111 F.Supp. 109 (D.Me. 1953), 22937, In re Daigle

Docket Nº22937.
Citation111 F.Supp. 109
Party NameIn re DAIGLE.
Case DateApril 02, 1953
CourtUnited States District Courts, 1st Circuit, District of Maine

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111 F.Supp. 109 (D.Me. 1953)

In re DAIGLE.

No. 22937.

United States District Court, D. Maine, Southern Division.

April 2, 1953

Alton A. Lessard, U.S. Atty., and Edward J. Harrigan, Asst. U.S. Atty., Portland, Me., for United States.

William P. Donahue, Biddeford, Me., pro se.

CLIFFORD, District Judge.

This case comes before this Court on the petition of the United States of America for review of an Order by the Referee in Bankruptcy in the above-captioned matter, dated November 15, 1950, wherein the Referee, in effect, directed the Trustee in Bankruptcy to pay and allow wage claims of five employees in accordance with his Order of Distribution, free and clear of income withholding taxes claimed to be due by the United States.

The United States contends that such Order was, and is, erroneous and contrary to law, and that the Referee erred in authorizing the payment of the said wage claims free and clear of the claim of the United States for withholding taxes.

The facts, briefly stated, are as follows: Paul Daigle, a general contractor, employing a number of individuals, filed a petition in bankruptcy on October 7, 1948, and was adjudged a bankrupt on October 9, 1948. Five of his former employees properly filed proofs of claims for wages earned within three months from the date of bankruptcy. The Referee determined that the five employees were entitled to allowance of their claims for wages and assigned to the claims the priority to which they were entitled under the provisions of Section 64, sub. a(2) of the Bankruptcy Act, 11 U.S.C.A. § 104 sub. a(2).

On the 11th day of October, 1950, the Referee ordered the United States to appear before him to show cause why he, the said Referee, should not order payment of the wage claims by the Trustee in Bankruptcy free and clear of any claim of the United States, that income withholding taxes should be withheld and paid by the said Trustee to the Collector of Internal Revenue for the District of Maine.

The United States seasonably filed its Answer to the show cause Order and, among other things, it asserted that such claims for wages should not be paid to these employees free and clear of the obligation that taxes on said amount be withheld by the Trustee and paid by him to the appropriate Collector of Internal Revenue.

On November 10, 1950, the Referee filed his opinion setting forth his reasons why the taxes should not be so withheld, disagreeing with the authorities cited by the United States. On November 15, 1950, the Referee filed his Order to the effect that the Trustee was authorized to pay and allow wage claims in accordance with his Order of Distribution free and clear of claims for withholding.

On the 17th day of November, 1950, the Government filed a motion for extension of time for filing a Petition for Review of the Referee's Order. This motion

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was granted and the time was extended for thirty days beyond the ten days provided by statute 11 U.S.C.A. § 67, sub. c. Although the Petition...

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