288 U.S. 290 (1933), 374, New York v. Maclay

Docket Nº:No. 374
Citation:288 U.S. 290, 53 S.Ct. 323, 77 L.Ed. 754
Party Name:New York v. Maclay
Case Date:February 06, 1933
Court:United States Supreme Court

Page 290

288 U.S. 290 (1933)

53 S.Ct. 323, 77 L.Ed. 754

New York



No. 374

United States Supreme Court

Feb. 6, 1933

Argued January 18, 19, 1933




Under R.S. § 3466, debts due by an insolvent corporation to the United States have priority over claims of a State for franchise taxes due but not liquidated, although, by the state law, such taxes are a lien in the sense that, when liquidated, they take precedence, by relation, over other intervening claims. Pp. 289-294.

59 F.2d 979 affirmed.

Certiorari, 287 U.S. 590, to review the affirmance of an order granting priority to the United States in the payment of income taxes and of a claim for damages, over the claim of the New York for franchise and gross earnings taxes, in the liquidation through a receivership of the assets of an insolvent corporation.

Page 291

CARDOZO, J., lead opinion

MR. JUSTICE CARDOZO delivered the opinion of the Court.

The controversy is one between the United States and a state as to priority of payment out of the assets of an insolvent corporation.

Receivers of the corporation were appointed by a consent decree in January, 1927, and creditors were directed to file their claims. The decree had the effect of a general assignment. Price v. United States, 269 U.S. 492, 502. The United States filed with the receivers a claim for additional taxes in the sum of $33,663.97 due from the insolvent for the years 1917 and 1918, and also a claim for $516.46 expenses incurred in the replacement of a buoy run into by the insolvent's tug. The State of New York filed a claim for franchise taxes due for the years 1921 to 1925, but not assessed or liquidated till after the receivership. It filed another claim afterwards for taxes due for later years. The District Court held that, under § 3466 of the Revised Statutes (31 U.S.Code, § 191), the debt owing to the United States had a preference over the debt owing to the state in the distribution of the fund. Upon appeal to the Circuit Court of Appeals for the Second Circuit, the decree was affirmed. 59 F.2d 979. The case is here on certiorari.

The decision of this Court in County of Spokane v. United States, 279 U.S. 80, upheld the power of Congress to give priority to debts due to the people of the United States, though the debts...

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