Kesler v. Department of Public Safety of Utah/Opinion of the Court

This case presents the rather rare claim of conflict between an otherwise valid exercise of a State's so-called police power and the overriding authority of the Bankruptcy Act. The statute before us is Utah's Motor Vehicle Safety Responsibility Act -a measure directed towards promoting safety in automobile traffic by administrative and compensatory remedies calculated to restrain careless driving. Its purpose is wholly unrelated to the purposes of the Bankruptcy Act.

In June 1957, a Utah court entered judgments in damages against appellant, based on his allegedly negligent operation of an automobile. On appeal to the State's Supreme Court the judgments were affirmed. After the judgments had remained unpaid for sixty days or more, the judgment creditors requested the court clerk to forward to the Department of Public Safety certified copies of the judgments, as provided by the Safety Responsibility Act. Thereupon the Department suspended appellant's automobile registration and his operator's license. On December 31, 1959, appellant was granted a voluntary discharge in bankruptcy, releasing him from the judgment debts. He then sought restoration of his license and registration. This was denied. The Safety Responsibility Act requires satisfaction of judgments due to auto accidents as a condition of reinstatement and specifically provides that a discharge in bankruptcy shall not relieve the judgment debtor from this requirement. Appellant initiated this ancillary bankruptcy proceeding, Local Loan Co. v. Hunt, 292 U.S. 234, 239, 54 S.Ct. 695, 696, 78 L.Ed. 1230, in the United States District Court for Utah, seeking an order requiring restoration of his privileges and a declaration that the Utah law was invalid insofar as it disrespected the discharge of the judgment debt by virtue of § 17 of the Bankruptcy Act, 11 U.S.C. § 35, 11 U.S.C.A. § 35. A three-judge District Court, 28 U.S.C. § 2281, 28 U.S.C.A. § 2281, upheld the statute and denied relief, 187 F.Supp. 277 (1960). The case was brought here on direct appeal, 28 U.S.C. § 1253, 28 U.S.C.A. § 1253, and we noted probable jurisdiction, 364 U.S. 940, 81 S.Ct. 459, 5 L.Ed.2d 372.

A preliminary point of jurisdiction is noted though it was not adverted to either by the District Court or by the parties. Was this a proper case for convening a three-judge court, as it must have been to justify direct appeal to this Court? The present suit asks that state officials be 'restrained and enjoined' from enforcing designated sections of the Utah Motor Vehicle Safety Responsibility Act because they 'are unconstitutional and void,' in that they are in conflict with § 17 of the Bankruptcy Act and therefore necessarily violative of the Supremacy Clause of the Constitution of the United States, Art. VI. It would seem to be compellingly clear that this case falls within § 2281 of Title 28 of the United States Code, 28 U.S.C.A. § 2281, which bars a suit for an injunction 'upon the ground of the unconstitutionality' of a state statute 'unless the application therefor is heard and determined by a district court of three judges.' This was so heard and appeal was properly brought directly here, unless invalidation of a state statute by virtue of the Supremacy Clause rests on a different constitutional basis than such invalidation because of conflict with any other clause of the Constitution, at least to the extent of reading such an implied exception into the procedure devised by § 2281. Neither the language of § 2281 nor the purpose which gave rise to it affords the remotest reason for carving out an unfrivolous claim of unconstitutionality because of the Supremacy Clause from the comprehensive language of § 2281.

Bearing in mind that the requirement for District Court litigation of three judges, of whom one must be a Justice of this Court or a circuit judge, involves a serious drain upon the federal judicial manpower, 'particularly in regions where, despite modern facilities, distance still plays an important part in the effective administration of justice * *  * ,' this Court has been led by a long series of decisions, in a variety of situations, to generalize that this procedural device was not to be viewed 'as a measure of broad social policy to be construed with great liberality, but as an enactment technical in the strict sense of the term and to be applied as such.' Phillips v. United States, 312 U.S. 246, 250-251, 61 S.Ct. 480, 483, 85 L.Ed. 800. The Court had already held that the three-judge requirement is not to be invoked on a contingent constitutional question. International Ladies' Garment Workers v. Donnelly Co., 304 U.S. 243, 251, 58 S.Ct. 875, 879, 82 L.Ed. 1316. The Court has been consistent in this view in dealing with claims of conflict between a state statute and a federal statute which has the constitutional right of way.

