Perez v. Campbell

PETITIONER:Perez
RESPONDENT:Campbell
LOCATION:Charlotte-Mecklenburg School District

DOCKET NO.: 5175
DECIDED BY: Burger Court (1970-1971)
LOWER COURT: United States Court of Appeals for the Ninth Circuit

CITATION: 402 US 637 (1971)
ARGUED: Jan 19, 1971
DECIDED: Jun 01, 1971

Facts of the case

Question

Audio Transcription for Oral Argument – January 19, 1971 in Perez v. Campbell

Warren E. Burger:

We’ll hear arguments next in Perez against Campbell for the State of Arizona.

Mr. Ching you may proceed whenever you are ready.

Anthony B. Ching:

Mr. Chief Justice, and may it please the Court.

This case is here on certiorari to review the decision of the Ninth Circuit Court of Appeals.

The facts are relatively simple.

The petitioners here are Adolfo Perez and his wife Emma Perez.

They live in Tucson, Arizona.

On July 8, 1965, Adolfo Perez, while driving his family car, had an accident.

A year or so later, a lawsuit was filed against Adolfo Perez and his wife based on the accident.

A year or so later, the Perez’s confessed judgment and the judgment was rendered against the two of them as husband and wife.

Thereafter, Adolfo and Emma Perez each filed a petition in bankruptcy.

The judgment was scheduled in each of the bankruptcy petition, and in due course that that was discharged.

However, Arizona law provides that anyone who has a judgment of this kind against him would have his driver’s license and automobile registration suspended until the judgment or a part of it is paid.

Potter Stewart:

The judgment was — the judgment ran against both the man and the wife, did it or did not?

Anthony B. Ching:

Yes.

That judgment is in the record.

It’s not reproduced in the appendix.

However, it’s in the record on page 54 and 55.

Warren E. Burger:

When you speak of it is being a confession of judgment, do you mean the conventional default judgment where they did not respond or did they affirmatively confess?

Anthony B. Ching:

The confession judgment was entered by their attorney.

They had — this is not in the record, but I will supply that information to the Court if the Court desires the information.

The Perez’s retained counsel.

An answer was filed denying the negligence.

On the date of trial, counsel advised the Perez’s to confess judgment so that he can take them to bankruptcy.

Potter Stewart:

And the theory on which the lawsuit was brought against her i.e. the wife was what, because the husband was driving the car alone in the car, was he not, at the time of the collision?

Anthony B. Ching:

Yes, the husband was alone.

This was alleged in the complaint.

Potter Stewart:

And the complaint joined her as a defendant on what theory, on the community property theory or —

Anthony B. Ching:

Exactly.

In Arizona, it is a common practice in suing a marital community to sue both the husband and wife.

Anthony B. Ching:

The complaint is also in the record, I believe its page 53 and 54 preceding the judgment in the record.

Again, it’s not reproduced in the appendix.

The complaint named him and Django Perez, his wife and subsequently the judgment recited Emma Perez since here true name was late unknown.

But the complaint spelled out that the suit was against Adolfo Perez and the marital community husband and wife.

Potter Stewart:

And the confession of judgment was filed on behalf of both defendants, man and wife?

Anthony B. Ching:

That’s right.

And so it’s a judgment, reciting judgment against Adolfo and Emma Perez, husband and wife.

Warren E. Burger:

Could the judgment have been entered against the driver only?

Is there any impediment in Arizona law to doing that?

Anthony B. Ching:

In Arizona, the — a suit can be brought either against the husband or against husband and wife.

This is entirely at the option of the plaintiff’s attorney.

Warren E. Burger:

But once having been brought against both of them, could a lawful judgment have been entered against the driver only, the husband?

Anthony B. Ching:

This is not shown by any of the case law in Arizona regarding community property.

Warren E. Burger:

But if the plaintiff and the defendants had agreed upon that, it probably could’ve been done, isn’t that correct?

Anthony B. Ching:

Most plaintiffs are not willing to do that because most plaintiffs feel that wife may have a job and it will be easier to garnish or execute on the wife if the complaint and the judgment reads the wife’s name.

In other words, the wife’s earnings are the community property during marriage and a complaint and a judgment against husband and wife will facilitate the garnishment and execution of a judgment.

Potter Stewart:

The complaint, the original complaint was based, I suppose upon the husband’s negligent conduct in driving the automobile, is that correct?

Anthony B. Ching:

Exactly.

Potter Stewart:

Was it based at all on the — against the wife under — on the basis that she had been negligent in lending the car for him to drive?

Anthony B. Ching:

No.

Potter Stewart:

Or anything such as that?

It was not based at all on her independent negligence, was it?

Anthony B. Ching:

No, there’s no allegation in the complaint as to that at all.

Potter Stewart:

The (Inaudible) on the complaint that is the wrong, the wrongful injuries were wrongful injuries because of the husband’s negligence, is that right?

Anthony B. Ching:

Exactly.

Potter Stewart:

Nothing as to — nothing in the complaint about the wife’s negligence, no allegations as to —

Anthony B. Ching:

No.

Potter Stewart:

She was joined merely as a member of the community that owned the automobile, I suppose?

Anthony B. Ching:

That is correct.

Potter Stewart:

Well now, where was title to the automobile?

Anthony B. Ching:

The title to the automobile is in the name of Adolfo Perez only.

Potter Stewart:

But as a matter of Arizona law, if the automobile was acquired after their marriage, regardless to the title it nonetheless belonged half to his wife, is that right?

Anthony B. Ching:

Exactly.

The automobile is community property.

Potter Stewart:

Right.

Anthony B. Ching:

And the wife has an interest in it, although the husband is the manager.

Potter Stewart:

Right.

Harry A. Blackmun:

Mr. Ching, do you know whether Arizona permits the holding of personal property in joint tenancy?

