Opinion
SULLIVAN, J.
Defendants Leo B. Hoschler, the Registrar of Contractors (registrar), the Contractors’ State License Board (board),1 and the mem[308]*308bers of the board appeal from a judgment entered in a proceeding in administrative mandamus ordering issuance of a peremptory writ of mandate commanding defendants to set aside their decision revoking the contractor’s license of plaintiff Ray Grimes and to reinstate plaintiff’s license.
The Registrar of Contractors filed an accusation (§ 7091; Gov. Code, § 11500 et seq.) against Grimes asserting as the sole ground for discipline that the latter had violated section 7113.52 in that by obtaining an adjudication in bankruptcy he had avoided lawful obligations incurred by him as a contractor. A hearing officer found the accusation to be true and proposed that plaintiff’s license be revoked. The registrar adopted the proposed decision of the hearing officer.
Grimes sought review of that decision by administrative mandamus. (Code Civ. Proc., § 1094.5.)3 He claimed that the provision in section 7113.5 establishing the basis for revocation of his license frustrates the purposes of the Bankruptcy Act under federal law and therefore is invalid under the supremacy clause of the federal Constitution. (U.S. Const., art. VI, cl. 2.) Relying on Perez v. Campbell (1971) 402 U.S. 607 [29 L.Ed.2d 233, 91 S.Ct. 1704], the superior court entered judgment in favor of Grimes, ordering issuance of a peremptory writ of mandate directing defendants to set aside the decision and ordering reinstatement of Grimes’ license. This appeal followed.
Defendants contend that the pertinent provision in section 7113.5 is not in conflict with that part of the Bankruptcy Act allowing a debtor to discharge certain debts in a bankruptcy proceeding. (11 U.S.C.A. § 35.) They argue that Perez v. Campbell, supra, 402 U.S. 637, is distinguishable from the present case and that our opinion in Tracy v. Contractors’ State License Board (1965) 63 Cal.2d 598, 599 [47 Cal.Rptr. 561, 407 P.2d 865], in which we sustained section 7113.5 against constitutional attack,' is still controlling.4
[309]*309In Perez v. Campbell, supra, 402 U.S. 637, 652 [29 L.Ed.2d 233, 243-244], the United States Supreme Court struck down a state statute providing that a discharge in bankruptcy did not exonerate a judgment debtor from the requirements of a state law in respect to the financial responsibility of motorists. The state law involved there authorized the suspension of a driver’s license and vehicle registration for nonpayment of a judgment debt attributable to an automobile accident. Under the provisions of the challenged statute, until the judgment was paid the suspension remained in effect and the judgment debtor continued under its restraint despite the fact that the debt might later be discharged in bankruptcy.
The Perez court carefully delineated the issue presented and explicated the principles for its resolution. The basic question, the high court explained, “is the power of a State to include as part of this comprehensive enactment designed to secure compensation for automobile accident victims a section providing that a discharge in bankruptcy of the automobile accident tort judgment shall have no effect on the judgment debtor’s obligation to repay the judgment creditor, at least insofar as such repayment may be enforced by the withholding of driving privileges by the State.” (Id., at p. 643 [29 L.Ed.2d at p. 238].) The appropriate test for determining the validity of such state power was described as follows: “Deciding whether a state statute, is in conflict with a federal statute and hence invalid under the Supremacy Clause is essentially a two-step process of first ascertaining the. construction of the two statutes and then determining the constitutional question whether they are in conflict.” (Id., at p. 644 [29 L.Ed.2d at p. 239].)
In applying this test, the Perez court examined the purposes of the two acts. Relying on the construction of the state statute by the Arizona courts, the high court concluded that the “sole emphasis in the [state] Act is one of providing leverage for the collection of damages from drivers who either admit that they are at fault or are adjudged negligent.” (Id., at pp. 646-647 [29 L.Ed.2d at p. 241].) The court then examined the federal act: “This Court on numerous occasions has stated that ‘[o]ne of the primary purposes of the bankruptcy act’ is to give debtors ‘a new opportunity in life and a clear field for future effort, unhampered by the pressure [310]*310and discouragement of preexisting debt.’ [Citations.]” (Id., at p. 648 [29 L.Ed.2d at pp. 241-242].)
The Supreme Court concluded that the state statute could not stand because of the apparent conflict between state law and federal law. (Id., at p. 652 [29 L.Ed.2d at pp. 243-244].) In reaching this conclusion the Perez opinion made clear that the controlling principle is whether a state statute interferes with and frustrates a federal statute and not merely whether the former is designed for some conceivable state purpose. In other words, the existence vel non of a conflict depends on the effect of the state statute and cannot be determined merely by a consideration of its purpose. Quoting from Hines v. Davidowitz (1941) 312 U.S. 52, 67 [85 L.Ed. 581, 587, 61 S.Ct. 399], the Supreme Court declared' that “‘[i]n the final analysis,’ our function is to determine whether a challenged state statute ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” (Perez v. Campbell, supra, 402 U.S. at p. 649 [29 L.Ed.2d at p. 242].)