Bearing in mind that due regard for the healthy working of the federal judicial system demands that the three-judge court requirement be treated as 'an enactment technical in the strict sense of the term,' we must examine the basis of the plaintiff's claim to determine whether it must come before a single judge or three judges. If in immediate controversy is not the unconstitutionality of a state law but merely the construction of a state law or the federal law, the three-judge requirement does not become operative. Such was the ruling in Ex parte Buder, 271 U.S. 461, 46 S.Ct. 557, 70 L.Ed. 1036, where the Supremacy Clause was not invoked and therefore the three-judge court was not required. In Ex parte Bransford, 310 U.S. 354, 60 S.Ct. 947, 84 L.Ed. 1249, Buder was followed. A three-judge court was not required because the issue was 'merely the construction of an act of Congress, not the constitutionality of the state enactment.' 310 U.S., at 359, 60 S.Ct. at 950. Contrariwise, in Query v. United States, 316 U.S. 486, 62 S.Ct. 1122, 86 L.Ed. 1616, the complainant sought to restrain the state officers from enforcing a state statute on the score of unconstitutionality of its threatened application. 316 U.S., at 489, 62 S.Ct. 1122. Accordingly, the requirement of a three-judge court applied. Query v. United States and Ex parte Bransford were clearly differentiated from one another in Case v. Bowles, 327 U.S. 92, 66 S.Ct. 438, 90 L.Ed. 552, where, as in Bransford, 'the complaint did not challenge the constitutionality of the State statute but alleged merely that its enforcement would violate the Emergency Price Control Act. Consequently a three-judge court is not required.' 327 U.S., at 97, 66 S.Ct. at 441.

Here, no question of statutory construction, either of a state or a federal enactment, is in controversy. We are confronted at once with the constitutional question whether the discharge in bankruptcy of a debt ousts the police power of a State from a relevant safety measure, the indirect and episodic consequence of which may have some bearing on a discharged debt but which in no wise resuscitates it as an obligation. The general principle elucidated by Mr. Justice Cardozo in differentiating between different stages of adjudication at which issues are reached, Gully v. First National Bank, 299 U.S. 109, 117-118, 57 S.Ct. 96, 100, 81 L.Ed. 70, serves to guide disposition of this case as it differently did Phillips v. United States, supra. This case presents a sole, immediate constitutional question, differing from Buder, Bransford, and Case, which presented issues of statutory construction even though perhaps eventually leading to a constitutional question.

The problem of highway safety has concerned legislatures since the early years of the century. Utah, like other States, has responded to this problem by requiring the registration and inspection of vehicles and prescribing certain necessary equipment; by requiring examination and licensing of operators and excluding unqualified persons from driving; by providing comprehensive regulations of speed and other traffic conditions; and by authorizing extraterritorial service of process on nonresident motorists involved in accidents within the State. And, like every other State, Utah has responded by enacting a financial-responsibility law.

Financial-responsibility laws are intended to discourage careless driving or to mitigate its consequences by requiring as a condition of licensing or registration the satisfaction of outstanding accident judgments, the posting of security to cover possible liability for a past accident, or the filing of an insurance policy or other proof of ability to respond in damages in the future. By 1915 a San Francisco ordinance required a bond or liability insurance for all buses; a number of other cities and States early enacted similar provisions. In 1925 Massachusetts forbade the registration of any motor vehicle without proof of adequate liability insurance or other evidence of ability to satisfy a judgment. Mass. Laws 1925, c. 346. That same year the Commissioners on Uniform Laws appointed a committee to consider a uniform compulsory insurance law. Handbook of the National Conference on Uniform State Laws (1932), p. 261.

