author: Mr. Justice Black Mr. Justice Harlan,

text:
    SUROWITZ v. HILTON HOTELS CORP. et al.
    No. 161.
    Argued January 20, 1966.
    Decided March 7, 1966.

      Richard F. Watt argued the cause for petitioner. With him on the brief were Sidney M. Davis, Walter J. Rockier and Lionel G. Gross.

      Samuel W. Block argued the cause for respondents. On the brief for Hilton Hotels Corp. were Leslie Hodson, Don H. Reuben and Lawrence Gunnels. With Mr. Block on the brief for the individual respondents were Albert E. Jenner, Jr., Keith F. Bode, William J. Friedman and Stanley R. Zax.

   Mr. Justice Black

delivered the opinion of the Court.

Petitioner, Dora Surowitz, a stockholder in Hilton Hotels Corporation, brought this action in a United States District Court on behalf of herself and other stockholders charging that the officers and directors of the corporation had defrauded it of several million dollars by illegal devices and schemes designed to cheat the corporation and enrich the individual defendants. The acts charged, if true, would constitute frauds of the grossest kind against the corporation, and would be in violation of the Securities Act of 1933, the Securities Exchange Act of 1934, and the Delaware General Corporation Law. Summarily stated, the detailed complaint, which takes up over 60 printed pages, charges first that defendants conceived and carried out a deceptive plan under which the Hilton Hotels Corporation through a formal “offer” mailed to all the stockholders, purchased from them some 300,000 shares of its outstanding common stock, that these defendants manipulated the stock’s market price to an artificially high level and then at this inflated price sold some 100,000 shares of their own stock to the corporation, and that the effect of this offer and purchase was to reduce the corporation’s working capital more than $8,000,000 at a time when its financial condition was weak, and the funds were badly needed to run the corporation’s business. The second deceptive scheme charged in the complaint was that the same defendants, all of whom were stockholders of the Hilton Credit Corporation, caused the Hilton Hotels Corporation to 'purchase, also at an artificially high price, more than a million shares of Hilton Credit Corporation stock, paying about $3,441,000 for it, of which over $2,000,000 was personally received by the defendants. The complaint was signed by counsel for Mrs. Surowitz in compliance with Rule 11 of the Federal Rules of Civil Procedure which provides that “The signature of an attorney constitutes a certificate by him that he has read the pleading; that to the best of his knowledge, information, and belief there is good ground to support it; and that it is not interposed for delay.” Also pursuant to Rule 23 (b) of the Federal Rules, the complaint was verified by Mrs. Surowitz, the petitioner, who stated that some of the allegations in the complaint were true and that she “on information and belief” thought that all the other allegations were true.

So far as the language of the complaint and of Mrs. Surowitz’s verification was concerned, both were in strict compliance with the provisions of Rule 23 (b) which states that a shareholder’s complaint in a secondary action must contain certain averments and be verified by the plaintiff. Notwithstanding the sufficiency of the complaint and verification under Rule 23 (b), however, the court, without requiring defendants to file an answer and over petitioner’s protest, granted defendants’ motion to require Mrs. Surowitz to submit herself to an oral examination by the defendants’ counsel. In this examination Mrs. Surowitz showed in her answers to questions that she did not understand the complaint at all, that she could not explain the statements made in the complaint, that she had a very small degree of knowledge as to what the lawsuit was about, that she- did not know any of the defendants by name, that she did not know the nature of their alleged misconduct, and in fact that in signing the verification she had merely relied on what her son-in-law had explained to her about the facts in the case. On the basis of this examination, defendants moved to dismiss the complaint, alleging that “1. It is a sham pleading, and 2. Plaintiff, Dora Surowitz, is not a proper party plaintiff . . . .” In response, Mrs. Surowitz’s lawyer, in an effort to cure whatever infirmity the court might possibly find in Mrs. Surowitz’s verification in light of her deposition, filed two affidavits which shed much additional light on an extensive investigation which had preceded the filing of the complaint. Despite these affidavits the District Judge dismissed the case holding that Mrs. Surowitz’s affidavit was “false,” that being wholly false it was a nullity, that being a nullity it was as though no affidavit had been made in compliance with Rule 23, that being false the affidavit was a “sham” and Rule 23 (b) required that he dismiss her case, and he did so, “with prejudice.”

The Court of Appeals affirmed the District Court’s dismissal, saying in part:

“We can only conclude, as did the court below, that plaintiff’s verification of the complaint was false because she swore to the verity of alleged facts of which she was wholly ignorant.” 342 F. 2d, at 606.

The Court of Appeals reached its conclusion that the case must be dismissed under Rule 23 (b) and Rule 41 (b) despite the fact that the charges made against the defendants were viewed as very serious and grave charges of fraud and that “many of the material allegations of the complaint are obviously true and cannot be refuted.” 342 F. 2d, at 607. We cannot agree with either of the courts below and reverse their judgments. We do not find it necessary in reversing, however, to consider all the numerous arguments made by respondents based on the origin, history and utility of Rule 23, and of derivative causes of action and class suits. No matter how much weight we give to the function of the Rule and of class action proceedings in protecting corporate management against so-called “nuisance” or “strike suits,” we hold that the Rule cannot justify dismissal of this case on the record shown here.

At the time the District Court dismissed and the Court of Appeals approved, there were pending before those courts not merely the complaint, the verified statements by counsel and by Mrs. Surowitz, and the deposition of Mrs. Surowitz, but, as noted above, two affidavits, one signed by Mrs. Surowitz’s attorney in this case, Mr. Walter J. Rockier, and the other signed by her son-in-law, Mr. Irving Brilliant, had been submitted in response to the defendants’ motion that the complaint be dismissed. These affidavits, as well as Mrs. Surowitz’s deposition, are a part of the record before us here and we shall now state the facts as they are illuminated by these affidavits.

Mrs. Surowitz, the plaintiff and petitioner here, is a Polish immigrant with a very limited English vocabulary and practically no formal education. For many years she has worked as a seamstress in New York where by reason of frugality she saved enough money to buy some thousands of dollars worth of stocks. She was of course not' able to select stocks for herself with any degree of assurance of their value. Under these circumstances she had to receive advice and counsel and quite naturally she went to her son-in-law, Irving Bril-, liant. Mr. Brilliant had graduated from the Harvard Law School, possessed a master’s degree in economics from Columbia University, was a professional investment advisor, and in addition to his degrees and his financial acumen, he wore a Phi Beta Kappa key. In 1957, six years before this litigation began, he bought some stock for his mother-in-law in the Hilton Hotels Corporation, paying a little more than $2,000 of her own money for it. He evidently had confidence in that corporation because by 1960 he had purchased for his wife, his deceased mother’s estate, a trust fund created for his children, and Mrs. Surowitz some 2,350 shares of the corporation’s common stock, at a cost of about $45,000 in addition to one of the corporation’s $10,000 debentures.

About December 1962, Mrs. Surowitz received through the mails a notice from the Hilton Hotels Corporation announcing its plan to purchase a large amount of its own stock. Because she wanted it explained to her, she took the notice to Mr. Brilliant. Apparently disturbed by it, he straightway set out to make an investigation. Shortly thereafter he went to Chicago, Illinois, where Hilton Hotels has its home office and talked the matter over with Mr. Rockier. Mr. Brilliant and Mr. Rockier had been friends for many years, apparently ever since both of them served as a part of the legal staff representing the United States in the Nuremberg trials. The two decided to investigate further, and for a number of months both pursued whatever avenues of information that were open to them. By August of 1963 on the basis of their investigation, both of them had reached the conclusion that the time had come to do something about the matter. In the meantime the value of the corporation’s stock had declined steadily, and in August the corporation failed to pay its usual dividend. In October, while a complaint was being prepared charging defendants with fraud and multiple violations of the federal securities acts and state law, Mr. Rockier met with defendants’ lawyers. This conference, instead of producing an understanding, merely provided Mr. Brilliant and Mr. Rockier with information, not previously available to them, which increased their grave suspicions about the corporation’s stock purchase and its management. For instance it was learned at this meeting that at the time of the stock purchase the president and chairman of the board of Hilton Hotels Corporation had purchased for an unusually high price over 100,000 shares of the corporation’s stock from several trusts established by a vice president and director of the corporation. Finally, in December, or almost exactly one year after the corporation had submitted its questionable offer to purchase stock from its shareholders, this complaint was filed charging the defendants with creating and participating in a fraudulent scheme which had taken millions of dollars out of the corporation’s treasury and transferred the money to the defendants’ pockets.