Anthony B. Ching:

Yes, Arizona permits the holding of a personal property in joint tenancy.

Harry A. Blackmun:

Would your case be any different if this automobile were registered in the names of Adolfo and Emma as joint tenants?

Anthony B. Ching:

The case will not be any different other than not only the community property of the husband and wife, but also Emma Perez’s separate property will then become liable.

So in other words, the joint property will make it a joint in several obligations.

Harry A. Blackmun:

As long as I’ve interrupted you, one more question.

Do you concede that Arizona could have made insurance, a condition precedent to the issuance of a license?

Anthony B. Ching:

Certainly, Your Honor and this has been done in three states: New York, Massachusetts and North Carolina.

After surrendering to the state their licenses upon demand, the petitioner’s filed a lawsuit in the District Court.

The state filed a motion to dismiss and a single-judge granted their motion to dismiss.

The case then was appealed to the Ninth Circuit, and the Ninth Circuit affirmed the decision and thereafter, certiorari was petitioned for — by the petitioners and this Court granted certiorari.

This case involves a very important and alleged conflict between a state statute and the Federal Bankruptcy Act.

This issue has been before the Court twice within the last 20 years, in the case of Reitz versus Mealey, a New York case, and Kesler versus Department of Public Safety, a case coming from Utah.

The statue was upheld under similar circumstances as regarding Adolfo Perez by a divided court in both cases.

Our argument here will be that this Court should reexamine these earlier cases and after due consideration, overrule these cases, because they are not logically sound and that they are now out of date and also that in applying Arizona law, the rationale used by the court previously is not applicable.

In the Reitz case and in Kesler, this Court sustained a statute on a basis that the purposes of these statutes are to deter irresponsible driving and to promote public safety which of course is a valid exercise of the state’s police power.

We would urge the Court to consider our argument that the statute really does not deter irresponsible driving and does not protect the public safety.

This type of suspension is not suspension for the conduct of negligent driving, but a suspension for the nonpayment of the judgment.

Warren E. Burger:

Well, when you use the word responsible, referring to it, I assume in the statute, in what sense do you think that word is used?

Responsible meaning a careful driver or is it responsible in the sense of a driver who can respond and does respond in damages?

Anthony B. Ching:

The Arizona statute has for the purpose the financially irresponsible drivers that it’s trying to reach and not the drivers who are irresponsible in their conduct.

And I will illustrate by pointing out to this Court that Arizona as in every state have criminal sanctions against irresponsible driving, for drunk driving, for manslaughter, for various violations.

And yet under Arizona law, no suspension can be for more than one year.

Anthony B. Ching:

Even if a person’s license is revoked for vehicular manslaughter or for twice driving under the influence of alcohol or drugs, he can apply to regain his license after one year.

But in this case, a person whose license is suspended can not get his license and sometimes permanently until he pays the judgment.

This I believe demonstrates that public safety is not what is intended by the statute.

The statue is intended to collect the dept to aid a victim.

Warren E. Burger:

Well, don’t you suppose that Arizona legislature had in mind that if there was a criminal conviction, manslaughter for example, that their invariably or if not then almost invariably, there would be a judgment or a claim that would be satisfied or else would come under the civil provisions of the statute?

Anthony B. Ching:

Exactly.

What I’m saying is that for a person who has insurance who is convicted for manslaughter or drunk driving, his insurance company would pay the judgment and he can regain his license after one year.

Warren E. Burger:

Well, I thought you had just agreed in response to a question of Justice Blackmun that the state had a lawful power under its police power to require insurance, did I misunderstand you on that?

Anthony B. Ching:

No.

I said a state can require everybody to have insurance.

I’m only trying to point out to this Court that there is a obvious conflict with the Bankruptcy Act.

Had neither of these petitioners gone through bankruptcy, then I would say there are constitutional questions, maybe surrounding, especially Emma Perez’s claim.

But now that both these petitioners have gone through bankruptcy, they have the shield of bankruptcy, and therefore, the only conflict that needs to be resolved by this Court is whether or not the statute conflicts with the Bankruptcy Act.

I’m not asking this Court to reach any constitutional decisions in this case.

Do you think you could prevail on this case without overruling Kesler as far as Emma Perez is concerned?

Anthony B. Ching:

As far as Mrs. Perez’s concerned, I believe that this Court can very well distinguish the Kesler case on a basis that the Kesler case as stated in the opinion by Mr. Justice Frankfurter, the state statute has for the purpose the deterring of irresponsible driving and that that purpose is absent as far as Mrs. Perez is concerned.

And then —

Anthony B. Ching:

— because she is not a negligent driver.

What basis then would there be for us to set aside the judgment as to Mrs. Perez, state judgment?

Anthony B. Ching:

I’m not asking this Court to set aside a state judgment, the state judgment is perfectly valid.

No, I mean the license.

Anthony B. Ching:

Because Mrs. Perez having gone through bankruptcy, the judgment is duly discharged in bankruptcy.

How would that — this presupposes that this Court is going to overrule Kesler.

Now, I’m asking you if Kesler is still remains on the books, do you think you have a claim as far as Mrs. Perez is concerned on the theory that the rationale of Kesler didn’t reach one circumstance, as Mrs. Perez was?

Anthony B. Ching:

Yes, I believe that this Court can, because the rationale of Kesler does not cover persons such as Mrs. Perez who is not —

What ground would that be on? Would that involve a constitutional approach?

Anthony B. Ching:

No that would only require the same approach under the Bankruptcy Act and the Supremacy Clause.

As to Mrs. Perez, there is a clear conflict between the state statute requiring that every person against whom a judgment is rendered to surrender the license and the Federal Bankruptcy Act.

A clear conflict has emerged and absent the rationale in Kesler as pertaining to the negligent driver, Mrs. Perez must have the cloak of protection of the Federal Bankruptcy Act.

Harry A. Blackmun:

Now Mr. Ching, you are raising a constitutional question and to what you’re basing your case on the Supremacy Clause?

Anthony B. Ching:

Exactly.

Harry A. Blackmun:

Well now, you do not mention Due Process or Equal Protection or Bill-of-Attainder Argument which are contained in the amicus briefs?

Anthony B. Ching:

No.

It is not necessary to reach this argument because as I’ve said before, had Emma Perez not gone through bankruptcy, these issues would have been raised.

However, since she has gone through bankruptcy, the only issue left is that whether the Bankruptcy Act gives her that certain protection.

Warren E. Burger:

Why is that so?

Harry A. Blackmun:

Are you abandoning those issues?

Anthony B. Ching:

I’m not abandoning these issues.

These issues were not decided by the lower court.

These issues would require a three-judge court at least under the case law as now existing and that if these issues were to be decided, I believe at least under existing case law, we would have to remand the case to the lower court to convene a three-judge court.

And I don’t think that is necessary because the Supremacy Clause as we know under Swift & Company versus Wickham does not need a three-judge court, and the one-judge court has properly decided that issue.

Warren E. Burger:

But independent of the bankruptcy discharge, do you think you have no claim by reason of the State of Arizona canceling her license for conduct in which she had no direct involvement?

Anthony B. Ching:

Yes.

I believe that the statute would be unconstitutional, even if Mrs. Perez had not gone through bankruptcy, but once she had gone through bankruptcy, she has the added protection of the Bankruptcy Act.

Warren E. Burger:

Well I —

Anthony B. Ching:

And the very reason that the statute may be unconstitutional, if you had not gone through bankruptcy would be more than enough to show that the same statute violates the Bankruptcy Act and thus the Supremacy Clause.

Warren E. Burger:

Well, I go back to Justice Blackmun’s question.

Are you abandoning any claim that apart from the bankruptcy problem, Arizona cannot constitutionally do this to her, to the wife?

Anthony B. Ching:

I’m not abandoning the claims.

I’m just fearful that jurisdictionally this Court cannot reach these constitutional issues being that a three-judge court was not convened, and therefore, these issues were not properly brought before this Court.

But a one-judge court did rule on the bankruptcy at issue, and therefore this Court can properly adjudicate a Bankruptcy Act claim.

Well, you have to do that to the jurisdiction is a problem?

Anthony B. Ching:

That’s right.

Otherwise, you would have to go back and start all over again?

Anthony B. Ching:

Which we don’t think it’s necessary because the Bankruptcy Act is the argument that we’re asserting.

You accept, in other words, for you argument the premise of the Court of Appeals of the three-judge court or of the Court of Appeals, both of them that these other constitutional questions are in substantial and therefore not sufficiently required a three-judge court?

Anthony B. Ching:

I don’t accept this statement.

However, I think it is unnecessary to reach at these issues.

The Court should limit itself to resolving the issues that is — the issue before the Court and the Bankruptcy Act claim is the issue, and once having resolved the Bankruptcy Act issue, it is unnecessary thereafter to reach the constitutional issues.

Well, Justice Blackmun’s question in a different way, it’s what I find the precedent.

Suppose you don’t prevail on your Supremacy Clause there, then do you — are you arguing here the — are you abandoning or you still maintaining the Due Process or Equal Protection?

Anthony B. Ching:

I would say as a secondary line of defense, I would say that this Court can properly consider the constitutional issues whether they are substantial and can remand the case to the lower court for a three-judge court to be convened if this Court deems necessary.

It would have to go back?

Anthony B. Ching:

This is up to this Court.

Potter Stewart:

Now, that — that takes care of Emma Perez, but in order for you to prevail with respect to Adolfo, it would be necessary for you to persuade this Court to overrule Kesler, is that correct?

Anthony B. Ching:

Exactly, and I propose to do so.

Potter Stewart:

Right.

Anthony B. Ching:

And in addition to what I pointed out as to the criminal sanctions vis-à-vis, the financial responsibility in my argument that the statute really does not protect the public to ensure the safe driver’s drive on the highways.

I think one question which a lot of people would have in mind is this.

You know, we can’t allow these people to drive, get into an accident, wipe out the judgment by bankruptcy and drive again and what’s going to prevent them from doing this over and over again?

The answer, of course, is that it won’t happen over and over again because the Arizona statute also provides that in order for Adolfo Perez to get his license again, and not only must he pay the debt, but he must also show that he has insurance for the future.

And the Perez’s are more than willing to pay insurance for the future, and therefore, if allowed to drive, they’ll be actually financially more responsible than some of the drivers on the streets and highways in Arizona who have no insurance.

Another thing we must point out in — or to demonstrate that the statute is not for the purposes of public safety.

I’d like to quote the Arizona Supreme Court decision in Schecter v. Killingsworth and this decision was cited both by myself and my opponent, and the Arizona court in that case that came out in interpreting the Financial Responsibility Act of Arizona saying that the state statute does not have for its primary purpose the purpose of public safety.

The Arizona court said, the Financial Responsibility Act has for its purpose, the principle purpose, the protection of the public using the highways from financial hardship which may result from the use of automobiles by financially irresponsible persons.

It accomplishes the objective by requiring proof of financial responsibility by those involved in an accident, either by showing of insurance which covers the accident or by requiring a bond or deposit or cash, or security.

It may as incidental purpose and effect because of the threat of loss of driving arise following an insured accident, one, encourage operators of motor vehicle to obtain liability insurance and two, encourage drivers to drive more carefully.

Because the uninsured motorist can avoid the adverse effect of a statute without obtaining insurance and without improving his driving skills, we cannot either — we cannot consider either the encouragement to obtain insurance or the improvement of the safety conditions on the highways to be the primary objective of this law.

And this point was omitted by the respondent in their brief as the proper interpretation of the Arizona statute placed by the Arizona Supreme Court.