The Perez court explained that a different principle was applied in two earlier decisions involving similar state statutes. (Kesler v. Department of Public Safety (1962) 369 U.S. 153 [7 L.Ed.2d 641, 82 S.Ct. 807] and Reitz v. Mealey (1941) 314 U.S. 33 [86 L.Ed. 21, 62 S.Ct. 24].) “[In Kesler the] statute, in short, frustrated Congress’ policy of giving discharged debtors a new start. But the Kesler majority was not concerned by this frustration. In upholding the statute, the majority opinion did not look to the effect of the legislation .... [It considered only] the purpose of the state legislation and upheld it because the purpose was not to circumvent the Bankruptcy Act but to promote highway safety.” (Perez v. Campbell, supra, 402 U.S. at p. 650, fn. omitted [29 L.Ed.2d at pp. 242-243].) “The opinion of the Court in Reitz was similarly concerned, not with the fact that New York’s financial responsibility law frustrated the operation of the Bankruptcy Act, but with the purpose.of the law, which was divined as the promotion of highway safety.” (Id., at p. 651 [29 L.Ed.2d at p.
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Opinion
SULLIVAN, J.
Defendants Leo B. Hoschler, the Registrar of Contractors (registrar), the Contractors’ State License Board (board),1 and the mem[308]*308bers of the board appeal from a judgment entered in a proceeding in administrative mandamus ordering issuance of a peremptory writ of mandate commanding defendants to set aside their decision revoking the contractor’s license of plaintiff Ray Grimes and to reinstate plaintiff’s license.
The Registrar of Contractors filed an accusation (§ 7091; Gov. Code, § 11500 et seq.) against Grimes asserting as the sole ground for discipline that the latter had violated section 7113.52 in that by obtaining an adjudication in bankruptcy he had avoided lawful obligations incurred by him as a contractor. A hearing officer found the accusation to be true and proposed that plaintiff’s license be revoked. The registrar adopted the proposed decision of the hearing officer.
Grimes sought review of that decision by administrative mandamus. (Code Civ. Proc., § 1094.5.)3 He claimed that the provision in section 7113.5 establishing the basis for revocation of his license frustrates the purposes of the Bankruptcy Act under federal law and therefore is invalid under the supremacy clause of the federal Constitution. (U.S. Const., art. VI, cl. 2.) Relying on Perez v. Campbell (1971) 402 U.S. 607 [29 L.Ed.2d 233, 91 S.Ct. 1704], the superior court entered judgment in favor of Grimes, ordering issuance of a peremptory writ of mandate directing defendants to set aside the decision and ordering reinstatement of Grimes’ license. This appeal followed.
Defendants contend that the pertinent provision in section 7113.5 is not in conflict with that part of the Bankruptcy Act allowing a debtor to discharge certain debts in a bankruptcy proceeding. (11 U.S.C.A. § 35.) They argue that Perez v. Campbell, supra, 402 U.S. 637, is distinguishable from the present case and that our opinion in Tracy v. Contractors’ State License Board (1965) 63 Cal.2d 598, 599 [47 Cal.Rptr. 561, 407 P.2d 865], in which we sustained section 7113.5 against constitutional attack,' is still controlling.4
[309]*309In Perez v. Campbell, supra, 402 U.S. 637, 652 [29 L.Ed.2d 233, 243-244], the United States Supreme Court struck down a state statute providing that a discharge in bankruptcy did not exonerate a judgment debtor from the requirements of a state law in respect to the financial responsibility of motorists. The state law involved there authorized the suspension of a driver’s license and vehicle registration for nonpayment of a judgment debt attributable to an automobile accident. Under the provisions of the challenged statute, until the judgment was paid the suspension remained in effect and the judgment debtor continued under its restraint despite the fact that the debt might later be discharged in bankruptcy.
The Perez court carefully delineated the issue presented and explicated the principles for its resolution. The basic question, the high court explained, “is the power of a State to include as part of this comprehensive enactment designed to secure compensation for automobile accident victims a section providing that a discharge in bankruptcy of the automobile accident tort judgment shall have no effect on the judgment debtor’s obligation to repay the judgment creditor, at least insofar as such repayment may be enforced by the withholding of driving privileges by the State.” (Id., at p. 643 [29 L.Ed.2d at p. 238].) The appropriate test for determining the validity of such state power was described as follows: “Deciding whether a state statute, is in conflict with a federal statute and hence invalid under the Supremacy Clause is essentially a two-step process of first ascertaining the. construction of the two statutes and then determining the constitutional question whether they are in conflict.” (Id., at p. 644 [29 L.Ed.2d at p. 239].)