Soon after these investigations began Rockier prepared a letter for Mrs. Surowitz to send to the corporation protesting the alleged fraudulent scheme. Mr. Brilliant, her son-in-law, took the communication to Mrs. Surowitz, explained it to her, and she signed it. Later, in August 1963, when the corporation declined to pay its dividend, Mrs. Surowitz, who had purchased the stock for the specific purpose of gaining a source of income, was sufficiently disturbed to seek Mr. Brilliant’s counsel. He explained to her that he and Mr. Rockier were of the opinion that the corporation’s management had wrongfully damaged the corporation, and together at that time Mrs. Surowitz and her son-in-law discussed the matter of her bringing this suit. When, on the basis of this conversation, Mrs. Surowitz stated that she agreed that suit be filed in her name, Mr. Rockier prepared a formal complaint which he mailed to Mr. Brilliant. Mr. Brilliant then, according to both his affidavit and Mrs. Surowitz’s testimony, read and explained the complaint to his mother-in-law before she verified it. Her limited education and her small knowledge about any of the English language, except the most ordinarily used words, probably is sufficient guarantee that the courts below were right in finding that she did not understand any of the legal relationships or comprehend any of the business transactions described in the complaint. She did know, however, that she had put over $2,000 of her hard-earned money into Hilton Hotels stock, that she was not getting her dividends, and that her son-in-law who had looked into the matter thought that something was wrong. She also knew that her son-in-law was qualified to help her and she trusted him. It is difficult to believe that anyone could be shocked or harmed in any way when, in the light of all these circumstances, Mrs. Suro-witz verified the complaint, not on the basis of her own knowledge and understanding, but in the faith that her son-in-law had correctly advised her either that the statements in the complaint were true or to the best of his knowledge he believed them to be true.

We assume it may be possible that there can be circumstances under which a district court could stop all proceedings in a derivative cause of action, relieve the defendants from filing an answer to charges of fraud, and conduct a pre-trial investigation to determine whether the plaintiff had falsely sworn either that the facts alleged in the complaint were true or that he had information which led him to believe they were true. And conceivably such a pre-trial investigation might possibly reveal facts surrounding the verification of the complaint which could justify dismissal of the complaint with prejudice. However, here we need not consider the question of whether, if ever, Federal Rule 23 (b) might call for such summary action. Certainly it cannot justify the court’s summary dismissal in this case. Rule 23 (b) was not written in order to bar derivative suits. Unquestionably it was originally adopted and has served since in part as a means to discourage “strike suits” by people who might be interested in getting quick dollars by making charges without regard to their truth so as to coerce corporate managers to settle worthless claims in order to get rid of them. On the other hand, however, derivative suits have played a rather important role in protecting shareholders of corporations from the designing schemes and wiles of insiders who are willing to betray their company’s interests in order to enrich themselves. And it is not easy to conceive of anyone more in need of protection against such schemes than little investors like Mrs. Surowitz.

When the record of this case is reviewed in the light of the purpose of Rule 23 (b)’s verification requirement, there emerges the plain, inescapable fact that this is not a strike suit or anything akin to it. Mrs. Surowitz was not interested in anything but her own investment made with her own money. Moreover, there is not one iota of evidence that Mr. Brilliant, her son-in-law and counselor, sought to do the corporation any injury in this litigation. In fact his purchases for the benefit of his family of more than $50,000 of securities in the corporation, including a $10,000 debenture, all made years before this suit was brought, manifest confidence in the corporation, not a desire to harm it in any way. The Court of Appeals in affirming the District Court’s dismissal, however, indicated that whether Mrs. Surowitz and her counselors acted in good faith and whether the charges they made were truthful were irrelevant once Mrs. Surowitz demonstrated in her oral testimony that she knew nothing about the content of the suit. That court said:

“Those affidavits reveal that substantial and diligent investigation by Brilliant, Rockier and others preceded the filing of this complaint. . . . Neither affidavit, however, does anything, if anything could be done, to offset plaintiff’s positive disavowal of any relevant knowledge or information other than the fact of her stock ownership.” ' 342 F. 2d, at 607.

In fact the opinion of the Court of Appeals indicates in several places that a woman like Mrs. Surowitz, who is uneducated generally and illiterate in economic matters, could never under any circumstances be a plaintiff in a derivative suit brought in the federal courts to protect her stock interests.

We cannot construe Rule 23 or any other one of the Federal Rules as compelling courts to summarily dismiss, without any answer or argument at all, cases like this where grave charges of fraud are shown by the record to be based on reasonable beliefs growing out of careful investigation. The basic purpose of the Federal Rules is to administer justice through fair trials, not through summary dismissals as necessary as they may be on occasion. These rules were designed in large part to get away from some of the old procedural booby traps which common-law pleaders could set to prevent unsophisticated litigants from ever having their day in court. If rules of procedure work as they should in an honest and fair judicial system, they not only permit, but should as nearly as possible guarantee that bona fide complaints be carried to an adjudication on the merits. Rule 23 (b), like the other civil rules, was written to further, not defeat the ends of justice. The serious fraud charged here, which of course has not been proven, is clearly in that class of deceitful conduct which the federal securities laws were largely passed to prohibit and protect against. There is, moreover, not one word or one line of actual evidence in this record indicating that there has been any collusive conduct or trickery by those who filed this suit except through intimations and insinuations without any support from anything any witness has said. The dismissal of this case was error. It has now been practically three years since the complaint was filed and as yet none of the defendants have even been compelled to admit or deny the wrongdoings charged. They should be. The cause is reversed and remanded to the District Court for trial on the merits.

Reversed and remanded.

MR. Justice Fortas took no part in the decision of this case.

The Chief Justice took no part in the consideration or decision of this case.

Mr. Justice Harlan,

concurring.

Rule 23 (b) directs that in a derivative suit “the complaint shall be verified by oath” but nothing dictates that the verification be that of the plaintiff shareholder. See Bose v. 39 Broadway, Inc., 80 F. Supp. 825. In the present circumstances, it seems to me the affidavit of Walter J. Rockier, counsel for Mrs. Surowitz, amounts to an adequate verification by counsel, which I think is permitted by a reasonable interpretation of the Rule at least in cases such as this. On this premise, I agree with the decision of the Court.

       48 Stat. 74, as amended, 15 U. S. C. § 77a et seq. (1964 ed.).

       48 Stat. 881, as amended, 15 U. S. C. § 78a et seq. (1964 ed.).

       Del. Code Ann. Tit. 8, §101 et seq. (1953 ed.).

       “(b) Secondary Action by Shareholders. In an action brought to enforce a secondary right on the part of one or more shareholders in an association, incorporated or unincorporated, because the association refuses to enforce rights which may properly be asserted by it, the complaint shall be verified by oath and shall aver (1) that the plaintiff was a shareholder at the time of the transaction of which he complains or that his share thereafter devolved on him by operation of law and (2) that the action is not a collusive one to copier on a court of the United States jurisdiction of any action of which it would not otherwise have jurisdiction. The complaint shall also set forth with particularity the efforts of the plaintiff to secure from the managing directors or trustees and, if necessary, from the shareholders such action as he desires, and the reasons for his failure to obtain such action or the reasons for not making such effort.”

       Consider, for example, these three excerpts taken from separate paragraphs in the Court of Appeals’ opinion:
      “We have considered all arguments advanced by the plaintiff. We have considered the record in the light of plaintiff’s limited grasp of the English language and the intricacies of corporate finance. We have considered the peculiar position of a plaintiff in a suit such as this as, principally, the instrument through which the judicial machinery is set in motion. It is not unreasonable to state as a minimum requirement that the plaintiff- have general knowledge of the acts of which she complains and the connection of the defendants to those acts which she alleges. We conclude that any lesser requirement would make the verification provision farcical.

      “But if the verification provision of the Rule is to have any real meaning, it requires that a plaintiff must have knowledge of his own position and relationship to the suit, of the official identity of the parties against whom the suit is brought and general knowledge of the wrongful acts which he alleges as a foundation for his complaint.

      “We think the court below correctly held that a pleading governed by Rule 23 (b) is sham when it clearly appears that the ostensible verification is a mere formality without knowledgeable or informative comprehension in the party plaintiff whose verification gives it the breath of life. That breath is not instilled by the reading of words to that plaintiff which she obviously did not understand.” 342 F. 2d, at 608, 606, and 607-608.


source: Caselaw Access Project

author: Mr. Justice Clark Mr. Justice Harlan,

license: Public Domain

text:
    PATE, WARDEN v. ROBINSON.
    No. 382.
    Argued January 26, 1966.
    Decided March 7, 1966.

      Richard A. Michael, Assistant Attorney General of Illinois, argued the cause for petitioner. With him on the brief were William G. Clark, Attorney General, and Philip J. Rock, Assistant Attorney General.

      John C. Tucker argued the cause for respondent. With him on the brief was Albert E. Jenner, Jr.

   Mr. Justice Clark

delivered the opinion of the Court.