And therefore, it is a well established doctrine that in such a case, the federal court must be bound by the interpretation placed by the state’s highest court.

I’ll just cite one case decided by this Court on that point, the Marine National Exchange Bank versus Kalt-Zimmers Manufacturing Company in 293 U.S. 357.

That case, it’s also a case involving bankruptcy and it involves another uniform law, the Negotiable Instrument Act, and involves the construction by the state court as to what is at holder in due course.

And this Court said that not withstanding the weight of thought to the contrary, the federal court is bound by the interpretation placed by the Wisconsin court.

I’d like to point out again that Mr. Justice Frankfurter in his opinion, at the time when he felt the driving is not important, Mr. Justice Frankfurter said that the — in fact, it’s only tangential as to a driving that only in particular cases when one seeks to drive to restore his driver’s license and registration.

I submit that this is no longer true that in this day when driving is such an important right as said by the Arizona Supreme Court again in the same case Schecter versus Killingsworth, when Arizona overruled a prior decision and said “driving is no longer privileged for the right.”

And I submit that every person whose license is suspended will seek to have his license restored.

Therefore, the effect of a statute is no longer a tangential.

It is very direct and complete and its impact on the Bankruptcy Act is again complete.

I would like to call attention to this Court as to a recent case decided by the Third Circuit on December 22, 1970 dealing with a point whether an owner who was vicariously liable would have his license suspended, and then after bankruptcy can he get the benefit of the bankruptcy by having his license restored.

The Third Circuit held that his license should be restored.

Anthony B. Ching:

A later, Second Circuit case, decided a couple of weeks ago, reached a contrary decision.

I have not read the Second Circuit opinion, but I like to quote the opinion by the Third Circuit, the opinion by seven judges out of nine.

The opinion said “Nor is the disability of disqualification from owning or operating a motor vehicle and essentially tangential impingement upon the purposes served by Section 17 of Bankruptcy Act, one cannot ignore the facts of present day urban existence, a combination of public and private policies have made use of an automobile an actual necessity for virtually everyone who must work for a living.

For the urban poor in particular, remoteness from the thriving suburban segments of the industry, economy and a deteriorating public transportation system often make use of an automobile, the only practical alternative to welfare.”

Potter Stewart:

Is that decision cited in your brief?

Anthony B. Ching:

No.

This decision was just decided less than a month ago.

Potter Stewart:

Do you have the citation?

Anthony B. Ching:

It’s 39 Law Week 2334.

Potter Stewart:

And then —

Hugo L. Black:

39 what?

Anthony B. Ching:

Law Week 2334.

Potter Stewart:

And then you mentioned the Second Circuit decision in conflict.

Have you got a —

Anthony B. Ching:

Yes.

It came out in a Law Week just a week ago.

I don’t have the exact citation, but I was informed of that.

Potter Stewart:

About a week ago in Law Week?

Anthony B. Ching:

Yes.

Potter Stewart:

Thank you.

Anthony B. Ching:

I don’t know how much time is remaining, I would like to reserve a few minutes for rebuttal.

Thank you Mr. Chief Justice.

Warren E. Burger:

Thank you Mr. Ching.

Mr. Schlosser?

Robert H. Schlosser:

Mr. Chief Justice —

Warren E. Burger:

By the way, Mr. Ching I think you have probably five minutes?

He has about 30 seconds.

Warren E. Burger:

Oh!

You have — we’ll make that a minute Mr. Ching.

Robert H. Schlosser:

Mr. Chief Justice —

Warren E. Burger:

Mr. Schlosser.

Robert H. Schlosser:

— and may it please the Court.

I might first state that as the Court is well aware, there have been two women’s lib groups who have filed amicus curiae in this particular action.

I did not respond to the amicus curiae in my answering brief for the simple reason that the notification concerning the granting of the original amicus curiae brief was not received until my brief was in preparation on its way to the printers.

Notification as to the second one of which I feel a response, a written response would definitely is more deserve it, was not received in my office until January 13 this year.

For that reason, I will attempt to cover these briefs in oral argument, especially the one from the organization located in Tucson, Arizona and would request that if the Court deemed necessary as based upon different citations, which I will utilize in the oral argument that they might see fit to grant leave to file either an additional authorities and/or maybe a short answering brief directed towards the amicus curiae briefs.

I would like first to briefly and devote actually a much smaller portion of my argument to the overall issue as challenge concerning the — whether or not to overrule Kesler and Reitz and reserve a primary portion of my argument or rather at the latter port — part of the argument, go into the issue concerning Emma, which is by far the more novel and interesting issue possibly here.

Now as Mr. Ching has pointed out and has stated and I think in both briefs that various lip service has been given to the type of statute which is challenged here, the type of statute which is challenged here has been enacted at least at one time in 45 or more of our states.

This is based on a Uniform Act with local state adoptions.

The public purposes justifying such statutes have been enumerated as follows: One, a deterrent to unsafe driving.

Number two; a very nebulous to protect others using the highways.

Number three and as mentioned most specifically by Arizona, to keep persons who may be injured by the financially irresponsible utilizing of the highways off of our welfare roles and four; the mention has been made to encourage insurance.

Arizona does can at least state that in their estimation, the primary purpose of this particular statute in the Arizona Supreme Court’s estimation when they wrote the Schecter case was to keep persons who may be injured by the financially irresponsible off the welfare roles.

Gentlemen, I don’t think that whether Arizona states that, they also did mention the incidental purposes.

I don’t think that Arizona’s placing its emphasis as far as it was concerned on that particular element or alleged public purpose in anyway should govern whether or not this statute is held constitutional or unconstitutional or violative or un-violative of the Supremacy Clause.

The reason why I say that is, this is the — challenged portion of this statute is all but verbatim, the statute which was challenged in Reitz and the statute which was challenged in Kesler.

