In re International Match Corporation, 431.

Decision Date12 August 1935
Docket NumberNo. 431.,431.
Citation79 F.2d 203
PartiesIn re INTERNATIONAL MATCH CORPORATION.
CourtU.S. Court of Appeals — Second Circuit

Peaslee & Brigham, of New York City (Martin A. Meyer, Jr., of New York City, on the brief; Ralph G. Albrecht, of New York City, of counsel), for the State of Delaware.

Rosenberg, Goldmark & Colin, of New York City (George K. Hourwich, of New York City, of counsel), for appellee.

Before MANTON, SWAN, and CHASE, Circuit Judges.

CHASE, Circuit Judge.

The bankrupt, a corporation organized under the laws of Delaware, was adjudicated a bankrupt in the District Court for the Southern District of New York on April 19, 1932. The appellee is its trustee. The appellant has filed its claim for franchise taxes for the year 1932, which were payable April 1, 1933, and for the year 1933, payable April 1, 1934. Although the claim was filed subsequent to the time limited in a bar order, the order was modified to permit filing and nothing now turns upon that. The claims were expunged upon the theory that they were not provable under section 64a of the Bankruptcy Act, as amended by Act May 27, 1926, 11 USCA § 104 (a).

It is undisputed that these taxes are laid upon the privilege of existing as a corporation. See State v. Surety Corporation, 19 Del. Ch. 17, 162 A. 852, 853. Also that they are to be computed on the basis of a report of the corporation's authorized capital, required to be filed, in accordance with section 66 of the Delaware Franchise Tax Law (Rev. Code Del. 1915, § 103, as amended by 37 Del. Laws, c. 7, § 1), on January 1, 1933, showing the 1932 capital structure, and on January 1, 1934, showing the 1933 capital structure. Under section 67 of the same law (Rev. Code Del. 1915, § 104, as amended by 37 Del. Laws, c. 7, § 2), the tax is to be prorated, if a corporation ceases to exist during a year, for the portion of the year during which it continued in existence and "In case a corporation shall have changed during the taxable year the amount of its authorized capital stock, the total annual franchise tax payable at the foregoing rates shall be arrived at by adding together the franchise taxes calculated as above set forth as prorated for the several periods of the year during which each distinct authorized amount of capital was in effect."

Considerable stress is placed by the appellant upon the words "changed during the taxable year," which appear in section 67 of the Delaware statute above quoted in part. It is argued from this that the franchise tax payable April 1, 1933, is for the year 1932, a year which had already commenced to run when the corporation was adjudicated a bankrupt. With this conclusion we agree. It is obvious that changes in capital structure which can be given effect in computing the tax on April 1st in any year are changes which are then known. Certainly no tax could be computed which was dependent in amount upon events which might subsequently take place. As the changes which must necessarily be given effect in the computation are those which are knowable and are "changes within the taxable year" as designated by the statute, it follows inevitably that the tax computed on any April 1st is the tax for the previous calendar year or such part of it as the corporation was in existence.

The questions presented are (1) whether the tax for 1932, payable April 1, 1933, was provable within the meaning of section 64a of the Bankruptcy Act; and (2) whether the tax for 1933, payable April 1, 1934, was likewise provable. The strongest argument in behalf of the appellant can be made for the first of these taxes and that will be considered first.

Section 64a of the Bankruptcy Act, as amended by Act May 27, 1926, 11 USCA § 104 (a), provides, in so far as now material, that "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, in the order of priority as set forth in paragraph (b) hereof. * * *" The time when such taxes must be due and owing to be so payable is not fixed by the section. As to property taxes, it is clearly established that those which accrue after petition filed and during administration are to be paid. Swarts v. Hammer, 194 U. S. 441, 24 S. Ct. 695, 48 L. Ed. 1060; Dayton v. Stanard, 241 U. S. 588, 36 S. Ct. 695, 60 L. Ed. 1190. In equity receiverships, franchise taxes upon the privilege of existing which accrue during the receivership are likewise to be paid by the receiver. Michigan v. Michigan Trust Co., 286 U. S. 334, 52 S. Ct. 512, 76 L. Ed. 1136; People v. Hopkins (C. C. A.) 18 F.(2d) 731. But in an equity receivership the title to the property remains in the corporation and is merely put into the custody of the receiver, who must of necessity use the owner's franchise in administering it. In bankruptcy, however, the trustee acquires the title by operation of law, and continued existence of the bankrupt as a corporation is nonessential. In re Century Silk Mills, Inc. (D. C.) 12 F.(2d) 292. So the supposed analogy...

To continue reading

Request your trial
10 cases
  • In re Freedomland, Inc.
    • United States
    • U.S. Court of Appeals — Second Circuit
    • 8 d5 Junho d5 1973
    ...the bankrupt. Bankruptcy Act § 64(a)(4), 11 U.S.C. § 104(a)(4). In reaching this decision, the court also referred to In re International Match Corp., 79 F.2d 203 (2d Cir.), cert. denied sub nom. Delaware v. Irving Trust Co., 296 U.S. 652, 56 S.Ct. 368, 80 L.Ed. 464 (1935), for the proposit......
  • In re Laytan Jewelers, Inc., 68 B 752.
    • United States
    • U.S. District Court — Southern District of New York
    • 24 d2 Agosto d2 1971
    ...no tax could be computed which was dependent in amount upon events which might subsequently take place", In re International Match Corp., 79 F.2d 203 (2d Cir. 1935), cert. den. Delaware v. Irving Trust Co., 296 U.S. 652, 56 S.Ct. 368, 80 L.Ed. 464 (1935). To argue as the debtor did, and the......
  • In re Freedomland, Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • 29 d2 Fevereiro d2 1972
    ...The question of what taxes "became legally due and owing" by the bankrupt was thus left to the courts. In Matter of International Match Corp., 79 F.2d 203 (2d Cir. 1935), cert. den. sub nom. Delaware v. Irving Trust Co., 296 U.S. 652, 56 S.Ct. 368, 80 L.Ed. 464, this Circuit had ruled that ......
  • In re Pressed Steel Car Co. of New Jersey, 6585.
    • United States
    • U.S. Court of Appeals — Third Circuit
    • 5 d6 Novembro d6 1938
    ...question. A statement similar in substance to that of Judge Knox is made by Circuit Judge Chase in his opinion in Re International Match Corporation, 2 Cir., 79 F.2d 203, 204. See, also, People of New York v. Hopkins, In Michigan v. Michigan Trust Co., 286 U.S. 334, 52 S.Ct. 512, 76 L.Ed. 1......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT