Perez v. Campbell

On July 8, 1965, Adolfo Perez was driving a car registered to him when he was in an accident in Arizona. Perez’s vehicle was not covered by liability insurance, and Perez and his wife (plaintiffs) were sued by the owner of the other vehicle, Leonard Pinkerton, in state court. for personal injuries and property damage. On October 31, 1967, the Perezes agreed to have a judgment entered against them, and soon thereafter, each filed a voluntary petition for bankruptcy in federal district court. The district court discharged both Perezes from all debts and claims against their estates, including the debt owed to Pinkerton. Article 4 of the Arizona Motor Vehicle Safety Responsibility Act (the Arizona act) required the suspension of a driver’s license and vehicle registration if a judgment was not paid within 60 days of entry, and discharge in bankruptcy did not relieve a debtor of this requirement. The Perezes were notified that their licenses and registration were being suspended, pursuant to § 28-1162(A) of the Arizona act, and suspension would continue until the judgment was paid. Section 17 of the Bankruptcy Act, 11 U.S.C. § 35, stated that a discharge in bankruptcy fully discharged all but certain specified judgments. The Arizona Supreme Court previously determined that the purpose of the Arizona act was to protect the public from financial hardship due to financially irresponsible drivers, and Supreme Court caselaw indicated that the purpose of the Bankruptcy Act was to give debtors a clean slate, unhampered by judgments. The Perezes brought suit against David H. Campbell (defendant), superintendent of the Motor Vehicle Division of the Arizona Highway Department, alleging that § 28-1163(B) of the Arizona act conflicted with the Bankruptcy Act. The district court dismissed the matter, and Ninth Circuit affirmed, based on Kesler v. Department of Public Safety and Reitz v. Mealey, which held that a state statute that frustrated the purpose of a federal statute could stand as long as the statute did not purposefully intend to circumvent federal law.