Petitioners Brief — Oliver v. United States

Supreme Court brief1925

Ask Donna

What actually matters in this document.

Text

Subject Index.

Pages

I. STATEMENT OF THE CASE 1

Il. Sratures INvoLvep 3

III. QUESTIONS PRESENTED 3

IV. ARGUMENT 4

1. A reasonable construction of Section 64, Subdivi-

sions ‘‘A’’ and ‘‘B’’ of Bankruptcy Act, estab-

lishes the following order of priority in the dis-

tribution of the estate:

(1) Expenses of preserving estate. See. 64b (1)

(2) Filing fees. Sec. 64b (2)

(3) Expenses of administration. See. 64b (3)

(4) Wages. Sec. 64b (4)

(5) Debts entitled to priority by the

laws of the United States or of

the various states, such as attach-

ment costs. Sec. 64b (5)

(6) Taxes. Sec. 64a

(7) General creditors. . 4

2. See. 3466, Revised Statutes, has no application... 17

3. The question of priority between sovereign and

subject is not involved... 17

V. ConcLusion ..... eahibdadisaatie 21

Table of Cases.

In re Amoratis, 178 Fed. 919

In re Baltimore Pearl Homing Co. (D. C. Md. 1923)

294 Fed. 921 16, 19

City of Richmond v. Bird (1919), 43 Am. B. R. 260,

369 U. 8. 174, 39 Bup. Ct. 186 4,9, 12, 13, 15

In re Cramond (D. C. N. Y. 1906), 17 Am. B. R. 22,

145 Fed. 966 15

In re Enterprise Brass Foundry (1923), 293 Fed. 69.. 14

In re A. E, Fountain (D. C. 8. D. N. Y.), 2 Am. B. R,

N. S. 455 14, 16,17

In re General Film Corporation (C. C. A. 2nd Cir.

1921), 48 Am. B. R. 149, 274 Fed. 903.0 16, 18

Guarantee Title and Trust Co. v. Title Guaranty and

Surety Co. (1912), 224 U. S. 152, 27 Am. B. R.

873, 32 Sup. Ct. 457, 56 Law Ed. 706... 10, 11, 13,14

15, 17, 18, 19, 20

In re Halsey (D. C. N. J. 1909), 23 Am. B. R. 401,

163 Fed. 118 15

In re Hessler Foundry and Mfg. Co. (Ref. N. D. N. Y.

920), 45 Am. B. R. 382 16, 18

In re Jacobson (C. C. A. 7th Cir. 1920), 45 Am. B. R.

1, 263 Fed. 883 16

In re Kittenplan (1922), 49 Am. B. R. 410, 285 Fed. 62 14

New Jersey v. Lovell (C. C. A. 3rd Cir. 1910) 24 Am.

B. R. 562, 179 Fed. 321 12,15

In re Oxley (D. C. Wash. 1913), 30 Am. B. R. 406,

) rea 16

Polk County v. Burnes (C. C. A. 8th Cir. 1917), 40

Am. B. R. 727, 247 Fed. 399... 16

In re Prince and Walter (D. C. Pa. 1904), 12 Am.

B. R. 675, 131 Fed. 546 15

In re A. J. Waterman Mfg. Co. (S. D. Me. 1923), 291

Fed. 589 oan 14, 16, 17

In re Weiss (D C. N. Y. 1908), 20 Am. B. R. 247, 159

Fed. 296 ........ 15

In re Wyley Co. (D. C. N. D. Ga. 1923), 292 Fed. 900 16

_ aeemmamas

No. 574

In the Supreme Court

OF THE

United States

OcToBeR TERM, 1923

A. J. OLIVER, as Trustee in Bankruptey

of the Estate of West Coast Rubber

Corporation, Oscar CourtiIn, Doro-

THY EK. KNicut, et al.,

Petitioners,

Vs.

THe Unirep States or AMERICA, and

THE City anD County oF San FRAN-

CISCO, a municipal corporation,

seeponsonts.

Certiorari to the United States Circuit Court of

Appeals for the Ninth Circuit.

BRIEF FOR PETITIONERS.

STATEMENT OF THE CASE.

This matter comes before the Supreme Court upon

certiorari to the Circuit Court of Appeals for the

Ninth Circuit.