In 1959 respondent Robinson was convicted of the murder of his common-law wife, Flossie May Ward, and was sentenced to imprisonment for life. Being an indigent he was defended by court-appointed counsel. It was conceded at trial that Robinson shot and killed Flossie May, but his counsel claimed that he was insane at the time of the shooting and raised the issue of his incompetence to stand trial. On writ of error to the Supreme Court of Illinois it was asserted that the trial court's rejection of these contentions deprived Robinson of due process of law under the Fourteenth Amendment. His conviction was affirmed, the court finding that no hearing on mental capacity to stand trial had been requested, that the evidence failed to raise sufficient doubt as to his competence to require the trial court to conduct a hearing on its own motion, and further that the evidence did not raise a “reasonable doubt” as to his sanity at the time of the offense. 22 Ill. 2d 162, 174 N. E. 2d 820 (1961). We denied certiorari. 368 U. S. 995 (1962). Thereupon, Robinson filed this petition for habeas corpus, which was denied without a hearing by the United States District Court for the Northern District of Illinois. The Court of Appeals reversed, 345 F. 2d 691 (1965), on the ground that Robinson was convicted in an unduly hurried trial without a fair opportunity to obtain expert psychiatric testimony, and without sufficient development of the facts on the issues of Robinson’s insanity when he committed the homicide and his present incompetence. It remanded the case to the District Court with directions to appoint counsel for Robinson; to hold a hearing as to his sanity when he committed the alleged offense; and, if it found him to have been insane at that time, to order his release, subject to an examination into his present mental condition. The Court of Appeals directed that the District Court should also determine upon the hearing whether Robinson was denied due process by the state court’s failure to conduct a hearing upon his competence to stand trial; and, if it were found his rights had been violated in this respect, that Robinson “should be ordered released, but such release may be delayed for a reasonable time ... to permit the State of Illinois to grant Robinson a new trial.” 345 F. 2d, at 698. We granted certiorari to resolve the difficult questions of state-federal relations posed by these rulings. 382 U. S. 890 (1965). We have concluded that Robinson was constitutionally entitled to a hearing on the issue of his competence to stand trial. Since we do not think there could be a meaningful hearing on that issue at this late date, we direct that the District Court, after affording the State another opportunity to put Robinson to trial on its charges within a reasonable time, order him discharged. Accordingly, we affirm the decision of the Court of Appeals in this respect, except insofar as it contemplated a hearing in the District Court on Robinson’s competence. Our disposition makes it unnecessary to reach the other reasons given by the Court of Appeals for reversal.

I.

The State concedes that the conviction of an accused person while he is legally incompetent violates due process, Bishop v. United States, 350 U. S. 961 (1956), and that state procedures must be adequate to protect this right. It insists, however, that Robinson intelligently waived this issue by his failure to request a hearing on his competence at the trial; and, further, that on the basis of the evidence before the trial judge no duty rested upon him to order a hearing sua sponte. A determination of these claims necessitates a detailed discussion of the conduct of the trial and the evidence touching upon the question of Robinson’s competence at that time.

The uncontradicted testimony of four witnesses called by the defense revealed that Robinson had a long history of disturbed behavior. His mother testified that when he was between seven and eight years of age a brick dropped from a third floor hit Robinson on the head. “He blacked out and the blood run from his head like a faucet.” Thereafter “he acted a little peculiar.” The blow knocked him “cockeyed” and his mother took him to a specialist “to correct the crossness of his eyes.” He also suffered headaches during his childhood, apparently stemming from the same event. His conduct became noticeably erratic about 1946 or 1947 when he was visiting his mother on a furlough from the Army. While Robinson was sitting and talking with a guest, “he jumped up and run to a bar and kicked a hole in the bar and he run up in the front.” His mother asked “what on earth was wrong with him and he just stared at [her], and paced the floor with both hands in his pockets.” On other occasions he appeared in a daze, with a “glare in his eyes,” and would not speak or respond to questions. In 1951, a few years after his discharge from the service, he “lost his mind and was pacing the floor saying something was after him.” This incident occurred at the home of his aunt, Helen Calhoun. Disturbed by Robinson’s conduct, Mrs. Calhoun called his mother about six o’clock in the morning, and she “went to see about him.” Robinson tried to prevent Mrs. Calhoun from opening the door, saying “that someone was going to shoot him or someone was going to come in after him.” His mother testified that, after gaining admittance, “I went to him and hugged him to ask him what was wrong and he went to pushing me back, telling me to get back, somebody was going to shoot him, somebody was going to shoot him.” Upon being questioned as to Robinson’s facial expression at the time, the mother stated that he “had that starey look and seemed to be just a little foamy at the mouth.” A policeman was finally called. He put Robinson, his mother and aunt in a cab which drove them to Hines Hospital. On the way Robinson tried to jump from the cab, and upon arrival at the hospital he was so violent that he had to be strapped in a wheel chair. He then was taken in an ambulance to the County Psychopathic Hospital, from which he was transferred to the Kankakee State Hospital. The medical records there recited:

“The reason for admission: The patient was admitted to this hospital on the 5th day of June, 1952, from the Hines Hospital. Patient began presenting symptoms of mental illness about a year ago at which time he came to his mother’s house. He requested money and when it was refused, he suddenly kicked a hole in her bar.
“Was drinking and went to the Psychopathic Hospital. He imagined he heard voices, voices of men and women and he also saw things. He saw a little bit of everything. He saw animals, snakes and elephants and this lasted for about two days. He went to Hines. They sent him to the Psychopathic Hospital. The voices threatened him. He imagined someone was outside with a pistol aimed at him. He was very, very scared and he tried to call the police and his aunt then called the police. He thought he was going to be harmed. And he says this all seems very foolish to him now. Patient is friendly and tries to cooperate.
“He went through an acute toxic episode from which he has some insight. He had been drinking heavily. I am wondering possibly he isn’t schizophrenic. I think he has recovered from this condition. I have seen the wife and she is in a pathetic state. I have no objection to giving him a try.”

After his release from the state hospital Robinson’s irrational episodes became more serious. His grandfather testified that while Robinson was working with him as a painter’s assistant, “all at once, he would come down [from the ladder] and walk on out and never say where he is going and whatnot and he would be out two or three hours, and at times he would be in a daze and when he comes out, he comes back just as fresh. He just says he didn’t do anything. I noticed that he wasn’t at all himself.” The grandfather also related that one night when Robinson was staying at his house Robinson and his wife had a “ruckus,” which caused his wife to flee to the grandfather’s bedroom. Robinson first tried to kick down the door. He then grabbed all of his wife’s clothes from their room and threw them out in the yard, intending to set them on fire. Robinson got so unruly that the grandfather called the police to lock him up.

In 1953 Robinson, then separated from his wife, brought their 18-month-old son to Mrs. Calhoun’s home and asked permission to stay there for a couple of days. She observed that he was highly nervous, prancing about and staring wildly. While she was at work the next day Robinson shot and killed his son and attempted suicide by shooting himself in the head. It appeared that after Robinson shot his son, he went to a nearby park and tried to take his life again by jumping into a lagoon. By his mother’s description, he “was wandering around” the park, and walked up to a policeman and “asked him for a cigarette.” It was stipulated that he went to the South Park Station on March 10, 1953, and said that he wanted to confess to a crime. When he removed his hat the police saw that he had shot himself in the head. They took him to the hospital for treatment of his wound.

Robinson served almost four years in prison for killing his son, being released in September 1956. A few months thereafter he began to live with Flossie May Ward at her home. In the summer of 1957 or 1958 Robinson “jumped on” his mother’s brother-in-law and “beat him up terrible.” She went to the police station and swore out a warrant for his arrest. She described his abnormalities and told the officers that Robinson “seemed to have a disturbed mind.” She asked the police “to pick him up so I can have him put away.” Later she went back to see why they had not taken him into custody because of “the way he was fighting around in the streets, people were beating him up.” She made another complaint a month or so before Robinson killed Flossie May Ward. However, no warrant was ever served on him.

The killing occurred about 10:30 p. m. at a small barbecue house where Flossie May Ward worked. At that time there were 10 customers in the restaurant, six of them sitting at the counter. It appears from the record that Robinson entered the restaurant with a gun in his hand. As he approached the counter, Flossie May said, “Don’t start nothing tonight.” After staring at her for about a minute, he walked to the rear of the room and, with the use of his hand, leaped over the counter. He then rushed back toward the front of the restaurant, past two other employees working behind the counter, and fired once or twice at Flossie May. She jumped over the counter and ran out the front door with Robinson in pursuit. She was found dead on the sidewalk. Robinson never spoke a word during the three-to-four-minute episode.

Subsequently Robinson went to the apartment of a friend, Mr. Moore, who summoned the police. When three officers, two in uniform, arrived, Robinson was standing in the hall approximately half way between the elevator and the apartment. Unaware of his identity, the officers walked past him and went to the door of the apartment. Mrs. Moore answered the door and told them that Robinson had left a short time earlier. As the officers turned around they saw Robinson still standing where they had first observed him. Robinson made no attempt to avoid being arrested. When asked his address he gave several evasive answers. He also denied knowing anything about the killing.

