T I v. DelBonis
Case Date: 12/18/1995
Court: United States Court of Appeals
Docket No: 95-1702
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UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT ____________________ No. 95-1702 T I FEDERAL CREDIT UNION, Plaintiff, Appellee, v. JOHN CARL DELBONIS, Defendant, Appellant. ____________________ APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Reginald C. Lindsay, U.S. District Judge] ___________________ ____________________ Before Torruella, Chief Judge, ___________ Bownes, Senior Circuit Judge, ____________________ and Stahl, Circuit Judge. _____________ ____________________ Theodore J. Koban for appellant. _________________ Paul F. Lorincz, with whom Coogan, Smith, Bennett, McGahan, _________________ ___________________________________ Lorincz & Jacobi were on brief for appellee. ________________ ____________________ December 18, 1995 ____________________ BOWNES, Senior Circuit Judge. This appeal by BOWNES, Senior Circuit Judge. ______________________ defendant-appellant John Carl DelBonis, a chapter 7 debtor, concerns the dischargeability of educational loans under 11 U.S.C. 523 (a)(8). The District Court for the District of Massachusetts reversed a bankruptcy court order granting DelBonis summary judgment. Debtor's appeal from that decision asks us to do two things: reverse the district court's holding that federal credit unions are nonprofit organizations and hold that educational loans issued to him by creditor-appellee TI Federal Credit Union are, therefore, dischargeable in bankruptcy. We deny both requests. Instead, we affirm the result achieved by the district court -- that debtor's loans are nondischargeable -- and elect not to reach the issue of federal credit unions' nonprofit status. Because our conclusion that federal credit unions qualify as government units within the meaning of 11 U.S.C. 523(a)(8) provides a sufficient legal basis for upholding the district court's order, we reserve the issue of whether such organizations qualify as nonprofit organizations within the meaning of that statute for another day. Jurisdiction of this appeal stems from 28 U.S.C. 158(d). I. THE FACTS I. THE FACTS Financial difficulties caused defendant-appellant John Carl DelBonis ("DelBonis") to file for bankruptcy under Chapter 7 of the Bankruptcy Code on September 20, 1993. -2- 2 DelBonis's Chapter 7 application, which he filed in the Eastern District of Massachusetts, listed, inter alia, _____ ____ educational loans he obtained on behalf of his wife and children as debts to be discharged. The loans, from which DelBonis obtained no direct personal benefit and on which he is the sole obligor, were acquired from the Texas Instrument Federal Credit Union, ("TIFCU") while DelBonis was employed at Texas Instruments, Inc. DelBonis's employment with Texas Instruments, Inc., one of nine institutional members of TIFCU, terminated in November, 1992. Chartered on May 9, 1960, pursuant to the Federal Credit Union Act, 12 U.S.C. 1751 et seq., TIFCU is a __ ___ federal credit union and has its principal place of business in Attleboro, Massachusetts. Like most federal credit unions, TIFCU provides a variety of credit, savings, and financial counseling services to its members. Loans -- educational; home equity; residential real estate; and member business -- however, represent TIFCU's primary investment. Cf. National Credit Union Administration, Office of __ Examination and Insurance, Federal Credit Union Handbook 11 _______ ______ _____ ________ (1988). Because TIFCU is a federal credit union, its loan activities are heavily regulated by the National Credit Union Administration ("NCUA"). See generally 12 C.F.R. Ch. VII (1- ___ _________ 1-95 Edition). NCUA exists within the executive branch of the federal government and was established in 1970 to -3- 3 "prescrib[e] rules and regulations for the organization and operation of federal credit unions . . . ." Federal Credit _______ ______ Union Handbook, supra, at 2. _____ ________ _____ DelBonis took out his first educational expense loan with TIFCU on December 27, 1985, for the sum of $3,500.00. TIFCU advanced the loans as part of a special educational loan program. The program, which was not federally guaranteed, had several attractive features. It made loans at low interest rates, gave borrowers longer repayment periods, and allowed loans to be aggregated in maximum amounts greater than those permitted under personal loan programs. One of the most appealing features of TIFCU's educational loan program was that it enabled borrowers to simultaneously borrow additional funds and refinance outstanding balances on previous loans. DelBonis took advantage of this feature on numerous occasions. Under the requirements of the loan program, the proceeds from each transaction were paid directly to the educational institution