The opinion
GARVIN, District Judge:
The case is before the court on exceptions taken by the people of the state of New York to the report of a special master, which contains a comprehensive review of the facts and a careful statement of the reasoning upon which he bases his conclusions. There is no occasion, therefore, for a restatement of the case.
I regret that I cannot agree with a report so scholarly in style and evidencing such exhaustive research.
The state of New York claims that the failure of the corporation and of its receivers to take proceedings under the Tax Law of the state of New York (Consol. Laws, c. 60), to review a tax improperly assessed, precludes any review by this court of the propriety of the assessment of such tax, citing In Matter of Gorham Manufacturing Co. v. State Tax Commission of State of New York, 266 U. S. 265 , 45 S. Ct. 80 , 69 L. Ed. 279 , decided November 17, 1924. The learned master has sought to distinguish this ease on the ground that -there the corporation had made application to the court to enjoin the collection of the tax, whereas in the case at bar, when the, assessment was made, the assets of the corporation were in the custody of the court. It does not seem to me that the distinction is well taken. Indeed, in the Gorham Case, supra, it is said, “A taxpayer who does not exhaust the rem *310 edy provided before an administrative board to secure tbe reviewal or correction of a tax cannot be heard by a judicial tribunal to assert its invalidity.” Ño suggestion is there indicated that a taxpayer may be beard under such circumstances, if tbe matter comes before tbe court as tbe result of a claim pressed, by the state, and not as tbe result of an'application by tbe corporation to enjoin the collection of tbe tax. I can see no justification for bolding that, because tbe receivers took no steps to review tbe assessment, they thereby acquired any greater rights than the corporation would have bad.
This applies particularly to that part of the master’s report by which a tax levied is reduced from $7,200 to $2,200. For the reason given the exception of the state of New York is sustained .
Tbe learned master also found that tbe franchise tax for the period ending October 31, 1922, in tbe sum of $5,783.47 should be disallowed by reason of the fact that no evidence was produced indicating that the receivers bad carried on tbe corporation’s business during this period. It is my opinion that this assessment is not subject to review in this court, for the reason hereinbefore set forth, and for the additional reason that tbe receivers had tbe right and did actually to some extent carry on tbe business of tbe corporation which thereby became liable to pay tbe tax. Tbe Corporation, which was alleged to be solvent, bad all the benefit to be derived from tbe right to conduct business.
Tbe exceptions are sustained.