Unwilling to require insurance or its equivalent from all highway users, six other States-five of them in New England adopted within the next two years laws with the same design but limited to careless drivers. The first of these, Connecticut Acts 1925, c. 183, provided for suspension of the registration of those convicted of certain infractions relating to motor vehicles and of those causing accidents of specified gravity, requiring proof of financial responsibility as a condition to restoration. Vermont enacted a similar provision, Acts 1927, No. 81. Maine's law, Laws 1927, c. 210, and Minnesota's, Laws 1927, c. 412, § 61(b), applied only to violations. Rhode Island, Acts 1927, c. 1040, originally required proof only after accidents resulting from violations; Acts 1929, c. 1429, required proof in addition not only of persons violating certain laws but of all minors as well. In New Hampshire, Laws 1927, c. 54, security to cover a potential judgment was required on request of the plaintiff in an accident case, if fault appeared after preliminary inquiry.

In 1929 seven States enacted laws providing for the first time that driving privileges be suspended following an adverse judgment in damages. Vermont added to her earlier statute a provision suspending privileges of anyone against whom there was an outstanding judgment based on a traffic violation until proof was made of financial responsibility. Vt. Acts 1929, No. 76. Connecticut, Maine, and Wisconsin suspended the privileges of the judgment debtor until the judgment was satisfied. Conn.Acts 1929, c. 297, § 25; Me.Laws 1929, c. 209; Wis. Laws 1929, c. 76. In Connecticut, however, suspension was only to occur if the judgment remained unpaid for sixty days, and then only '(u)pon complaint * *  * by any prevailing party' in the lawsuit. Iowa's law was substantially similar, giving the creditor control by providing that 'a transcript of such judgment * *  * may be filed' to initiate suspension. Iowa Laws 1929, c. 118. California required court clerks to transmit to the vehicle administrator notice of judgments unpaid for fifteen days; the debtor's license and registration were thereupon to be suspended until both the debt was discharged and proof of financial responsibility was given. Cal.Stat.1929, c. 258, § 4. New York adopted a law materially the same as California's providing in addition that a discharge in bankruptcy should not relieve the judgment debtor of these requirements and also suspending privileges pending proof after conviction for certain violations. N.Y.Laws 1929, c. 695.

Abandoning the drive for a uniform compulsory-insurance law as not then feasible, the Commissioners on Uniform Laws in 1929 began work on a more limited financial-responsibility act. As finally approved by the Conference in 1932, the Uniform Automobile Liability Security Act combined features from several of the statutes already in force. Proof of financial responsibility was required to be maintained for a minimum of three years by four classes of persons: (1) those convicted of certain violations; (2) those wishing to obtain or renew driving privileges, and who had been at fault in two accidents of specified gravity during the preceding year; (3) minors; (4) those against whom a judgment of a certain magnitude had remained unsatisfied for fifteen days. The provisions regarding judgments followed those of California and New York: the court or clerk was to forward notice of all unsatisfied judgments, and the debtor's privileges were to be suspended until both satisfaction of the obligation, to the extent of the minimum required insurance amount, and proof of future responsibility. 11 U.L.A. 125 (1938).

The Uniform Act as such was adopted only in Hawaii, Pennsylvania, and Washington; its provisions regarding accidents and minors found little favor. Yet during the two decades following 1929 a large majority of States enacted one or another form of financial-responsibility law. Utah's first such statute, enacted in 1943, was typical of the most common enactment. Twelve other States and the District of Columbia adopted this same basic law; and, with respectively minor modifications, it was paralleled by five more in addition to the earlier California and New York laws. This law provided for suspension of privileges following certain convictions and after a judgment remained unpaid a specified time. Restoration in either case was conditioned on proof of future responsibility; in the case of a judgment, the debt must be discharged as well. The unpaid judgment was required to be forwarded on the initiative of the court or clerk. Six States adopted laws differing from Utah's principally in that proof of future responsibility, without satisfaction of the debt, was sufficient to terminate suspension. In addition, most of these statutes provided that a discharge in bankruptcy should not relieve the judgment debtor from suspension.