DelBonis specified. During the period spanning December 27, 1985 to January 4, 1991, DelBonis turned to TIFCU sixteen times for assistance in meeting his family's educational needs. Each time TIFCU responded by granting him the funds he requested. In fact, TIFCU advanced a total of $43,114.87 in loan -4- 4 proceeds on DelBonis's behalf. DelBonis ultimately asked and was permitted to consolidate these loans into a single promissory note for $39,064.46, payable over ten years, with interest at 9.6% per annum. A principal balance of $32,618.27 is currently due on that amount. II. THE PROCEEDINGS BELOW II. THE PROCEEDINGS BELOW On December 3, 1993, nine months after DelBonis filed for Chapter 7 bankruptcy and, thereby, sought to avoid repayment of his loan debt, TIFCU initiated a bankruptcy court adversary proceeding. TIFCU requested a determination as to whether 11 U.S.C. 523(a)(8) rendered the educational loans issued to DelBonis nondischargeable in bankruptcy. TIFCU argued that its status as a nonprofit required a finding of nondischargeability under the statute. Six months after the adversary proceedings began, the parties submitted an Agreed Statement of Fact to the bankruptcy court. That document included the erroneous stipulation that "TIFCU is not a governmental unit . . . ." Agreed Statement of Fact at 2. DelBonis filed a motion for _________________________ summary judgment on June 6, 1994, almost immediately after the Agreed Statement of Fact was filed with the bankruptcy court. His summary judgment motion raised two issues bearing on 11 U.S.C. 523 (a)(8)'s applicability in this case: 1) whether TIFCU is a nonprofit institution; and 2) whether -5- 5 debtor's loans became due within the seven-year period prescribed by 11 U.S.C. 523(a)(8). The bankruptcy court granted summary judgment on the first issue and, based on its analysis, did not reach the second issue. The bankruptcy court found that "loans incurred to educate members of a debtor's family qualify as educational loans within the meaning of 11 U.S.C. 523(a)(8)." In re DelBonis, 169 B.R. 1, 2 (Bankr. D. Mass. ______________ 1994). It ruled, however, that federal credit unions are not nonprofit organizations entitled to Section 523(a)(8) protection because they are comprised of member-shareholders and are authorized to issue dividends to such members. Id. ___ The bankruptcy court found that nonprofit organizations do not possess such characteristics. Id. at 3-4. The ___ bankruptcy court acknowledged that TIFCU's suit raised a novel issue of law and, therefore, denied debtor's requests for fees and costs. Id. at 4. ___ TIFCU appealed the bankruptcy court's decision on June 28, 1994 and filed a Motion to Amend the Agreed Statement of Fact on the ground that it included a stipulation erroneously denying TIFCU's legal status as a government unit. The bankruptcy court denied TIFCU's Motion to Amend on July 11, 1994. TIFCU subsequently filed a new Notice of Appeal challenging both the bankruptcy court's -6- 6 summary judgment order and denial of the Motion to Amend the Agreed Statement of Fact. On appeal, the district court reversed the bankruptcy court's grant of summary judgment. It held that federal credit unions qualify as nonprofit organizations under Section 523(a)(8) and issued a detailed opinion outlining the legal and policy-based justifications for such a classification. Id. at 5. Our decision in La Caisse ___ _________ Populaire Ste. Marie v. United States, 563 F.2d 505 (1st Cir. _____________________________________ 1977), defining a credit union as "a democratically controlled, cooperative, nonprofit society organized for the purpose of encouraging thrift and self-reliance among its members . . . ," was cited as support for the district court's reversal. Id. at 4-5 (quoting La Caisse Populaire ___ _______ ____________________ Ste. Marie v. United States, 563 F.2d 505, 509 (1st Cir. _____________________________ 1977). La Caisse held that state credit unions are entitled _________ to general income tax exemption under Section 501(c)(14)(A) of the Internal Revenue Code. Because the ground on which it based its decision independently warranted a finding that debtor's loans are nondischargeable, the district court deemed it unnecessary to "reach the question whether [the bankruptcy court judge] should have allowed the appellant's motion to amend its agreed statement of facts regarding . . . [TIFCU's] status as a federal instrumentality." Id. at 5. ___ III. THE STATUTE III. THE STATUTE -7- 7 Resolution of this case, as the following discussion reveals, requires us to consider a gaggle of statutes and statutory issues. Questions about the status of federal credit unions implicate the Federal Credit Union Act, 12 U.S.C. 1751 et seq., bankruptcy law, and the federal __ ___ income tax code. See 26 U.S.C. 501. Because the ___ possibilities