Hypothecating Your Kidneys
posted by Nate Oman
Currently, 42 U.S.C. 274e(a) makes it “unlawful for any person to knowingly acquire, receive, or otherwise transfer any human organ for valuable consideration.” There are, of course, arguments that this prohibition ought to be dropped and that allowing the sale of say kidneys would dramatically increase supplies. On the whole, I find myself persuaded by the pro-kidney selling arguments. I am curious, however, about the other legal consequences of making kidneys saleable. Consider bankruptcy.
When a person files for bankruptcy, the law automatically creates a bankruptcy estate consisting of “all legal or equitable interests of the debtor in property as of the time of the commencement of the case.” 11 U.S.C. 541(a)(1). Of course, the homestead exemption allows debtors to keep some property, but the size of the bankruptcy estate matters a great deal because it provides a baseline for computing the rights of creditors in bankruptcy. If kidneys were saleable, they would seem to follow under the language of 541. In the absence of a specific provision in the homestead exemption, a debtor who wanted to hang on to his or her kidneys in a Chapter 7 would have to forego protecting some otherwise exempt asset to keep them. Do you want to keep your car or your kidneys? Of course such a choice might not be such a bad thing. After all, the debtor got in bankruptcy at least in part by borrowing money, and their ability to do so is enhanced by the presence of assets to satisfy the debt. Kicking kidneys into the bankruptcy estate would presumably enhance the credit worthiness of a lot of marginal debtors with few other valuable assets. Normally, of course, the trustee in bankruptcy gets to liquidate the debtor’s non-exempt assets, regardless of the debtor’s wishes. Would the Bankruptcy Code require the force sale of organs?
This, of course, leads to the question of whether or not folks should be able to hypothecate (ie grant an security interest in) their kidneys. Perhaps they already can.
Section 274e does cover “transfers,” which might include the granting of a security interest. On the other hand, it speaks only of “any human organ,” rather than “any interest in a human organ.” The whole point of hypothecation, of course, is that you don’t have to physically transfer the collateral. 9-408(c) of the UCC states that a “rule of law . . . that prohibits . . . the . . . transfer of, or creation of a security interest . . . in a . . . general intangible . . . is ineffective,” although 9-408(d) does make such a security interest unenforceable against the debtor. The Supremacy Clause leads me to doubt whether provision is effective against federal laws, but it purports to allow the creation of otherwise prohibited security interests for the sole purpose of giving creditors favorable treatment in bankruptcy. (The paradigmatic application of 9-408 would be to a copyright licence that cannot be transferred or sublicensed by the liscensee. 9-408 nevertheless allows banks to get a security interest in the liscense and then claim secured status on that basis if the debtor files for bankruptcy.) The question, of course, is whether of not kidneys fall under the defition of “general intangibles” which includes any personal property that is not a good (or a bunch of other stuff like chattel paper that only commecial-law geeks need to worry about). A “good” is defined under Article 9 as “all things that are movable when a security interest attaches.” If I hypothecate a kidney that is still in my body is the kidney really “moveable”? The Code’s definition of good does include “unborn young animals” and “crops grown, growing, or to be grown.” On the other hand, it excludes “oil, gas, or other minerals before extraction.” Is a kidney in my body like natural gas waiting to be extracted, or an unborn animal waiting to be born? Like the crops and unborn young, it is “living.” Unlike them it will not through a natural process become a seperate moveable thing. Like the un-extracted minerals, it requires human agency to become moveable. Unlike un-extracted minerals it is part of a living organism.
In short, I think that there is at least a colorable argument to be made that one can, under existing law, hypothecate one’s kidneys. You reach this conclusion by either interpreting the federal prohibition on the “transfer of any organ” as not reaching the creation of security interests in an un-transfered organ, or alternatively by arguing that an un-extracted kidney is not a “good,” bringing it under the definition of “general intangibles” and thus making it hypothecatable under 9-408 notwithstanding the federal prohibition. Of course, in either case you cannot repo the kidney. Under the first theory, the repo would be an actual transfer of the organ and therefore subject to the 274e prohibition, and under the second theory the security interest would not be enforceable against the debtor because of 9-408(d). (It would also, presumedly, be difficult to repo a kidney without running afoul of 9-906(b)(2)’s prohibition on breaching the peace.) Both scenario’s, however, would allow a creditor with a security interest in a kidney to file a secured claim in bankruptcy, at which point the real problem becomes one of valuation. How do you figure out the value of a secured claim based on a piece of collateral that cannot be sold?
Still, it is something to think about the next time you are negotiating out a car loan. You might want to consider offering GMAC Finance a kidney as a way of sweetening the deal.