Bright v. State of Arkansas
| Decision Date | 02 April 1918 |
| Docket Number | 4961. |
| Citation | 249 F. 950 |
| Parties | BRIGHT et al. v. STATE OF ARKANSAS. |
| Court | U.S. Court of Appeals — Eighth Circuit |
James F. Read and James B. McDonough, both of Ft. Smith, Ark., for appellants.
John D Arbuckle, Atty. Gen., T. W. Campbell, Asst. Atty. Gen., and Hamilton Moses, Special Counsel, of Little Rock, Ark., for the State of Arkansas.
Before SANBORN and CARLAND, Circuit Judges, and TRIEBER, District judge.
By Act 112 of the Acts of Arkansas of 1911, page 68, the state of Arkansas imposed an annual tax of $568, payable on or before August 10th, and an annual penalty of $142 for a failure to pay this tax by August 10th, on the Kansas City & Memphis Railway Company 'for the privilege of exercising its franchise in the state of Arkansas' (sections 6 and 12) and provided that these taxes and penalties should be a first lien upon all the property of the corporation, whether employed by the corporation in the prosecution of its business, or in the hands of an assignee, trustee or receiver for the benefit of the creditors or stockholders thereof (section 14). On July 14, 1914, in a creditors' suit entitled Riley v. Kansas City & Memphis Railway Company which owned and was operating a railroad in Arkansas, the court below appointed receivers, who took possession of and have since been operating the railroad of the defendant for the benefit of its creditors. In 1915 the state intervened in this suit, and prayed that the court would order the receivers to pay these franchise taxes for the years 1914 and 1915, and the penalties for the failure to pay them, and the court granted its request. This is the order challenged by the appeal.
The taxes in question are not taxes upon property. They are taxes for the privilege of exercising the power to do the business the corporation conducts in a corporate capacity, and if the question here presented were new the decision of the Supreme Court in United States v. Whitridge, 231 U.S. 144 147, 149, 34 Sup.Ct. 24, 58 L.Ed. 159, to the effect that receivers were not required to pay the corporation tax for which the corporation would have been liable during the receivership in that case under the Corporation Tax Law (Tariff Act Aug. 5, 1909, Sec. 38, 36 Stat. c. 6, pp. 11, 112-117), would have been persuasive by analogy, if not controlling. But the question whether or not receivers of the property of corporations should be required to pay the taxes accruing during the receivership against the corporations for the privilege of doing business in their corporate capacity, while the corporations can ordinarily do no business, has long been a subject of debate and of conflicting decisions. It is held that such receivers are not liable for, and ought not to be required to pay, such taxes in Johnson v. Johnson Bros., 108 Me. 272, 275, 276, 80 A. 741, Ann. Cas. 1913A, 1303, Johnson v. Monson Consolidated Slate Co., 108 Me. 296, 80 A. 750, State v. Bradford Savings Bank, 71 Vt. 234, 237, 44 A. 349, and Commonwealth v. Lancaster Savings Bank, 123 Mass. 493, 496, 497. On the other hand, it is held in a considered opinion by the Circuit Court of Appeals of the Ninth Circuit, in Coy v. Title Guarantee & Trust Co., 220 F. 90, 93, 135 C.C.A. 658, L.R.A. 1915E, 211, and by the great weight of modern authority, that courts of equity, operating the property and liquidating the debts of corporations, which would otherwise have been liable to pay such taxes, ought to direct the payment by their receivers of such taxes as would have accrued during the time the receivers were actually operating the property. Coy v. Title Guarantee & Trust Co. (D.C.) 212 F. 520, 524; Duryea v. American Woodworking Machine Co. (C.C.) 133 F. 329; Conklin v. United States Shipbuilding Co. (C.C.) 148 F. 129, 130; New York Terminal Co. v. Gaus, 139 A.D. 347, 124 N.Y.Supp. 200; Philadelphia & Reading R.R. Co. v. Commonwealth, 104 Pa. 80, 86; Central Trust Co. v. N.Y. City, etc., Ry. Co., 110 N.Y. 250, 253, 257, 18 N.E. 92, 1 L.R.A. 260; New York Terminal Co. v. Gaus, 204 N.Y. 512, 517, 98 N.E. 11; 3 Thompson on Corporations (2d Ed.) Sec. 2941; In re United States Car Co., 60 N.J.Eq. 514, 517, 43 A. 673.
In deciding questions of policy and practice which...
To continue reading
Request your trial
-
Secondary Life Three LLC v. Transamerica Life Ins. Co.
...judicial uniformity, accept it as persuasive and follow it, unless we are clearly convinced that it is wrong.”) (citing Bright v. Arkansas, 249 F. 950, 952 (8th Cir. 1918); New Amsterdam Cas. Co. v. Iowa State Bank, 277 F. 713, 716 (8th Cir. 1921); Hennepin Cnty., Minn. v. M. W. Savage Fact......
-
Lowden v. State Corp.. Comm'n.
...that a franchise tax is payable wherever the receiver continues to operate the business, regardless of its nature. Compare Bright v. Arkansas, 249 F. 950 (C.C.A.8); State v. Bradley, 207 Ala. 677, 93 So. 595, 26 A.L.R. 421; Central Trust Co. v. New York, C. & N. R. Co., 110 N. Y. 250, 18 N.......
-
In re Detroit Props. Corp.
...created the liability of the receiver for franchise taxes, but have founded liability upon general principles as well. Bright v. State of Arkansas (C. C. A.) 249 F. 950;Armstrong v. Emmerson, 300 Ill. 54, 132 N. E. 768, 18 A. L. R. 693. In Ohio, where such a statute exists, it has been held......
-
People of State of Michigan Haggerty v. Michigan Trust Co
...compelled to pay them now. The decisions as to this are persuasive and uniform. Coy v. Title Guarantee & Trust Co., supra; Bright v. Arkansas (C. C. A.) 249 F. 950; McFarland v. Hurley (C. C. A.) 286 F. 365; People v. Hopkins (C. C. A.) 18 F.(2d) 731, 733; cf. In re Tyler, 149 U. S. 164, 18......