for confusion run high, we think it important to clearly set out the terms of 11 U.S.C. 523(a)(8), the statute on the basis of which TIFCU initiated the adversary proceeding. In relevant part, 11 U.S.C. 523 (a)(8) provides: (a) A discharge under section 727, 1141, 1228(a), 1228(b) or 1328(b) of this title does not discharge an individual debtor from any debt -- (8) for an educational benefit overpayment or loan made, insured or guaranteed by a government unit, or made under any program funded in whole or in part by a governmental unit or nonprofit institution, or for an obligation to repay funds received as an educational benefit,scholarship or stipend, unless -- (A) such loan, benefit, scholarship, or stipend overpayment first became due more than 7 years (exclusive of any applicable suspension of the repayment period) before the date of the filing of the petition; or (B) excepting such debt from discharge under this paragraph will impose an un-due hardship on the debtor and the debtor's dependents. In summary, Section 523(a)(8) offers two alternatives for adjudicating educational loans issued by a federal credit union nondischargeable. First, it provides -8- 8 that educational loans or benefit overpayments are nondischargeable, if issued in whole or in part by an agency qualifying as a nonprofit organization. Second, the statute also makes loans issued, insured, or guaranteed by governmental units nondischargeable. A debtor's loans, thus, are nondischargeable if they fall within the parameters of either provision. Congress delineates only two exceptions to this nondischargeability policy. A demonstration that the educational loan, benefit, scholarship, or stipend at issue in the case first became due more than seven years before the filing of the bankruptcy petition excepts a debtor from the statute. Finally, evidence that nondischargeability will impose an undue hardship on debtor or debtor's dependents provides a basis for circumventing nondischargeability. The hardship alleged, however, must be undue and attributable to truly exceptional circumstances, such as illness or the existence of an unusually large number of dependents. In re _____ Lohman, 79 B.R. 576, 581 (Bankr. D. Vt. 1987). ______ Thus far, this case has primarily traveled down the analytical path carved out by Section 523(a)(8)'s nonprofit organization provision. In the adversary proceeding conducted before the bankruptcy court, TIFCU's principal argument for nondischargeability of DelBonis's loans was that it qualified as a nonprofit organization within the meaning -9- 9 of 11 U.S.C. 523 (a)(8). Similarly, both the bankruptcy court and the district court, albeit with different results, focused solely on whether federal credit unions are nonprofits. A reasonable basis for assuming such an analytical tack exists, to be sure. Numerous other courts have fixed their nondischargeability analyses on questions pertaining to the, oftentimes, fine distinctions between nonprofit and for- profit entities. Unfortunately, a reading of their decisions suggests that no clear consensus on these questions has been reached. See In re Roberts, 149 B.R. 547 (Bankr. C.D.Ill. ___ _____________ 1993) ("[I]t is not disputed that the Credit Union is a nonprofit institution."); TI Federal Credit Union, 183 B.R. _______________________ at 1; Compare with In re Sinclair-Ganos, 133 B.R. 382 (Bankr. _______ ____ ____________________ W.D. Mich. 1991) ("[T]his court holds that a credit union is not a nonprofit institution under 11 U.S.C. section 523 (a)(8)); and In re Simmons, 175 B.R. 624 (Bankr. E.D.Va. ___ ______________ 1994) ("[T]he credit union in the case at bar is not a nonprofit institution within the scope of section 523 (a)(8)"). Disagreements over whether courts should concentrate on an organization's articulated purpose, specific financial activities, or competitiveness with other for-profit institutions in making nonprofit status determinations abound. Compare TI Federal Credit Union, 183 _______ _______________________ B.R. at 1 with In re DelBonis, 169 B.R. 1 and In re Roberts, ____ ______________ ___ _____________ -10- 10 149 B.R. at 547. Consequently, no clear test for "determining when a nonprofit institution is -- or is not -- a nonprofit institution under section 523 (a)(8) of the Bankruptcy Code" has been formulated. In re Roberts, 149 ______________ B.R. at 551; see also 18 Am. Jur. 2d, Corporations 32 at ___ ____ 827 ("The words 'profit' or 'nonprofit' have no definite meaning or general application . . . ."). In light of this discord, we are satisfied that the district court's focus on whether federal credit unions are nonprofits was misplaced. Sound judicial policy counsels against deciding complicated legal issues where a clear, principled, alternative basis for reaching the same result exists. Cf. Walmac Co. v. Issacs, 220 F.2d 108, 