The bankrupt estate of the West Coast Rubber

Corporation was administered before A. B. Kreft,

Esq., referee in bankruptcy at San Francisco. Cer-

tain labor claims were filed against the estate and

the referee allowed them for the total sum of $917.85

as entitled to priority of payment under the pro-

visions of Sec. 64b (4) of the bankruptcy act. These

claimants also presented claims for costs incurred

in attachment suits commenced prior to bankruptcy

in an endeavor to collect their claims. These at-

tachment costs claims were allowed for the total sum

of $99.70 as entitled to priority of payment under

the provisions of See. 64b (5) of the bankruptcy

act, as the same was construed by the Circuit Court

of Appeals for the Ninth Circuit in the case of In

re Amoratis, 178 Fed. Rep. 919.

The United States Government presented a claim

for manufacturer’s excise tax which was finally al-

lowed by the referee for $1851.66. The City and

County of San Francisco, a municipal corporation,

presented a claim for personal property taxes, which

was finally allowed for $904.26.

It appeared that there was not enough money in

the estate to pay all of these claims in full, although

there was sufficient to pay either the tax claims in

full or the labor and attachment costs claims in full.

The question then arose as to what claims should be

paid first.

The referee decided that labor and attachment

costs claims should be paid first. This decision was

affirmed by District Judge Dooling of the Northern

District of California, but was reversed by the

Circuit Court of Appeals for the Ninth Circuit,

which held that the tax claims should be paid be-

fore the labor and attachment costs claims. The ref-

eree, in his order, set out in detail his views upon

the legal questions involved (Trans. of Record, pp.

34-50). On review of the referee’s decision he filed

his certificate, wherein he discussed further the

legal matters involved (Trans. of Record, pp. 53-

56). Judge Dooling, in connection with his decision,

wrote a short opinion (Trans. of Record, p. 57). The

opinion of the Circuit Court of Appeals appears in

Trans. of Record, pp. 61-63.

II.

STATUTES INVOLVED.

The case at bar involves the construction of Sees.

64a and 64b (4) and 64b (5) of the Bankruptcy Act.

ITI.

QUESTION PRESENTED.

The sole question presented is whether the tax

claims referred to in Sec. 64a of the Bankruptcy

Act are to be paid prior to the labor claims referred

to in Sec. 64b (4) of the act, and attachment costs

claims in California covered by Sec. 64b (5) of the

‘act as construed in the case of In re Amoratis, 178

Fed. Rep. 919, by the Court of Appeals for the Ninth

Circuit.

ARGUMENT.

IV.

1. A RBEASONABLE CONSTRUCTION OF SECTION 64, SUB-

DIVISIONS “A” AND “B” OF BANKRUPTCY ACT, Es-

TABLISHES THE FOLLOWING ORDER OF PRIORITY

IN THE DISTRIBUTION OF THE ESTATE:

(1) Expenses of preserving estate. Sec. 64b (1).

(2) Filing fees. Sec, 64b (2).

(3) Expenses of administration. Sec. 64b (8).

(4) Wages. Sec. 64b (4).

(5) Debts entitled to priority by the laws of the United

States or of the various states, such as attachment costs.

Sec. 64b (5).

(6) Taxes. Sec. 64a.

(7) General creditors.

We think the disposition of the case at bar turns

upon the meaning of the words “dividends to cred-

itors’’ used in See. 64a.

In the concluding paragraph of his opinion

(Trans. of Record, p. 58), J udge Dooling, after re-

ferring to the case of

City of Richmond v. Bird (1919), 43 Am.

B. R. 260, 249 U. S. 174, 39 Sup. Ct. 186,

wherein the Supreme Court stated that the word

““dividends”’ as commonly used throughout the act,

means partial payment to general creditors, states:

“‘The ordinary rules of construction support

the ruling of the referee. The taxes in question

are given priority only over ‘dividends to cred-

itors.’ Everywhere else in the act the word

‘dividend’ means a partial payment to general °

creditors. There is no reason why a different

meaning should be assigned to it here.’’ (Italics

ours. )

In their opinion, the Circuit Court of Appeals say

(Trans. of Record, p. 62):

“It is true that the term ‘dividend to ecredi-

tors’ ordinarily refers to dividends to general

creditors, but it does not necessarily have that

meaning. A dividend is that which is to be di-

vided. In bankruptcy it is the sum of money

which is to be divided among two or more

creditors. It is not necessarily a partial pay-

ment. It is obvious that it may at times be a

payment in full even as to general creditors.”

What provisions are contained in the act that sup-

port these respective views?

Sec. la (9), which defines the term ‘‘ereditor,”’

is as follows:

“Creditor shall include anyone who owns a

demand or claim provable in bankruptcy * * .”’