And because Arizona says “Of the various purposes, we happen to think this one is the more valid” is no reason for this Court to feel that we are talking about a different statute.

And to that —

William J. Brennan, Jr.:

Well Mr. Schlosser, as I read that opinion it isn’t that is no more valid.

Am I right that in effect what your court said was that the principle, the primary, I think the word primary was —

Robert H. Schlosser:

The primary, I understand correctly, thank you.

William J. Brennan, Jr.:

— was financial in order to keep, as you said, victims off the welfare rolls and the others were on the incidental.

Now, are you suggesting the significant — that has no significance for us in the constitutional question?

Robert H. Schlosser:

I’m suggesting that we are talking about the same statute.

William J. Brennan, Jr.:

I’m also suggest —

Well, what we’re talking as I understand it, we’re talking about a statute either identically or similarly phrased as to which, however, your Supreme Court has given a gloss, not given in the statute involved in the Kesler case, is that right?

Robert H. Schlosser:

I would have to agree with that.

William J. Brennan, Jr.:

And you think that nevertheless has no significance for us on the constitutional question?

Robert H. Schlosser:

I don’t feel that if you feel the statutes are substantially the same for the purposes of judging the supremacy argument, that Arizona is classifying one as primary and others as incidental should be binding upon this Court.

Potter Stewart:

I’m a little dense, but I don’t quite see the connection between the statute and keeping people off their welfare rolls, just as a matter of relevant connection.

Potter Stewart:

This — if a person in Arizona is in an accident and there’s a judgment him that remains unpaid, he has to give up his license, he can’t drive.

That’s what the statute says, isn’t it?

Robert H. Schlosser:

Yes.

In this particular —

Potter Stewart:

Now what’s that got to do with the welfare roll?

I think his discharging bankruptcy would more likely keep him off the welfare rolls.

Robert H. Schlosser:

May I point out to the Court that in the Schecter case as I recall, the particular suspension which was discussed there was what the prejudgment suspension.

The suspension which is prior to any judgment being enlarged where a determination is made upon the reasonable possibility of judgment by the director of the financial responsibility section with a provision for appeal from his determination, wherein he also sets a bond and the Instant case deals with a post judgment suspension where the liability issues and so forth have been clear.

Now if that provides a distinction, I’m not certain other than that the bond is there, I would tend to agree with this Court concerning the primary purpose of the statute concerned as opposed to the Arizona court.

Potter Stewart:

I — would you explain to me what it really has to do with the welfare, presence on the welfare rolls or not of anybody?

Warren E. Burger:

Yes, I’m confused too, as Justice Stewart is.

I thought someone had been referring to the victims of uncompensated —

Robert H. Schlosser:

That’s —

Warren E. Burger:

— accidents through the people who are on welfare —

Robert H. Schlosser:

That’s my understanding of the decision, excuse me?

Warren E. Burger:

— not the driver of the car.

Robert H. Schlosser:

No it’s the —

Warren E. Burger:

You’re not concerned about him.

Robert H. Schlosser:

No, it’s the third person victim.

Potter Stewart:

It’s the uncompensated victim, isn’t it?

Robert H. Schlosser:

Yes.

That is —

Potter Stewart:

By hypothesis, the victim is already been victimized.

He’s been hit by an negligent driver and injured, let’s say, or suffered property loss.

Now then what’s — so he’s already been victimized?

Robert H. Schlosser:

Yes.

Potter Stewart:

By a man who can’t pay a judgment, by hypothesis, and so what — does it matter what you do to that man who can’t pay the judgment with respect to whether or not somebody goes on the welfare rolls?

Robert H. Schlosser:

Well —

I suppose the theory is, isn’t it that if he seriously hurt, he can’t work, he may become an object of welfare?

Robert H. Schlosser:

That is true.

Robert H. Schlosser:

But —

Potter Stewart:

My hypothesis, a judgment proof debtor has hit this person, so therefore his injuries can not be compensated.

Now, whether or not the victim goes on a welfare rolls hardly has anything to do with what you do to that judgment proof debtor, does it?

Robert H. Schlosser:

However, you’re presupposing facts that we’re not in issue in the Schecter case.

First of all, there was no discussion of whether or not the person was judgment of proof.

In that case, they were imposing a bond.

Potter Stewart:

By hypothesis, this is it, isn’t it in this case?

Robert H. Schlosser:

In the Instant case?

Potter Stewart:

This is it — we’re talking here about a judgment creditor who can’t pay — a judgment debtor who can not pay the judgment, aren’t we?

Robert H. Schlosser:

That’s the allegation of the petitioner, yes that’s correct.

Potter Stewart:

Well, that’s a fact in this case as it comes to us?

Robert H. Schlosser:

Well, I have to dispute with the facts that if you’re basing them on a Ninth Circuit opinion also Your Honor, which I will cover in the Emma portion of my oral argument.

Potter Stewart:

Now, very well, I didn’t mean to throw you off.

But I just don’t myself see the connection between this to any possible, a very rational or relevant connection between this statute and the question of who goes on the welfare rolls and who doesn’t?

Robert H. Schlosser:

Well, might I say briefly in answer to that and I doubt that it will satisfy you.

I’m not so sure I’m satisfied with the Arizona explanation.

I might say Kesler was talking about a prejudgment situation where they were trying to extract a bond.

Number two, it may not be every situation where you have a person who is impecunious or indigent who is the person subjected, you do have stubborn people who maybe refuse to get insurance and refuse to maybe protect themselves as they should, but who are not necessarily ones who are indigent.

Warren E. Burger:

I suppose the Arizona legislature is dealing with the generality of people, not those who will be judgment proof, and that they believe at least that this kind of a statute holding the club of cancellation of the license will lead in most cases to the satisfaction of the judgment.

Isn’t that a rational theory, or not?