113 (1st __ _____________________ Cir. 1955). TIFCU's appeal of the bankruptcy court's denial of its Motion to Amend the Agreed Statement of Fact gave the district court an opportunity to decide this case under 11 U.S.C. 523 (a)(8)'s government unit provision. That provision provides us with a principled, alternative basis for affirming the district court's nondischargeability order. Unlike the nonprofit provision, the government unit prong of the Section 523(a)(8) is unambiguous and not particularly difficult to interpret. In re Pelkowski, 990 ________________ F.2d 737, 741-42 (3rd Cir. 1993). And the law establishes -11- 11 that federal credit unions perform important governmental purposes and operate as federal instrumentalities. IV. DISCUSSION IV. DISCUSSION Before addressing the substantive issues underlying our conclusion that federal credit unions are government units within the meaning of Section 523(a)(8), we must confront the threshold issue of whether the question of TIFCU's status as a government unit is properly before us. We, therefore, begin our discussion by evaluating the procedural propriety of our deciding this case on that basis. The substantive issues underlying our judgment that debtor's loans are nondischargeable will be discussed thereafter. A. Stipulations A. Stipulations In our judicial system, "[s]tipulations fairly entered into are favored." Burstein v. United States, 232 __________________________ F.2d 19, 23 (8th Cir. 1956). Factual stipulations tend to "expedite a trial and eliminate the necessity of much tedious proof." Id. As a result, "parties to a lawsuit are free to __ stipulate to factual matters." Saviano v. Commissioner of ___________________________ Internal Revenue, 765 F.2d 643, 645 (7th Cir. 1985). They _________________ are, however, not generally free to extricate themselves from those stipulations once crafted. Due to the interest in preserving the efficiency attained through stipulations, "[t]he general rule . . . [is] that stipulations of attorneys made during a trial may not be disregarded or set aside at -12- 12 will . . . ." Marshall v. Emersons Ltd., 593 F.2d 565, 569 __________________________ (4th Cir. 1979) (citing Maryland Cas. Co. v. Rickenbaker, 146 ________________________________ F.2d 751, 753 (4th Cir. 1944)); see also 73 Am. Jur. 2d, ___ ____ Stipulation 1 (1974). Litigation stipulations can be understood as the analogue of terms binding parties to a contract. As in contract law though, rules limiting litigants to trial stipulations are not absolute. Marshall, 593 F.2d at 569. ________ Case law is clear that "a stipulation of counsel originally designed to expedite the trial should not be rigidly adhered to when it becomes apparent that it may inflict a manifest injustice upon one of the contracting parties." Id. at 568. __ Parties will usually be relieved of their stipulations where it becomes evident that "the agreement was made under a clear mistake." Brast v. Winding Gulf Colliery Co., 94 F.2d 179, ___________________________________ 180 (4th Cir. 1938). Relief from erroneous stipulations is especially favored where the mistake made concerns a legal conclusion. Saviano, 765 F.2d at 645. "[P]arties may not stipulate to _______ the legal conclusions to be reached by the court." Id.; see ___ ___ also Swift & Co. v. Hocking Valley Ry. Co., 243 U.S. 281, ____ ________________________________________ 289-90 (1917); O'Connor v. City and County of Denver, 894 ________________________________________ F.2d 1210, 1225-26 (10th Cir. 1990)(citing Platt v. United ________________ States, 163 F.2d 165, 168 (10th Cir. 1947)); C.C. Gunn v. ______ _____________ United States, 283 F.2d 358, 364 (8th Cir. 1960); In re ______________ _____ -13- 13 Dawson, 162 B.R. 329, 334 (Bankr. D. Kan. 1993). Issues of ______ law are the province of courts, not of parties to a lawsuit, individuals whose legal conclusions may be tainted by self- interest. Courts, accordingly, "are not bound to accept as controlling, stipulations as to questions of law." Estate of _________ Sanford v. Commissioner, 308 U.S. 39, 51 (1939); accord _________________________ ______ Dedham Water Co., Inc. v. Cumberland Farms Dairy, Inc., 972 ________________________________________________________ F.2d 453, 457 (1st Cir. 1992) (citing RCI Northeast Servs. ____________________ Div. v. Boston Edison Co., 822 F.2d 199, 203 (1st Cir. 1987); _________________________ In re Scheinberg, 132 B.R. 443, 444, aff'd, 134 B.R. 426 _________________ _____ (Bankr. D. Kan. 1992). We review this appeal de novo because we are __ ____ persuaded that TIFCU's erroneous stipulation that federal credit unions are not government units concerned a matter of law, not of fact. See Compagnie De Reassurance v. New ___ __________________________________ England Reinsur., 57 F.3d 56, 71 (1st Cir. 1995), cert. _________________ _____ denied, -- S.Ct. --, 64 U.S.L.W. 3250 (Dec. 4, 1995). ______ Appellate courts review bankruptcy court findings of fact under the clearly erroneous standard, but subject legal conclusion drawn by such courts to de novo review. See __ ____ ___ Western Auto Supply Co. v. Savage Arms, Inc. (In re Savage ______________________________________________ ____________ Indus., Inc.), 43 F.3d 714, 719-20, n.8 (1st Cir. 1994); In ____________ __ re Comer, 723 F.2d 737, 739 (9th Cir. 1984); see also Inwood ________ ___ ____ ______ Lab., Inc. v. Ives Lab., Inc., 456 U.S. 844, 855 n. 15 _______________________________ (1982)(citing United States v. Singer Mfg. Co., 374 U.S. 174, ___________________________ -14- 14 194 n. 9 (1963)); accord Cumpiano v. Banco Santander Puerto ______ ___________________________________ Rico, 902 F.2d 148, 153 (1st Cir. 1990). Whether Congress ____ meant to include federal credit unions within the meaning of the term "government unit" has not previously been addressed by this court, but is, otherwise, a garden-variety legal question, one courts are regularly called upon to answer. It primarily requires us to consider not facts, but law and various legal authorities -- i.e., federal statutes; case law; and legislative history. To the extent, if at all, factual considerations enter our analytical picture, it will be only to help us reach the proper legal conclusion on the question now before us. TIFCU's erroneous stipulation does not bind this appeal. No injustice flows from our decision to relieve TIFCU from the burden of its erroneous stipulation. See ___ Marshall, 593 F.2d at 568. Debtor's position, admittedly, is ________ not aided by our decision to set TIFCU's stipulation aside. We think it fairly obvious though, that a far greater harm would be effectuated by allowing that stipulation to stand. Important federal bankruptcy and loan policies are at stake in this litigation, not merely DelBonis's personal financial difficulties, however unfortunate and burdensome they may be. It was error for the bankruptcy court to refuse to allow TIFCU to amend the Agreed Statement of Facts. B. Appeals and Lower Court Error B. Appeals and Lower Court Error -15- 15 Having concluded that the issue of whether federal credit unions qualify as government units under 11 U.S.C. 523 (a)(8) remains an open issue, we move on to consider a second, but not unrelated, procedural question: Does the district court's decision not to evaluate TIFCU's appeal from the bankruptcy court's denial of its Motion to Amend the Agreed Statement of Fact preclude us from addressing that issue? The answer to this question is an unqualified no. A district court's failure to decide an issue raised by a party and adequately supported by the facts contained in the record does not move that issue beyond an appellate court's purview. Estate of Soler v. Rodriguez, 63 F.3d 45, 53 (1st Cir. 1995) ____________________________ (citing Willhauck v. Halpin, 953 F.2d 689, 704 (1st Cir. ____________________ 1991). In this circuit, "[a]n appellate court is not limited to the legal grounds relied upon by the district court, but may affirm on any independently sufficient grounds." Id.; see also Polyplastics, Inc. v. Transconex, __ ___ ____ __________________________________ Inc., 827 F.2d 859, 861 (1st Cir. 1987); Casagrande v. ____ ______________ Agonitsas, 748 F.2d 47, 48 n. 1 (1st Cir. 1984)(per curiam). _________ While it is axiomatic that, except in exceptional circumstances, parties may not surprise appellate courts with new issues, we do not find ourselves faced with a situation in which a party has conjured up an issue for appellate review without first presenting it to the trial court. See ___ -16- 16 Johnston v. Holiday Inns, 595 F.2d 890, 894 (1st Cir. 1979); _________________________ see also Teamsters, Chauffers, Warehousemen & Helper's Union, ___ ____ ____________________________________________________ Local No. 59 v. Superline Transp. Co., 953 F.2d 17, 21 (1st _____________________________________ Cir. 1992); McCoy v. Massachusetts Institute of Technology, ________________________________________________ 950 F.2d 13 (1st Cir. 1991), cert. denied, 504 U.S. 910 _____________ (1992) ("It is hornbook law that theories not raised squarely in the district court cannot be surfaced for the first time on appeal."). TIFCU raised the issue of its status as a government instrumentality on two separate occasions. Its effort to amend the Agreed Statement of Facts and to, thereby, correct the erroneous legal conclusion that federal credit unions are not government units, coupled with its appeal of the bankruptcy court's denial of that motion, preserved the issue for our review. TIFCU has fulfilled its obligation to squarely raise those issues most pertinent to the resolution of its entire case. See id. We think it worth noting, however, ___ ___ that we would be able to reach the issue of whether federal credit unions are governmental units even if TIFCU had done nothing. Contrary to what debtor might have us believe, the rule that binds parties to their arguments is not inflexible. Johnston, 595 F.2d at 894. "[A]ppellate court[s] ha[ve] ________ discretion, in . . . exceptional case[s], to reach virgin issues." United States v. La Guardia, 902 F.2d 1010, 1013 ____________________________ (1st Cir. 1990); United States v. Mercedes-Amparo, 980 F.2d _________________________________ -17- 17 17, 18-19 (1st Cir. 1992); ; accord Singleton v. Wulff, 428 ______ ___________________ U.S. 106, 121 (1976); G.D. v. Westmoreland School District, _______ _____________________________ 930 F.2d 942, 950 (1st Cir. 1991) (holding that in exceptional circumstances appellate courts may review issues of law inadequately raised at trial); United States v. _________________ Krynicki, 689 F.2d 289, 291-92 (1st Cir. 1989). ________ Our recent decision, National Ass'n of Social ___________________________ Workers v. Harwood, No. 95-1090, slip op. at 9 (1st Cir. ___________________ November 13, 1995), stands for the proposition that cases involving important constitutional or governmental issues may be exceptional and, as such, there should be a full treatment of all legal issues involved, whether squarely introduced by the parties or not. See Baybank-Middlesex v. Raylar ___ _____________________________ Distributors, Inc., No. 95-1623, slip op. at 5 (1st Cir. ___________________ November 7, 1995); cf. Lebron v. Nat'l R.R. Passenger Corp., ___ ____________________________________ 115 S. Ct. 961, 965 (1995) (permitting a party to raise an issue it expressly disavowed and did not raise until after certiorari was granted)("parties . . . [will] not [be] limited to the precise arguments they made below"). National ________ Ass'n of Social Workers addressed the constitutionality of ________________________ Rhode Island House of Representatives Rule 45, banning "lobbyist and lobbying from the floor of the House while the House is in session . . . ." Id. at 2. The district court ___ held that Rule 45 violated the free speech clause of the First Amendment. We reversed the district court, holding -18- 18 that legislative immunity thwarted the constitutional attack, even though that issue had not previously been raised by either of the parties. We departed from the rule limiting parties to their lower court arguments because we recognized the issue presented by the case as important, "of great public moment." Id. at 11. It implicated matters "as basic ___ as "federalism, comity, and respect for the independence of democratic institutions." Id. National Ass'n of Social ___ _____________________________ Workers makes us doubly certain of the procedural propriety _______ of deciding this case. The present case fits squarely into the mold cast by National Ass'n of Social Workers and the __________________________________ cases we have deemed "exceptional" in the past. See United ___ ______ States v. La Guardia, 902 F.2d 1010, 1013 (1st Cir. 1990); _____________________ United States v. Krynicki, 689 F.2d 289, 291-92 (1st Cir. __________________________ 1982). We are convinced that a miscarriage of justice would be worked by a failure to address the governmental status of federal credit unions because the governmental issues that question implicates are so important. The continued viability of educational loan programs and the stability of federal credit unions impact the health of the national economy and the country's educational system. As we indicated in the previous section, whether federal credit unions qualify as government units under Section 523(a)(8) is "strictly a question of law" and can be resolved on the basis of the existing record. La Guardia, 902 F.2d at 1013. It ___________ -19- 19 requires no additional factfinding or further argument; the parties are not prejudiced in any way by the lack of another opportunity to reargue their case. We think it likely that questions about the government unit status of federal credit unions will resurface in future cases, in virtually "identical terms." Id. The dischargeability of loans under Section 523(a)(8) ___ continues to be a heavily litigated area. Finally, we are convinced that the result achieved by the district court was correct. And "[i]n the review of judicial proceedings . . . [it] is settled that, if the decision below is correct, it must be affirmed, although the lower court relied upon a wrong ground or gave a wrong reason." Helvering v. Gowan, __________________ 302 U.S. 238, 245 (1937). We can identify no legitimate reason to decline to chart the alternative course we see in this case. Additionally, we are certain that remanding at this point in the case would be a colossal waste of judicial resources. See