In applying this test, the Perez court examined the purposes of the two acts. Relying on the construction of the state statute by the Arizona courts, the high court concluded that the “sole emphasis in the [state] Act is one of providing leverage for the collection of damages from drivers who either admit that they are at fault or are adjudged negligent.” (Id., at pp. 646-647 [29 L.Ed.2d at p. 241].) The court then examined the federal act: “This Court on numerous occasions has stated that ‘[o]ne of the primary purposes of the bankruptcy act’ is to give debtors ‘a new opportunity in life and a clear field for future effort, unhampered by the pressure [310]*310and discouragement of preexisting debt.’ [Citations.]” (Id., at p. 648 [29 L.Ed.2d at pp. 241-242].)
The Supreme Court concluded that the state statute could not stand because of the apparent conflict between state law and federal law. (Id., at p. 652 [29 L.Ed.2d at pp. 243-244].) In reaching this conclusion the Perez opinion made clear that the controlling principle is whether a state statute interferes with and frustrates a federal statute and not merely whether the former is designed for some conceivable state purpose. In other words, the existence vel non of a conflict depends on the effect of the state statute and cannot be determined merely by a consideration of its purpose. Quoting from Hines v. Davidowitz (1941) 312 U.S. 52, 67 [85 L.Ed. 581, 587, 61 S.Ct. 399], the Supreme Court declared' that “‘[i]n the final analysis,’ our function is to determine whether a challenged state statute ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” (Perez v. Campbell, supra, 402 U.S. at p. 649 [29 L.Ed.2d at p. 242].)
The Perez court explained that a different principle was applied in two earlier decisions involving similar state statutes. (Kesler v. Department of Public Safety (1962) 369 U.S. 153 [7 L.Ed.2d 641, 82 S.Ct. 807] and Reitz v. Mealey (1941) 314 U.S. 33 [86 L.Ed. 21, 62 S.Ct. 24].) “[In Kesler the] statute, in short, frustrated Congress’ policy of giving discharged debtors a new start. But the Kesler majority was not concerned by this frustration. In upholding the statute, the majority opinion did not look to the effect of the legislation .... [It considered only] the purpose of the state legislation and upheld it because the purpose was not to circumvent the Bankruptcy Act but to promote highway safety.” (Perez v. Campbell, supra, 402 U.S. at p. 650, fn. omitted [29 L.Ed.2d at pp. 242-243].) “The opinion of the Court in Reitz was similarly concerned, not with the fact that New York’s financial responsibility law frustrated the operation of the Bankruptcy Act, but with the purpose.of the law, which was divined as the promotion of highway safety.” (Id., at p. 651 [29 L.Ed.2d at p. 243].)
Finally, Perez emphasized that the ruling of Kesler and Reitz was no longer valid. “We can no longer adhere to the aberrational doctrine of Kesler and Reitz that state law may frustrate the operation of federal law as long as the state legislature in passing its law had some purpose in mind other than one of frustration. Apart from the fact that it is at odds with the approach taken in nearly all our Supremacy Clause cases, such a doctrine would enable state legislatures to nullify nearly all unwanted federal legislation by simply publishing a legislative committee report [311]*311articulating some state interest or policy — other than frustration of the federal objective — that would be tangentially furthered by the proposed state law. In view of the consequences, we certainly would not apply the Kesler doctrine in all Supremacy Clause cases. Although it is possible to argue that Kesler and Reitz are somehow confined to cases involving either bankruptcy or highway safety, analysis discloses no reason why the States should have broader power to nullify federal law in these fields than in others. Thus, we conclude that Kesler and Reitz can have no authoritative effect to the extent they are inconsistent with the controlling principle that any state legislation which frustrates the full effectiveness of federal law is rendered invalid by the Supremacy Clause.” (Id., at pp. 651-652 [29 L.Ed.2d at pp. 243-244].)5
Our task in the case at bench, therefore, is to determine whether the challenged provision in section 7113.5 represents “‘an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” (Perez v. Campbell, supra, 402 U.S. at p. 649 [29 L.Ed.2d at p. 242].) The purposes embodied in the Bankruptcy Act, as explained in Perez (402 U.S. at p. 648 [29 L.Ed.2d at p. 242]) are to give debtors a “new opportunity” and a “clear field for future effort” by eliminating preexisting debts.
We turn to consider the purpose and effect of the challenged state provision. In Tracy v. Contractors' State License Board, supra, 63 Cal. 2d 598, 600, this court concluded that the provision is> “not designed to aid collection of debts but to protect the health, safety, and welfare of the public.”6 The purpose of the statute has also been declared to be “frankly [312]*312economic,” i.e., it reflects a “state concern for the economic ills of society.” (Hope v. Contractors’ etc. Bd., supra, 228 Cal.App.2d 414, 425.) It would not seem, at first blush, that a statute whose purpose is to protect the “health, safety, and welfare of the public,” even though motivated by “frankly economic” reasons, would conflict with the purposes of the Bankruptcy Act. But we must probe further since we are commanded by Perez to consider not only the declared purpose of section 7113.5 but also its effect.