Four defense witnesses expressed the opinion that Robinson was insane. In rebuttal the State introduced only a stipulation that Dr. William H. Haines, Director of the Behavior Clinic of the Criminal Court of Cook County would, if present, testify that in his opinion Robinson knew the nature of the charges against him and was able to cooperate with counsel when he examined him two or three months before trial. However, since the stipulation did not include a finding of sanity the prosecutor advised the court that “we should have Dr. Haines’ testimony as to his opinion whether this man is sane or insane. It is possible that the man might be insane and know the nature of the charge or be able to cooperate with his counsel. I think it should be in evidence, your Honor, that Dr. Haines’ opinion is that this defendant was sane when he was examined.” However, the court told the prosecutor, “You have enough in the record now. I don’t think you need Dr. Haines.” In his summation defense counsel emphasized “our defense is clear .... It is as to the sanity of the defendant at the time of the crime and also as to the present time.” The court, after closing argument by the defense, found Robinson guilty and sentenced him to prison for his natural life.

II.

The State insists that Robinson deliberately waived the defense of his competence to stand trial by failing to demand a sanity hearing as provided by Illinois law. But it is contradictory to argue that a defendant may be incompetent, and yet knowingly or intelligently “waive” his right to have the court determine his capacity to stand trial. See Taylor v. United States, 282 F. 2d 16, 23 (C. A. 8th Cir. 1960). In any event, the record shows that counsel throughout the proceedings insisted that Robinson’s present sanity was very much in issue. He made a point to elicit Mrs. Robinson’s opinion of Robinson’s “present sanity.” And in his argument to the .judge, he asserted that Robinson “should be found not guilty and presently insane on the basis of the testimony that we have heard.” Moreover, the prosecutor himself suggested at trial that “we should have Dr. Haines’ testimony as to his opinion whether this man is sane or insane.” With this record we cannot say that Robinson waived the defense of incompetence to stand trial.

We believe that the evidence introduced on Robinson’s behalf entitled him to a hearing on this issue. The court’s failure to make such inquiry thus deprived Robinson of his constitutional right to a fair trial. See Thomas v. Cunningham, 313 F. 2d 934 (C. A. 4th Cir. 1963). Illinois jealously guards this right. Where the evidence raises a “bona fide doubt” as to a defendant’s competence to stand trial, the judge on his own motion must impanel a jury and conduct a sanity hearing pursuant to Ill. Rev. Stat., c. 38, § 104-2 (1963). People v. Shrake, 25 Ill. 2d 141, 182 N. E. 2d 754 (1962). The Supreme Court of Illinois held that the evidence here was not sufficient to require a hearing in light of the mental alertness and understanding displayed in Robinson’s “colloquies” with the trial judge. 22 Ill. 2d, at 168, 174 N. E. 2d, at 823. But this reasoning offers no justification for ignoring the uncontradicted testimony of Robinson’s history of pronounced irrational behavior. While Robinson’s demeanor at trial might be relevant to the ultimate decision as to his sanity, it cannot be relied upon to dispense with a hearing on that very issue. Cf. Bishop v. United States, 350 U. S. 961 (1956), reversing 96 U. S. App. D. C. 117, 120, 223 F. 2d 582, 585 (1955), Likewise, the stipulation of Dr. Haines’ testimony was some evidence of Robinson’s ability to assist in his defense. But, as the state prosecutor seemingly admitted, on the facts presented to the trial court it could not properly have been deemed dispositive on the issue of Robinson’s competence.

III.

Having determined that Robinson’s constitutional rights were abridged by his failure to receive an adequate hearing on his competence to stand trial, we direct that the writ of habeas corpus must issue and Robinson be discharged, unless the State gives him a new trial within a reasonable time. This disposition accords with the procedure adopted in Rogers v. Richmond, 365 U. S. 534 (1961). We there determined that since the state court had applied an erroneous standard to judge the admissibility of a confession, the “defendant should have the opportunity to have all issues which may be determinative of his guilt tried by a state judge or a state jury under appropriate state procedures which conform to the requirements of the Fourteenth Amendment.” At 547-548. It has been pressed upon us that it would be sufficient for the state court to hold a limited hearing as to Robinson’s mental competence at the time he was tried in 1959. If he were found competent, the judgment against him would stand. But we have previously emphasized the difficulty of retrospectively determining an accused’s competence to stand trial. Dusky v. United States, 362 U. S. 402 (1960). The jury would not be able to observe the subject of their inquiry, and expert witnesses would have to testify solely from information contained in the printed record. That Robinson’s hearing would be held six years after the fact aggravates these difficulties. This need for concurrent determination distinguishes the present case from Jackson v. Denno, 378 U. S. 368 (1964), where we held that on remand the State could discharge its constitutional obligation by giving the accused a separate hearing on the voluntariness of his confession.

If the State elects to retry Robinson, it will of course be open to him to raise the question of his competence to' stand trial at that time and to request a special hearing thereon. In the event a sufficient doubt exists as to his present competence such a hearing must be held. If found competent to stand trial, Robinson would have the usual defenses available to an accused.

The case is remanded to the District Court for action consistent with this opinion.

It is so ordered.

Mr. Justice Harlan,

whom Mr. Justice Black joins, dissenting.

The facts now canvassed by this Court to support its constitutional holding were fully sifted by the Illinois Supreme Court. I cannot agree that the state court’s unanimous appraisal was erroneous and still less that it was error of constitutional proportions.

The Court appears to hold that a defendant’s present incompetence may become sufficiently manifest during a trial that it denies him due process for the trial court to fail to conduct a hearing on that question on its own initiative. I do not dissent from this very general proposition, and I agree also that such an error is not “waived” by failure to raise it and that it may entitle the defendant to a new trial without further proof. Waiver is not an apposite concept where we premise a defendant so deranged that he cannot oversee his lawyers. Since our further premise is that the trial judge should and could have avoided the error, a new trial seems not too drastic an exaction in view of the proof problems arising after a significant lapse of time. However, I do not believe the facts known to the trial judge in this case suggested Robinson’s incompetence at time of trial with anything like the force necessary to make out a violation of due process in the failure to pursue the question.

Before turning to the facts, it is pertinent to consider the quality of the incompetence they are supposed to indicate. In federal courts — and I assume no more is asked of state courts — the test of incompetence that warrants postponing the trial is reasonably well settled. In language this Court adopted on the one occasion it faced the issue, “the 'test must be whether . . . [the defendant] has sufficient present ability to consult with his lawyer with a reasonable degree of rational understanding — and whether he has a rational as well as factual understanding of the proceedings against him.’ ” Dusky v. United States, 362 U. S. 402. In short, emphasis is on capacity to consult with counsel and to comprehend the proceedings, and lower courts have recognized that this is by no means the same test as those which determine criminal responsibility at the time of the crime. The question, then, is not whether the facts before the trial judge suggested that Robinson’s crime was an insane act but whether they suggested he was incompetent to stand trial.

The Court’s affirmative answer seemingly rests on two kinds of evidence, principally adduced by Robinson to prove an insanity defense after the State rested its main case. First, there was evidence of a number of episodes of severe irrationality in Robinson’s past. Among them were the slaying of his infant son, his attempted suicide, his efforts to burn his wife’s clothing, his fits of temper and of abstraction, and his seven-week incarceration in a state hospital eight years before the trial. This evidence may be tempered by the State’s counterarguments, for example, that Robinson was found guilty of his son’s killing and that alcoholism may explain his hospitalization, but it cannot be written off entirely. The difficulty remains that while this testimony may suggest that Flossie May Ward’s killing was just one more irrational act, I cannot say as a matter of common knowledge that it evidences incapacity during the trial. Indeed, the pattern revealed may best indicate that Robinson did function adequately during most of his life interrupted by periods of severe derangement that would have been quite apparent had they occurred at trial. The second class of data pertinent to the Court’s theory, remarks by witnesses and counsel that Robinson was “presently insane,” deserves little comment. I think it apparent that these statements were addressed to Robinson’s responsibility for the killing, that is, his ability to do insane acts, and not to his general competency to stand trial.

Whatever mild doubts this evidence may stir are surely allayed by positive indications of Robinson's competence at the trial. Foremost is his own behavior in the courtroom. The record reveals colloquies between Robinson and the trial judge which undoubtedly permitted a reasonable inference that Robinson was quite cognizant of the proceedings and able to assist counsel in his defense. • Turning from lay impressions to those of an expert, it was stipulated at trial that a Dr. Haines, Director of the Behavior Clinic of the Criminal Court of Cook County, had examined Robinson several months earlier and, if called, would testify that Robinson “knows the nature of the charge and is able to cooperate with his counsel.” The conclusive factor is that Robinson’s own lawyers, the two men who apparently had the closest contact with the defendant during the proceedings, never suggested he was incompetent to stand trial and never moved to have him examined on incompetency grounds during trial; indeed, counsel’s remarks to the jury seem best read as an affirmation of Robinson’s present “lucidity” which would be highly peculiar if Robinson had been unable to assist properly in his defense. See p. 386, n. 8, ante, of the Court’s opinion.

Thus, I cannot agree with the Court that the requirements of due process were violated by the failure of the trial judge, who had opportunities for personal observation of the defendant that we do not possess, to halt the trial and hold a competency hearing on his own motion.