Indiana and Maryland in 1931, like Connecticut and Iowa before, placed control of suspension for unpaid judgments in the hands of the creditor by requiring that notice be forwarded to the administrator only on the creditor's request. Ind.Acts 1931, c. 179, § 2; Md.Laws 1931, c. 498. Neither specified the effect of a discharge. Maryland's law was in other respects like that of Utah; Indiana's, which required only proof of future responsibility and not discharge for reinstatement, was replaced in 1935 by a statute on the Utah model. In Massachusetts suspension followed when the registrar was 'satisfied by such evidence as he may require' that the judgment was sixty days unpaid. Mass.Acts 1932, c. 304. Delaware's law was similar in this respect. Del.Laws 1931, c. 14. New Hampshire's 1937 law required proof of future responsibility following certain convictions and certain accidents but not after unpaid judgments; it required those involved in accidents not only to provide proof for the future but to deposit security to cover the past accident as well. N.H.Laws 1937, c. 161. Provisions requiring security after accidents, but without the need of proof for the future, were adopted by a number of other States in the next few years.

New York's law, one source of most of the early legislation, underwent a gradual evolution after its enactment. In 1936 the legislature provided that if proof of future responsibility was given the maximum period of suspension should be three years. The same year the statute was further amended to add a novel provision. If the judgment creditor consented, and if proof of future responsibility was given, a defaulting judgment debtor might continue to enjoy driving privileges for six months, and thereafter so long as consent was not withdrawn. In 1937 it was made clear the requirement of judgment payment did not apply to insured owners or drivers. In 1939 report of the unpaid judgment was made dependent upon request by the creditor. Finally, in 1941, New York adopted the New Hampshire requirement of proof and security for damages arising out of certain accidents. The 1941 law also provided, as a number of States had done before, for payment in installments, with suspension upon default of payments.

It was against this background that the Uniform Act of 1932 was withdrawn for further study in light of the States' extensive experience. Handbook of the National Conference of Commissioners on Uniform State Laws (1943), p. 69. The result of this study was an entirely revised model act, indorsed by the National Conference, which now appears as Chapter 7 of the Uniform Vehicle Code of 1956.

The new Uniform Code reflects most of the changes wrought in New York's law from 1929 to 1941. It requires persons involved in certain accidents to deposit security to cover the past if they were not insured. It requires proof of future responsibility from those convicted of certain violations and from those owing judgments unsatisfied after thirty days. In addition, unless insured, the judgment debtor must satisfy the obligation, to the extent of the minimum amounts of financial responsibility required, before his privileges are restored. Installment payments, until default, are allowed. Bankruptcy is no release; unpaid judgments are to be reported only on request by the judgment creditor; with the creditor's consent the debtor may be permitted to drive for six months, if he shows financial responsibility, and longer until consent is revoked.

The material provisions of the new Uniform Code with respect to financial responsibility are currently in effect in twenty-one States, including Utah, and in the District of Columbia. Fifteen other States have enacted statutes substantially similar except that unpaid judgments are reported by the court or clerk without request by the creditor. Nine more retain statutes differing from the last foregoing principally in the absence of provisions for restoration of privileges without payment on the consent of the creditor; these are in substance the same as the common statute earlier in force in Utah, except that security is usually required in the event of accident. Vermont's statute, requiring only proof and not payment to reinstate privileges after judgment, differs in other particulars as well. Maine and New Hampshire make no provisions for judgments, suspending only after accidents and violations. In Massachusetts and New York insurance or its equivalent is compulsory.