See. la (11):

‘*Debt shall include any debt, demand or claim

provable in bankruptcy.’’

See. 39a (1):

“Referees shall declare dividends and prepare

and deliver to trustees dividend sheets showing

the dividends declared and to whom payable.”’

Sec. 47a (9):

“Trustees shall * * * pay dividends within

ten days after they are declared by the ref-

erees.”’

See. 53a:

“The Attorney-General shall annually lay be-

fore Congress statistical tables showing for the

whole country, and by states, the number of

cases during the year of voluntary and invol-

untary bankruptcy ; the amount of the property

of the estates; the dividends paid and the ex-

penses of administering such estates; and such

other like information as he may deem impor-

tant.”’

Sec. 56a:

‘Creditors shall pass upon matters submitted

to them at their meetings by a majority vote in

number and amount of claims of all creditors

whose claims have been allowed and are present,

except as herein otherwise provided.’’

See. 56b:

**Creditors holding claims which are secured

or have priority shall not, in respect to such

claizus, be entitled to vote at creditors’ meetings,

no shali such claims be counted in computing

either the number of creditors or the amount of

their claims, unless the amounts of such elaims

exceed the values of such securities or priorities,

and then only for such excess.”’

Sec. 57e:

‘“‘Claims of secured creditors and those who

have priority may be allowed to enable such

creditors to participate in the proceedings at

creditors’ meetings held prior to the determina-

tion of the value of their securities or priorities,

but shall be allowed for such sums only as to

the courts seem to be owing over and above the

value of their securities or priorities.’’

Sec. 57h:

‘The value of securities held by secured cred-

itors shall be determined by converting the same

gaara pease ee

into money according to the terms of the agree-

ment pursuant to which such securities were de-

livered to such creditors or by such creditors

and the trustee, by agreement, arbitration, com-

promise, or litigation, as the court may direct,

and the amount of such value shall be credited

upon such claims, and a dividend shall be paid

only on the unpaid balance.”’

. OT-l:

“*Whenever a claim shall have been reconsid-

ered and rejected, in whole or in part, upon

which a dividend has been paid, the trustee may ~

recover from the creditor the amount of the di-

vidend received upon the claim if rejected in

whole or the proportional part thereof is reject-

ed only in part.”’

Sec. 58a (5):

‘Creditors shall have at least ten days’ notice

by mail, to their respective addresses as they

appear in the list of creditors of the bankrupt,

or as afterwards filed with the papers in the

cases by the creditors, unless they waive notice

in writing, of * * * the declaration and

time of payment of dividends * * * |”

See. 65a:

“Dividends of an equal per centum shall be

declared and paid on all allowed claims, except

such as have priority or are secured.’’

See. 65e:

“The rights of creditors who have received

dividends, or in whose favor final dividends have

been declared, shall not be affected by the proof

and allowance of claims subsequent to the date

of such payment or declarations of dividends;

but the creditors proving and securing the al-

lowance of such claims shall be paid dividends

equal in amount to those already received by

the other creditors if the estate equals so much

before such other creditors are paid any further

dividends. ”’

Sec. 65d:

‘Whenever a person shall have been adjudged

a bankrupt by a court without the United

States and also by a court of bankruptcy, credi-

tors residing within the United States shall first

be paid a dividend equal to that received in the

court without the United States by other credi-

tors before creditors who have received a divi-

dend in such court shall be paid any amounts.”

While it is to be noted that in the sections we

have quoted the word ‘‘dividend” is not defined,

still the language contained in See. 65a,

“Dividends of an equal per centum shall be

declared and paid on all allowed claims, except

such as have priority or are secured,’

is equivalent to a definition to the effect that “‘divi-

dend’’ means partial payments to general creditors.

We find that nowhere in the act is the word “‘divi-

dend”’ referred to in any manner other than as par-

tial payment to general creditors.

We cannot find anything in the act that indicates

that payments on claims which are to be paid in full

are to be treated as dividends to creditors within

the meaning of Sec. 64a. Lending strength to the

distinction between dividends to be paid to general

creditors and payments to creditors who are to be

paid in full are the provisions of Sees. 56a, 56b and

57 to the effect that creditors who are to be paid

in full or are secured have no voice in voting upon

matters concerning the administration of the estate.