Several other grounds have been urged as a basis for habeas corpus relief for Robinson. These other grounds are understandably not discussed in the Court’s opinion, and I think it is sufficient for me to say I do not believe that they warrant further proceedings. In my view, the Court of Appeals should be reversed and the District Court’s dismissal of the petition reinstated.

       Nor do we pass on the contention that Robinson was denied his Sixth Amendment rights by the trial judge’s refusal to issue summonses for material witnesses.

       These witnesses were Miss Willie Ceola Peterson, Robinson’s mother; Mr. William H. Langham, his grandfather; Mrs. Helen Calhoun, his aunt; and Mrs. Alice Moore, a family friend.

       The Reverend Elmer Clemons was also shot and killed in the fracas. The indictment covering that offense was dismissed at the close of the trial in question.

       According to the testimony of an arresting officer the following exchange took place:
      “I asked him what his name was and he said, ‘My name is Ted.’ I said, ‘What is your real name?’ And he said, ‘Theodore Robinson.’ Then I asked him — I told him he was under arrest and he said, ‘For what?’ I said, ‘Well, you are supposed to be wanted for killing two people on the south side.’ I asked him did he know anything about it. He said, ‘No, I don’t know what you are talking about.’ So then I asked him where he lived and he said, T don’t live no place.’
      “I said, ‘What do you mean you don’t live no place?’ He said, ‘That’s what I said.’
      “So then pretty soon asked him again and he said, ‘Sometimes I stay with my mother.’ And I said, ‘Where does she live?’ He said, ‘Some address on East 44th Street.’
      "So then we took him on to the 27th District and while we were making the arrest slip, asked him again his address and he said he lived at 7320 South Parkway. That’s about all he said. He didn’t know anything about any killing or anything.”

       His mother stated: “I think he is insane.” Mrs. Calhoun testified as follows:
      “Q. Do you have an opinion as to whether or not presently he is sane or insane?
      “A. He is sick. He is insane.
      “Q. First of all, do you have an opinion?
      “A. Yes.
      “Q. What is your opinion as to his present sanity? . . .
      “A. He is mentally sick.”

       Although defense counsel phrased his questions and argument in terms of Robinson's present insanity, we interpret his language as necessarily placing in issue the question of Robinson’s mental competence to stand trial. Counsel was simply borrowing the terminology of the relevant Illinois statutes and decisions. The state law in effect at the time of Robinson’s trial differentiated between lack of criminal responsibility and competence to stand trial, but used “insanity” to describe both concepts. Ill. Rev. Stat., e. 38, §§ 592, 593 (1963). The judges likewise phrased their decisions only in terms of sanity and insanity. See, e. g., People v. Baker, 26 Ill. 2d 484, 187 N. E. 2d 227 (1962). The statutory provisions and terminology in this field have now been clarified by the enactment of an article dealing with the “competency of accused.” Ill. Rev. Stat., c. 38, §§ 104-1 to 104-3 (1963), as amended by the Code of Criminal Procedure of 1963. Even if counsel may also have meant to refer to the statutory provisions dealing with commitment for present insanity, Ill. Rev. Stat., c. 38, §592 (1963), this fact would not affect the determination that counsel’s words raised a question as to competence that the trial judge should have considered.

       Moreover, as the Court of Appeals stressed, the trial judge did not give Robinson an opportunity to introduce expert testimony on the question of his sanity. The judge denied counsel’s request for a continuance of several hours in order to secure the appearance of a psychiatrist from the Illinois Psychiatric Institute.

       As defense counsel insisted in his closing argument :
      “In this case, which is a very serious case, the defendant has been able to cooperate with counsel with some reservations. . . . However, I do not feel that this present . . . lucidity bears on the issue of his sanity at the time of the crime and his sanity at the present time. I think the words sanity and insanity, the words are legal terms. I think that presently Mr. Theodore Robinson is in a lucid interval. I believe that from the witness stand you have heard testimony to indicate and prove that Mr. Theodore Robinson is presently insane. . . .”

       The constitutional violation alleged is the failure to make an inquiry. In the more usual case, the simple claim that a defendant was convicted while incompetent during the trial, there is of course no proof of a constitutional violation until that incompetence is established in appropriate proceedings.

       See James v. Boles, 339 F. 2d 431; United States v. Kendrick, 331 F. 2d 110; Lyles v. United States, 103 U. S. App. D. C. 22, 254 F. 2d 725.

       At the time Robinson's mother and Mrs. Calhoun made the statements noted in the Court’s opinion, p. 383, n. 5, ante, they also stated Robinson did not know the difference between right and wrong. Counsel’s statement, too, quoted by the Court at p. 386, n. 8, ante, was directed to acquittal, not postponement. See, n. 5, infra. Mrs. Moore, a family friend, responded to the question on Robinson’s sanity by saying: “When he is in those moods, I think he is insane; when he is in those moods, because he is terrible.”

       The Illinois Supreme Court stated in its opinion: “[T]he record reflects several instances where defendant displayed his ability to assist in the conduct of his defense in a reasonable and rational manner. Typical instances of when defendant displayed mental alertness, as well as understanding and knowledge of the proceeding, appear in his remarks to the court as follows: ‘Your honor, they were on the State’s witness list and the State said they have several witnesses. They produced two. For what reason, I don’t know, but I am on trial here and 1 would like to be given every consideration, and I would like that the court be adjourned until tomorrow morning — to give me time to confer with counsel for the calling of witnesses.’ Again, when discussing witnesses with the court, defendant said: ‘Well, the police are contending that the clothes they have found in Moore’s apartment was mine. That is the reason at the beginning of trial, I asked the attorney to have a pre-trial preliminary to determine the admissibility and validity of the evidence that the State was intending to use against me.’ ” 22 Ill. 2d, at 168, 174 N. E. 2d, at 823.

       The record in my view does not bear out any suggestion that Robinson’s counsel apprised the trial judge that he believed Robinson incompetent to stand trial, even granting that “insane” was a synonym for “incompetent” under then-existing state law (pp. 384-385, n. 6, ante). Under Illinois law, as one would naturally expect, incompetence at the time of trial has been a ground not for acquitting the defendant but for postponing his trial; and nowhere in the record does Robinson’s counsel even hint to the judge that he believes the trial should be deferred or abated because his client is not fit to continue. The ready explanation for counsel’s references to “present insanity,” apart from emphasizing Robinson’s general lack of criminal responsibility, is that Illinois law provided that one acquitted on grounds of insanity at the time of the crime shall by the same verdict be found cured of or still afflicted with “such insanity” and committed in the latter instance. Ill. Rev. Stat., e. 38, § 592 (1959).


text:
    PERRY v. COMMERCE LOAN CO.
    No. 694.
    Argued January 26, 1966.
    Decided March 7, 1966.

      Robert J. Harris argued the cause and filed a brief for petitioner.

      R. Howard Smith argued the cause and filed a brief for respondent.
   Mr. Justice Clark

delivered the opinion of the Court.

Perry, a furnace operator employed by Moore Lead Company, filed a petition in the District Court under Chapter XIII of the Bankruptcy Act, 52 Stat. 930 (1938), as amended, 11 U. S. C. §§ 1001-1086, requesting confirmation of his plan for an extension of time within which to pay his debts out of his future wages. In his plan he proposed to pay his debts of $1,412 in 28 equal monthly installments of $60 from his wages of $265 a month. On the hearing for confirmation of the plan, however, it appeared that Perry had previously filed a petition in straight bankruptcy and obtained a discharge therein in 1959, within six years of the filing of this proceeding. On motion of the respondent, Commerce Loan Company, the referee dismissed the plan on the ground that the previous bankruptcy was a bar thereto under the provisions of § 14 (c) (5) of the Act. On review the District Court upheld the dismissal. The Court of Appeals affirmed. 340 F. 2d 588. We granted certiorari, 382 U. S. 889, in view of a conflict on the point among the courts of appeals. We conclude that confirmations of wage-earner plans by way of extensions are not affected by §14 (c)(5), and, therefore, reverse the judgment below.

I.

Although statutory relief for the financially distressed wage earner had been available to some extent as early as the Bankruptcy Act of 1867, 14 Stat. 517, Congress found in its study prior to the 1938 revision of the bankruptcy laws that there were no effective provisions for the complete repayment of the wage earner’s debts suited to his problems. H. R. Rep. No. 1409, 75th Cong., 1st Sess., 53 (1937). For example, compositions under § 12 of the 1898 Act, 30 Stat. 549, were available to the wage earner, but the relief afforded was unsatisfactory. Section 12 proceedings, which were primarily adaptable for use by business entities, were disproportionately expensive in view of the small sums ordinarily involved in wage-earner cases; they lacked flexibility; and they did not provide for jurisdiction of the court subsequent to confirmation. Other provisions of the Act had similar disadvantages. Faced with inadequate relief under the federal bankruptcy laws and often with little protection from creditors under state law, the only course usually open to the wage-earning debtor was straight bankruptcy. In such proceedings, everyone lost — the creditors by receiving a mere fraction of their claims, the debtor by bearing thereafter the stigma of having been adjudged a bankrupt. In designing a remedy for the dilemma facing a debtor seeking to repay, rather than avoid, his obligations, the Congress settled upon the wage-earner extension-of-time procedures of Chapter XIII. The chapter gave — and was intended to give— to the wage earner a reasonable opportunity to arrange installment payments to be made out of his future earnings. Congress clearly intended to encourage wage earners to pay their debts in full, rather than to go into straight bankruptcy or composition, by offering two inducements: (1) avoidance of an adjudication of bankruptcy with its attendant stigma; and, at the same time, (2) temporary freedom during the extension from garnishments, attachments and other harassment by creditors. H. R. Rep. No. 1409, 75th Cong., 1st Sess., at 52-55.

