Shine v. Shine
802 F.2d 583 (1986)

  • Marguerite and Louis were getting a divorce.
  • Although the divorce was granted in Virginia, where Louis lived, Marguerite had gotten a DC Court to grant her $250 a month in alimony payments in a totally separate action.
    • The Virginia divorce decree specifically said that there were no property issues to be resolved.
  • Three years went by and Louis hadn't paid a dime of the alimony. Marguerite sued in New Hampshire (where she now lived) to get the money.
  • The Trial Court ordered Louis to pay $12k in back-alimony.
  • In response, Louis declared bankruptcy.
  • In order to stop Louis from weaseling out of his debts, Marguerite filed a complaint in Federal Bankruptcy Court to have the support obligation declared nondischargeable under 11 U.S.C. 523(a)(5).
    • 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 found for Louis. Marguerite appealed to the Federal District Court.
    • The Bankruptcy Court found that the debt was not dischargeable because it "relates to the oral separation agreement between the parties."
    • However, on reconsideration, they changed their mind and found 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."
      • Basically, the Court was saying that the separate judgment Marguerite had from the DC Court wasn't part of the divorce settlement and so was not covered by 523(a)(5).
  • The District Court reversed. Louis appealed.
    • The Appellate Court found 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."
  • The Appellate Court affirmed and found that the alimony payments were not dischargeable.
    • The Appellate Court looked to precedent and found that some courts found the debt dischargeable and used different reasoning:
      • Some have looked primarily to the plain language of the Statute.
      • 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.
      • Others have found in the legislative history of 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.
    • The Court looked to case law and found that other courts found the debt not dischargeable and used different reasoning:
      • Some courts relied upon the legislative history of 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.
      • Other courts 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.
    • The Court looked to the case law about the 1903 Amendments to 17 of the 1898 Bankruptcy Act. In those cases, the court had traditionally found that it was the substance rather than the formal designation of the payments that determined if they counted as alimony or not.
      • That would imply that it didn't matter that Marguerite had a separate agreement, it should still count as 'alimony'.
      • The original 1898 Act had no exception for spouses. The US Supreme Court then proclaimed that spousal support was 'a duty not a debt' and so was nondischargeable. Then Congress came back in 1903 and added that exception to the Statute.
    • The Court then looked at the 1978 Amendments and found that it was intended to broaden the spousal exception. That would imply that Marguerite's claim was nondischargeable.
    • The Court looked to the legislative history and found that the final wording of 523(a)(5) was a combination of words of the House and Senate versions and if narrowly construed would convey a meaning not intended by either chamber.
      • Basically, if the Court construed the plain language of the Statute, it would reverse a long standing precedent and leave Marguerite out of luck, and that was contrary to public policy.
        • There was no evidence in the legislative history to imply that Congress intended to reverse a long standing precedent.
      • It is possible that there was a drafting error between the different versions of the bill. The Court felt that if there was a drafting error then the plain language of the Statute shouldn't be taken literally.
        • Is it really the court's job to fix drafting errors and determine what Congress intended? Even if the end result in unjust, shouldn't the court rule according to the law and let Congress fix their own mistakes?
          • Compare to Smith v. United States (508 U.S. 223 (1993)), in which the court came to the opposite conclusion and enforced the unjust decision.