In City of Richmond v. Bird, supra, the Supreme

Court notes particularly Sections 65b and 64a. The

court, at page 262 of 43 Am. B. R. states:

“Sec. 64a directs that taxes be paid in advance

of dividends to creditors; and ‘dividend’ as -

commonly used throughout the act means par-

tial payment to general creditors. In Sec. 65b

(Comp. St., See. 9649), for example, the word

occurs in contrast to payment of debts which

have priority.”’

Before the bankrupt estate is ready to pay divi-

dends to general creditors, its property must be

sold and all payments required by Sec. 64 com-

pleted. If Congress intended that taxes should

precede the payments required by See. 64b, or some

of them, why were the words ‘‘in advance of divi-

dends to creditors” used? There is apparently no

purpose in their use except to indicate that taxes

are to be paid just prior to payments to general

creditors, because the words “‘in advance of”’ really

mean “‘next preceding’’, so that, if we give See.

64a this construction, it would read, in the light of

the expression of the Supreme Court in City of

Richmond v. Bird, supra:

“‘The court shall order the trustee to pay all

taxes legally due and owing by the bankrupt

to the United States, state, county, district or

municipality next preceding partial payments

to general creditors,’’

The Circuit of Appeals in its decision, while re-

ferring to the language of the Supreme Court in

City of Richmond v. Bird, supra, relies upon the fol-

lowing language in the prior Supreme Court case of

Guarantee Title & Trust Co. v. Title Guaranty &

Surety Co. (1912), 224 U. S. 152, 27 Am. B. R. 873,

32 Sup. Ct. 457, 56 L. ed. 706, wherein the court, at

page 879 of 27 Am. B. R., said:

“‘Labor claims are given priority and it is

provided that debts having priority shall be paid

in full. The only exception is ‘taxes legally due

and owing by the bankrupt to the United States,

state, county, district or municipality’. ”’

It seems to us that the Supreme Court in Guaran-

tee Title & Trust Co. v. Title Guaranty & Surety Co.,

supra, in saying that the only exception is taxes, had

in mind the words of subdivision (b) of Sec. 64:

“‘the debts to have priority except as herein provid-

ed.”’ Sce. 64 contains no exception unless it be

taxes. We think that the Supreme Court, not hav-

ing before it the matter of an exact construction of

the words ‘‘in advance of dividends to creditors,”

thought that the words ‘‘except as herein provided”

referred to the taxes specified in subdivision (a). If

the words ‘‘except as herein provided”’ in fact refer

to taxes, the whole provision becomes ambiguous,

because, if reference is to taxes, there would be no

necessity of placing in subdivision (a) the words

‘in advance of payment of dividends to creditors.”

If such exception is not contained in Sec. 64, but

reference is made to other provisions of the act, the

whole Sec. 64 becomes harmonious.

It is conceded in the case at bar that costs of pre-

serving the estate, and expenses of administration,

take precedence over taxes. If the words of subdivi-

sion “‘b,’’ “except as herein provided”’ refer to the

taxes specified in subdivision ‘fa,’’ where are taxes

to be placed in subdivision “b’’? This must, of

course, be somewhere after subdivision (3), as the

priority of (1), (2) and (3) are conceded. The

wages in question in the case at bar are covered by

subdivision (4), Therefore, if the decision of the

Circuit Court of Appeals is correct, the place for

taxes is between (3) and (4). If taxes are superior

to (4) then they are also prior to (5) which em-

braces a debt due the government.

Guarantee Title & Trust Co. v. Title Guar-

anty & Surety Co.

The Supreme Court, in that case, directly decided

that labor claims are prior to a debt due the United

States. If it was the intention of Congress to place

taxes between (3) and (4) it would be hard to con-

ceive of a more awkward way of expressing such

intention. If such was the intention, the obvious

and natural way would have been to insert the tax

provision at (4) instead of wages. In Guarantee

Title & Trust Co. v. Title Guaranty d: Surety Co.,

supra, the Supreme Court further states:

“The act takes into consideration, we think,

the whole range of indebtedness of the bankrupt

NN ae eae na mPa

national, state and individual, and assigns the

order of payment.’’

What is this range of indebtedness and what is

the order of payment? We would say:

First. Liens not affected by the act as covered

by Sec. 67d. The Supreme Court, in City of Rich-

mond v. Bird, supra, decides that taxes (where no

lien is given by law therefor) are inferior to liens

protected by Sec. 67d, which are superior to every-

thing.

Second. The payments provided for, in the order

fixed, in subdivisions (1), (2), (3), (4) and (5) of

Sec. 64b.

Third. Taxes.