History demonstrates that extension plans under Chapter XIII are fulfilling the purposes intended. The records of the Administrative Office of the United States Courts show that over the past 20 years more than 20% of all proceedings filed under the Bankruptcy Act by wage earners have been for plans under Chapter XIII, the overwhelming majority of these being for extension plans. Since many wage earners who go into bankruptcy do not proceed under Chapter XIII because they are unemployed (and consequently have no earnings to use for extension arrangements), have an inextricably large indebtedness, or are simply unaware of the existence of an alternative to straight bankruptcy, the 20% figure is even more significant. Moreover, large sums of money are annually returned to creditors under extension plans, the current rate being well over $26,000,000. As wage earners ordinarily have little or no assets available for distribution in straight bankruptcy, these sums represent settlements which the debtors would otherwise be unable to effect and the creditors unable to obtain. See Note, The Wage Earner Plan — A Superior Alternative to Straight Bankruptcy, 9 Utah L. Rev. 730 (1965) ; Allgood, Operation of the Wage Earners’ Plan in the Northern District of Alabama, 14 Rutgers L. Rev. 578 (1960).

In light of the proven advantages of extension plans, the Congress has re-expressed its legislative purpose in amendments to Chapter XIII adopted since the original enactment. A report to the House of Representatives expresses it in these words:

“[C] hap ter XIII provides a highly desirable method for dealing with the financial difficulties of individuals. It creates an equitable and feasible way for the honest and conscientious debtor to pay off his debts rather than having them discharged in bankruptcy. The power of the court to change the amount and maturity of installment payments without affecting the aggregate amount of such payments makes chapter XIII particularly applicable to the present-day financial problems generated by heavy installment buying.” H. R. Rep. No. 193, 86th Cong., 1st Sess., 2 (1969).

And similarly, the Senate report states:

“We think there can be no doubt . . . that a procedure by which a debtor who is financially involved and unable to meet his debts as they mature, over a period of time, works out of his involvement and pays his debts in full is good for his creditors and good for him.” S. Rep. No. 179, 86th Cong., 1st Sess., 2 (1959).

It is with this underlying policy in mind that we turn to a consideration of the problem posed here, i. e., whether confirmation of an extension plan is barred by a discharge in bankruptcy obtained within the previous six years.

II.

Chapter XIII requires the confirmation of a wage-earner extension plan if “the debtor has not been guilty of any of the acts or failed to perform any of the duties which would be a bar to the discharge of the bankrupt . . . .” § 656 (a)(3). And Chapter III commands that a discharge of a bankrupt shall be granted unless the court is satisfied that the bankrupt has “within six years prior to the date of the filing of the petition in bankruptcy . . . been granted a discharge, or had a composition or an arrangement by way of composition or a wage earner’s plan by way of composition confirmed under this Act . . . .” §14 (c)(5). The “discharge” of a debtor under a wage-earner plan shall issue after compliance with the provisions of the confirmed plan, § 660, c. XIII, 11 U. S. C. § 1060. If at the expiration of three years from the date of confirmation of the plan the debtor has not completed his payments in accordance with his plan the court may, after notice and hearing, discharge the debts and liabilities dischargeable under the plan, provided the court is satisfied that the debtor’s failure to make all of his payments “was due to circumstances for which he could not be justly held accountable.” § 661, c. XIII, 11 U. S. C. § 1061. And finally, § 602, of Chapter XIII declares that the provisions of Chapters I through VII of the Bankruptcy Act, insofar as they are not inconsistent or in conflict with the provisions of Chapter XIII, apply in proceedings thereunder.

We should note at the outset that in his present application for relief Perry did not file a straight, voluntary bankruptcy action in the District Court, nor “a composition or an arrangement by way of composition or a wage earner’s plan by way of composition.” He proposed to pay all his debts, secured and unsecured, and sought only an extension of time — 28 months — in which to pay them in equal installments from his future wages. Ordinarily, a wage earner seeking to obtain the benefits of extension proceedings under Chapter XIII need only file a plan that meets the approval of the majority of his creditors, § 652, 11 U. S. C. § 1052, and is confirmed by the court; whereupon the plan becomes binding, § 657, 11 U. S. C. § 1057, and the appointed trustee commences collecting and disbursing to the creditors the periodic payments provided under the plan. Extension plans, therefore, differ materially from straight bankruptcy, arrangements under Chapters XI and XII, and wage-earner plans by way of composition, all of which contemplate only a partial payment of the wage earner’s debts. Indeed, under an extension plan, the wage earner who makes the required payments will have paid his debts in full and will not need a discharge, even though the Act provides for a formal one. § 660.

In view of these considerations and the purposes of Chapter XIII as outlined above, we do not believe that the Congress intended to apply the six-year bar of § 14 (c) (5) to the confirmation of wage-earner extension plans. The six-year bar was enacted 35 years prior to the adoption of Chapter XIII, 32 Stat. 797 (1903), at a time when no relief corresponding to extension plans existed under the Bankruptcy Act. The unmistakable purpose of the six-year provision was to prevent the creation of a class of habitual bankrupts — debtors who might repeatedly escape their obligations as frequently as they chose by going through repeated bankruptcy. See H. R. Rep. No. 1698, 57th Cong., 1st Sess., 2 (1902); In re Thompson, 51 F. Supp. 12, 13 (1943). But an extension plan has no escape hatch for debtors, it is “a method by which, without resorting to bankruptcy proceedings in the usual sense, a wage earner may meet the claims of creditors.” S. Rep. No. 179, 86th Cong., 1st Sess., 2 (1959). To apply the six-year bar at the time of ruling on the confirmation of an extension plan would be both illogical and in head-on collision with the congressional purpose as announced in the adoption and design of extension plans under Chapter XIII. Even if a literal reading of these provisions suggested the application of § 14 (c)(5) to extension plans, we would have little hesitation in construing the Act to give effect to the clear policy underlying Chapter XIII. As was said in United States v. American Trucking Assns., 310 U. S. 534, 543 (1940):

"There is, of course, no more persuasive evidence of the purpose of a statute than the words by which the legislature undertook to give expression to its wishes. Often these words are sufficient in and of themselves to determine the purpose of the legislation. In such cases we have followed their plain meaning. When that meaning has led to absurd or futile results, however, this Court has looked beyond the words to the purpose of the act. Frequently, however, even when the plain meaning did not produce absurd results but merely an unreasonable one 'plainly at variance with the policy of the legislation as a whole’ this Court has followed that purpose, rather than the literal words.”

But such a literal reading is not apparent in this case. Section 656. (a) (3) does not, on its face, state that a court may confirm an extension plan only if the debtor is eligible for a discharge in bankruptcy. Rather, the language of the section speaks, ambiguously, of “guilty” acts and unfulfilled duties. There is, of course, no unfulfilled duty involved in § 14 (c)(5). Moreover, a prior bankruptcy is hardly a “guilty” act within the usual meaning of that word, and its use as a reference to §14 (c)(5) is strained indeed. In fact, the legislative history of § 14 (c) lends some support to a view that a prior discharge is not a “guilty” act. In 1903, when the forerunners of subdivisions (3) through (6) were originally added to § 14. (c), the House report stated:

“This amendment also provides four additional grounds for refusing a discharge in bankruptcy: (1) Obtaining property on credit on materially false statements; (2) making a fraudulent transfer of property; (3) having been granted or denied a discharge in bankruptcy within six years, and (4) having refused to obey the lawful orders of the court or having refused to answer material questions approved by the court. No person who has been guilty of any of these fraudulent acts should be discharged, and a person who has refused to obey the order of the court ought not to be discharged, and it is quite clear that no person should have the benefit of the act as a voluntary bankrupt of tener than once in six years.” H. R. Rep. No. 1698, 57th Cong., 1st Sess., 2 (1902). (Italics added.)

