Gen., Morris Beatus, Deputy Atty. Gen., San Francisco, for plaintiff and respondent.

CAPACCIOLI, Associate Justice.

Defendant Dale Randall Goebel was convicted, following a court trial, of two counts of violating Penal Code section 484b (failure to apply and diversion of construction funds) in connection with two construction projects. ¹ Section 484b states: "Any

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person who receives money for the purpose of obtaining or paying for services, labor, materials or equipment and willfully fails to apply such money for such purpose by [195 Cal.App.3d 421] either willfully failing to complete the improvements for which funds were provided or willfully failing to pay for services, labor, materials or equipment provided incident to such construction, and wrongfully diverts the funds to a use other than that for which the funds were received, shall be guilty of a public offense and shall be punishable by a fine not exceeding ten thousand dollars ($10,000), or by imprisonment in the state prison, or in the county jail not exceeding one year, or by both such fine and such imprisonment if the amount diverted is in excess of one thousand dollars ($1,000). If the amount diverted is less than one thousand dollars ($1,000), the person shall be guilty of a misdemeanor."

A., I-V ^**

VI

Supremacy Clause

Defendant contends that this criminal prosecution must be dismissed because section 484b, as applied to a bankruptcy debtor who has received a discharge such as he, conflicts with the Bankruptcy Code (11 U.S.C.) and, therefore, violates the Supremacy Clause of the United States Constitution. ⁶ Specifically, defendant asserts that section 484b conflicts with the exemption provisions of section 522 of the Bankruptcy Code, the preference provisions of section 547 of that code, and the "fresh start" policy basic to a discharge under chapter 7 of that code.

Deciding whether a state statute conflicts with federal law and is consequently invalid under the Supremacy Clause is essentially a two-step process. (Perez v. Campbell (1971) 402 U.S. 637, 644, 91 S.Ct. 1704, 1708, 29 L.Ed.2d 233, 239.) We must first ascertain the construction of the state and federal statutes and then determine the constitutional question whether they are in conflict. (Ibid.) A state statute impermissibly conflicts with federal law if it stands as an obstacle to the accomplishment and execution of the full Congressional purposes and objectives of the federal enactment. (Id. at p. 649, 91 S.Ct. at p. 1711, 29 L.Ed.2d at p. 242.) It does not matter whether the state legislature intended to hinder federal law. (Id. at pp. 651-652, 91 S.Ct. at pp. 1712-1713, 29 L.Ed.2d [195 Cal.App.3d 422] at pp. 243-244; see Grimes v. Hoschler (1974) 12 Cal.3d 305, 308-313, 115 Cal.Rptr. 625, 525 P.2d 65.)

Chapter 7 of the Bankruptcy Code provides a type of bankruptcy relief which involves the collection, liquidation, and distribution of an individual debtor's property and the discharge of his debts. ⁷ (11 U.S.C.

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§ 701 et seq.) Commencement of a voluntary bankruptcy case creates an estate comprised of "... all legal or equitable interests of the debtor in property as of the commencement of the case" with exceptions not relevant here and other specified interests. (11 U.S.C. § 541.) The debtor is under a duty to surrender all property of the estate to the bankruptcy trustee. (11 U.S.C. § 521, subd. (4).) It is the trustee's duty in a chapter 7 case to administer the bankruptcy estate, collect the estate's property, and reduce that property to money. (11 U.S.C. § 704.)

A discharge under chapter 7 relieves the debtor of all legal responsibility for the discharged debts. (11 U.S.C. §§ 524, 727.) Unless an exception regarding a particular debt is established, a discharge under section 727 "... discharges the debtor from all debts that arose before the date of the order for relief ... and any liability on a claim that is determined under section 502 of this title as if such claim had arisen before the commencement of the case...." ⁸ (11 U.S.C. § 727, subd. (b); see 11 U.S.C. § 523.)

One of the primary purposes of the Bankruptcy Code, which is continued from the former Bankruptcy Act, is to give the honest individual debtor a fresh start unhampered by the pressure and discouragement of preexisting debt. (See Sen.Rept. No. 95-989, pp. 6-7, 98 [5 U.S.Code Cong. & Admin.News (1978, 95th Cong., 2d sess.) pp. 5787, 5792-5793, 5884]; H.Rept. No. 95-595, pp. 125-126, 128, 175-176, 384 [5 U.S.Code Cong. & Admin.News (1978, 95th Cong., 2d sess.) pp. 6086-6087, 6089, 6136-6137, 6340]; Perez v. Campbell, supra, 402 U.S. at pp. 648, 660, 91 S.Ct. at pp. 1710, 1716; Local Loan Co. v. Hunt (1934) 292 U.S. 234, 244, 54 S.Ct. 695, 78 L.Ed. 1230; Williams v. United States Fidelity & Guaranty Co. (1915) 236 U.S. 549, 554-555, 35 S.Ct. 289, 290-291, 59 L.Ed. 713; 11 U.S.C. §§ 522, 524, 727.) A second major purpose of the Bankruptcy Code, which is also [195 Cal.App.3d 423] carried forward from earlier law, is the equitable distribution of the debtor's assets among creditors. (See H.Rept. No. 95-595, pp. 177-178, 186 [5 U.S.Code Cong. & Admin.News (1978, 95th Cong., 2d sess.) pp. 6138-6139, 6147]; Kuehner v. Irving Trust Co. (1937) 299 U.S. 445, 451-452, 57 S.Ct. 298, 301-302, 81 L.Ed. 340; Louisville Bank v. Radford (1934) 295 U.S. 555, 587-588, 55 S.Ct. 854, 862-863, 79 L.Ed. 1593; Palmer v. Radio Corporation of America (5th Cir.1971) 453 F.2d 1133, 1140-1141.)

To facilitate a "fresh start," a debtor is entitled to exempt specified property from the estate. (See 11 U.S.C. § 522; H.Rept. No. 95-595, p. 126 [5 U.S.Code Cong. & Admin.News (1978, 95th Cong., 2d sess.) p. 6087].) At the time defendant filed for bankruptcy under chapter 7, it was possible for a debtor to exempt from the estate $7,900 worth of any property under certain circumstances. (See 11 U.S.C. former § 522, subd. (d)(1) and (d)(5), Pub.L. 95-598.) ⁹ To achieve equitable distribution, a trustee may set aside specified prepetition preferential transfers of property which would, if not set aside, enable a creditor to receive more than he would have otherwise under the Bankruptcy Code. (11 U.S.C. §§ 547, 550; H.Rept. No. 95-595, p. 177-178 [5 U.S.Code Cong. & Admin.News (1978, 95th Cong., 2d sess.) pp. 6138-6139]; see 11 U.S.C. 101, subd. (48).) The trustee may generally recover the property or its value for the benefit of the estate. (11 U.S.C. § 550.) Other...