Robert H. Schlosser:

That is a rational theory.

I’m not so certain of the wisdom of it.

I might point out that Congress has enacted similar legislation for the District of Columbia as well.

As to the theory which you propose being a rational theory, I would definitely agree that, that is probably one of their motives, but that whether or not it is effective or not, is subject to speculation.

Now, if a — I might say that one of the valid purposes which has been mentioned, but never discussed in any full degree in any of the cases I’ve read is to encourage the obtaining of insurance or the posting of surety bonds.

These as in Arizona and in many states which don’t have compulsory insurance, rental agencies, persons who contract for a hire and so forth, are often required to do and treat it in a different class because of their inordinate and use of highway looking toward direct pecuniary gain.

I might say that a complete reversal or detraction of the reverse of rights Kesler position, I think would leave us in a position to where as a practical matter, your marginal owner would be maybe financially ahead to not purchase insurance and save a few dollars aside to pay for his bankruptcy discharge.

And then as long as he’s often off — does not have an accident for another six years, he’s safe again.

Now, I would like to direct the balance of my comment and my time, I believe to, with the exception of a very short summary, to the Emma Perez situation.

Thus far we’ve had three briefs filed, as far as I’m concerned, and an opinion written by the Ninth Circuit Court of Appeals that is entirely in error concerning law and facts, concerning Emma Perez.

Robert H. Schlosser:

There are certain aspects and basic doctrines of community property law and tort liability law in Arizona that best be explained.

The first one is that, number one, in Arizona, mere ownership of a vehicle is not grounds for liability against the owner by a borrower, negligently driving the same.

Secondly, in Arizona it is not necessary for the wife to be a party to a judgment versus the husband for driving of the community vehicle.

The case of Bristol versus Moser which is in 99 P.2nd 706, in the case of First National Bank versus Reeves which is on 234 Pacific 556, both Arizona cases, have held that a community, let’s assume Mr. Perez is on a community errand.

I’ll give Mr. Ching that much, although I don’t know that that was established in the record or the appendix.

Mr. Perez is driving a community vehicle on a community errand, nevertheless, pursuant to Emma’s contention, she had nothing to do with the accident other than she was misfortunate enough to be married to an uninsured, non-negligent community property husband negligently driving her community — the community property vehicle.

Thurgood Marshall:

Suppose Mrs. Perez was in London, the same result?

Robert H. Schlosser:

Yes.

Mrs. Perez confessed judgment, if she is to be believed and her allegations concerning no liability at all, confessed a judgment which the law could not have imposed upon her had she chosen, or had her lawyer advised her to contest it.

In the First National Bank versus Reeves or the Bristol case and I can’t recall which one of them says “The husband is the only indispensable party to such a judgment.

The other one vacated a judgment versus the wife and husband on a community obligation.”

The case of Mortensen v. Knight in Arizona deals with whether or not parties are inversely responsible for their spouse’s negligent operation of a community vehicle.

In Mortensen v. Knight, the wife was the negligent driver, the husband — liability was imposed against the husband, on a theory of ownership, no.

Liability, not directly. Liability was imposed against the husband for the following reason.

He was a co-owner because it was community vehicle, yes, but the court said “That isn’t enough.”

He is imposed with liability because Arizona makes him the exclusive agent and manager of the community that was a community vehicle.

He had a right to control his wife. Conversely as pointed out in all these briefs filed by the amicus curiae women’s lib groups, conversely by that very own Arizona opinion, Mrs. Perez did no right to control what Mr. Perez did because she has no right to control the utilization of community property contrary to her husband’s wishes, and consequently could not have been held liable.

The law imposes a suspension versus persons who are not owners or not drivers or not ones who maintain vehicles.

The suspension is imposed against persons who are judgment debtors as a result of that type of relationship that does not presuppose that someone who has that type of relationship to a vehicle is going to be a judgment debtor.

And I maintain based on the decisions cited, Mortensen v. Knight incidentally I’m sorry is 305 Pacific 2nd 463, and Peterson v. Feldman dealing with mere ownership is not sufficient to impose liability is 436 Pacific 2nd 169, once again both Arizona cases.

Those are cited in your brief?

Robert H. Schlosser:

No they’re not Your Honor.

These are primarily in response to the argument which is set out in the amicus curiae brief from Tucson.

Warren E. Burger:

You’re going to give us that though.

You’re going to supplement —

Robert H. Schlosser:

I would like if the Court grant leave to supplement my brief either by just giving you an official list of these authorities which I cite in my opinion, or a brief, supplemental answering brief in response to the amicus curiae, whichever the Court please.

Warren E. Burger:

You may just submit the list, if that suits your purpose.

Robert H. Schlosser:

Thank you, thank you I appreciate that.

So basically, my contention is Emma Perez confessed judgment on bad advice when had she not confessed judgment, she could’ve received summary judgment if she could’ve established the facts which she asked this Court to rely on.

Thurgood Marshall:

Was there any procedure in the State of Arizona for getting this corrected?

Robert H. Schlosser:

I regret to say that if this were a prejudgment situation, you have a review.

The post judgment suspension relies on the due process procedures which are afforded in your tortuous action tribunal.

Consequently, by confessing judgment and then by not entering an appeal, there is no forum now and it is — the judgment is a judgment to that extent.

Byron R. White:

Mr. Schlosser, would you say that Arizona could give a cause of action against Mr. and Mrs. Perez for the debt in order to protect those people who are injured on the highways?

Robert H. Schlosser:

Could — I’m not certain I followed your question sir.

Byron R. White:

Well, let’s assume Mr. Perez has an accident and he hurts somebody, and he gets sued for the debt.

Robert H. Schlosser:

Yes sir.

Byron R. White:

And there’s a judgment against him.

Robert H. Schlosser:

Yes sir.

Byron R. White:

And then he takes bankruptcy.