Securities and Exchange Commission v. Chenery ___ _____________________________________________ Corporation, 318 U.S. 80, 88 (1943). Nothing would be gained ___________ by asking the district court to reinstate its holding and to tackle a legal question which falls well within our current power to formulate. Id. Accordingly, we proceed. ___ C. Are Federal Credit Unions Federal C. Are Federal Credit Unions Federal Instrumentalities? Instrumentalities? -20- 20 The term "government unit," as employed in 11 U.S.C. 523 (a)(8), means: "United States; State; Commonwealth; District; Territory; municipality; foreign state; department, agency, or instrumentality of the United States, . . . a State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other foreign or domestic government." 11 U.S.C. 101. Legislative history suggests that Congress intended to "'defin[e] 'government unit' in the broadest sense." H. Rep. No. 95-595, 95th Cong., 1st Session (1977), reprinted in App. 2 Collier on _________ __ ___________ Bankruptcy, pt. II, at 311 (Lawrence P. King, ed., 15th ed. __________ 1995). We think it evident, based on this, that 11 U.S.C. 101 encompasses federal credit unions as federal instrumentalities, but refrain from making a categorical holding to that effect at this juncture. The legislative history indicates that Congress meant to temper its exhortation to define broadly. According to that history, we must demonstrate that federal credit unions have an active relationship with the federal government, that they carry out some governmental function. Id. "'[I]nstrumentality' does ___ not include entities that owe their existence to State action such as the granting of a charter or a license, but that have no other connection with a State or local government or the Federal Government. Id. ___ -21- 21 Whether federal credit unions are federal instrumentalities, thus, depends on the types of functions such organizations perform. We are aware of no settled process for assessing the governmental character of a particular function or service. In the area of federal instrumentality decisions, we lack the advantage of any bright line rules or tests. Federal Reserve Bank of Boston _______________________________ v. Comm'r of Corporations and Taxation, 499 F.2d 60, 64 (1st _______________________________________ Cir. 1974); see also United States v. Michigan, 851 F.2d at ___ ____ _________________________ 806 (citing Dep't of Employment v. United States, 385 U.S. ______ ____________________ _________________ 355, 358-59 (1966) ("[T]here is no simple test for ascertaining whether an institution is so closely related to government activity as to become a tax-immune instrumentality"). As a result, we rest our decision on a combination of statutory interpretation, case law, and consideration of the factors relevant to federal instrumentality determinations. Perhaps the most "significant factor in determining whether a particular entity is a federal instrumentality is whether it performs an important government function." United States v. Michigan, 851 F.2d 803, 806 (6th Cir. 188); __________________________ see also Federal Land Bank v. Bismarck Lumber Co., 314 U.S. ___ ____ _________________________________________ 95 (1941). In response to devastating Depression era losses -- failed banks; high interest rates; diminished credit opportunities -- Congress created scores of federal -22- 22 organizations and corporations designed to stabilize the national economy and pursue other governmental ends. See ___ generally Lebron, 115 S. Ct. at 969-71 (detailing the history _________ ______ of federal corporations in the United States and explaining that even the denial of federal instrumentality status in enabling legislation is not dispositive in federal instrumentality determinations); see also Reconstruction ___ ____ ______________ Finance Corporation, 306 U.S. at 391, n.3 (listing federal ___________________ credit unions among a list of forty corporations Congress provided to discharge governmental functions). As part of this rehabilitative effort, the Congress created federal credit unions by enacting the Federal Credit Union Act, 12 U.S.C. 1751 et seq., in 1934. __ ___ The express purpose of the Federal Credit Union Act, articulated in its long title, was: "[T]o establish a Federal Credit Unions System, to establish a further market for securities of the United States and to make more available to people of small means credit for provident purposes through a national system of cooperative credit, thereby helping to stabilize the credit structure of the United States." 