United States v. Security Industrial Bank

PETITIONER:United States
RESPONDENT:Security Industrial Bank
LOCATION:Mobile, Alabama

DOCKET NO.: 81-184
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 459 US 70 (1982)
ARGUED: Oct 06, 1982
DECIDED: Nov 30, 1982

Alan I. Horowitz – on behalf of the Appellant
Henry F. Field – on behalf of the Appellee

Facts of the case


Media for United States v. Security Industrial Bank

Audio Transcription for Oral Argument – October 06, 1982 in United States v. Security Industrial Bank

Audio Transcription for Opinion Announcement – November 30, 1982 in United States v. Security Industrial Bank

Warren E. Burger:

The judgment and opinion of the Court in United States against the Security Industrial Bank will be announced by Justice Rehnquist.

William H. Rehnquist:

This case comes to us from the Court of Appeals for the Tenth Circuit.

A group of people in Kansas and Colorado have borrowed money from several loan companies before in November 1978 and each of these individuals gave the loan company a lien on household furnishings and appliances as security for the debt.

In November 1978, Congress passed a new bankruptcy law.

One provision of this permits individuals who become bankrupt to avoid some liens on household furnishings and appliances.

Some time after the new law became effective, each of these individual borrowers, in our case, filed for bankruptcy and the Bankruptcy Courts in Kansas and Colorado each claimed the new law entitled them to keep the household goods notwithstanding the lien.

Each of the loan companies protested, it would unconstitutional to apply this law to them.

They relied on the Fifth Amendment to the Constitution which forbids the Government to take private property for public use without just compensation.

United States Government appeared on behalf of the individuals to defend the constitutionality of the statute.

In each case, the Bankruptcy Courts in Kansas and Colorado ruled for the loan company.

The Government appealed and the Court of Appeals for the Tenth Circuit agreed with the loan companies that the statute is unconstitutional, although they agreed with the Government that the statute was intended to apply to these transactions which occurred before the date the statute was enacted.

We have decided we not — need not decide whether these laws unconstitutional because we determined that Congress did not intend the statute to apply to liens that were created before it was enacted.

In the rather early case of Holt against Henley decided in 1914, this Court established the principle of construction that no bankruptcy law shall be interpreted to destroy property rights that were created before the law was enacted unless Congress is explicitly required the contrary.

In this case, an early draft of the 1978 statute contained this sort of explicit statement but Congress removed it before it passed the law.

Therefore, we affirm the judgment of the Court of Appeals under which the loan companies were entitled to obtain their liens.

Justice Blackmun joined by Justice Brennan and Justice Marshall has filed an opinion concurring in the judgment.

Warren E. Burger:

Thank you, Justice Rehnquist.