Fourth. General creditors.

The language of the Court of Appeals for the

Third Cireuit, in

New Jersey v. Lovell (1910), 24 Am. B. R.

562, 179 Fed. 321,

is enlightening:

‘‘Now, while the relative order in which sub-

divisions ‘a’ and ‘b’ are placed is not happy,

and indeed tends to mislead, yet the general in-

tent of the section is clear. In subdivision ‘b’

we find the general scheme of awarding priority

in advance of dividend creditors. That subdi-

vision makes provision for paying such costs,

fees and liens as are therein provided, and if

there are no outstanding taxes the fund is then

paid to creditors. But before paying creditors,

subdivision ‘a’ intervenes and makes provision

Later, in that decision, the court states that the

question in the case at bar here was not decided,

but the reasoning of the court certainly supports our

position.

The point we desire to make plain here is that

the words: “except as herein provided’’ do not

refer to paragraph ‘‘a”’ relating to taxes, but to

exceptions elsewhere found in the act, and especially

embracing that very important class of debts not

affected by the act and covered by Sec. 67d. viz.,

claims resting upon valid substantive liens, These

words really mean “except as in this act otherwise

provided”. Language is used elsewhere in the act

similar to the words “except as herein provided,”’

tained in the section in which the words appear, and

in each case the apparent meaning of the words is

“except as in this act otherwise provided. See Sees,

21 (b), 38 (4), and 56a.

We respectfully submit that the expression of the

Supreme Court, in Guarantee Title & Trust Co. v.

Title Guaranty & Surety Co., supra, that the only

exception is taxes is based upon the inadvertent as-

sumption that the words “except as herein provid-

ed’’ refer to taxes, and was obiter dicta, and that the

later expression of the court in City of Richmond v.

Bird, supra, (also stated by the Court of Appeals

to be obiter dicta), is the correct construction of

the act as to when taxes are payable.

There is nothing in the scheme of payment pro-

vided for by Sec. 64 which warrants the assumption

that it was the intention of Congress to insert taxes

between (3) and (4) of subdivision ‘‘b,’’ If any

doubt exists as to the order of payment that doubt

is whether taxes precedes everything mentioned in

‘**bh”’ or follows everything therein.

There have been only a few decisions affecting the

question at issue. In the Matter of Enterprise

Brass Foundry (1923), 293 Fed. Rep. 69, Judge

Neterer of the District Court for the Western Dis-

trict of Washington took Judge Dooling’s view that

wages should be paid ahead of taxes. In the Mat-

ter of Kittenplan (1922), 49 Am. B. R. 410, 285 Fed.

62, Judge Knox of the District Court for the South-

ern District of New York held that taxes were prior

to labor claims. He referred to only a few of the

cases bearing upon the question and relied on Guar-

antee Title & Trust Co. v. Title Guaranty & Surety

Co., supra, and did not mention City of Richmond

v. Bird, supra. In the Matter of A. J. Waterman

Mfg. Co. (1923), 291 Fed. 589, Judge Hale for the

District Court of the Southern District of Maine,

held, although by way of dicta, that taxes were first.

He did not discuss any of the cases bearing upon the

question. In the Matter of A. E. Fountain (1924),

2 Am. B. R., N. S., 455, Judge Augustus N. Hand

—

of the District Court for the Southern District of

New York held that taxes are to be paid prior to

labor claims. He rests his decision upon the hold-

ing of the Circuit Court of Appeals in the case at

bar, and accepts their interpretation of the effect

of City of Richmond v, Bird, supra, and Guarantee

Title & Trust Co. v. Title Guaranty & Surety Co.,

supra.

Several early cases held that, inasmuch as “a”?

precedes “‘b’’, and taxes were not to be considered as

debts, taxes were to be paid even in advance of ex-

penses of administration. See

Am. B. R. 675, 131 Fed. Rep. 546;

In re Weiss (D. 0. New York, 1908), 20 Am.

B. R. 247, 159 Fed. Rep. 295;

B. R. 22, 145 Fed. Rep. 966,

The case of City of Chattanooga v. Hill (C. C. A.

8th Cir. 1905), 15 Am. B. R. 195, 139 Fed. Rep. 600,

is sometimes referred to as supporting this doctrine,

but an examination of the case shows that the court

expressly refrained from passing upon the question.

The later cases have all repudiated this doctrine.

See

In re Halsey (D. C. N. J., 1909), 23 Am. B.