The effect of the section is unmistakably clear: a licensee is threatened with the loss of his license if his debts incurred as a contractor are discharged for less than their full amount in a bankruptcy proceeding. As a further consequence, the Contractors License Law forbids the reissuance of a revoked license until the amounts of the discharged debts are paid in full. (§ 7102.)7 Hence, the statutory scheme in question frustrates the objectives of Congress in three respects: first, it tends to discourage a licensed contractor from having his business debts discharged in bank-, ruptcy; second, if he is adjudicated a bankrupt, either voluntarily or involuntarily, section 7113.5 empowers the board to revoke or suspend his license, thus depriving him of his means of livelihood; and third, section 7102, in effect, compels the disciplined licensee to pay his discharged business debts if he desires to have his license reissued or reinstated.8 In sum, the relevant sections of the Contractors License Law here under examination not only discourage licensed contractors from voluntarily availing themselves of the beneficent provisions of the Bankruptcy Act but sternly deny a fresh start to all licensees who are adjudicated bankrupts either voluntarily or involuntarily.
[313]*313The state statutes here challenged bear-a striking similarity to the state financial responsibility laws under- attack in Perez. There a driver’s' license was required to be suspended for- failure to pay a judgment debt discharged in a bankruptcy proceeding; here a contractor’s license is subject to being revoked or suspended for failure to pay the full amount of a business debt discharged in bankruptcy. Furthermore it is noteworthy that under each state statute, the respective license may not be reinstated or reissued unless the discharged debt has been paid in full. The conclusion is ineluctable that section 7113.5 is in conflict with the Bankruptcy Act and therefore must be declared invalid as violative of the supremacy clause.
Defendants, however, Attempt to 'distinguish the statute in this case from the one in Perez. First, they argue that, unlike the state statute in Perez, section 7113.5 is not designed to promote the collection of debts discharged in bankruptcy. Apparently, defendants-continue to look only to the purpose of the statute and not to its effect. As Perez pointed out, the crucial question is whether the state act frustrates the intent of Congress to give debtors a “new opportunity in life.” (Perez v. Campbell, supra, 402 U.S. at p. 648 [29 L.Ed.2d at p. 241].) Therefore, although a state statute is not expressly designed to promote the collection of debts, it may still offend the purpose of Congress if its effect is to deny to debtors the benefits of the Bankruptcy Act.
Additionally, defendants argue that unlike the state law in Perez which required the suspension of a license, section 7113.5 imposes less severe sanctions. (See Tracy v. Contractors’ State License Board, supra, 63 Cal.2d at p. 601; Hope v. Contractors’ etc. Bd., supra, 228 Cal.App.2d at p. 425.) They urge that under the section a discharge of debts in bankruptcy does not automatically result in loss of a contractor’s license but merely gives cause for disciplinary action in an administrative proceeding wherein the contractor may be deemed worthy of retaining his license. The record in the instant case belies such a claim., The registrar, in his administrative hearing on the accusation, merely considered evidence that Grimes had been adjudicated a- bankrupt and had discharged his debts incurred as a contractor for less than their full’ amount'. -The trial court found that his adjudication as a bankrupt was the sole cause for revocation of his license. In any event, defendants’- argument is beside the point. Whether disciplinary action is automatic or discretionary, the objectives of the Bankruptcy Act are frustrated where, as here, a state statute permits the registrar to revoke the license of a contractor who has been adjudicated a bankrupt.
[314]*314Finally, defendants contend that our decision herein is controlled by our earlier opinion in Tracy v. Contractors’ State License Board, supra, 63 Cal.2d 598. In Tracy, this court, relying on Hope v. Contractors’ etc. Bd., supra, 228 Cal.App.2d 414 and noting that Hope rested on Kesler which in turn rested on Reitz, concluded that section 7113.5 was not in conflict with the Bankruptcy Act because it was not intended to promote the collection of debts. However, as we have explained, subsequent to Tracy, the high court in Perez overruled both Kesler and Reitz, and thus knocked out the decisional underpinnings from Hope and Tracy. Moreover, it is clear that Tracy is inconsistent with Perez; the former considered only the purpose of the state statute .and did not, as required by the latter decision, examine its effect. Tracy v. Contractors’ State License Board, supra, 63 Cal.2d 598, is therefore overruled.
We hold that the challenged provision in section 7113.5 conflicts with the Bankruptcy Act and therefore is invalid under the supremacy clause of the United States Constitution.
The judgment is affirmed.
Wright, C. J., Tobriner, J., and Mosk, J., concurred.