Shine v. Shine, 86-1287

• Decision Date: 06 October 1986
• Docket Number: No. 86-1287,86-1287
• Parties: , 15 Bankr.Ct.Dec. 465, Bankr. L. Rep. P 71,516 Marguerite C. SHINE, Plaintiff, Appellee, v. Louis M. SHINE, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 583

802 F.2d 583

55 USLW 2261, 15 Bankr.Ct.Dec. 465, Bankr.

L. Rep. P 71,516

Marguerite C. SHINE, Plaintiff, Appellee, v. Louis M. SHINE, Defendant, Appellant.

No. 86-1287.

United States Court of Appeals First Circuit.

Submitted Sept. 12, 1986.

Decided Oct. 6, 1986.

Luke S. O'Neill, Jr., Manchester, N.H., on brief, for defendant, appellant.

Richard Y. Uchida and Rinden Professional Ass'n, Concord, N.H., on brief, for plaintiff, appellee.

Before COFFIN, BOWNES and BREYER, Circuit Judges.

BOWNES, Circuit Judge.

In this appeal, we must determine whether an obligation incurred because of the failure to pay court-ordered support is dischargeable in bankruptcy where the support order was not explicitly embodied in "a separation agreement, divorce decree, or property settlement agreement," the language of the bankruptcy statute then in effect, 11 U.S.C. Sec. 523(a)(5) (1978).

The plaintiff, Marguerite Shine, and the defendant, Louis Shine, were married in the District of Columbia on September 20, 1969. They did not have any children and, on October 30, 1972, they divided their property and separated without making any agreement regarding support. In December of 1972, plaintiff commenced an action for separate maintenance from defendant in the Superior Court of the District of Columbia where defendant was a resident. The Superior Court issued an order requiring defendant to pay $250 per month to plaintiff beginning in April 1973. In 1975, plaintiff, then a resident of Virginia, was granted a decree of divorce from defendant by the Circuit Court of Fairfax County, Virginia. The decree made no provision for alimony and support. It stated: "the parties hereto have not entered into a Property Settlement Agreement [and] ... there are no property rights to be determined by the Court." At the time of the divorce, defendant was a resident of New Hampshire.

Throughout this period, the District of Columbia support order continued in effect with defendant in arrears. Plaintiff brought suit on the arrearage in the Superior Court of the District of Columbia in 1976 and judgment was entered for $9,045, the payments due as of June 1, 1976. By a consent decree entered in August of 1976, the Superior Court vacated the order of support first entered in 1973 for payments due subsequent to June 1, 1976, leaving the judgment for the arrearage untouched. No payment was made on the judgment. In 1982, plaintiff brought suit in the United States District Court for the District of New Hampshire to collect the arrearage. A judgment for $12,112, plus interest and costs, issued and plaintiff then proceeded to sue in the New Hampshire Merrimack County Superior Court to collect the judgment. This suit was stayed when defendant filed for bankruptcy.

Plaintiff then filed a complaint in the United States Bankruptcy Court for the District of New Hampshire seeking to have the support obligation declared nondischargeable under 11 U.S.C. Sec. 523(a)(5) (1978). Section 523(a)(5) excepted from discharge any debt "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...." The Bankruptcy Court initially held that the debt was not dischargeable because it "relates to the oral separation agreement between the parties." In re Shine, 43 B.R. 686, 688 (Bankr.D.N.H.1984). Upon motion for reconsideration, however, it held that the debt was dischargeable because it was not created by a "separation agreement which itself embodies an agreed arrangement between the parties for the obligation to make support payments." In re Shine, 49 B.R. 978, 980 (Bankr.D.N.H.1985). Upon appeal, the district court held that the debt was not dischargeable because "to allow the defendant's debt to be discharged would be contrary to Congressional intent and public policy." In re Shine, 57 B.R. 386, 389 (D.N.H.1986). Defendant has appealed.

To our knowledge, no circuit court has yet addressed the dischargeability of support debts which implicated the scope of the "in connection" clause of Sec. 523(a)(5), although numerous bankruptcy courts have considered the dischargeability of such debts. The question has arisen in cases where child or spousal support has been ordered by a court independent of any legal dissolution of a marriage or where child support has been ordered as the result of a paternity suit. The bankruptcy courts are divided. The courts finding the debt dischargeable have used different rationales. Some have looked primarily to the words of the statute itself, In re Antikainen, 48 B.R. 630 (Bankr.D.Minn.1985); In re Leach, 15 B.R. 1005 (Bankr.D.Conn.1981). Some have been guided by the general rule that exceptions to discharge in bankruptcy should be narrowly construed against the creditor and in favor of the bankrupt, In re Marino, 29 B.R. 797 (N.D.Ind.1983); In re Brown, 43 B.R. 613 (Bankr.M.D.Tenn.1984); In re Fenstermacher, 31 B.R. 77 (Bankr.D.Neb.1983), overruled on other grounds, In re Pierson, 47 B.R. 258 (Bankr.D.Neb.1985). Others have found in the legislative history of Sec. 523(a)(5) an intent that Congress meant to exclude from protection support debts not specifically originating in a formal separation agreement or divorce decree. In re Bruner, 43 B.R. 143 (Bankr.E.D.Mo.1984); In re Brown, 43 B.R. 613 (Bankr.M.D.Tenn.1984); In re Richards, 33 B.R. 56 (Bankr.D.Or.1983), rev'd on other grounds, 45 B.R. 811 (D.Or.1984).