Robert H. Schlosser:

Yes sir.

Byron R. White:

Could Arizona nevertheless furnish the injured person with the cause action against Mr. and Mrs. Perez?

Robert H. Schlosser:

No.

Arizona —

Byron R. White:

For the debt?

Robert H. Schlosser:

I don’t believe so Your Honor.

I believe that Arizona would certainly feel bound by the Kesler decision which makes the —

Byron R. White:

But you think for this very same purpose, namely of compensating the injured person, Arizona may take away the driver’s license?

Robert H. Schlosser:

I would have to say my answer with that would be in the affirmative, yes.

Byron R. White:

Yes.

And if the answer is no, why — you’re in trouble I think?

Robert H. Schlosser:

Yes.

Byron R. White:

Yes.

Potter Stewart:

Now Mr. Ching told us that it was the practice in Arizona in a situation such as alleged here, i.e. personal injuries caused by the sole negligence of a husband driving a car registered in his name, but which is community property.

He told us that it is the practice in Arizona to get a judgment against husband and wife because assume the wife is a wage earner, half of her wage is I guess belong the husband and could be levied against by the judgment creditor, is that right?

Robert H. Schlosser:

I would say that that is the prevailing practice.

However, if I —

Potter Stewart:

You say it is the prevailing practice?

Robert H. Schlosser:

Yes, but I don’t — that does not alter what is the law in Arizona and there’s one other factor that entertains this subject when you sue both husband and wife and get a judgment against both husband and wife.

If you have a negligent husband driving, you sue him and you sue husband and — excuse me, if you sue him, you have a judgment versus the community if he’s on a community errand, and you have a judgment versus his separate property.

Robert H. Schlosser:

If you join the wife, not only is she subjecting her community, but there’s very good argument even if they want to characterize it “husband and wife” after their judgment heading that you’ve also got her separate property too, for something that should not in anyway be affected as long as she was not negligent, did not have any power to control the operation that —

Potter Stewart:

So what you’re saying is that if the allegations here are correct, the judgment against here was completely unjustified under Arizona law?

Robert H. Schlosser:

That’s right and they relied on bad attorney’s advice in the lower court, the same advice which was to confess judgment and go through bankruptcy.

Where do you think that law brings this out?

Robert H. Schlosser:

It brings us to a situation, I believe Your Honor, [Attempt to Laughter] where as far as relief for Mrs. Perez.

There’s one factor which is later on in my notes, but I might mention it I — this may not be justice, but I don’t know what to do, what the law can do about people who confess liability to actions they’re not liable for and then let their appeal time run.

Now, this is a sanction which they relied on.

They relied on an attorney who gave them advice contrary to a statute which at least at the time of his advice had been held constitutional or like counter part had.

I don’t know what to — what advice to offer them other than the fact that the procedure set out in area is 2011 65 had never been utilized in this case, which is a method for these people to have their license returned and I would call the Court’s attention to that.

Arizona is unique, I think, as compared to the other states who have this because in reviewing, some of the other states who have statutes based on the Uniform Safety Responsibility Act, Arizona is one of the few that in working out an installment plan does not only have the situation where you can have concurrence of the person who was injured.

In other words, you can have your license returned in Arizona in a superior court’s discretion by petitioning that court, filing or servicing notice on the injured persons, the persons who would have a right to object or be the real party in interest, actually.

And you can go into that court, put on a showing as to your ability to pay, and that court can set installment payments.

I would surmise, it is much like a support proceeding for fathers who’ve divorces —

Thurgood Marshall:

Mr. Schlosser, once the bankruptcy has gone through, who is the party in interest?

Robert H. Schlosser:

The party in interest pursuant to the Arizona statutes, and I would be less than candid if I told you different, were still be victims of the accident.

Thurgood Marshall:

So bankruptcy wouldn’t help at all?

Robert H. Schlosser:

Bankruptcy merely precludes those people from utilizing any technical aspects in collecting that judgment, no garnishments or executions.

Thurgood Marshall:

But they could object to their license?

Robert H. Schlosser:

All they can do is — different than Utah.

In Utah, they instigate the action.

In Arizona, they can relieve the party or a court can relieve the party over their objection.

If the court orders them to pay installment payments in his discretion and they keep up their installment payments.

Thurgood Marshall:

But that without the license division, the judgment debtor wouldn’t have any such right, would he?

You want to get to and under the statute and now Arizona which says the man can’t drive or the woman can’t drive?

Robert H. Schlosser:

I believe that’s right.

Thurgood Marshall:

And that’s a brand new right given to a judgment debtor in a bankruptcy procedure, the right to keep me from getting my license?

Robert H. Schlosser:

Oh, the creditor Your Honor?

Thurgood Marshall:

Yes.

Robert H. Schlosser:

Oh!

Yes.

Robert H. Schlosser:

See, I was a little confused in terminology.

He doesn’t have the right to keep you from getting it, but he does.

We’re playing semantics now and probably I am with you.

He has the right to allow you off the hook as opposed to — he doesn’t invoke it.

I might be playing a word game with you, I’m afraid possibly I am.

Thurgood Marshall:

Make it the both of us.

Robert H. Schlosser:

I might point out to the Court that we have — Mr. Ching has admitted that you can require compulsory insurance.

He’s also — I would feel by this same admission,his objection is to the creditor, the creditor’s power in this situation.

What if we had a statute in Arizona which said you get in an accident and you don’t show us that you had insurance or some other funds, deposit on that date of that accident, you loose your license automatically; nothing about creditors, nothing about bankruptcy, or anything else.

Warren E. Burger:

But creditor is not taking any action here, it’s only state action we’re concerned with, isn’t it?

Robert H. Schlosser:

That’s true.

The creditor does have power to relieve, also the superior court does Your Honor, based on conditional payments which either the creditor could waive if he’d wanted to.

