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More fuel for the fire -- Computerized Printouts for DV

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This is an older appeal published in 1997 for US Bankruptcy Court, but it has not been countered. It has some extremely interesting commentary about computer generated forms and print outs, namely, that they are totally useless. I "bolded" some of the relevant passages that can be used as additional support for the argument that computer printouts are not written agreements or contracts and do not valiate a debt.









No. 96-1462



(D.C. No. 95-D-1157)

[Preceeding paragraphs omitted]

Although we have never addressed whether a computer generated form produced from a debtor's oral statements will satisfy the definition of a "writing," we perceive distinct reasons for Congress to have intended § 524(a)(2)(B) to require a document in writing under the entire scheme of the Bankruptcy Code. As noted in Engler, giving a statement of financial condition is a solemn part of significant credit transactions; therefore, it is only natural that solemnity be sanctified by a document which the debtor either prepares or sees and adopts. In a world where important decisions relating to the extensions of credit and service will be made upon the contents of a statement relating to financial condition, too much mischief can be done by either party to the transaction were it otherwise. Somewhere in the commercial risk allocation picture, the writing must stand as a bulwark which tends to protect both sides.

A creditor who forsakes that protection, abandoning caution and sound business practices in the name of convenience, may find itself without protection. For example, in In re Ward, 857 F.2d 1082 (6th Cir. 1988), the court denied nondischargeability where the debtor filled in the credit card application and the bank issued a $2,000 credit line and credit card to "a person who was not only hopelessly insolvent, but who had recently been convicted of an embezzlement offense." Id. at 1083. The court reasoned a bank's extending that sort of risk must do some minimal investigation, a concept the Bankruptcy Code embodies.

One commenter has written, "[F]rom the perspective of the bankruptcy proceeding, it is inequitable to reward a possibly imprudent creditor who failed to detect the debtor's misrepresentation by excepting her debt from discharge, while the debtor's other more prudent creditors have their claims evaluated collectively." Zeigler, The Fraud Exception to Bankruptcy, 38 Stan. L. Rev. 891, 907-08 (1986). Other courts have noted a creditor who extends credit without proper investigation is not entitled to a judgment of nondischargeability. Citibank v. Cox (In re Cox), 150 B.R. 807 (Bankr. N.D. Fla. 1992); First Card Services, Inc. v. Cronk (In re Cronk), 144 B.R. 903 (Bankr. M.D. Fla. 1992). This authority demonstrates a reluctance to part from the precise language of the Code to acknowledge and condone business practices which have been adopted largely for the sake of convenience.

In the information age, it is convenient to purchase goods over the telephone and use our credit cards to make a purchase and avoid a visit to a vendor. We merely give the seller our credit card number instead of signing the voucher, and our oral representations are transferred into computer data which become a debt upon which we are obliged. The seller also relies upon our oral statements for our convenience and to effect a sale that he or she might otherwise have not made. Yet, these valid transactions do not rise to the level of a statement of financial condition.

By enactment of the provisions of 11 U.S.C. § 523(a)(2)(B), Congress has conferred a special dignity on statements of that nature. They are not to be regarded in the same manner as other legitimate transactions, nor are the deceptions that may be employed in such a statement treated in the same way as other fraudulent acts in which a debtor may engage. Even though fraud is a basis for nondischargeability under other circumstances having no necessary relation to written documents, 11 U.S.C. § 523(a)(2)(A), Congress has provided deception made in statements of financial condition must be in writing before a creditor is entitled to an exception from discharge.

As noted by Justice Souter in Field v. Mans, ___U.S.___, 116 S. Ct. 437, 441 (1995), there is a marked distinction in origin between § 523(a)(2)(A) which arises from and is a codification of the principles of common law fraud, and § 523(a)(2)(B) whose roots are purely statutory in origin. Distinguishing the two, he said:

The sum of all this history is two close statutory companions barring discharge. One applies expressly when the debt follows a transfer of value or extension of credit induced by falsity or fraud (not going to financial condition), the other when the debt follows a transfer or extension induced by a materially false and intentionally deceptive written statement of financial condition upon which the creditor reasonably relied.

Id. at 441. Can it be said any plainer? A written statement of financial condition does not mean an oral statement converted into an electronic format. Despite Bellco's argument that reasoning merely relates to the "process" by which the statement evolves while the statute pertains to the "essence"of the statement, Fields addresses that contention as well but in a less direct way.

Justice Souter pointed out § 523(a)(2)(B) devolves from an amendment of the Bankruptcy Act of 1898 which was adopted in its original form in 1903. Except for some narrowing of its scope, the section has existed in its current format for over ninety-four years without change. We know when it was adopted there was no device for the conveyance of written information regarding financial condition except for a document. It takes no imagination whatever, then, to assume when Congress adopted the language, "statement in writing," it meant a statement in a written document. Congress made no statutory distinction between the "process" and the "essence" of the statement. Unequivocally, it addressed the only form of writing it knew. Bellco argues, however, technology has changed, and we should recognize the change. But, the statute has not changed. It remains in the form originally conceived and enacted by Congress. It goes without saying, we are bound by the law as we find it, not as we would like it to be.

We note with some wryness that in this instance the law lags behind technology and custom, but that gap is a subject which must be addressed to the Congress and not the courts. We will not undertake to rewrite the express language of a statute merely to accommodate the commercial conveniences attributable to modern technology. AFFIRMED.

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