Twenty years ago, the Court had before it the New York variant of this legislation. This provided for suspension of license and registration whenever a judgment remained unpaid for fifteen days, as certified by the county clerk on his initiative. Proof of future responsibility was required for reinstatement; unless three years had elapsed, so was satisfaction of the judgment other than by discharge in bankruptcy. In 1936 the statute was amended to terminate the suspension with creditor consent on proof of responsibility, and in 1939 to require certification of the judgment only on request by the creditor or his attorney. The Court held that this statute, as it stood before 1936, was an appropriate measure to promote highway safety and did not violate the Due Process Clause of the Fourteenth Amendment. Because the statute was not designed to aid collection of debts but to enforce a policy against irresponsible driving, and because this policy would be frustrated if negligent drivers could avoid the statute by 'the simple expedient of voluntary bankruptcy,' no conflict with the Bankruptcy Act was found. The Court expressly left unanswered the claim that the amendments giving the creditor control over initiation and duration of the suspension were contrary to the Bankruptcy Act. Reitz v. Mealey, 314 U.S. 33, 62 S.Ct. 24, 86 L.Ed. 21 (1941).

The Utah law here challenged is in substance that which the Court did not have to pass on in Reitz v. Mealey, with two exceptions. Not only is the creditor permitted to initiate, lift, and restore suspension as under the New York amendments; he is also given power to restore suspension for default on payment of installments, and, if the judgment is not satisfied, the suspension is permanent rather than limited to three years. Appellant urges that the Utah creditor's added control over the license and registration procedures demonstrates that the State is acting as a collecting agent for the creditor rather than furthering an interest in highway safety, and that to make suspension perpetual rather than for three years only renders the collection pressure more effective. Do these differences make a constitutional difference, in light of the considerations that underlay the decision in the Reitz case?

Section 17 of the Bankruptcy Act, 11 U.S.C. § 35, 11 U.S.C.A. § 35, provides that 'A discharge in bankruptcy shall release a bankrupt from all of his provable debts,' with exceptions not here material. See also 11 U.S.C. § 1(15), 11 U.S.C.A. § 1(15). A discharge relieves the bankrupt 'from legal liability to pay a debt that was provable,' Zavelo v. Reeves, 227 U.S. 625, 629, 33 S.Ct. 365, 367, 57 L.Ed. 676 (1913); it is a valid defense in an action brought in a state court to recover the debt. A State cannot deal with the debtor-creditor relationship as such and circumvent the aim of the Bankruptcy Act in lifting the burden of debt from a worthy debtor and affording him a new start. The limitations imposed upon the States by the Act raise constitutional questions under the Supremacy Clause, Art. VI Thus, a discharge does not free the bankrupt from all traces of the debt, as though it had never been incurred. This Court has held that a moral obligation to pay the debt survives discharge and is sufficient to permit a State to grant recovery to the creditor on the basis of a promise subsequent to discharge, even though the promise is not supported by new consideraton. Zavelo v. Reeves, supra. The theory, the Court declared, is that 'the discharge destroys the remedy but not the indebtedness,' 227 U.S., at 629, 33 S.Ct. at 367. And in Spalding v. New York ex rel. Backus, 4 How. 21, 11 L.Ed. 858 (1846), under an earlier bankruptcy law, the Court held that a discharge did not prevent the State from collecting a fine for contempt in violation of an injunction issued to aid in the execution of a judgment debt, although the fine was turned over to the creditor. States are not free to impose whatever sanctions they wish, other than an action of debt or assumpsit, to enforce collection of a discharged debt. But the lesson Zavelo and Spalding teach is that the Bankruptcy Act does not forbid a State to attach any consequence whatsoever to a debt which has been discharged.

The Utah Safety Responsibility Act leaves the bankrupt to some extent burdened by the discharged debt. Certainly some inroad is made on the consequences of bankruptcy if the creditor can exert pressure to recoup a discharged debt, or part of it, through the leverage of the State's licensing and registration power. But the exercise of this power is deemed vital to the State's well-being, and, from the point of view of its interests, is wholly unrelated to the considerations which propelled Congress to enact a national bankruptcy law. There are here overlapping interests which cannot be uncritically resolved by exclusive regard to the money consequences of enforcing a widely adopted measure for safeguarding life and safety.