We can expect, it’s impractical, but they could relieve on an installment plan.

This is — we talk about whether customarily used.

They also have the power where you have a creditor who is over bearing.

The superior court does have the power under the areas of 2011 65 Section, to set monthly payments in his discretion.

I merely point out to the Court the admissions, concerning insurance as a compulsory, prerequisite and so forth.

And once again, I still have to admit that I am somewhat baffled as our respondents who I represent, how a person can admit that this could be required as a precondition to issuance of the license, yet a less severe restriction is unconstitutional.

Now —

Potter Stewart:

Well, only because of the existence of the Bankruptcy Act and because of the Supremacy Clause which wouldn’t touch the requirement of insurance.

Robert H. Schlosser:

That’s true, that’s true.

I’m referring to characterization and our argument —

Potter Stewart:

Their argument is based upon —

Robert H. Schlosser:

Yes.

Potter Stewart:

— the bankruptcy power of Congress and it’s — and the legislation that Congress has enacted under that power being supreme to the laws of Arizona.

It’s not based on, at the moment at least, on any concepts of Due Process or Equal Protection, that’s the reason for that difference, isn’t it?

Robert H. Schlosser:

Yes.

Potter Stewart:

The bankruptcy legislation wouldn’t have anything to do with your compulsory insurance statute, is that correct?

Robert H. Schlosser:

Yes.

I might point out on the brief from the Woman Center in Los Angeles, one of the amicus curiae briefs.

Robert H. Schlosser:

In brief response to that, once again they are relying on the fact which was pointed in Ninth Circuit erroneously that Emma Perez is an established fact was non-negligent.

Only Mr. Ching’s assertion concerning the complaint that we know that she’s not negligent.

Not being in the car does not necessarily mean that you’re guilty of nonfeasance or in fact misfeasance.

There are innumerable factual situations where this could’ve been imposed.

Warren E. Burger:

And you say that they’re foreclosed, everyone’s foreclosed in challenging that by reason of the entry of a judgment by confession whether it was good or bad advice?

Robert H. Schlosser:

I would think so.

Warren E. Burger:

They can’t go behind the judgment?

Robert H. Schlosser:

I would think so.

I would — that what would be my position right or wrong as to these facts.

Secondly, the Court of Appeals did rely on a case by the name of Donato versus Fishburn to say the wife is bound to join in this judgment.

Gentlemen, I have reread Donato versus Fishburn.

I don’t know where the Court of Appeals came to that conclusion, it certainly not in the case.

All it talks about is executing versus the community based on a judgment.

There’s no discussion in there whatsoever concerning whether or not a wife has to be or does not have to be, any discussion concerning proper, necessary indispensable parties in a community property situation.

Potter Stewart:

Well as Mr. Justice Harlan asked you earlier, where does all has leave us with respect to the issue in this case, with respect to Emma Perez?

The fact is that she is now a judgment creditor rightly or wrongly, erroneously or correctly under Arizona law, she is one and — a judgment debtor, I beg your pardon, judgment debtor I misspoke.

And that now her claim is that because of her discharge and because of the effect of the bankruptcy proceedings, her liability to the judgment creditor is now discharged as a matter of the supremacy of federal law.

Now wouldn’t that argument be just as good or bad just as sound or unsound, whether or not the original judgment against her was justified or unjustified?

Robert H. Schlosser:

Yes, if you’re taking about the Supremacy Clause, definitely.

Potter Stewart:

Yes.

Robert H. Schlosser:

We do have —

Potter Stewart:

What I gather is what Mr. Ching is talking about?

Robert H. Schlosser:

Yes, but we do have other contentions in the various other briefs and we also have some erroneous conclusions in the Ninth Circuit brief which I did want to make sure the Court was clarified as to my position.

Yes, I would agree.

I personally think, for instance Mr. Ching mentioned that he’s going — first his brief talks about Perez’s and then he says “In addition, here is Emma”, and then he says “Emma’s innocent.”

Therefore, I personally think innocent, not innocent, owner, driver, what have you if it violates the Supremacy Clause because the suspension isn’t discharged, it doesn’t make any difference.

If she’s innocent or if she was guilty of all the gross negligence because of course, that can’t be discharged —

Potter Stewart:

Right.

Robert H. Schlosser:

— well for moment, excuse me, but the distinction in relationship, I don’t think has any validity if the supremacy what we’re talking about.

My time is up.

Robert H. Schlosser:

I want to thank you for your time.

Warren E. Burger:

Thank you Mr. Schlosser.

We’ll give you a little more time Mr. Ching.

Anthony B. Ching:

Mr. Chief Justice.

I would rebut that Mr. Schlosser’s argument as to ownership being not a basis for the judgment.

Under the statute, defining judgment in the Financial Responsibility Act 28-1102 Sub-para 2, judgment means any judgment which has become final etcetera, by a court etcetera, upon a cause of action arising out of the ownership, maintenance or use of a motor vehicle, if ownership is just very much part of the judgment.

As to welfare, I would say to the Court that there’s more likelihood that a judgment debtor would go on welfare than judgment creditor.

The creditors allow them have insurance and the subjugation —

Warren E. Burger:

How can you categorize that Mr. Ching?

It depends on the economic status of the particular victim?

Anthony B. Ching:

Exactly.

Warren E. Burger:

You really can’t generalize about people who get hit by automobiles, can you?

Anthony B. Ching:

No, but I’m saying that Arizona has by statutory scheme providing for the uninsured motorist provision for example, and the insurance company pay off to the victims and that in the Schecter case, the court took about 76% of the motorists being insured, and therefore at least one — three out of four victims are most likely have insurance.

Therefore, those creditors pursuing the debtors, three out of four are insurance companies.

Warren E. Burger:

Thank you Mr. Ching.

Thank you Mr. Schlosser.

The case is submitted.