This language might be construed to set apart acts which are criminal or reprehensible in nature and to consider a prior bankruptcy to be something other than a “guilty” act. But we need not, and do not, go so far as to place this interpretation on the words “guilty acts.” It suffices that we find in them sufficient ambiguity to impel recourse to the legislative purposes, outlined above, underlying §14 (c)(5). And while the identical language of § 656 (a) (3) has been a part of the Bankruptcy Act since 1898, as a restriction to confirmation of compositions under what is now § 366 (3), 52 Stat. 911, as amended, 11 U. S. C. § 766 (3) and § 472 (3), 52 Stat. 923, as amended, 11 U. S. C. § 872 (3), there is no indication that its enactment in Chapter XIII was intended to bar confirmation of wage-earner extensions. Indeed, it would seem that the absence of any legislative history bearing on the adoption of this provision in Chapter XIII indicates that its inclusion was a legislative oversight, at least insofar as it bears on wage-earners’ extension plans.

This oversight is, of course, cured by the provisions of § 602, which further buttress our conclusion. That section directs that the provisions of Chapters I through VII, which include §14 (c)(5), are incorporated into Chapter XIII only “insofar as they are not inconsistent or in conflict with the provisions of this chapter.” The rationale of §14 (c)(5) — the prevention of recurrent avoidance of debts — is so inconsistent with the aims of extension plans as to fall squarely within the exception of § 602.

It is claimed, however, that § 686 (5) of Chapter XIII, 11 U. S. C. § 1086 (5), indicates a contrary result. We think not. This provision, in setting the effective date of the chapter, provides that confirmations thereunder “shall not be refused because of a discharge granted or a composition confirmed prior to the effective date of this amendatory Act.” It must be remembered that extension-plan relief of Chapter XIII was novel to the law of bankruptcy. However, both compositions and straight bankruptcies were old on the books. The Congress, we believe, was only making certain, insofar as extensions were concerned, that the old procedures would not affect the new. This would be consistent with the purpose of the Congress not to make § 14 (c)(5) applicable to confirmations in extension-plan cases. Rather than making an illogical exemption from the six-year bar, given in cases where a discharge had been received before — but not after — the new Act, § 686 (5) merely gave expansive effect to the congressional purpose by making it clear that the remedy afforded be available retroactively as well as prospectively.

We emphasize that our construction of the Act does not preclude application of § 14 (c)(5) to confirmations of general arrangements under Chapter XI or to real property arrangements under Chapter XII. It is true that restrictions identical in phrasing to § 656 (a) (3) appear both in Chapter XI, § 366 (3), and in Chapter XII, §472 (3). The relief afforded in those chapters, however, represents a wholly different statutory scheme from wage-earners’ extensions, and the restrictive provisions are not, therefore, in pari materia. Sections 366 (3) and 472 (3) neither impart to nor receive from § 656 (a)(3) a meaningful effect. Nor does our construction imply an immunity from the six-year bar to those seeking confirmation of wage-earner compositions. A composition under Chapter XIII, unlike an extension, is closely akin to straight bankruptcy and to proceedings under Chapters XI and XII, for under such a plan the debtor is discharged from his debts and claims of the creditors are only partially paid. In re Jensen, 200 F. 2d 58 (1952), cert. denied, 345 U. S. 926 (1953), but see In re Goldberg, 53 F. 2d 454 (1931). It is both logical and consistent with the underlying purposes of § 14 (c) (5) that confirmation of wage-earner compositions be barred by prior bankruptcy, since repeated use of such plans would, in effect, provide an opportunity for abuse of the Act.

It has been argued that extension plans do not completely avoid the possibility of adjusting the wage earner’s debts. It is true that § 660 provides for discharge after compliance with the provisions of a Chapter XIII plan. While this section applies to wage-earner compositions as well as to extensions, a “discharge” thereunder has a wholly different impact where an extension is involved. In the latter case a discharge is little more than a mere formality. It is also claimed that § 661 presents a somewhat more troublesome objection. That section as we have noted may allow a wage earner to obtain a release from all dischargeable debts if, after notice and hearing, the court is satisfied that the failure of the debtor to comply with the plan was due to circumstances for which he could not be held justly accountable. However, we see no serious problems in this section. First, experience has shown that almost all plans approved under the Act envision repayment within three years. The problem, therefore, is not likely to arise. Second, there are adequate provisions for notice and hearing prior to a discharge under § 661. Objecting creditors may raise § 14 (c)(5) as a bar to relief if and when the debtor seeks such relief. A request for relief under § 661 would, in effect, constitute an attempt to transpose an extension plan into a composition, and a grant of relief thereunder would, at that time, be tantamount to a confirmation of a composition. The six-year bar would, therefore, be operative in such a situation. In view of this, as well as the power of the court to make certain that the provisions of the chapter are not abused, we see no reason to allow this section alone to destroy the beneficial purposes of enactment.

For the foregoing reasons, we conclude that petitioner’s plan should have been confirmed.

Reversed and remanded.

Mr. Justice Harlan,

dissenting.

The result reached by the Court may well be desirable, but in my opinion it is one that cannot be attained under the present statute within the proper limits of the judicial function.

Chapter XIII of the Bankruptcy Act establishes procedures for the relief of wage earners who are unable to meet their debts as they mature. Two types of procedures are made available: extension plans under which the wage earner’s debts are intended to be paid off in full over a period of time, and composition plans under which only a percentage of debts are recoverable. Referring to both types of plans, § 656 of the Bankruptcy Act, 11 U. S. C. § 1056 (1964 ed.), provides that “a plan” shall not be confirmed if the debtor has “been guilty of any of the acts or failed to perform any of the duties which would be a bar to the discharge of the bankrupt . . . .” To ascertain what would be a bar to the discharge of a bankrupt one must turn to § 14 (c), 11 U. S. C. § 32 (c) (1964 ed.), which provides, among other things, that no discharge may be granted if the bankrupt has been granted a previous discharge within six years. § 14 (c)(5). It is undisputed that petitioner here was so discharged, and there is no question but that he would have been refused another discharge in bankruptcy at the time he applied for this extension plan. The statutory scheme thus plainly seems to bar him from obtaining Chapter XIII relief as well.

The process by which the Court has undertaken to release the debtor from the impact of these straightforward statutory provisions seems to me wholly unavailing. The Court’s major argument is built upon its reading of the word “guilty” in § 656 (a)(3). As already noted that section denies confirmation to an extension plan if the debtor has been “guilty” of any act that would bar a discharge in bankruptcy. The argument is that since receiving a prior discharge is neither unlawful nor morally reprehensible one cannot be “guilty” of it, and hence that the six-year “discharge” provision cannot be a bar to a Chapter XIII extension plan.

This argument presupposes that the word “guilty” was intentionally used in § 656 in a discriminating sense, that is, to distinguish among those acts catalogued in § 14 (c) which under § 656 would bar confirmation of an extension plan. The fact of the matter is, however, that when Congress in .1938 enacted Chapter XIII, 52 Stat. 930-938, it took as its model the form and language of the prior bankruptcy' act, more specifically § 12d, 30 Stat. 550, dealing with compositions. The “guilty” phrase was appropriate in that 1898 statute because at that time the only bars to a discharge in the predecessor of § 14 (c) were offenses punishable by imprisonment or fraudulent concealment. Section 14b, 30 Stat. 550. In 1903, Congress amended § 14b to include the six-year bar, 32 Stat. 797, and over the years other grounds for refusing confirmation have been added to that section. But the word “guilty” was never changed, and has obviously remained in several chapters of the Act merely as a shorthand way of referring back to those items that preclude the granting of a discharge. Thus, Chapter XI of the Bankruptcy Act, which deals with arrangements, has almost an exact duplicate of § 656 (a) (3) containing the same “guilty” phraseology. § 366 (3), 11 U. S. C. § 766 (3) (1964 ed.). Chapter XII, which deals with real property arrangements, contains a similar provision. § 472 (3), 11 IT. S. C. § 872 (3) (1964 ed.). And of course Chapter XIII, dealing with both compositions and extensions for wage earners, uses this language. These parallel provisions all derive from the same section framed in 1898.

This history and this parallelism indubitably demonstrate two things: first, that the Congress did not devise the “guilty” terminology in 1938 as a means of making a subtle distinction between the morally reprehensible bars to bankruptcy contained in § 14 (c) and the other bars there enumerated; and second, that the word “guilty” means the same thing when applied to general arrangements in § 366, to real property arrangements in § 472, and to compositions and extensions in § 656. If the word “guilty” excludes the six-year bar for extension plans, it is impossible to see what sort of statutory interpretative sleight of hand would save it for general arrangements, real property arrangements, and wage-earner composition plans. Moreover, it seems already accepted that as applied to Chapter XI arrangements, the “guilty” provision does refer back to the six-year bar. See In re Jensen, 200 F. 2d 58; 9 Collier, Bankruptcy ¶ 9.19, at 310-311 (14th ed. 1964); Kennedy, Hospitality for Repeaters Under the Bankruptcy Act, 68 Com. L. J. 117, 119-120 (1963). The same would appear to be true of the meaning of “guilty” in Chapter XII. See 9 Collier, supra, ¶ 9.07, at 1146. And the Court in its present opinion appears to concede that when applied to compositions, .§ 656 is somehow transformed to include the six-year bar.