When Reitz v. Mealey was in the District Court, 34 F.Supp. 532 (N.D.N.Y.1940), Judge Learned Hand upheld the statute, as did this Court, without deciding the validity of the creditor-control amendments; but in passing he dealt with the realities of the situation and demonstrated the thin difference they made. As for the 1936 amendment, 'The original statute in fact gave the creditor power at any time to restore the license by a complete satisfaction of the judgment; and the amendment merely added to this by enabling him to withdraw his consent, once given, after six months.' The 1939 amendment

'merely relieved the clerk of an irksome duty. He had been     obliged to find out whenever a judgment had remained unpaid      for fifteen days, whether it was for damages due to negligent      driving. Instead of this the amendment set up an automatic     system depending upon the creditor's interest in starting the      clerk into action. This distinction is, however, more     apparent than real because under the section as it stood      before 1939, the creditor had the same incentive and he was      as likely as thereafter to advise the clerk of the judgment *      *  *. (t)he chance that the clerk would have acted without     being prodded by the creditor must have been very remote.' 34      F.Supp., at 535.

This Court was of course aware of the practical pressures of the New York statute as a device to collect debts discharged in bankruptcy; the argument was pressed upon it in the dissent. Yet the statute was upheld. Why? Because the 'police power' of a State, especially when exerted for the protection of life and limb, is as pervasive as any of the reserved powers of the States and should be respected unless there is a clear collision with a national law which has the right of way under the Supremacy Clause of Article VI. The facts that the consequences of the New York Safety Act may in fact have subjected a debtor to the payment of money of which as an obligation in the creditor-debtor relation he was quit did not lead this Court to hold that the State had intruded into the bankruptcy domain or subverted the purpose of the bankruptcy law. Why? At the heart of the matter are the complicated demands of our federalism.

Are the differences between the Utah statute and that of New York so significant as to make a constitutionally decisive difference? A State may properly decide, as forty-five have done, that the prospect of a judgment that must be paid in order to regain driving privileges serves as a substantial deterrent to unsafe driving. We held in Reitz that it might impose this requirement despite a discharge, in order not to exempt some drivers from appropriate protection of public safety by easy refuge in bankruptcy. To make suspension of privileges dependent upon the creditor's request, as twenty-one have done, and as Congress has done for the District of Columbia, is nothing more than to make explicit what happens in the real world regardless of the statutory language. Even if the creditor-request provision makes suspension more likely, we see no reason why a State may not so provide in order that the deterrent be made more effective by authorizing the party most likely to be interested in the enforcement of the sanction to set it in motion. Nor do we think in excess of their power the action of thirty-five States that have attempted, as Congress has done, to authorize the creditor to lift and restore the suspension, or the forty-three that, again as Congress, have provided that in the absence of creditor consent the suspension shall last forever unless the judgment is extinguished. To whatever extent these provisions make it more probable that the debt will be paid despite the discharge, each no less reflects the State's important deterrent interest. Congress had no thought of amending the Bankruptcy Act when it adopted this law for the District of Columbia; we do not believe Utah's identical statute conflicts with it either.

Utah is not using its police power as a devious collecting agency under the pressure of organized creditors. Victims of careless car drivers are a wholly diffused group of shifting and uncertain composition, not even remotely united by a common financial interest. The Safety Responsibility Act is not an Act for the Relief of Mulcted Creditors. It is not directed to bankrupts as such. Though in a particular case a discharged bankrupt who wants to have his rightfully suspended license and registration restored may have to pay the amount of a discharged debt, or part of it, the bearing of the statute on the purposes served by bankruptcy legislation is essentially tangential.

There are no apothecary's scales by which the differences between the Utah and New York statutes can be constitutionally weighed. The matter rests in judgment. That organon of adjudication leads us to conclude that the differences are too insubstantial, too tenuous as a matter of practical reality, to reach constitutional solidity.

Affirmed.

Mr. Justice WHITTAKER took no part in the decision of this case.