12 U.S.C. 1751, reprinted in Credit Union _________ __ National Association, Inc., Legislative History of the _____________________________ Federal Credit Union Act: A Study of the Historical _____________________________________________________________ Development From 1934 to 1980 of the Statute Governing _____________________________________________________________ Federal Credit Unions;" see also Branch Bank & Trust v. Nat'l _____________________ ___ ____ ____________________________ -23- 23 Credit Union Admin. Bd., 786 F.2d 621, 625-26 (4th Cir. ________________________ 1986), cert. denied, 479 U.S. 1063 (1987). In effect, the ____________ Federal Credit Union Act created a localized and liberalized system of federal credit services. It modeled that system on the strong network of state and local credit unions already established at the time. That network started functioning in the early twentieth century, with the occurrence of two important events, the founding of the first United States- based credit union, La Caisse Populaire, in 1908 and the enactment of the first comprehensive credit union statute, the Massachusetts Credit Union Act, Mass. Gen. L. ch. 171, 1 et seq., in 1909. See La Caisse Populaire, 563 F.2d at __ ___ ___ ____________________ 505; J. Moody and G. Fite, The Credit Union Movement: ____________________________ Origins and Development 1850 to 1980 19-31 (2d ed. 1984). ____________________________________ This history demonstrates that federal credit unions were intended to perform a variety of governmental functions. Our research establishes that they still do. Federal credit unions enable the federal government to make credit available to millions of working class Americans. These organizations, often described as "cooperative association[s] organized . . . for the purpose of promoting thrift among [their] members and creating a source of credit for provident or productive purposes, 12 U.S.C. 1752, provide credit at reasonable rates to millions of individuals who -- because they lack security or, as recent studies show, -24- 24 reside in low income areas or in communities primarily inhabited by racial minorities -- would otherwise be unable to acquire it. Cf. United States v. Michigan, 851 F. 2d at __ __________________________ 806; see also Federal Credit Union Handbook, at iii; Anthony ___ ____ _____________________________ D. Taibi, Banking, Finance, and Community Economic _______________________________________________ Empowerment: Structure, Economic Theory, Procedural Civil _____________________________________________________________ Rights, and Substantive Racial Justice, 107 Harv. L. Rev. ________________________________________ 1463 (1994) (describing impact of redlining and credit discrimination on local communities ). Because large financial entities generally refuse to extend credit to individuals without traditionally accepted forms of collateral, entities offering usurious interest rates are too often the only other viable source of credit for many working class people. See Branch Bank & Trust, 786 F.2d at 621 ___ _____________________ (outlining formation of credit unions in response to entities offering usurious rates). Nevertheless, the functions performed by federal credit unions are not limited to broadening the availability of credit in the United States. Federal credit unions are authorized to perform many other governmental functions. To begin, the Federal Credit Union Act authorizes them to issue loans and dividends to their members. 12 U.S.C. 1757; see ___ also 12 U.S.C. 1763. It also authorizes federal credit ____ unions to invest their funds in obligations of the United States; invest in securities; or make deposits in national -25- 25 banks. Id. Indeed, federal credit unions serve as fiscal ___ agents of the United States and depositories for public monies. United States v. Maine, 524 F. Supp. at 1059; see ______________________ ___ also United States v. Michigan, 635 F. Supp 944, 947 ____ ____________________________ (W.D.Mich. 1985), aff'd, 851 F.2d 803 (6th Cir. 1988); 12 _____ U.S.C. 1767(a) ("Each Federal credit union organized under this chapter . . . shall act as fiscal agent of the United States . . . [and] [a]ny Federal credit union . . . shall be a depository of public money . . . ."). Such functions have properly been regarded as important governmental functions by other courts. In Smith _____ v. Kansas City Title & Trust Co., 255 U.S. 180 (1921), the __________________________________ United States Supreme Court acknowledged that employment as a fiscal agent of the United States and service as a depository for public monies fulfilled important government purposes. 255 U.S. at 209-11. Smith exempted farm loans from state _____ taxation because of the governmental functions federal land banks performed and, concomitantly, held that Congress acted within its constitutional authority when it enacted the Federal Farm Loan Act, 39 Stat. 360, as amended by Jan. 18, 1918, 40 Stat. 431. The Farm Loan Act established federal land banks and joint-stock land banks. Id. ___ In the two dec |