In short, construing “guilty” to refer only to “reprehensible” aspects of § 14 (c) has no basis in legislative history, and requires a strained attempt to distinguish other applications of the identical section and of parallel sections which concededly are applied more generally. Because of its ramifications, this construction may do serious harm to the administration of Chapter XIII compositions, Chapter XII real property arrangements, and Chapter XI arrangements.

The Court also advances another argument in support of its conclusion that confirmation of this extension plan was not barred by virtue of §§ 656 and 14 (c). This argument rests essentially on § 602 of the Bankruptcy Act, 11 U. S. C. § 1002 (1964 ed.). Section 602 provides that the provisions of Chapters I through VII shall apply to Chapter XIII “insofar as they are not inconsistent or in conflict with the provisions of this chapter . . . .” It seems to be said that the six-year bar is inconsistent with the provisions of Chapter XIII because the extension plan is designed to give wage earners relief, and the six-year bar would preclude some such people from receiving that relief without good reason.

This argument likewise does not withstand analysis. To be sure the six-year bar makes it impossible for certain wage earners to get relief by way of extension plans, but so do all the other restrictions on this form of relief. Nobody would suggest that it is “inconsistent” with Chapter XIII to withhold extension-plan relief from those who engage in fraud on the ground that such a restriction cuts down the number of people who can take advantage of Chapter XIII. Section 656 clearly does establish restrictions on the class of people to whom relief is available; the question before us is whether the six-year bar is such a limitation; citation of § 602 is con-clusory only, and makes no positive contribution to a meaningful analysis.

My conclusion that the statute should be read literally to preclude the confirmation of an extension plan if the applicant has been granted a discharge within the previous six years is reinforced by § 686 (5) of Chapter XIII, 11 II. S. C. § 1086 (5) (1964 ed.). Section 686 (5) in its entirety declares that “confirmation of a plan under this chapter shall not be refused because of a discharge granted or a composition confirmed prior to the effective date of this amendatory Act.” The inclusion of this provision indicates quite clearly that Congress did believe that a prior discharge would be a bar to a Chapter XIII plan, and that it decided to remove that restriction only for discharges granted before September 22, 1938, the effective date of the statute in question. See 10 Collier, supra, ¶ 33.05, at 477. Such a provision is perfectly understandable. Before the enactment of the extension-plan amendment, wage earners who sought a bankruptcy remedy could obtain only a discharge through straight bankruptcy or composition. There would be no reason to preclude wage earners who availed themselves of such relief prior to September 1938 from obtaining a more favorable extension plan subsequently. On uhe other hand, after enactment of Chapter XIII, wage earners would have the opportunity to apply for an extension plan. It is not difficult to understand why Congress should have refused to permit wage earners who chose a discharge in bankruptcy rather than an extension plan a second opportunity, within six years, to receive statutory relief. I am frank to say that I am unable to perceive the basis for the Court’s contrary explanation of this provision.

The short of the matter is that the Court’s arguments do not support the conclusion it reaches. The conclusion is of course supportable as a legislative judgment, even though arguments can be made for both sides. Thus, it might be argued for the six-year bar in a Chapter XIII context somewhat as follows: the wage-earner extension plan is a new and very advantageous procedure for the debtor, but it is a burden on the courts. It is also a constraint on creditors who will be delayed in collecting, will be precluded from garnishing, and may not receive full repayment if the debtor obtains a discharge under § 661 of the Act, 11 U. S. C. § 1061 (1964 ed.). It is therefore reasonable to limit the availability of this kind of relief to those wage earners who have not had the advantage of a discharge in bankruptcy in the previous six years. Furthermore, it is certainly arguable that the six-year bar encourages wage earners to make use of the Chapter XIII procedure. With the prior-discharge bar eliminated, a debtor might eschew an extension plan and decide instead to go through straight bankruptcy first, waiting a few months until the going once again “gets tough” to take advantage of the extension plan.

I venture considerations such as these not as overcoming the countervailing ones relied on by the Court, and heretofore espoused by others, but simply to point up the fact that this is not one of those cases where seemingly straightforward statutory language must yield its literal meaning to a contrary congressional intent. What we have here are but two contrasting legislative policies, wherein the Court’s duty is to take the statute as it is presently plainly written.

I would affirm the judgment of the Court of Appeals.

       All United States Code citations herein refer to the 1964 edition.

       52 Stat. 850 (1938), as amended, 11 U. S. C. § 32 (e) (5): “(c) The court shall grant the discharge [in bankruptcy] unless satisfied that the bankrupt has ... (5) in a proceeding under this title commenced within six years prior to the date of the filing of the petition in bankruptcy . . . been granted a discharge, or had a composition or an arrangement by way of composition or a wage earner’s plan by way of composition confirmed under this title . . . .” 11 U. S. C. §32 (c)(5).

       Compare In re Schlageter, 319 F. 2d 821 (C. A. 3d Cir. 1963), and Perry v. Commerce Loan Co., 340 F. 2d 588, with Edins v. Helzberg’s Diamond Shops, Inc., 315 F. 2d 223 (C. A. 10th Cir. 1963), and In re Mahaley, 187 F. Supp. 229 (D. C. S. D. Cal. 1960). See also In re Mayorga, 355 F. 2d 89 (C. A. 9th Cir. 1966).

       Chapter XIII also provides for wage-earner plans by way of composition. Compositions under that chapter, however, are almost insignificant in the operation of wage-earner plans because most creditors will not give the necessary approval. The latest published statistics show that 95% of the funds paid to creditors under Chapter XIII proceedings derive from extensions rather than compositions. Administrative Office of the United States Courts, Tables of Bankruptcy Statistics, Table F 11 (1964) (by computation).

       11 U. S. C. § 1002: “The provisions of chapters 1-7 of this title shall, insofar as they are Pot inconsistent or in conflict with the provisions of this chapter, apply in proceedings under this chapter . . . .”

       Such a collision undoubtedly affects the functioning of the Act. The Administrative Office of the United States Courts reports that a “pronounced drop in Chapter XIII filings” has been noted in the districts in the Sixth Circuit as a result of the holding in Perry. Administrative Office of the United States Courts, Memorandum for the Committee on Bankruptcy Administration of the Judicial Conference of the United States, Ueport on the Use of Chapter XIII, p. 2 (June 22, 1965).

       This is not the only example of drafting oversights in the Act. Although § 14 (c) (5) was amended in 1938 to include a reference to wage-earner compositions, the provision in that section relating to confirmation of a composition was not deleted even though § 12 of the 1898 Act, 30 Stat. 549, under which such a composition might have been confirmed, was repealed in the same enactment.

       We note that the National Bankruptcy Conference has proposed amendments to- the Act which are intended to clarify the interrelationship of §§14 (c)(5), 656 (a)(3), and 661. The proposed clarification is in accord with our construction of the Act. See H. R. 20, 89th Cong., 1st Sess. (1965). The Judicial Conference, upon request of the Congress, has submitted its views approving the bill. Letter from the Director of the Administrative Office of the United States Courts to the Chairman of the Committee on the Judiciary, House of Representatives (September 29, 1965). See also Report of the Proceedings of the Judicial Conference of the United States, at 68 (September 22-23, 1965).

       “The judge shall confirm a composition if satisfied that (1) it is for the best interests of the creditors; (2) the bankrupt has not been guilty of any óf the acts or failed to perform any of the duties which would be a bar to his discharge ...” § 12d, 30 Stat. 550.

       See the proposed amendments of the Bankruptcy Act by the National Bankruptcy Conference, note 8, ante, p. 404; Kennedy, Hospitality for Repeaters Under the Bankruptcy Act, 68 Com. L. J. 117 (1963).


author: Per Curiam.

text:
    UNITED TRANSPORTS, INC., et al. v. UNITED STATES et al.
    No. 868.
    Decided March 7, 1966.

      James W. Wrape, Robert E. Joyner and Reagan Sayers for appellants.

      Solicitor General Marshall, Assistant Attorney General Turner, Howard E. Shapiro, Robert W. Ginnane and Robert S. Burk for the United States et al.; Paul F. Sullivan for Kenosha Auto Transport Corp., and Donald W. Smith for Commercial Carriers, Inc., appellees.
   Per Curiam.

The motions to affirm are granted and the judgments are affirmed.


text:
    CIESIELSKI v. OHIO.
    No. 920.
    Decided March 7, 1966.

      Theodore R. Saker for appellant.
   Per Curiam.

The appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for a writ of certiorari, certiorari is denied.


text:
    SOCIEDAD de MARIO MERCADO e HIJOS v. PUERTO RICO.
    No. 786.
    Decided March 7, 1966.

      Pedro M. Porrata and Charles Cuprill Oppenheimer for appellant.
    /. B. Fernandez Badillo, Solicitor General of Puerto Rico, and Irene Curbelo, Assistant Solicitor General, for appellee.
   Per Curiam.

The motion to dismiss is granted and the appeal is dismissed for want of jurisdiction. Treating the papers whereon the appeal was taken as a petition for a writ of certiorari, certiorari is denied.

Mr. Justice Fortas took no part in the consideration or decision of this case.