R. 401, 163 Fed. Rep. 118;

State of New Jersey v. Lovell (C. C. A. 3rd

Cir., 1910), 24 Am. B. R. 562, 179 Fed. Rep.

321;

In re Oxley (D.C. Wash. 1913), 30 Am. B. R.

406, 204 Fed. Rep. 826;

Polk County v. Burnes (C. C. A. 8th Cir.

1917), 40 Am. B. R. 727, 247 Fed. Rep. 399;

Matter of Jacobson (C. C. A. Tth Cir. 1920),

45 Am. B. R. 1, 263 Fed. Rep. 883;

In re General Film Corporation (C. C. A.

2nd Cir. 1921), 48 Am. B. R. 149, 274 Fed.

Rep. 903;

In re Hessler Foundry & Mfg. Co. (Ref. N. D.

N. Y., 1920), 45 Am. B. R. 382;

In re Wyley Co. (D. C. N. D. Ga., 1923), 292

Fed. Rep. 900;

In re Baltimore Pearl Hominy Co. (D. C.

Md., 1923), 294 Fed. 921;

In-re A. J. Waterman Mfg. Co. (D. C. Me.

S. D., 1923); 291 Fed. 589;

In re A. E. Fountain (D. C. N. Y. S. D, |

1924), 2 Am. B. R. N. S. 455.

As was said in Matter of Jacobsen, supra, it is

hardly conceivable that Congress would confer upon

the bankruptey court the power to sequester and

preserve property and administer bankrupt estates

and yet deny to the court the power to protect its

officers in the performance of their duties, notwith-

standing such performance of duties and such ad-

ministration of the insolvent estate is for the benefit

of the taxing powers even more than it is for the

general creditors, by reason of the priority given

taxes over the claim of general creditors.

2. SEC. 3466, REVISED STATUTES, HAS NO APPLICATION.

This section is continually referred to and relied

upon by the United States Government in its claims

for taxes filed against bankrupt estates, but it has

no application as it has been superseded by the

Bankruptcy Act. This section would apparently

give priority to tax claims over labor claims, and

provides:

‘‘Whenever any person indebted to the

United States is insolvent, or whenever the es-

tate of any deceased debtor, in the hands of the

executors or administrators, is insufficient to

pay all the debts due from the deceased, the

debts due to the United States shall first be sat-

isfied; and the priority hereby established shall

extend as well to cases in which a debtor, not

having sufficient property to pay all his debts,

makes a voluntary assignment thereof, or in

which the estate and effects of an absconding,

concealed or absent debtor are attached by pro-

cess of law, as to cases in which an act of bank-

ruptey is committed.”’

The following cases hold that the section does not

apply to bankruptcy proceedings:

Guaranty Title & Trust Co. v. Title Guaranty

& Surety Co., supra;

In re Fountain, supra;

In re A. J. Waterman Mfg. Co., supra.

8% THE QUESTION OF PRIORITY BETWEEN SOVEREIGN

AND SUBJECT IS NOT INVOLVED.

The soverign has enacted its own bankruptcy laws

and instituted its own bankruptcy courts. The Con-

—

stitution of the United States gives Congress con-

current powers to impose and collect taxes and to

establish a uniform bankruptcy law, and if Con-

gress, in exercising these powers, establishes certain

priorities of payment, and relegates taxes to an in-

ferior position, no one can be heard to complain be-

cause Congress is only doing what the soverign gave

it the right to do.

In the Bankruptcy Act of 1898, Congress departed

very considerably from the principles of public pol-

icy theretofore prevailing as to the rights of the

sovereign. The sovereign is expressly referred to in

Sec. 64a of the act and this section is binding upon

the various governments because they are named

therein.

Guarantee Title & Trust Co. v. Title Guar-

anty & Surety Co., supra;

In re Hessler Foundry & Mfg. Co., supra.

In re General Film Corporation, supra;

In re Wyley Co., supra.

In the case of in re Wyley Co., supra, Judge Sib-

ley for the District Court for the Northern District

of Georgia, said at page 901 of 292 Fed. Rep.:

‘‘Taxes due the United States and bankrupt-

cies are alike wholly subject to the power of

Congress. Congress may make such provision

for the one through the other as it sees fit. A

tax has such lien and priority, and only such,

as-is given it by statute. 37 Cyc. 1138, 1143.

The common-law preference of the sovereign is

said not to exist in favor of the United States,

save as continued by statutes. United States v.

Bank of North Carolina, 6 Pet, 29, 8 Law. Ed.

308.