Perez. v. Campbell
Headline: Court strikes down Arizona law that kept drivers’ licenses suspended after a bankruptcy discharge, limiting states’ power to force discharged debtors to pay accident judgments.
Holding: The Court held that Arizona’s statute preventing license restoration after a bankruptcy discharge conflicts with the federal Bankruptcy Act and is invalid under the Constitution’s Supremacy Clause.
- Blocks state rules that keep drivers’ licenses suspended despite a federal bankruptcy discharge.
- Affects similar laws in many States and the District of Columbia.
- Limits state leverage to collect discharged accident judgments through license suspensions.
Summary
Background
Adolfo and Emma Perez were sued after a 1965 uninsured car accident and confessed judgment for repairs and injuries. Each filed for bankruptcy in November 1967 and received a federal discharge in July 1968. Arizona officials had suspended the Perezes’ driver licenses and vehicle registration under a state safety-responsibility law and relied on §28-1163(B), which said a bankruptcy discharge would not relieve a judgment debtor from the statute’s requirements.
Reasoning
The Court asked whether that Arizona rule conflicts with the federal Bankruptcy Act’s policy of giving discharged debtors a fresh start. The majority rejected earlier cases that upheld similar state laws by focusing on state purpose rather than effect. The Court applied the usual Supremacy-Clause test — state law cannot stand if it obstructs the full purpose of federal law — and concluded Arizona’s anti-discharge provision conflicted with the federal discharge and was therefore unconstitutional.
Real world impact
The ruling invalidates Arizona’s specific anti-discharge license-suspension rule. The opinion notes many States and the District of Columbia have similar statutes, so the decision limits state power to use license suspension as a device to collect debts discharged in bankruptcy. The Court left intact other parts of the safety-responsibility scheme, and it did not rule on unrelated requirements that some drivers show future proof of financial responsibility.
Dissents or concurrances
Justice Blackmun, joined by three colleagues, agreed the license loss for Emma Perez was unconstitutional but would have upheld the statute as applied to Adolfo Perez; he emphasized different results for an innocent wife and the negligent driver.
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