Those courts finding the debt not dischargeable have also relied upon the legislative history of Sec. 523(a)(5), finding a basic intent upon the part of Congress to except spousal and child support debts from discharge and no specific intent to exclude from that protection support debts arising outside of divorce or formal separation. In re Pierson, 47 B.R. 258 (Bankr.D.Neb.1985); In re Balthazor, 36 B.R. 656 (Bankr.E.D.Wisc.1984); In re Mojica, 30 B.R. 925 (Bankr.E.D.N.Y.1983); In re Cain, 29 B.R. 591 (Bankr.N.D.Ind.1983); but see In re Marino, 29 B.R. 797. Other courts finding the debt nondischargeable have found the requisite "connection" in a variety of circumstances in which the obligation derived from a source other than the main divorce decree or separation agreement. In re Jackson, 27 B.R. 892 (Bankr.W.D.Ky.1983); In re Graham, 14 B.R. 246 (Bankr.W.D.Ky.1981); In re Morris, 14 B.R. 217 (Bankr.D.Col.1981). Where child support arising out of a paternity suit has been at issue, an additional factor leading at least two courts to hold the support debt not dischargeable has been the possible unconstitutionality of a law which protects support for children of married parents but does not protect support for children of unmarried parents. In re Mullally, 56 B.R. 271 (Bankr.N.D.Ill.1985); In re Pierson, 47 B.R. 258. This is not a consideration relevant to this case.

These conflicting interpretations of the statute derive from the two established public policies in this area. The general bankruptcy rule of construing exceptions to discharge against the creditor and in favor of the debtor, Gleason v. Thaw, 236 U.S. 558, 562, 35 S.Ct. 287, 289, 59 L.Ed. 717 (1915), In re Hunter, 780 F.2d 1577, 1579 (11th Cir.1986), In re Delano, 50 B.R. 613, 617 (Bankr.D.Mass.1985), supports a narrow construction of the statute. This general rule implements "[t]he overriding purpose of the bankruptcy laws ... to provide the bankrupt with comprehensive, much needed relief from the burden of his indebtedness by releasing him from virtually all his debts." In re Cross, 666 F.2d 873, 879 (5th Cir.1982). On the other hand, the long-standing policy of excepting spousal and child support from discharge in bankruptcy supports a more liberal construction:

The bankruptcy law should receive such an interpretation as will effectuate its beneficient purposes and not make it an instrument to deprive dependent wife and children of the support and maintenance due them from the husband and father, which it has ever been the purpose of the law to enforce. ... Unless positively required by direct enactment the courts should not presume a design upon the part of Congress in relieving the unfortunate debtor to make the law a means of avoiding enforcement of the obligation, moral and legal, devolved upon the husband to support his wife and to maintain and educate his children.

Wetmore v. Markoe, 196 U.S. 68, 77, 25 S.Ct. 172, 175, 49 L.Ed. 390 (1904).

The exception from discharge for alimony and payments for maintenance and support has long been an accepted part of bankruptcy law. Even prior to the 1903 Amendment to Sec. 17 of the 1898 Bankruptcy Act, which explicitly incorporated this exception, Act of Feb. 5, 1903, ch. 487, Sec. 5, 32 Stat. 797, 798, the majority of courts held that such payments constituted a nondischargeable "duty" rather than a provable "debt." 1A Collier on Bankruptcy 1668-69 (14th ed. 1978). In Audubon v. Shufeldt, 181 U.S. 575, 21 S.Ct. 735, 45 L.Ed. 1009 (1901), the Supreme Court found this exception to be implied in the 1898 Act, which discharged all debts "founded ... upon a contract, expressed or implied," Act of July 1, 1898, ch. 541, Sec. 63(4), 30 Stat. 544, 563:

Alimony does not arise from any business transaction but from the relation of marriage. It is not founded on a contract, express or implied, but on the natural and legal duty of the husband to support the wife. The general obligation to support is made specific by the decree of the Court of appropriate jurisdiction. ... But its obligation in that respect does not affect its nature.

Id. at 577-78, 21 S.Ct. at 736. And in Wetmore, 196 U.S. 68, 25 S.Ct. 172, 49 L.Ed. 390 the Court found that the 1903 Amendment explicitly including the exception was "declaratory of the true meaning and sense of the statute," id. at 76-77, 25 S.Ct. at 175, rather than indicating the exception's absence prior to 1903.

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