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NO. 84-443

IN THE SUPREME COURT OF THE STATE OF MONTANA
1985

STATE OF MONTANA, ex rel., JOSEPH DUANE ROUGH, Relator,

THE DISTRICT COUFT OF THE EIGHTH JUDICIAL DISTRICT, et. al., Respondents.

ORIGINAL PROCEEDING: COUNSEL OF RECORD: For Relator: LaRue Smith, Great Falls, Montana For Respondent: Clary
&

Clary, Great Falls, Montana

Submitted on Briefs: July 11, 1985 Decided: December 5, 1985

Filed:

DEC-51985

* #

Clerk

Mr. Justice Fred J. Weber delivered the Opinion of the Court. Relator, Joseph Duane Rough, petitioned this Court to review by writ of certiorari an order of the Cascade County District Court holding him in contempt. remand. The issues on appeal are: 1. Did the District Court have subject matter We reverse and

jurisdiction to enforce an obligation allegedly discharged by the United States Bankruptcy Court? 2. Did the District Court err in concluding that the

credit union debt was excepted from discharge? In 1977, Joseph Rough married Nancy Rough. In July

1982, they co-signed a promissory note for $2,394.20 to the Malmstrom Federal Credit Union. separate guarantee agreement. On December The 30, 1982, Nancy Court and Joseph Rough were into the Nancy Rough also signed a

divorced.

District

incorporated

dissolution decree the parties' property division and support agreement. $250.00 Under the decree, Joseph Rough contributed In

per month child support but no maintenance.

addition, he was to pay the debt owed to Malmstrom Federal Credit Union. In July 1983, Joseph Rough filed a petition for

bankruptcy. unsecured

He listed Malmstrom Federal Credit Union as an creditor. Nancy Rough was not listed as a

creditor, even though she was a co-debtor and guarantor on the debt. On November 16, 1-983, Joseph Rough received a

general discharge of his debts by order of the United States Bankruptcy Court for the District of Montana. Shortly

thereafter, First Liberty Federal Credit Union, successor in interest to Malmstrom Federal Credit Union, commenced a

collection suit against Nancy Rough in Justice Court.

Nancy Rough moved the District Court to enforce the terms of the dissolution decree and require Joseph Rough to make appropriate arrangements to release her from any

obligation due and owing to the credit union.

Following a

hearing on the motion, the District Court conclud.ed: That the bankruptcy discharged the Respondent of his own obligation to pay the Credit Union, but did not discharge his obligation under the Decree of Dissolution to pay the indebtedness due the Credit Union for which the Petitioner was held liable. That by his failure to pay the Malmstrom Federal Credit Union obligation, the Respondent is in contempt of the Court's Decree of Dissolution and the Agreement between the parties. The court held Joseph Fough in contempt but stayed the iudgrnent, contingent on satisfactory arrangements being made to pay the credit union and Nancy Rough's attorney's fees. Upon Joseph Rough's failure to make satisfactory

arrangements, the District Court ordered him to serve 5 days in jail and execute an allotment authorizing $250 per pay period to Nancy Rough in order that she might pay the debt owed the credit union, attorney's fees, and interest. The

order stated that the jail term was suspended for ten days and that if Joseph Rough executed the allotment, the sentence would be suspended. Joseph Rough filed a. petition for writ of certiorari asking this Court to review the contempt order and money judgment. The petition was granted and this Court stayed

further contempt proceedings.

Did the District Court have subject matter jurisdiction to enforce an obligation allegedly discharged by the United States Bankruptcy Court? Nancy jurisdiction Rough to contends determine that the District obligations Court under has a

whether

dissolution decree are enforceable and whether a debt is excepted from discharge because it was neither listed nor scheduled. Joseph Rough argues that a discharge in bankruptcy wipes clean a.11 previous debts. We disagree. Under Title 11 U.S.C.

5 523, some debts flow through the bankruptcy unaffected even

though the debtor is granted a general discharge. U.S.C.

Title 11

5 523 (a)(3) and (5) specifically except from discharge
creditors and debts in the nature of alimony,

unlisted

maintenance or support. The Bankruptcy Court has concurrent but not exclusive jurisdiction to determine whether debts are excepted from discharge under S 523(a) (3) and (5). [Dlebts that fall within section 523(a) (3) are of the type which the bankruptcy court has concurrent but not exclusive jurisdiction. Should a creditor bring suit in a court other than the bankruptcy court on a debt which he contends is excepted from discharge under section 523(a) (3), the local court would determine the question of dischargeability.

Section 523 (a)(5) does not fa]-1 within the terms of section 523 (c) which discharges debts specified in section 523 (a)(2), (4) or (6) unless the creditor requests the court for a hearing to determine dischargeability of such debts. In effect, the determination of whether debts within subsection (a)(2), (4) or (6) are dischargeable under section 523 (a) falls within the exclusive jurisdiction of the bankruptcy court, and only as a matter of concurrent jurisdiction with respect to other types of debts.

..

Thus, debts falling within other clauses of section 523 (a) may have the issue of dischargeability tried in courts other than those of bankruptcy unless a complaint is filed by either the creditor or the debtor in the bankruptcy court. 3 Collier - Bankruptcy on 1985).

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Montana Law